Croy Inc. has the following projected sales for the next five months:   

Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $3.40 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,778 pounds.     

Required:

1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.)

2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to 2 decimal places.)

what are the benefits of becoming a CPA as an accounting student?

Transactions for Fixed Assets, Including Sale

The following transactions and adjusting entries were completed by Robinson Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.

Required:

Journalize the transactions and the adjusting entries. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations. Round your final answers to the nearest cent.

Acme Storage is evaluating an investment to produce a new product with an extended marketable life of 4 years. In order to produce this product, the company will have to acquire a piece of new equipment worth $400,000. The opportunity cost of borrowing for an asset which has a purchase price of $400,000 is 15%. Other details of each alternative are provided as follows:

Purchase:

This equipment can be depreciated at 30% reducing balance if owned, and has an expected salvage value of $100,000 after 4 years.

Lease:

If the lease is in advance, there will be four payments of $145,000 made at the beginning of each year and a residual payment of $40,000 made at the end of the term, i.e., at the end of year 4.

The company tax rate is 25%. Calculate the NPV of leasing and advise the company as to whether it should purchase or lease the equipment with payments made in advance?

Pat’s Pizzeria produces three types of deli style pizzas: Thin Crust, Deep Dish, and Stuffed Crust. Pat’s anticipated sales mix is 4:5:6 Thin:Deep:Stuffed. Current sales are 1,500 bundles per year.   

Fixed costs are estimated at $50,000, which include $44,000 for general overhead, such as rent, utilities, etc., and $6,000 for advertising. Pat’s tax rate is 20%.

Round all interim answers to 4 decimal places. For all questions, supporting calculations MUST be included.

1. What is the operating leverage ratio when 1,500 bundles are sold?

If sales increase by 15% from this level, by what percentage should Pat expect profit before tax to increase?

How much is this increase in dollars?

What is Pat’s expected profit before tax in dollars?

B. What is Pat’s margin of safety, in units of each type of pizza, at current level of sales?

C. Prepare a contribution margin income statement for the level of sales required to earn $100,000 of before tax profits. Show revenues and variable costs for each type of pizza in the contribution margin income statement.

D. If Pat increases advertising costs by 200%, sales of all types of pizzas are expected to increase by 12% above the original sales levels. Assuming the sales mix will remain the same, should Pat increase her advertising expenditure? Why or why not?

E. What is the minimum percentage sales would need to increase before Pat would consider the additional advertising? (Hint- at what point will she not lose anything?)

(Return to the original problem assumptions for parts F – G. Do not assume advertising has been increased.)

F. How many bundles of pizza will Pat have to sell to earn after-tax profits equal to 15% of revenue?

G. In analyzing results at the end of the year, Pat discovered that, although she sold 22,500 pizzas as planned, the actual sales mix was 6 Thin Crust, 6 Deep Dish, and 3 Stuffed Crust pizzas. How did Pat’s actual profit differ from her projected profit?   Explain why this happened.

The separate condensed balance sheet of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as follows:

Additional Information:
* On December 31, 2020, Patrick acquired 100% of Sean’s voting stock in exchange for $460,000.
* At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $25,000 more than their carrying amounts.

1. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount
of total assets should be reported?

2. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount
of total stockholders’ equity should be reported?

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners. As the MBA intern you are to prepare a managerial accounting focused report to the owners of Al Dente's Italian Restaurant, to include the following:

1. Prepare a contribution margin income statement using the given financial data. Use the following format:

Sales

Variable costs

Cost of sales

Operating

Total variable costs

Contribution margin

Fixed costs

Operating

Administrative

Total fixed costs

Net operating income

Lionel Corporation manufactures pharmaceutical products sold through a network of sales agents in the United States and Canada. The agents are currently paid an 18% commission on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019:

Since the completion of the income statement, Lionel has learned that its sales agents are requiring a 5% increase in their commission rate (to 23%) for the upcoming year. As a result, Lionel’s president has decided to investigate the possibility of hiring its own sales staff in place of the network of sales agents and has asked Alan Chen, Lionel’s controller, to gather information on the costs associated with this change.

Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each employee of $80,000, including fringe benefits expense. Travel and entertainment expenses is expected to total $700,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $200,000. In addition to their salaries, the eight salespeople will each earn commissions at the rate of 10% of sales. The president believes that Lionel also should increase its advertising budget by $600,000 if the eight salespeople are hired.

Required

1. Determine Lionel’s breakeven point (operating profit = 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement.

2. If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement.

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ROI and Residual Income:
Impact of a New Investment
The Mustang Division of Detroit Motors had an operating income of $700,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent.

(a) Compute the return on investment. (Round your answer to three decimal places.)
Answer

(b) Compute the residual income.
$Answer

(c) The Mustang Division has an opportunity to increase operating income by $200,000 with an $950,000 investment in assets.

1. Compute the Mustang Division's return on investment if the project is undertaken. (Round your answer to three decimal places.)
Answer

2. Compute the Mustang Division's residual income if the project is undertaken.
$Answer

The companies Act, 71 of 2008, allows for the board of a company to appoint a number of committees.

1. How can one ensure that committees, once they are established, functions effectively.

2.Do you think that it is correct to say that king IV is silent on the issue of committees? Fully motivate your answer.

3.The establishment of an audit committee is a legislative requirements. Describe the responsibilities of the Audit committee as reflected in the companies Act.

Question 3

3.1 King IV establishes principles and make recommendations in relation to "ethical leadership" and the establishment of an "ethical culture" in organization. List the relevant principles and discuss the recommendations made by king IV on how to implement these principles in your organization.

3.2 The issue of "responsible investing" has become very important n recent years.

3.2.1 Explain what the objectives were when the code for responsible investing in south Africa (CRISA) was when it was launched in 2012?

3.2.2 To whom was it applicable?

3.2.3 Discuss the principles that it wishes to establish.

3.3.4 Describe how the CRISA principles relate to principle 17 of king IV.

3

On January 1, 2017, Pepper purchased 75% of the outstanding shares of Salt for $1,275,000. At that time, Salt’s assets and liabilities had the following book and fair values.

During 2017, Pepper sold goods to Salt for $130,000. These goods cost Pepper $85,000. Salt sold 60% of these goods during 2017. Also, during 2017, Salt sold goods to Pepper for $90,000, earning a gross profit of 40%. Pepper had 20% of these goods in its 2017 ending inventory. The tax rate for both companies is 30%. On December 31, 2017, Pepper determined that there was a $3,000 goodwill impairment.

Required:

Note: The calculations in part 1 are required to earn marks in part 2. Assignments submitted without supporting calculations will receive zero for this question.

Pepper accounts for Salt using the entity theory and cost methods.

1. Calculate the following for consolidated financial statements. (2 marks)
   1. a) Goodwill using fair values
   2. b) Acquisition differential, and prepare the ADA table
   3. c) Unrealized inventory profits before and after tax
   4. d) Consolidated net income and the NCI share
   5. e) Consolidated retained earnings and NCI Balance Sheet

Prepare a consolidated income statement that includes a section below net income attributing income to shareholders of Pepper and NCI shareholders. Prepare a consolidated balance sheet for 2017. Prepare these statements in good form. (18 marks)

Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $5,998,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,030,000 including retained earnings of $1,530,000.

At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary:

Post acquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends:

No asset impairments have occurred since the acquisition date.

Individual financial statements for each company as of December 31, 2021, follow. Parentheses indicate credit balances. Dividends declared were paid in the same period

Total liabilities and equity$(15,952,250) $(4,760,000)

1. Determine the fair value in excess of book value for Allison's acquisition date investment in Mathias.

2. Prepare a worksheet to determine the consolidated values to be reported on Allison’s financial statements.

The following cost data for the year just ended pertain to Sentiments, Inc., a greeting card manufacturer:

*All services are provided to manufacturing departments.

§Cost of idle time is an overhead item; it is not included in the direct-labor wages given above.

†The rental of sales space was made necessary when the sales offices were converted to storage space for raw material.

Required:
1. Compute each of the following costs for the year just ended:

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Developing a Master Budget
for a Merchandising Organization
Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010.

Actual and forecasted sales for selected months in 2010 are as follows:

Monthly operating expenses are as follows:

Cash dividends of $17,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $4,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.

• Part A
• Part B
• Part C
• Part D
• Part E
• Part F

(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.

(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.

Only use negative signs, if needed, for: excess receipts over disbursements, balance before borrowings and cash balances (beginning and ending).

(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.

Only use negative signs to show net losses in income.

(f) Prepare a budgeted balance sheet as of June 30, 2010.