Respond with at least 200 words.

Identify the differences between service and merchandising companies.

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”

Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:

Sales: $22,235,000. Variable expenses: 13,981,800. Contribution margin: 8,253,200. Fixed expenses: 6,100,000. Net operating income: $2,153,200. Divisional average operating assets: $4,625,000.

The company had an overall return on investment (ROI) of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,400,000. The cost and revenue characteristics of the new product line per year would be:

Sales: $9,600,000. Variable expenses: 65% of sales. Fixed expenses: $2,582,400.

Required:

1. Compute the Office Products Division’s ROI for this year.

2. Compute the Office Products Division’s ROI for the new product line by itself.

3. Compute the Office Products Division’s ROI for next year assuming that it performs the same as this year and adds the new product line.

4. If you were in Dell Havasi’s position, would you accept or reject the new product line?

5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line?

6. Suppose that the company’s minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income.

a. Compute the Office Products Division’s residual income for this year.

b. Compute the Office Products Division’s residual income for the new product line by itself.

c. Compute the Office Products Division’s residual income for next year assuming that it performs the same as this year and adds the new product line.

d. Using the residual income approach, if you were in Dell Havasi’s position, would you accept or reject the new product line?

Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $402,000 2016 460,000 2017 539,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $167,000. The equipment is expected to last three years and have a(n) $14,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $96,000 in 2015, $38,000 in 2016, and $19,000 in 2017. Wyhowski's tax rate is 35%. Required: Enter all amounts as positive numbers. 1. How much did Wyhowski pay in income tax each year? If required, round all calculations to the nearest dollar. Year Taxes Paid 2015 $ 15,750 2016 $ 2017 $ 2. How much income tax expense did Wyhowski record each year? Year Income Tax Expense 2015 $ 2016 $ 2017 $

Alpha Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow:

Required:

a. Prepare a schedule to allocate service department costs to the production departments by the direct method.

b. Prepare a schedule to allocate service department costs to the production departments by the step-down method, allocating Custodial Services first.

Alexander Ryan earns net self employment income of 115,000. he works a second job from which he receives FICA taxable earnings of 44,000.

self employment tax?

You have the following information for Sheridan Company for the month ended October 31, 2017. Sheridan Company uses a periodic method for inventory.

Calculate the weighted-average cost. (Round answer to 3 decimal places, e.g. 5.125.)

Calculate ending inventory, cost of goods sold, gross profit under each of the following methods.

(1) LIFO.
(2) FIFO.
(3) Average-cost.

(Round answers to 0 decimal place, e.g. 125.)

Required information

[The following information applies to the questions displayed below.]

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

2. Prepare the current-year income statement for the company using absorption costing.

Applied vs. Actual Manufacturing Overhead

Sloan Manufacturing Corporation applies manufacturing overhead on the basis of 120% of direct labor cost. An analysis of the related accounts and job order cost sheet indicates that during the year total manufacturing overhead incurred was $420,000 and that at year-end Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold included $60,000, $40,000, and $300,000, respectively, of direct labor incurred during the current year.

a. Determine the over-applied manufacturing overhead at year-end (assume it is significant).

Over-applied manufacturing overhead $Answer_____

b. Prepare a journal entry to record the disposition of the over-applied manufacturing overhead.

The table below shows the closing monthly stock prices for IBM and Amazon. Calculate the simple three-month moving average for each month for both companies. (Input all amounts as positive values. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Rob operates a small plumbing supplies business as a sole proprietor. In 2018, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages paid of $58,000. The business sold some land that had been held for investment generating a long-term capital gain of $15,000. The business has $300,000 of qualified business property in 2018. Rob's wife, Marie, has wage income of $250,000. They jointly sold stocks in 2018 and generated a long-term capital gain of $13,000. Rob and Marie have no dependents and in 2018, they take the standard deduction of $24,000.

The income threshold for QBI limitations starts at $315,000 for married filing jointly taxpayers.

a. What is Rob and Marie's taxable income before the QBI deduction?

On March 1, 2019, Annapolis Company has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. During the month 35,000 units were started. At the end of the month all started units were 55% complete with respect to conversion. Direct Materials placed into production had a total cost of $475,000 and the total conversion cost for the month was $368,000. Annapolis uses the weighted-average process costing method. Use this information to determine the cost per equivalent unit of conversion for the month of March. (Round answer to the nearest cent.)

15) Redbird Company uses the indirect method to prepare its statement of cash flows. Using the following information, complete the worksheet for the year ended December 31, 2018.

- Net Income for the year ended December 31, 2018 was $49,000

- Depreciation expense for 2018 was $12,000

- During 2018, plant assets with a book value of $10,000 (cost $10,000 and accumulated depreciation $0) were sold for $14,000

- Plant assets were acquired for $52,000 cash

- Issued common stock for $28,000

- Issued long-term notes payable for $34,000

- Repaid long-term notes payable for $40,000

- Purchased treasury stock for 3,000

- Paid dividends of $10,000

                                                                       Redbird Company

                                                   Spreadsheet for Statement of Cash Flows

                                                            Year Ended December 31, 2018

Cost of Units Completed and in Process The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production. Work in Process—Assembly Department Bal., 5,000 units, 40% completed 13,900 To Finished Goods, 115,000 units ? Direct materials, 118,000 units @ $1.9 224,200 Direct labor 204,900 Factory overhead 79,740 Bal. ? units, 70% completed ? a. Based on the above data, determine the different costs listed below. If required, round your interim calculations to two decimal places. 1. Cost of beginning work in process inventory completed this period. $ 8,340 2. Cost of units transferred to finished goods during the period. $ 3. Cost of ending work in process inventory. $ 4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. $ b. Did the production costs change from the preceding period? c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?

Costs per Equivalent Unit The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production. ACCOUNT Work in Process—Baking Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 5,700 units, 2/3 completed 12,160 31 Direct materials, 102,600 units 174,420 186,580 31 Direct labor 45,690 232,270 31 Factory overhead 25,696 257,966 31 Goods finished, 104,100 units 249,650 8,316 31 Bal. ? units, 2/5 completed 8,316 a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent. 1. Direct materials cost per equivalent unit $ 1.70 2. Conversion cost per equivalent unit $ 2.40 3. Cost of the beginning work in process completed during March $ 4. Cost of units started and completed during March $ 5. Cost of the ending work in process $ b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?