Chenango Industries uses 15 units of part JR63 each month in the production of radar equipment. The cost of manufacturing one unit of JR63 is the following:

Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost. This is a separate charge in addition to manufacturing overhead. Chenango Industries’ annual manufacturing overhead budget is one-third variable and two-thirds fixed. Scott Supply, one of Chenango Industries’ reliable vendors, has offered to supply part number JR63 at a unit price of $51,000.

Required:

1. If Chenango Industries purchases the JR63 units from Scott, the capacity Chenango Industries used to manufacture these parts would be idle. Should Chenango Industries decide to purchase the parts from Scott, the unit cost of JR63 would increase (or decrease) by what amount?
2. Assume Chenango Industries is able to rent out all its idle capacity for $81,000 per month. If Chenango Industries decides to purchase the 15 units from Scott Supply, Chenango’s monthly cost for JR63 would increase (or decrease) by what amount?
3. Assume that Chenango Industries does not wish to commit to a rental agreement but could use its idle capacity to manufacture another product that would contribute $165,000 per month. If Chenango’s management elects to manufacture JR63 in order to maintain quality control, what is the net amount of Chenango’s cost from using the space to manufacture part JR63?

Everbuilt Company had no jobs in progress at the beginning of June and no beginning inventories. It started only two jobs during June—Job L and Job W. Job L was completed and sold by the end of June and Job W was incomplete at the end of June. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional information is available for the company as a whole and for Jobs L and W (all data and questions relate to the month of June):

Estimated total fixed manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . . .        $30,000

Estimated variable manufacturing overhead per

direct labor-hour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.00

Estimated total direct labor hours to be worked. . . . . . . . . . . . . . . . . . . . . . . . .        6,000

Total actual manufacturing overhead costs incurred. . . . . . . . . . . . . . . . . . . . .         $47,500

Job L             Job W

Direct materials. . . . . . . . . . . . . . . . . . . . . . $39,000           $24,000

Direct labor cost. . . . . . . . . . . . . . . . . . . . . . $62,000           $22,500

Actual direct labor hours worked. . . . . . . .    4,200             1,500

What is the amount of underapplied or overapplied overhead?

please give step by step instructions

Jack and June are retired and receive $10,000 of social security benefits and taxable pensions totaling $25,000. They have been offered $20,000 for an automobile that they restored after they retired. They did most of the restoration work themselves and the sale will result in a gain of $12,000. What tax issues should Jack and June consider?

I need an original answer and not a copy and paste

During July, the following costs were incurred:
Materials (30,000 units) $24,900
Labour and overheads $20,075
At the beginning of July, there were 15,000 units of work in progress valued as follows:
Materials (100% complete) $9,000
Labour and overheads (40% complete) $1,250
At the end of July, there were 5,000 units of work-in-progress. They were 100% complete for materials
and 50% complete for labour and overheads.
Using both FIFO approach and Weighted Average approach:
(a) calculate how many units were completed during July
(b) calculate the cost per unit
(c) value the finished items and the closing work-in-progress
(d) prepare a Process Account. (Note: assume no losses)

Amy Lee hired Adler ​& Company to remodel her kitchen. A total of 33 professional hours were incurred on this job. In​ addition, Amy's remodelling job required one of the professionals to travel back and forth to her house for a total of 132 km. The blueprints had to be copied four times because Amy changed the plans several times. In​ addition, 19 hours of secretarial time were used lining up the subcontractors for the job.

Requirement 1. Calculate the current indirect cost allocation rate per professional hour. ​(Round your answer to the nearest​ cent.)

The current indirect cost allocation rate per professional hour is .....$ .

Requirement 2. Calculate the amount that would be billed to Amy Lee given the current costing structure.

Determine the​ formula, then calculate the amount that would be billed to Amy Lee given the current costing structure. ​(Round all calculations to the nearest​ cent.)

Requirement 3. Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs.

Determine the​ formula, then calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. ​(Round your final answers to the nearest​ cent.)

Requirement 4. Calculate the amount that would be billed to Amy Lee using ABC costing.

Determine the​ formula, then calculate the amount that would be billed to Amy Lee using ABC costing. ​(Round all calculations to the nearest​ cent.)

Requirement 5. Which type of billing system is fairer to​ clients? Explain.

The

▼

ABC

traditional

billing system should be fairer to clients because they are charged according to

▼

the direct labour hours on the job

the resources they used

the total hours on the job

.

For​ example, copying blueprints is

▼

not expensive

very expensive

. Under the fairer​ system, clients are charged

▼

a set one time fee for

according to the number of

blueprint copies that their job required. The fairer system better recognized the extent to which

▼

operating

receiving

selling

costs are incurred by each unique client job.

Which of the following statements is not true for tax years beginning after 2017?

a. Affiliated corporations that file consolidated returns can take 100% dividends

received deduction.

b. The dividends received deduction for a small investment in an unrelated corporation

is 50%.

c. The dividends received deduction for a large investment in a corporation is 65%.

d. There is no income limitation on the dividends received deduction.

      Employees who are compensated with restricted stock or stock options face financial risks not associated with cash compensation. Describe and compare the financial risks of these two types of equity-based compensation.

In 1948, Janet bought a home for $52,000. She lived there until she died in 2018. When she died her home had a fair market value of $4.8 million. She also had $100,000 in a tax-deductible IRA account. Janet named you in her will as her sole heir and beneficiary.

In 2018, how will you treat the deductible IRA account that you receive from Janet? On these facts will Janet's estate pay tax on it? On these facts, will you pay income tax on it (and, if so, when)?

Zelda Corp. makes pottery for people to store items in, Most of the indirect costs used to make these pots are associated with the manufacturing process. This means that Samantha Inc. allocates variable and fixed manufacturing overhead on the basis of machine hours. On January 1st, Zelda Corp. planned on making 4,500 clay pots for the month. They believed it would take 10,125 machine hours and 2,250 direct labor hours to make these pots. They believed their total manufacturing overhead would be $95,175, with $60,750 coming from variable manufacturing overhead. On February 1st, found that for January they had made 4,450 clay pots and that on average, each pot took 2.3 machine hours and .6 direct labor hours to make. Their manufacturing overhead ended up being $101,933, with $42,570 coming from fixed manufacturing overhead. Using this information please conduct a 4 variance analysis for both Variable and Fixed Manufacturing Overhead.

On August 27, 2015, Celgene Corporation acquired all of the outstanding stock of Receptos, Inc., in exchange for $7.6 billion in cash. Referring to Celgene’s 2015 financial statements and its July 14, 2015, press release announcing the acquisition, answer the following questions regarding the Receptos acquisition.

Why did Celgene acquire Receptos?

What accounting method was used, and for what amount, to record the acquisition?

What amount did Celgene include in pre-combination service compensation in the total consideration transferred? What support is provided for this treatment in the Accounting Standards Codification (see ASC 805-30-30, paragraphs 9-13)?

What allocations did Celgene make to the assets acquired and liabilities assumed in the acquisition? Provide a calculation showing how Celgene determined the amount allocated to goodwill.

Describe the nature of the in-process research and development product rights acquired by Celgene in its acquisition of Receptos.

How will Celgene account for the in-process research and development product rights acquired in the Receptos combination?

Classifying Costs

The following is a list of costs incurred by several businesses. Classify each of the following costs as product costs or period costs. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense.

Tell what you know about the difference between volume-based (traditional) costing and activity-based (ABC) costing

Pecot Industries has provided the following data from its activity-based costing system:

Data concerning Pecot’s product LB28 appears below:

            Number of units produced      430

            Machine hours                        990

            Number of orders                    70

            Inspection hours                      20

            Direct materials cost               $37.74 per unit

            Direct labor cost                     $10.45 per unit

Calculate the total unit product cost of LB28:

(Step 1: Determine activity rates for each activity pool

Step 2: Determine overhead costs charged to product LB28

Step 3: Add up all product costs for LB28

Step 4: Determine unit product cost)

Time-Driven activity-based costing, activity-based management

Midwest Office Products 7 John Malone, general manager of Midwest Office Products (MOP), was concerned about the financial results for calendar year 2003. Despite a sales increase from the prior year, the company had just suffered the first loss in its history (See summary income statement in Exhibit).

Exhibit Midwest Office Products: Income Statement, January-December 2003

Midwest Office Products was a regional distributor of office supplies to institutions and commercial businesses. It offered a comprehensive product line ranging from simple writing implements (such as pens, pencils, and markers) and fasteners to specialty paper for modern high-speed copiers and printers. MOP had an excellent reputation for customer service and responsiveness.

Warehouse personnel at MOP’s distribution center unloaded truckload shipments of products from manufacturers and moved the cartons into designated storage locations until customers requested the items. Each day, after customer orders had been received, MOP personnel drove forklift trucks around the warehouse to accumulate the cartons of items and prepare them for shipment.

MOP ordered supplies from many different manufacturers. It priced products to its end-use customers by first marking up the purchased product cost by 16% to cover the cost of warehousing, order processing, and freight; then it added another 6% markup to cover the general selling, and administrative expenses, plus an allowance for profit. The markups were determined at the start of each year, based on actual expenses in prior years and general industry and competitive tends. Midwest adjusted the actual price quoted to a customer based on long-term relationships and completive situations, but pricing was generally independent of the specific level of service required by that customer, except for desktop deliveries.

Typically, MOP shipped products to its customers using commercial truckers. Recently, MOP had introduced a desktop delivery option in which Midwest personnel personally delivered supplies directly to individual locations at the customer’s site. Midwest had leased four trucks and hired four drivers for the desktop delivery service. Midwest charged a price premium (up to an additional 5% markup) for the convenience and savings such direct delivery orders provided to customers. The company believed that the desktop delivery option would improve margins and create more loyal customers in its highly competitive office supplies distribution business.

Midwest had introduced electronic data interchange (EDI) in 1999, and a new internet site in 2000, which allowed customer orders to arrive automatically so that clerks would not have to enter data manually. Several customers had switched to this electronic service because of the convenience to them. Yet Midwest’s costs continued to rise. Malone was concerned that even after introducing innovations such as desktop delivery and electronic order entry, the company could not earn a profit. He wondered about what actions he should take to regain profitability.

Distribution Center: Activity Analysis

Malone turned to his controller, Melissa Dunhill, and director of operations, Tim Cunningham, for help. Tim suggested:

Distribution center manager, Wilbur smith, spoke with Melissa and Tim about operations at the center:

All we do is store the cartons, process the orders, and get them ready to ship to customers, either by commercial freight or using the desktop delivery options.

Wilbur described some details of these activities:

The amount of warehouse space we need and the people to move cartons in and out of storage and get them ready for shipment for depends on the number of cartons. All items have about the same inventory turnover so space and handling costs are proportional to the number of cartons that go through the facility.

We are commercial freight for normal shipments, and the cost is based more on volume than on anything else. Each carton we ship by commercial carrier costs about the same, regardless of the weight or distance. Of course, any carton that we deliver ourselves, through our new desktop delivery service, avoids the commercial shipping charges but does use our trucks and drivers.

The team talked with one of the truck drivers doing desktop deliveries:

An average delivery takes about three hours. But delivery times can be as short as 30 minutes for nearby customers, and up to eight hours for delivery to a distant customer. We also spend different times once we arrive at a customer’s site. Some customers have only a single drop-off point, while others require us to deliver individual cartons to different locations at their site.

Melissa and Time next checked on the expenses of entering and validating customer order data and the distribution center. The order entry expenses included the data processing system, the data entry operators, and supervisors. They spoke with Hazel Nutley, a data entry operator at Midwest for 17 years.

All I do is key in orders, line by line by line. I start by entering the customer ID and validating our customer information. Beyond that, the only thing that really matters is how many order lines I have to enter. Each line item on the order has to be entered separately. Of course, any order that comes in through the EDI system or Internet page sets up automatically without any intervention for me. I just do a quick check to make sure the customer hasn’t made an obvious error, and that everything looks correct. This validity check takes about the same time for all electronic orders; it doesn’t depend on the number of items ordered.

Melissa and Tim collected information from company databases and learned the following:

-The distribution centers processed 80,000 cartons in 2003. Of these, 75,000 cartons were shipped by commercial freight. The remaining 5,000 cartons were shipped under the desktop delivery option. Midwest made 2,000 desktop deliveries during the year (the average desktop delivery was for 2.5 cartons).

-People felt that handling, processing and shipping 80,000 cartons per year was about the capacity that could be handled with existing people and space resources.

-The total compensation for truck driver was $250,000 per year. Each driver worked about 1,500 hours per year doing the desktop delivery service. This was also the maximum time available for each truck, after subtracting maintenance and repair time.

-Midwest employed 16 order entry operators. The $840,000 of order entry costs in Midwest’s income statement included the salaries, fringe benefits, and supervision, occupancy, and equipment costs for operators.

-With vacations and holidays. Each operator worked about 1,750 hours per year. But allowing for breaks, training, and other time off, the order entry supervisor believed that operators provided about 1, 5000 hours per year of productive work.

-Operators required about 9 minutes (0.15 hour) to enter the basic information on a manual customer order. Beyond this basic setup time for a manual order, operators took an additional 4.5 minutes (0.075) to enter each line item on the order. The operators spent an average of 6 minutes (0.10 hour) to verify the information on an electronic order.

-Some customers paid their invoices within 30 days, while others took 90 to 120 days to pay. Midwest had recently taken out a working capital loan to help finance its growing accounts receivables balance. The current interest rate on this load was 1% per month on the average loan balance.

Understanding Order Costs and Profitability

Melissa looked through recent orders and found five that seemed representative of those received during the past year (see Exhibit). The orders all involved cartons containing merchandise costing about $500 to acquire form manufacturers to which the normal 22% markup had been realized. Orders requiring direct delivery had an additional 4% to 5% surcharge. Although each of these orders had been priced in the standard way for cost recovery and profit margins, Melissa wondered what profits Midwest Office Products had really earned on each of these orders.

Exhibit Midwest Office Products: Five Orders

Required

Based on the interviews and the data in the case, estimate the following:

The cost of processing cartons through the facility

The cost of entering electronic and manual customer orders

The cost of shipping cartons on commercial carriers

The cost per hour for desktop deliveries

Using this capacity cost rate information, calculate the cost and profitability of the five orders in Exhibit. What explains the variation in profitability across the five orders?

On the basis of your analysis, what actions should John Malone take to improve Midwest’s profitability? Include suggestions for managing customer profitability.

Suppose that currently, Midwest processes 40,000 manual orders per year, with a total of 200,000 line items entered, and 30,000 electronic orders.

How much unused practical capacity does the company have?

If the company’s efforts to encourage customers who order manually to change to electronic ordering results in 20,000 manual orders per year (100,000 line items entered) and 50,000 electronic orders, how many order entry operators will the company require? If order entry resource costs can be reduced in proportion to the number of employees, what will be the cost savings for the changes?

Returning to the original information in part D, if the company’s process improvement efforts result in a 20% reduction in time to preform each of the three order entry actives, how many order entry operators will the company require? If order entry resource costs can be reduced in proportion to the number of employees, what will be the cost savings for the process improvement?