TOPIC # 1: Please provide one real world example of a product cost or a period cost that a company like Raytheon or Delta Airlines will have on its income statement or balance sheet. In your own words, and drawing on your professional experience, provide a description of the cost and say why you think it is a product or period cost.

Some things to consider - how does this relate to your job? How does this relate to a business that you know about? If you don't have a job, then try to relate the topic to a business or industry that you are interested in.

You are evaluating the balance sheet for PattyCake’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $360,000; accounts receivable = $1,280,000; inventory = $2,180,000; accrued wages and taxes = $540,000; accounts payable = $840,000; and notes payable = $680,000. Calculate PattyCakes’ current ratio. (Round your answer to 2 decimal places.) Calculate PattyCakes’ quick ratio. (Round your answer to 2 decimal places.) Calculate PattyCakes’ cash ratio. (Round your answer to 2 decimal places.)

Understand you can only answer 1 question, but if you give the extra effort I will guarantee a thumbs up.

Which of the following is the proper sequence of the cost allocation process?

A. form cost pools, select an allocation base, identify the cost objectives

B. Identify the cost objectives, form cost pools, select an allocation base

C. Select an allocation base, identify the cost objectives, form cost pools

D. Form cost pools, identify the cost objectives, select an allocation base

Which of the following is not a basis for developing a traditional overhead rate?

A. Machine hours

B. Direct labor hours

C. Number of settings

D. Number of units produced

A measure of an activity used to allocate a cost is a:

A. cost object

B. Cost pool

C. cost objective

D. cost Driver

Which of the following is not a primary focus of activity-base management?

A. To measure the cost of producing a product

B. to improve the effectiveness of an activity

C. to improve the efficiency of an activity

D. To reduce the cost of an activity

Which of the following could be used to allocate factory rent?

A. Machine hours

B. Direct labor hours

C. Number of employees

D. Square footage occupied

Service department fixed costs should be allocated to production departments based on:

A. projected long-run needs of production departments

B. Actual use of production departments

C. projected short-term needs of production departments

D. unitized fixed costs and actual usage by production departments

Use the following variable for next two

                                          Personal                      Maintenance                    assembly                  finishing

Cost of operation              $75,000                      $55,000                           

Number of employees       0                                 25                                   35                               45

Machine hours                  0                                 150                                 500                              300

The maintenance costs allocated to the assembly department are

A. $24,062.50

B. $28,947

C. $34,375

D. $16,740

The personal costs allocated to the maintenance department is:

A. $0

B. $17,857

C. $53,571

D. $11,842

Use the variables for the next two questions

Using ABC, the amount of setup cost allocated to job 1234 was:

A. $400

B. $500

C. $600

D. $700

Using ABC, the amount of inspection cost allocated to job 1234 was:

A. $400

B. $200

C. $300

D. $500

How many steps are in an ABM study?

A. 3

B. 4

C. 5

D. 6             

On January 1, 2018, Cardi Corp. had the following balances (all balances are normal):

The following events occurred during 2018:

1. On January 1, Cardi Corp. declared a 3% stock dividend on its common stock when the market value of the common stock was $11 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.
2. On February 15, Cardi Corp. reacquired 500 shares of common stock for $13 each.
3. On March 31, Cardi Corp. reissued 250 shares of treasury stock for $18 each.
4. On July 1, Cardi Corp. reissued 250 shares of treasury stock for $10 each.
5. On October 1, Cardi Corp. declared full year dividends for preferred stock and $2.00 cash dividends for outstanding shares and paid shareholders on October 15.
6.    On December 15, Cardi Corp. split common stock 2 shares for 1.
7. Net Income for 2018 was $300,000.

Requirements:

1. Prepare journal entries for the transactions listed above.
2. Prepare a Stockholders' section of a classified balance sheet as of December 31, 2018 (after taking into consideration your journal entries)

A property contributed by A is subject to a recourse loan of $775,000 that is assumed by the partnership with a tax basis of $1,850,000 and is valued at $2,578,000. The three partners share profits and losses as follows; 45% to A, 45% to B and 10% to C. The balances of their tax basis capital accounts are: (A-$974,531), (B-$1,197,959) and (C-$398,600). Book Value Capital accounts are: (A-$1,793,700), (B-$1,793,700) and (C-$398,600). Create a schedule of the allocation of the recourse loan among each partner.

Assume a closed economy without Government. However, there exists a financial sector that creates an array of financial assets on which both households and firms invest. Let ? denote the average earnings from these financial assets. The consumption expenditure of the households is influenced by their wage income and the financial income and is given by ? = ?(?, ?); ?? > 0, ?? > 0, where ??, ?? are partial derivatives of consumption with respect to income ? and financial earnings ? respectively. Similarly, the real investment expenditure of firms is given by ? = ?(?, ?); ?? > 0, ?? < 0, where ??, ?? are the partial derivatives of the real investment with respect to income and financial earnings. Note that ?? < 0 implies that the real investment falls as financial earnings for the firm rises. Either using the Keynesian cross model or the Multiplier analysis, answer the following questions.

(i) Identify the “wealth effect” in this model? [2]

(ii) Derive the relationship between output ? and financial earnings ?, and examine the analytical conditions under which the relationship is positive ( ?? ??>0) and negative ( ?? ?? < 0). [15]

(iii) Describe why the scenario where the expansion in output driven by rise in financial earnings, i.e. when ?? ??>0, could make the economy unstable and vulnerable to crisis?

Make-or-Buy Decision

Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $25 each. Zion uses 10,000 units of Component K2 each year. The cost per unit of this component is as follows:

Assume that 75% of Zion Manufacturing’s fixed overhead for Component K2 would be eliminated if that component were no longer produced.

Required:

1. CONCEPTUAL CONNECTION: If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease?
Increase $fill in the blank 2

Which alternative is better?

2. CONCEPTUAL CONNECTION: Briefly explain how increasing or decreasing the 75% figure affects Zion’s final decision to make or purchase the component.

As the percentage of avoidable fixed cost increases (above 75%), total relevant costs of making the component increase, causing the “purchase” decision to be   financially appealing (compared to the “make” option) than it was when the percentage was 75%. In other words, as the percentage increases, difference between the “purchase” and “make” options increases resulting in the “purchase” decision being even   attractive. Alternatively, as the percentage of avoidable fixed costs decreases, the “make” option eventually is   costly and   appealing financially as the “purchase” option. Finally, as the percentage of avoidable fixed cost decreases low enough and the total relevant costs of making the component decrease, the   option becomes the more financially appealing option

3. CONCEPTUAL CONNECTION: By how much would the per-unit relevant fixed cost have to decrease before Zion would be indifferent (i.e., incur the same cost) between “making” versus “purchasing” the component?
$fill in the blank 9

Understand you can only answer 1 question, but if you are able to answer them all I will guarantee a thumbs up.

Variable production cost per unit        $8

Variable S and A cost per unit            $2

Fixed overhead cost                           $150,000

Fixed selling and admin, cost             $200,000

Units produced                                   $50,000

Units sold                                            $48,000

Using full costing, the cost per unit is

A. $8

B. $11

C. $12

D. $9.05

Using variable costing, the cost of the ending inventory is:

A. $40,000

b. $22,000

C. $16,000

D. $24,000

Using variable costing, the contribution margin is

A. $576,000

B. 432,000

C. $336,000

d. $480,000

Using full costing, the gross margin is

A. $576,000

B. 432,000

C.336,000

D. $480,000

Total period costs under variable costing are

A. $350,000

B. $296,000

C.$446,000

D.$200,000

E10-4 Computing Issue Prices of Bonds Sold at Par, at a Discount, and at a Premium LO10-2, 10-4, 10-5

James Corporation is planning to issue bonds with a face value of $508,500 and a coupon rate of 6 percent. The bonds mature in 7 years and pay interest semiannually every June 30 and December 31. All of the bonds will be sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)

Required:

Compute the issue (sale) price on January 1 of this year for each of the following independent cases:

a. Case A: Market interest rate (annual): 4 percent.

b. Case B: Market interest rate (annual): 6 percent.

c. Case C: Market interest rate (annual): 8.5 percent.

12. There are many public policy reasons for the adverse possession doctrine. Select three.

a. Resolving boundary disputes

b. Resolving title concerns

c. Assuring property is put to productive use

d. Avoiding unnecessary paperwork

e. Moving to electronic record keeping

f. Assisting the poor in obtaining property

Snowbird Inc. (Snowbird) manufactures and sells one model of sleds. Snowbird’s accountant gathered the following information to prepare the budget for 2020:

Snowbird has a policy of maintaining finished goods inventory at the end of each quarter equal to 5% of the following quarter’s projected sales. There were 150 sleds in finished goods inventory at the start of 2020, with a total cost of $45,000. Materials and labour requirements for the sleds are:

Direct materials inventory on the first day of 2020 was 1,000 board-metres. Direct materials were originally purchased at $33 per board-metre. Prices have now risen to

$34 per board-metre. The desired ending materials inventory is 10% of the following quarter’s projected production needs.

Snowbird’s direct labourers are paid $16 per hour. Variable manufacturing overhead is allocated at the rate of $15 per direct labour hour. Fixed manufacturing overhead costs are budgeted at $186,240 for 2020. Snowbird uses first-in, first-out to account for its inventory flow.

Required:

Prepare the following budgets and schedules as part of the master budget for the first quarter of 2020:

1. Production budget
2. Direct materials purchase budget
3. Direct labour budget (
4. Manufacturing overhead budget
5. Ending finished goods inventory budget

Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the company’s estimator and the work supervisors. The on-site supervisors claim that the estimators do not adequately distinguish between routine work, such as removal of asbestos insulation around heating pipes in older homes, and nonroutine work, such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: “My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $2.80 to determine the bid price. Since our average cost is only $2.585 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart.”

To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow:

Required:

1. Perform the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system.

a. A routine 1,000-square-foot asbestos removal job.

b. A routine 2,000-square-foot asbestos removal job.

c. A nonroutine 2,000-square-foot asbestos removal job.

Complete this question by entering your answers in the tabs below.

• Req 1

Perform the first-stage allocation of costs to the activity cost pools.

Req 2

Compute the activity rates for the activity cost pools.

Req 3A to 3C

Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system. (Round the "Average Cost per thousand square feet" to 2 decimal places.)

a. A routine 1,000-square-foot asbestos removal job.
b. A routine 2,000-square-foot asbestos removal job.
c. A nonroutine 2,000-square-foot asbestos removal job.

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Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally:

*One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).

Required:

1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 17,000 carburetors from the outside supplier?

2. Should the outside supplier’s offer be accepted?

3. Suppose that if the carburetors were purchased, Troy Engines, Ltd., could use the freed capacity to launch a new product. The segment margin of the new product would be $170,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 17,000 carburetors from the outside supplier?

4. Given the new assumption in requirement 3, should the outside supplier’s offer be accepted?

E10-8 Recording and Reporting a Bond Issued at a Discount (with Discount Account) LO10-4

Park Corporation is planning to issue bonds with a face value of $610,000 and a coupon rate of 7.5 percent. The bonds mature in 6 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)  

Required:

1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the journal entry to record the interest payment on June 30 of this year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. What bond payable amount will Park report on its June 30 balance sheet? (Enter all amounts with a positive sign.)

Managerial Accounting: Creating Value in a Dynamic Business Environment ex 2-28 page 64