QUESTION ONE:

Refer to the information provided below and answer the following questions:

1.1 Calculate the Payback period of the first alternative ( answer expressed in years, months and days)

1.2 Calculate the Accounting Rate of Return (on average investment) of the first alternative.

1.3 On the basis of the Net Present Value, which alternative should be chosen? provide relevant calculations (annuity discount factor @ 12% = 3.6048)

1.4 Calculate the internal Rate of Return of the first alternative (Annuity Discount Factor @ 13% = 3. 5 172)

information

The management of Woodies Incorporated is considering two investment opportunities:

- The first alternative involves the purchase of new machinery for R500 000 which will enable the company to modernise its plant. The machinery is expected to have a useful life of 5 years and no salvage value is anticipated. The modenisation is expected to increase effeciency, resulting in an increase of R142 000 in annual net cash flows.

- The second alternative involves purchasing a truck. the truck costs R500 000. its useful life is expected to be 5 years and a salvage value of R100 000 is anticipated. the truck is expected to generate R320 000 per year in additional revenues. The drivers salary and other cash operating expenses are expected to amount R180 000 per year. Woodies incorporated desires a return of 12%. the straight line method of depreciation is used.

Q1. Bayblo has incurred the following costs to make 200,000 units during the month of December. Rials Materials 500,000 Direct labor 200,000 Variable manufacturing overhead 60,000 Variable selling and administrative costs 90,000 Fixed manufacturing overhead 400,000 Fixed selling and administrative costs 400,000 Bayblo’s December 1st inventory consisted of 20,000 units valued at RIALS 116,000 using absorption costing. Total fixed costs and variable costs per unit have not changed during the past few months. In December, Bayblo sold 210,000 units at RIALS 20 per unit.

REQUIRED: 1. Using absorption costing, calculate the following.

a. Bayblo’s December manufacturing cost per unit

b. Bayblo’s December 30 inventory value c. Bayblo’s December net income.

2. Using variable costing, calculate the following.

a. Bayblo’s December manufacturing cost per unit.

b. Bayblo’s December 30 inventory value. c. Bayblo’s December net income.

3. Identify and explain the reason/s why the income calculated in the previous two questions might differ.

1. Keep-or-Drop Decision

   Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows:

   		Alanson		Boyne		Conway		Total
   Sales revenue		$1,280		$185		$360		$1,825
   Less: Variable expenses		1,115		45		288		1,448
   Contribution margin		$165		$140		$72		$377
   Less direct fixed expenses:
   	Depreciation	50		15		10		75
   	Salaries	95		85		84		264
   Segment margin		$20		$40		$(22)		$38

   Direct fixed expenses consist of depreciation and plant supervisory salaries. All depreciation on the equipment is dedicated to the product lines. None of the equipment can be sold.

   Assume that, each of the three products has a different supervisor whose position would be eliminated if the associated product were dropped.

   Assume that 20% of the Alanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would go elsewhere to purchase Alanson.

   Required:

   Conceptual Connection: Estimate the impact on profit that would result from dropping Conway. Enter amount in full, rather than in thousands. For example, "15000" rather than "15".
   $

   Should Petoskey keep or drop Conway?
   

Tekashi is currently dating his girlfriend Sara. Sara does not have a job, nor does she go to school. Sara also has no income. Tekashi pays $10,000 towards Sara’s support and she lives with him during the entire year. Sara does not contribute to his own support.

1. Can Tekashi claim Sara as a “qualifying child” or “qualifying relative” dependent?

2. Tekashi has no children or possible dependents other than Sara. What is Tekashi’s filing status?

3.What if Sara’s mistress, Jenny, pays $10,002 towards Sara’s financial support? Does Sara still qualify as his dependent?

4. What if Sara only lives with Tekashi for 160 days of the year?

The taxation is for the United States.

Edit: I'll do it myself. /thread

       The following information is from Franklin Industries master budget for 2008:

Prepare flexible budgets for the production and sale of 14,000, 15,000 and 16,000 units, respectively.

Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 32,000 of these balls, with the following results: Sales (32,000 balls) $ 800,000 Variable expenses 480,000 Contribution margin 320,000 Fixed expenses 211,000 Net operating income $ 109,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $109,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $109,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 32,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.

7.The Manning Company has financial statements as shown next, which are representative of the company’s historical average.

The firm is expecting a 25 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.

Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations.)

1

Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that would require a $4,200,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company’s discount rate is 20%. The project would provide net operating income each year for five years as follows:

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. What is the project’s net present value?

2. What is the project’s internal rate of return to the nearest whole percent?

3. What is the project’s simple rate of return?

4-a. Would the company want Casey to pursue this investment opportunity?

4-b. Would Casey be inclined to pursue this investment opportunity?

The following information is available for Columbia, Inc. for the month of January:

Required:

Materials are added at the beginning of the process. Calculate the cost per equivalent unit in process for conversion and direct material.

Do any of you plan to go on and sit for the CFP exam? Please find the Open Educational Resources websites under Course Information. Find the CFP Board website. What are the requirements to hold the CFP designation? What is the benefit of getting this designation? How does the board benefit the public?

Issue Price

The following terms relate to independent bond issues:

1. 550 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments
2. 550 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments
3. 860 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments
4. 1,970 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments

Use the appropriate present value table:

PV of $1 and PV of Annuity of $1

Required:

Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar.

Pawn Corporation acquired 70 percent of Shop Corporation's voting stock on January 1, 20X2, for $416,500. The fair value of the noncontrolling interest was $178,500 at the date of acquisition. Shop reported common stock outstanding of $200,000 and retained earnings of $350,000. The differential is assigned to buildings with an expected life of 15 years at the date of acquisition.

On December 31, 20X4, Pawn had $25,000 of unrealized profits on its books from inventory sales to Shop, and Shop had $40,000 of unrealized profit on its books from inventory sales to Pawn. All inventory held at December 31, 20X4, was sold during 20X5.

On December 31, 20X5, Pawn had $14,000 of unrealized profit on its books from inventory sales to Shop, and Shop had unrealized profit on its books of $55,000 from inventory sales to Pawn.

Pawn reported income from its separate operations (excluding income on its investment in Shop and amortization of purchase differential) of $118,000 in 20X5, and Shop reported net income of $65,000.

Required:
Compute consolidated net income and income assigned to the controlling interest in the 20X5 consolidated income statement.

Fedora, Inc, uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion cost is incurred uniformly throughout production. The company had respective work-in-process inventories on May 1 and May 31 of 62,300 units and 71,500 units, the latter of which was 50% complete. The production supervisor noted that Fedora completed 103,000 units during the month.

Costs in the May 1 work-in-process inventory were subdivided as follows: materials, $41,500; conversion, $93,000. During May, Fedora charged production with $359,850 of material and $740,000 of conversion, resulting in a material cost per equivalent unit of $2.30.

Required:

Determine the number of units that Fedora started during May.

Compute the number of equivalent units with respect to conversion cost.

Determine the conversion cost per equivalent unit. (Round your final answers to two decimal places.)

Compute the cost of the May 31 work-in-process inventory. (Round your intermediate calculations to 2 decimal places and final answers to nearest whole dollar.)

What account would have been credited to record Fedora's completed production?

Explain the role of a management control system. Identify the advantages and disadvantages of decentralization.