1. Use the following information to complete the Revenue and asset test for industry segments:

1. Which of the operating segments would be considered reporting segments under the "revenue" test?

2. Which of the operating segments would be considered reporting segments under the "asset" test?

Waterways Continuing Problem 12

At the end of June the manager of the B.C. manufacturing plant was provided with the following variance analysis report:

The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The production supervisor was puzzled. He thought the cost-cutting measures they had incorporated were beginning to work. He certainly wasn’t expecting such a large discrepancy.

The standard rates the plant was using with its normal costing system are summarized below.

Other relevant information:

Calculate the following production variances.

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$17 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $5.30 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $22,500 in new equipment during May and $53,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $24,750 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

The company maintains a minimum cash balance of $63,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $63,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

    b. A schedule of expected cash collections, by month and in total.

    c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

    d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $63,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

Debt Ratio: _____ (20x8) and ______ (20x7)

Times Interest Earned Ratio: _____ (20x8) and ______ (20x7)

Net Profit Margin Ratio: _____ (20x8) and ______ (20x7)

Gross Profit Ratio: _____ (20x8) and ______ (20x7)

Asset Turnover: _____ (20x8) and ______ (20x7)

Return on Assets: _____ (20x8) and ______ (20x7)

Return on Equity: _____ (20x8) and ______ (20x7)

Price/Earnings Ratio: _____ (20x8) and ______ (20x7)

Dividend Yield Ratio: _____ (20x8) and ______ (20x7)

Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow Indirect Expense Cost Allocation Base Supervision $ 84,500 Number of employees Utilities 70,000 Square feet occupied Insurance 32,500 Value of assets in use Total $ 187,000 Departmental data for the company’s recent reporting period follow Department Employees Square Feet Asset Values Materials 40 39,000 $ 12,000 Personnel 10 19,500 1,600 Manufacturing 84 107,250 47,200 Packaging 66 29,250 19,200 Total 200 195,000 $ 80,000 1. Use this information to allocate each of the three indirect expenses across the four departments. 2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments.

1. On the sheet of Goal Seek, find the way to achieve your 2017 profit goals.
   1. Go back to Income Statement sheet. It must be completed by now. Copy the gray area (A3:G23). Go to the sheet of Goal Seek, and paste it at the cell A3.
   2. At the blank Rows 1 & 2, merge some cells and add a title 2017 Sales Estimates.
   3. The cell J3 should show a label Price Increasing Rate:, and J4 should show 5%. If they are not there because of your copying and pasting, please add them to your sheet at proper locations.
   4. Edit your data sheet and include 5% increase on Unit Price of all products. Make sure you use formula with reference to J4, where it shows the increasing rate of prices.
   5. Use the Goal Seek tool and see if we want to achieve a $125,000 net profit, what is the increasing rate of price we should apply in 2017?
2. The goal Seek is:

   	Price Increasing Rate:
   	10%

Company Delta is trying to decide which of the two IT systems to install. Syske 10 million euro and will increase operating profits by 5 million euro per year. Its useful life is five years. Because of rapid technological change, it will have no salvage walue of this time. System 2 costs 15 million euro and will increase operating profits by 8 million euro per year. Its useful life also 5 years, it also will have no salvage value. For tax purposes the company can depreciate either computer system on a straight-line basis.
a) Suppose the company's tax rate is 40% and its cost of capital for either IT system is 10 per cent.
Which system should it buy?
b) If no depreciation is allowed, which IT system is a better choice?

Balch acquired 80 percent of Birch's outstanding shares on January 1, 2016, in exchange for $369,000 in cash. The subsidiary's stockholders' equity accounts totaled $353,000 and the noncontrolling interest had a fair value of $92,250 on that day. However, a building (with a ten-year remaining life) in Birch's accounting records was undervalued by $19,000. Balch assigned the rest of the excess fair value over book value to Birch's patented technology (five-year remaining life).

At December 31, 2018, Balch owes Birch $19,000 for inventory acquired during the period.                                                                                                                                                         

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.  Note: Parentheses indicate a credit balance.

complete the consolidation worksheet for December 31, 2018.

example of an s&p 500 company that uses activity-based costing, overall review of this company, advantages, and disadvantages specific with the firm.

Question Two The following balances were extracted from the books of Bashara Kabwa Enterprises, a wholesale business, as at 31 October 2018: Drawings 660,000 Trade receivables 990,000 Purchases 2,303,840 Sales returns 79,420 Capital 4,101,100 Trade payables 330,000 Sales 4,691,280 Purchases returns 120,340 Discount received 93,720 Provision for depreciation: Motor vehicles 176,000 Fixtures and fittings 63,800 Allowances for doubtful debts 44,000 15% bank loan 220,000 Salaries and wage 1,034,000 Discount allowed 54,560 Bank balance 568,260 Cash in hand 26,400 Electricity expenses 103,840 Rent and rates 54,560 Freehold premises (cost) 1,569,700 Fixtures and fittings (cost) 334,400 Motor vehicles (cost) 462,000 Stationery 34,320 Postage and telephone expenses 44,000 Insurance premiums 13,200 Bad debts written off 15,840 Motor vehicle expenses 84,920 Inventory (1 November 2017) 1,393,480 Interest on bank loan 16,500 Additional information: 1. The value of inventory as at 31 October 2018 was Sh. 1,036,400 2. Sales includes Sh. 300,000 worth of goods sold by Bashara Kabwa Enterprises agents, who are allowed 15% commission on such sales. This transaction has not been recorded in the books. 3. Depreciation is to be provided as follows: Fixtures and fittings – 10% per annum on reducing balance basis. Motor vehicle – 15% per annum on straight line basis. 4. Annual insurance premium amounted to Sh. 12,000. 5. As at 31 October 2017, there was a balance of Sh. 65,000 received from a customer in cash. 6. Salaries and wages were in arrears of Sh. 35,000 7. The Electricity bill for the month of October of Sh. 14,500 was received on 5 November 2018. 8. An allowance of 5% is to be maintained for doubtful debts. 9. Goods worth Sh. 48,840 had been distributed to potential customers as free samples. Required: a) Income statement for the year ended 31 October 2018 b) Statement of Financial position as at 31 October 2018 c) Error of commission :

Mr. and Mrs. Lovejoy are married with no dependent children. Mr. Lovejoy worked for Smart Tech Corporation January through March and for Computer Associates the remainder of the year. Mrs. Lovejoy finished her degree in November and immediately began as an associate with Smith and Weber. They report the following information for 2018. Use Individual Tax Rate Schedules and Standard Deduction Table.

Standard Deduction Table

1. Compute AGI.
2. Compute taxable income.
3. Compute net tax liability (after credits).

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.

Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $6.00 per direct labor-hour Machine processing $3.00 per machine-hour Machine setups $45.00 per setup Production orders $160.00 per order Shipments $115.00 per shipment Product sustaining $775.00 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 1,100 50 Machine-hours 2,800 40 Machine setups 21 2 Production orders 21 2 Shipments 42 2 Product sustaining 2 2

Required: Determine the total overhead cost that would be assigned to each of the products listed above in the activity-based costing system.