Transfer pricing is a contentious issue for almost any company where divisions buy from or sell to each other. Stated another way, transfer pricing causes more conflict between divisions than almost any other issue.
What is you experience or knowledge about this issue? How do you suggest that it be resolved?
In: Accounting
The ledger of Whispering Winds Company contains the following
balances: Retained Earnings $28,000, Dividends $1,500, Service
Revenue $51,500, Salaries and Wages Expense $29,000, and Supplies
Expense $6,000.
The closing entries are as follows:
(1) | Close revenue accounts. | |
(2) | Close expense accounts. | |
(3) | Close net income/(loss). | |
(4) | Close dividends. |
Enter the balances in T-accounts, post the closing entries, and
underline and balance the accounts.
Salaries and Wages Expense |
|||
---|---|---|---|
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit balance |
select an option Bal.(1)(2)(3)(4) |
enter a credit balance |
Supplies Expense |
|||
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit balance |
select an option Bal.(1)(2)(3)(4) |
enter a credit balance |
Service Revenue |
|||
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit balance |
select an option Bal.(1)(2)(3)(4) |
enter a credit balance |
Dividends |
|||
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit balance |
select an option Bal.(1)(2)(3)(4) |
enter a credit balance |
Income Summary |
|||
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit balance |
select an option Bal.(1)(2)(3)(4) |
enter a credit balance |
Retained Earnings |
|||
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit amount |
select an option Bal.(1)(2)(3)(4) |
enter a credit amount |
select an option Bal.(1)(2)(3)(4) |
enter a debit balance |
select an option Bal.(1)(2)(3)(4) |
enter a credit balance |
In: Accounting
9. X Company currently buys 10,000 units of a component part each year from a supplier for $7.10 each but is considering making them instead. Variable costs of making would be $4.90 per unit; additional annual fixed costs would be $6,000. Equipment would have to be purchased for $33,000 and will last for 7 years, at which time it will have a disposal value of $5,000. Assuming a discount rate of 4%, what is the net present value of making the part instead of continuing to buy it?
10. X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment:
Current equipment | |
Current sales value | $10,000 |
Final sales value | 6,500 |
Operating costs | 64,500 |
New equipment | |
Purchase cost | $46,000 |
Final sales value | 6,500 |
Operating costs | 55,000 |
Maintenance work will be necessary on the new equipment in Year 3, costing $2,000. The current equipment will last for five more years; the life of the new equipment is also five years. Assuming a discount rate of 4%, what is the net present value of replacing the current equipment?
In: Accounting
Answer:
Playground Steel Factory is a leading manufacturer and supplier of Restaurant Seating, Tables & Other related Furniture, Indoor & Outdoor Playgrounds for Restaurants, Public & Private Parks, Public Houses, Hospitals, Schools and Furniture Seating for Shopping Centers, Sun Shades & Car Shades in the whole Kingdom of Saudi Arabia and Middle East Countries.
The Factory expected to sell 50,000 units from one of its products "Hospital seats" during 2018, the following is the planned sales and variable costs for 2018.
Sales (50,000 units) SR 3,000,000
Variable costs 1,750,000
During the year, a competitor came out with a similar hospital seats at a lower price. Management reacted by dropping its selling price for the hospital seat, but the actual sales dropped to 45,000 units at 55 SR per seat.
The cost accounting department prepare the sales price variance and revenue sales quantity variance.
Actual units sold at Actual Price |
Actual units sold at Standard Price |
Standard units sold at Standard Price |
||||||||||||||||
Actual Units |
× |
Actual Price |
Actual Units |
× |
Standard Price |
Standard Units |
× |
Standard Price |
||||||||||
45,000 |
× |
55 |
45,000 |
× |
60 |
50,000 |
× |
60 |
||||||||||
2,475,000 |
2,700,000 |
3,000,000 |
||||||||||||||||
Sales Price |
Revenue sales quantity variance |
|||||||||||||||||
-225,000 |
-300,000 |
|||||||||||||||||
Unfavorable |
Unfavorable |
|||||||||||||||||
Revenue Budget Variance |
||||||||||||||||||
-525,000 |
||||||||||||||||||
In: Accounting
E8-24 The Whole Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. The Whole Bread Company allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours.
Requirements 1. Prepare a variance analysis of fixed manufacturing overhead cost. 2. Is fixed overhead underallocated or overallocated? By what amount? 3. Comment on your results. Discuss the variances and explain what may be driving them.
The following is some budget data for the Whole Bread Company for 2017 and additional infomation for the year ended Decmeber 31, 2017:
Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Data Table Planned (budgeted) output 2,800,000 baguettes Actual production 2,700,000 baguettes Budgeted direct manufacturing labor 56,000 hours Actual direct manufacturing labor 48,500 hours Actual fixed manufacturing overhead $284,000 Direct manufacturing labor use 0.02 hours per baguette Fixed manufacturing overhead $5.00 per direct manufacturing labor-hour Same Budgeted Lump Sum Actual Costs Regardless of Flexible Allocated Incurred Output Level Budget Overhead Fixed MOH
Same Budgeted | ||||
Lump Sum | ||||
Actual Costs | Regardless of | Flexible | Allocated | |
Incurred | Output Level | Budget | Overhead | |
Fixed MOH | ||||
Planned (budgeted) output | 2,800,000 | baguettes |
Actual production | 2,700,000 | baguettes |
Budgeted direct manufacturing labor | 56,000 | hours |
Actual direct manufacturing labor | 48,500 | hours |
Actual fixed manufacturing overhead | $284,000 |
In: Accounting
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $39,000, $67,000, and $69,000, respectively. Over the next three years, the business reported net income and (loss) as follows:
2017 | $ | 79,000 | |
2018 | 51,000 | ||
2019 | (34,000 | ) | |
During this period, each partner withdrew cash of $15,000 per year. Krause invested an additional $6,000 in cash on February 9, 2018.
At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows:
Determine the ending capital balance for each partner as of the end of each of these three years. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)
In: Accounting
Laraia Corporation has provided the following contribution
format income statement. All questions concern situations that are
within the relevant range.
Sales (3,000 units) $150,000
Variable expenses 90,000
Contribution margin 60,000
Fixed expenses 48,000
Net operating income $12,000
g. If the variable cost per unit increases by $5, spending on
advertising increases by $3,000, and unit sales increase by 450
units, what would be the estimated net operating income?
h. What is the break-even point in unit sales?
i. What is the break-even point in dollar sales?
j. Estimate how many units must be sold to achieve a target profit
of $54,000.
k. What is the margin of safety in dollars?
l. What is the margin of safety percentage?
m. What is the degree of operating leverage?
n. Using the degree of operating leverage, what is the estimated
percent increase in net operating income of a 15% increase in
sales?
In: Accounting
Comparative Balance Sheet of “Alpha- Beta” | ||||||
Assets | 2018 | 2017 | Liabilities & Stockholders’ Equity |
2018 | 2017 | |
Fixed Assets Property, Plant and Equipment Accumulated depreciation Net Property, Plant and Equipment Other Assets Total Fixed Assets Current Assets Cash and Cash Equivalents Accounts receivables Inventory Prepaid Expenses Total Current Assets Total Assets |
3,250,000 (425,000) 2,825,000 725,000 3,550,000 300,000 900,000 1,100,000 100,000 2,400,000 5,950,000 |
2,100,000 (250,000) 1,850,000 550,000 2,400,000 300,000 750,000 800,000 100,000 1,950,000 4,350,000 |
|
1,250,000 997,600 2,247,600 2,200,000 2,200,000 502,400 1,000,000 1,502,400 3,702,400 5,950,000 |
1,250,000 600,000 1,850,000 1,150,000 1,150,000 450,000 900,000 1,350,000 2,500,000 4,350,000 |
Comparative Income Statement of “Alpha- Beta” | ||
2018 | 2017 | |
Sales Cost of Goods Sold Gross Profit Selling and Administrative Expenses Net Operating Income Interest Expenses Income Before Taxes Tax Net Income |
5,000,000 (3,200,000) 1,800,000 (1,000,000) 800,000 (240,000) 560,000 (162,400) 397,600 |
3,000,000 (1,800,000) 1,200,000 (900,000) 300,000 (110,000) 190,000 (55,100) 134,900 |
Given answer from Cheggs expert for quick ratio: Quick Ratio (QR) = (Cash&Cash Equivalents + Current Receivables+Prepaid Expenses or (CA-Inventory)/CL where CA: Current Assets and CL: liabilities
Given answer from Cheggs expert for Days’ Sales in Inventory = (Ending Inventory * 365) / Cost of Goods Sold
Given answer from Cheggs expert for Operating cycle:
Operating Cycle = Days of Sales Inventory + Days of Sales Outstanding - Days payable outsatanding
My Questions:
1) For quick ratio calculation why weren't 'prepaid expenses' substructed, too?
2) I have the impression that the 'Operating cycle' was asked to be calculated not the 'net operating cycle'. Can you please help since all the formula used in the answer confused me? I did not find any reference for the formula day payable outstanding and the average inventory can be found only for year 2018....
3) Can 'Days' sales in inventory' be calculated by using 'sales' instead of CoGs? (that was our tutor's suggestion)
In: Accounting
In: Accounting
Explain the usefulness of a flexible budget in specific business cases.: Explanation clearly details the usefulness of a flexible budget and why it provides more useful information than a static budget report.
In: Accounting
The following is the unadjusted trial balance for Panorama Resort Inc. at its year end, December 31, 2018. The company adjusts its accounts annually.
Debit |
Credit |
||
Cash |
$ 42,580 |
||
Accounts receivable |
17,935 |
||
Supplies |
12,980 |
||
Prepaid insurance |
10,200 |
||
Land |
85,000 |
||
Buildings |
310,000 |
||
Accumulated depreciation—buildings |
$ 62,000 |
||
Accounts payable |
14,600 |
||
Unearned revenue |
44,520 |
||
Note payable, due 2021 |
148,000 |
||
Common shares |
80,000 |
||
Retained earnings |
62,000 |
||
Rent revenue Salaries expense |
348,200 |
525,000 |
|
Utilities expense |
39,395 |
||
Repairs and maintenance expense |
21,560 |
||
Interest expense |
7,850 |
||
Income tax expense |
21,000 |
||
$874,120 |
$874,120 |
Additional information is provided below:
REQUIRED:
Prepare all necessary adjusting journal entries for their year-end, December 31, 2018. Omit explanations but show calculations. Round all calculations to the nearest dollar.
In: Accounting
Should setting a transfer pricing rule differ between national and multinational companies?
In: Accounting
Produce a direct materials budget with the following additional information.
Units = 83,000
Direct material Cost Usage
Steel $8.00/lb 12.100 oz/unit
Plastic $3.50/lb 10.897 oz/unit
What is the total direct materials cost?
Note: lb = pound = 16 oz
In: Accounting
Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $910. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 300 Units sold 265 Units in ending inventory 35 Variable costs per unit: Direct materials $ 115 Direct labor $ 325 Variable manufacturing overhead $ 45 Variable selling and administrative $ 20 Fixed costs: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative $ 34,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 241,150 Cost of goods sold 192,125 Gross margin 49,025 Selling and administrative expense 39,300 Net operating income $ 9,725 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.
In: Accounting
In: Accounting