Campbell Manufacturing Company uses two departments to make its products. Department I is a cutting department that is machine intensive and uses very few employees. Machines cut and form parts and then place the finished parts on a conveyor belt that carries them to Department II, where they are assembled into finished goods. The assembly department is labor intensive and requires many workers to assemble parts into finished goods. The company’s manufacturing facility incurs two significant overhead costs: employee fringe benefits and utility costs. The annual costs of fringe benefits are $264,000 and utility costs are $192,000. The typical consumption patterns for the two departments are as follows:

The supervisor of each department receives a bonus based on how well the department controls costs. The company’s current policy requires using a single allocation base (machine hours or labor hours) to allocate the total overhead cost of $456,000.

Required

1. Assume that you are the supervisor of Department I. Choose the allocation base that would minimize your department’s share of the total overhead cost. Calculate the amount of overhead that would be allocated to both departments using the base that you selected.

2. Assume that you are the supervisor of Department II. Choose the allocation base that would minimize your department’s share of the total overhead cost. Calculate the amount of overhead that would be allocated to both departments using the base that you selected.

3. Assume that you are the plant manager and have the authority to change the company’s overhead allocation policy. Formulate an overhead allocation policy that would be fair to the supervisors of both Department I and Department II. Compute the overhead allocations for each department using your policy.

4. 	Department Allocated Cost I II Total

5. 	Department Allocated Cost I II Total

6. 	Costs Department I Department II Fringe benefits Utility Total

7. 	Costs Department I Department II Fringe benefits Utility Total

Explain why Ford would be violating U.S. GAAP if it recognized all related revenue at the time cash was received from customers, rather than recording any as deferred

On January 1, 2017, Sheridan Company purchased  9% bonds having a maturity value of $ 290,000, for $ 313,782.32. The bonds provide the bondholders with a  7% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Sheridan Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

a. Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

b. Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)

c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2018. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

FIFO versus LIFO: Ratio Analysis

Presented below are the financial statements of two companies that are identical in every respect except the method of valuing their inventories. The method of valuing inventory is LIFO for the LIFO Company and FIFO for the FIFO Company.

Required
Using the two sets of financial statements, calculate the ratios below for each firm. Ignore the effect of taxes (i.e., assume zero taxes for both firms).

Round all answers to nearest one decimal place, except for 10. Earnings per share (example for percentage ratios: 0.2345 = 23.5%).
Round Earnings per share two decimal places.

Presented below are the financial statements of two companies that are identical in every respect except the method of valuing their inventories. The method of valuing inventory is LIFO for the LIFO Company and FIFO for the FIFO Company.

On January 1, 2011, Garner issued 10-year $200,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Garner $2, par value, ordinary shares. Interest on the bonds is paid annually on December 31. The market rate for Garner’s non-convertible debt is 9%. The company has had 10,000 ordinary shares (and no preference shares) outstanding throughout its life. None of the bonds have been converted as of the end of 2012. (Ignore all tax effects.)Accounting(a) Prepare the journal entry Garner would have made on January 1, 2011, to record the issuance of the bonds and prepare an amortization table for the first three years of the bonds.(b) Garner’s net income in 2012 was $30,000 and was $27,000 in 2011. Compute basic and diluted earnings per share for Garner for 2012 and 2011.(c) Assume that all of the holders of Garner’s convertible bonds convert their bonds to shares on January 2, 2013, when Garner’s shares are trading at $32 per share. Garner pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion, using the book value method.AnalysisShow how Garner Company will report income and EPS for 2012 and 2011. Briefly discuss the importance of IFRS for EPS to analysts evaluating companies based on price-earnings ratios. Consider comparisons for a company over time, as well as comparisons between companies at a point in time.PrinciplesIn order to converge U.S. GAAP and IFRS, U.S. standard-setters (the FASB) are considering whether the equity element of a convertible bond should be reported as equity. Describe how the journal entry you made in part (a) above would differ under U.S. GAAP. In terms of the accounting principles discussed in Chapter 2, what does IFRS for convertible debt accomplish that U.S. GAAP potentially sacrifices? What does U.S. GAAP for convertible debt accomplish that IFRS potentially sacrifices?

A variation on cost-plus pricing is time-and-material pricing. Under this approach, two pricing rates are set. Explain where this approach is used and identify the steps involved in time-and-material pricing. Also explain what the material loading charge covers and how it is expressed.

On January 1, 2017, Buffalo Company purchased  12% bonds, having a maturity value of $ 304,000, for $ 327,047.70. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Buffalo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.

(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $52,000 $52,000 $52,000 Cash flow from operations Year 1 50,000 26,000 52,000 Year 2 2,000 26,000 Year 3 27,000 27,000 Disinvestment 0 0 0 Life (years) 3 years 3 years 1 year (a) Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is 10 percent. Round accounting rate of return four decimal places. Round net present value to the nearest whole number. Use negative signs with your answers, when appropriate. Proposal X Proposal Y Proposal Z Best proposal Payback period (years) Answer 2 Answer 2 Answer 1 Answer Accounting rate of return Answer 0.173 Answer 0.5065 Answer 0.1 Answer Net present value Answer 15,393 Answer 13,409 Answer (4,732) Answer (b) Factors explaining the differences in rankings include all of the following except: The net present value method considers the cost of capital while the payback method does not discount future cash flows. Net present value considers the timing of cash flows while payback considers only total cash flows. While the accounting rate of return explicitly considers the cost of the asset as part of annual depreciation the net present value method considers the cost of the asset as part of the initial investment. The accounting rate of return considers profitability while payback only considers the time required to recover the investment. Mark 1.00 out of 1.00

On January 1, 2017, Brussels enterprises issue bonds at par dated January 1, 2017, that have $3,300,000 par value, mature in 4 years and pay 10% interest semiannually on June 30 and December 31

1) Record the entry for the issuance of bonds for cash on January wa1, 2017

2) record the entry for the first semiannual interest payment on June 30, 2017

3) Record the entry for the second semiannual interest payment on December 31, 2017

4) record the entry for the maturity of the bonds on december 31, 2020.

The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 4,000 sets per year. Annual cost data at full capacity follow: Direct labor $ 90,000 Advertising $ 99,000 Factory supervision $ 74,000 Property taxes, factory building $ 20,000 Sales commissions $ 55,000 Insurance, factory $ 6,000 Depreciation, administrative office equipment $ 3,000 Lease cost, factory equipment $ 14,000 Indirect materials, factory $ 20,000 Depreciation, factory building $ 101,000 Administrative office supplies (billing) $ 4,000 Administrative office salaries $ 112,000 Direct materials used (wood, bolts, etc.) $ 426,000 Utilities, factory $ 43,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.) 2. Compute the average product cost of one patio set. 3. Assume that production drops to only 1,000 sets annually. Would you expect the average product cost per set to increase, decrease, or remain unchanged?

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Is ABC info always better than Average-cost? No… not always. ABC costing will surely be more detailed and most likely more accurate, however will an organization's benefits of ABC outweigh the added intricate, time consuming costly characteristics?

One factor to consider in this would be the amount of overhead costs an organization tends to operate with. ABC should be used "when overhead is high, because small changes in each product cost can make a large difference overall." A company who produces one single product would likely have low overhead as most of the costs would be direct costs associated with the single product. In this situation, ABC benefits would not outweigh the costs and time required to produce ABC information.

“While ABC isn't allowed for external financial reporting, companies may find it useful to enact an ABC system to more effectively analyze cost data.” Since ABC does not conform to GAAP for external reporting requirements, a company essentially has to report on costs twice. It’s important for organizations to consider the added time and cost of now reporting two different ways.

Marwick’s Pianos, Inc., purchases pianos from a large manufacturer for an average cost of $1,496 per unit and then sells them to retail customers for an average price of $2,300 each. The company’s selling and administrative costs for a typical month are presented below: Costs Cost Formula Selling: Advertising $ 956 per month Sales salaries and commissions $ 4,828 per month, plus 3% of sales Delivery of pianos to customers $ 59 per piano sold Utilities $ 640 per month Depreciation of sales facilities $ 5,046 per month Administrative: Executive salaries $ 13,522 per month Insurance $ 697 per month Clerical $ 2,549 per month, plus $41 per piano sold Depreciation of office equipment $ 937 per month During August, Marwick’s Pianos, Inc., sold and delivered 64 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount Sales $ 1,360,000 Selling price per pair of skis $ 400 Variable selling expense per pair of skis $ 46 Variable administrative expense per pair of skis $ 19 Total fixed selling expense $ 135,000 Total fixed administrative expense $ 125,000 Beginning merchandise inventory $ 75,000 Ending merchandise inventory $ 115,000 Merchandise purchases $ 285,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31. 3. What was the contribution margin per unit?

​Don’t Cry Over Spilled​ Milk, Inc., a manufacturer of​ mops, uses the weighted average method in its processing costing system. The company uses a departmental costing system to allocate manufacturing overhead​ (MOH) to production. Production in the​ company's first processing​ department, Machining, is highly automated. As​such, machine hours are used as the allocation base in the department.

At the beginning of the​ year, the company estimated that its total MOH would be​ $400,000; 87.5% of which was expected to be generated in the Machining department. The Machining department was expected to log​ 100,000 machine hours during the year. The following data related to the operations in Machining during June​ 2018:

During​ June, 8,500 actual machine hours were logged during production.

​(round all calculation to 2 decimal places. round final answers to the nearest

dollar.​)

The cost to assemble one mop in June was

A.​$19.87       

B.​$13.77

C.​$19.67