Eagle Company makes the MusicFinder, a sophisticated satellite radio. Eagle has experienced a steady growth in sales for the past five years. However, Ms. Luray, Eagle's CEO, believes that to maintain the company's present growth will require an aggressive advertising campaign next year. To prepare for the campaign, the company's accountant, Mr. Bednarik, has prepared and presented to Ms. Luray the following data for the current year, year 1:
| Variable costs: | ||
| Direct labor (per unit) | $ | 94 |
| Direct materials (per unit) | 37 | |
| Variable overhead (per unit) | 16 | |
| Total variable costs (per unit) | $ | 147 |
| Fixed costs (annual): | ||
| Manufacturing | $ | 386,000 |
| Selling | 291,000 | |
| Administrative | 790,000 | |
| Total fixed costs (annual) | $ | 1,467,000 |
| Selling price (per unit) | 410 | |
| Expected sales revenues, year 1 (24,000 units) | $ | 9,840,000 |
Eagle has an income tax rate of 30 percent.
Ms. Luray has set the sales target for year 2 at a level of $11,890,000 (or 29,000 radios).
Required:
a. What is the projected after-tax operating profit for year 1?
b. What is the break-even point in units for year 1? (Round up your answer to the nearest whole number.)
c. Ms. Luray believes that to attain the sales
target (29,000 radios) will require additional selling expenses of
$296,000 for advertising in year 2, with all other costs remaining
constant. What will be the after-tax operating profit for year 2 if
the firm spends the additional $296,000?
d. What will be the break-even point in sales dollars for year 2 if the firm spends the additional $296,000 for advertising? (Solve by computing volume in units first. Round up units to the nearest whole number and round your final answer to the nearest whole dollar amount.)
e. If the firm spends the additional $296,000 for advertising in year 2, what is the sales level in dollars required to equal the year 1 after-tax operating profit? (Solve by computing volume in units first. Round up units to the nearest whole number and round your final answer to the nearest whole dollar amount.)
f. At a sales level of 29,000 units, what is the maximum amount the firm can spend on advertising to earn an after-tax operating profit of $758,000? (Round intermediate calculations and final answer to the nearest whole dollar amount.)
In: Accounting
A23. (Capital budgeting—payback method) Allenby Corp. has $10 million to invest. Listed below are the expected future cash inflows to be received for four alternative investments, in millions of dollars.
Investment A, Investment B,
Investment C, Investment
D
Year 1 7, 1, 0,
7
Year 2 1, 2, 0,
3
Year 3 2, 7, 3,
0
Year 4 2, 8, 7,
0
Year 5 2, 9, 10,
0
A. Compare investments A and B.
a. Compute the payback
periods for Investments A and B.
b. Which one would you
pick, based only on payback period?
c. Do you think one is a
better investment?
B. Compare investments C and D.
a. Compute the payback
periods
b. Which one would you
pick, based on the payback periods?
c. Do you think this is
the better investment? Why, or why not?
In: Accounting
Young Professional Couple are concerned as to the funding of their children's higher educations. Their alma mater has a Qualified Tuition Program and they hav ealso hear about savings bonds and Educational Savings Account. What is your advice to them?
In: Accounting
James Corp. applies overhead on the basis of direct labor hours.
For the month of May, the company planned production of 10,000
units (80% of its production capacity of 12,500 units) and prepared
the following overhead budget:
| Operating Levels | |||
| Overhead Budget | 80% | ||
| Production in units | 10,000 | ||
| Standard direct labor hours | 27,000 | ||
| Budgeted overhead | |||
| Variable overhead costs | |||
| Indirect materials | $ | 16,200 | |
| Indirect labor | 27,000 | ||
| Power | 5,400 | ||
| Maintenance | 5,400 | ||
| Total variable costs | 54,000 | ||
| Fixed overhead costs | |||
| Rent of factory building | 23,000 | ||
| Depreciation—Machinery | 10,800 | ||
| Supervisory salaries | 14,800 | ||
| Total fixed costs | 48,600 | ||
| Total overhead costs | $ | 102,600 | |
During May, the company operated at 90% capacity (11,250 units) and
incurred the following actual overhead costs:
| Overhead Costs | |||
| Indirect materials | $ | 16,200 | |
| Indirect labor | 29,875 | ||
| Power | 6,075 | ||
| Maintenance | 6,710 | ||
| Rent of factory building | 23,000 | ||
| Depreciation—Machinery | 10,800 | ||
| Supervisory salaries | 18,200 | ||
| Total actual overhead costs | $ | 110,860 | |
2. Compute the overhead volume variance.
3. Prepare an overhead variance report at the
actual activity level of 11,250 units.
In: Accounting
In: Accounting
Fortes Inc. has provided the following data concerning one of the products in its standard cost system. Materials price variances is calculated on material purchased and materials quantity is based on Material used in production. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.
|
Inputs |
Standard Quantity or Hours per Unit of Output |
Standard Price or Rate |
|||||
|
Direct materials |
8.7 |
ounces |
$ |
6.80 |
per ounce |
||
|
Direct labor |
0.6 |
hours |
$ |
28.70 |
per hour |
||
|
Variable manufacturing overhead |
0.60 |
hours |
$ |
5.10 |
per hour |
||
The company has reported the following actual results for the product for April:
|
Actual output |
6300 |
units |
|
|
Raw materials purchased |
48,900 |
ounces |
|
|
Actual cost of raw materials purchased |
$ |
316,540 |
|
|
Raw materials used in production |
54,840 |
ounces |
|
|
Actual direct labor-hours |
3530 |
hours |
|
|
Actual direct labor cost |
$ |
105,850 |
|
|
Actual variable overhead cost |
$ |
17,090 |
Required:
|
Enter all numbers as positive and rounded to the nearest dollar |
|
|
Materials price variance |
$ |
|
Materials quantity variance |
$ |
|
Labor rate variance |
$ |
|
Labor efficiency variance |
$ |
|
Variable overhead rate variance |
$ |
|
Variable overhead efficiency variance |
$ |
In: Accounting
Holl Corporation has provided the following data for November.
|
Denominator level of activity |
4900 |
machine-hours |
|
|
Budgeted fixed manufacturing overhead costs |
$ |
58,310 |
|
|
Standard machine-hours allowed for the actual output |
5200 |
machine-hours |
|
|
Actual fixed manufacturing overhead costs |
$ |
57,330 |
Required:
Calculate the following. Input all amounts as positive values
|
FOH Budget Variance |
$ |
|
FOH Volume Variance |
$ |
In: Accounting
the key measurements used by organizations to track financial performance in a health care organization or department?
In: Accounting
Select an organization of your choice and examine the structure. Then, briefly describe the type of structure the organization has and explain how it is effective in accomplishing the organization's goals. Discuss the advantages and disadvantages of the structure, and provide two recommendations to address those disadvantages.
In: Accounting
1. Using Apple’s actual 9/30/17 balance sheet to answer this question, which of the following best represents Apple’s Accounting Equation?
a. $375,319,000,000 = $241,272,000,000 + $134,047,000,000
b. $128,645,000,000 = $100,814,000,000 + $27,831,000,000
c. $194,714,000,000 = $100,814,000,000 + $93,900,000,000
d. $241,272,000,000 = $107,225,000,000 + $134,047,000,000
2. Using Apple’s actual 9/30/17 balances shown in the balance sheet to answer this question, what would be the impact to their accounting equation if Apple took out a new $1,000,000,000 bank loan in exchange for cash?
a. Assets would decrease $1,000,000,000 and Stockholders’ equity would decrease $1,000,000,000
b. Assets would decrease $1,000,000,000 and Liabilities would increase $1,000,000,000
c. Assets would increase $1,000,000,000 and Liabilities would increase $1,000,000,000
d. Assets would increase $1,000,000,000 and Stockholders’ equity would increase $1,000,000,000
3. Using Apple’s actual 9/30/17 balances shown in the balance sheet to answer this question, what would be the new Total Liabilities if Apple took out a new $1,000,000,000 bank loan?
a. $242,272,000,000
b. $376,319,000,000
c. $135,047,000,000
d. $100,814,000,000
In: Accounting
Detmer Liebold uses a job-order costing system with a single predetermined overhead rate based on direct labor hours. The predetermined overhead rate is based on the following data: Total direct labor hours 70,000
Total fixed overhead cost 273,000
Variable manufacturing overhead per direct labor hour $6.00
Job 924 was recently completed with the following characteristics.
Number of units produced 50
Total direct labor hours 100 Direct materials $680
Direct labor cost $7,000
Complete the following table to calculate the unit product cost for Job 924:
Account Amount Calculations
Total fixed manufacturing overhead cost
+ Total variable manufacturing overhead cost
Total manufacturing overhead cost
/ Direct labor hours
Predetermined overhead rate
Direct materials
Direct labor
Manufacturing overhead applied
Total cost of Job 924
Total cost of Job 924 From calculation above
/ Number of units produced Unit product cost for Job 924
In: Accounting
In: Accounting
Discussion Form:
1. Explain why LIFO is not used in process costing?
2. Explain the concept of equivalent units of production?
3. What is the difference between FIFO method and Average Cost method?
4. Explain the purpose of break-even analysis?
In: Accounting
Estimated manufacturing overhead $ 500,000
Actual manufacturing overhead $ 550,000
Estimated direct labor hours 10,000 hours
Actual direct labor hours 10,500
|
13. |
Calculate the predetermined overhead allocation rate using direct labor hours as the allocation base. |
|
14. |
Determine the amount of overhead allocated during the year. Record the journal entry. |
|
15. |
Determine the amount of underallocated or overallocated overhead. Record the journal entry to adjust Manufacturing Overhead. |
In: Accounting
Jungle Corporation's stockholder's equity section at December 31, 2014 appears below:
Stockholders equity
Paid in Capital
Common stock, $10 par, 60,000 outstanding $600,000
Paid in Capital in excess of par 150,000
Total paid in capital $750,000
Retained Earnings 150,000
Total Stockholder's Equity $900,000
On June 30, 2015, the board of directors of Kenner Corp declared a 15% stock dividend, payable on July 31, 2015, to stockholders of record on July 15, 2015. The fair value of Kenner Corp's stock on June 30, 2015 was $15.
On December 1, 2015 the board of directors declared a 2 for 1 stock split effective December 15, 2015. Jungle Corp's stock was selling for $20 on December 1, 2015, before the stock split was declared. Par value of the stock was adjusted. Net income for 2015 was $190,000 and there were no cash dividends declared.
Instructions
(a) Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split. Show all calculations.
(b) Fill in the amount that would appear in the stockholder's equity section for Jungle Corp at December 31, 2015, for the following items: (Show all calculations)
1.Common Stock
2.Number of shares outstanding
3.Par value per share
4.Paid-in capital in excess of par
5.Retained Earnings
6.Total Stockholder's Equity
In: Accounting