On March 1, 2017, the Company entered into an agreement with a customer, Thornock Square Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Thornock Square Apartments once the construction of the entire building is complete. In addition, Thornock Square Apartments has various design requirements that would require Cannon to incur significant costs to rework the building prior to selling it to a customer other than Thornock Square Apartments.
To construct the apartment building, Cannon acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Thornock Square Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in Thornock Square Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:
A. As of June 30, 2017, in total, Cannon has purchased $75,000 of component parts. As of June 30, 2017, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, Cannon has incurred $12,500 of direct costs to integrate the component parts into the Thornock Square Apartments construction project during the three months ended June 30, 2017.
B. During the three months ended September 30, 2017, Cannon purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 2017. During the three months ended September 30, 2017, Cannon incurred an additional $50,000 of direct costs to integrate the component parts into the Thornock Square Apartments construction project.
C. As of September 30, 2017, Cannon determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.
D. As of December 31 2017, the construction project was completed. During the three months ended December 31, 2017, Cannon purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 2017. Cannon has incurred $187,500 of direct costs to integrate the component parts into the Thornock Square Apartments construction project during the three months ended December 31, 2017.
If Thornock Square Apartments cancels the contract, Cannon will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is considered to be a reasonable margin. Cannon will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by Cannon.

1) What amount of revenue should be recognized for the following periods: a. The three months ended June 30, 2017? b. The three months ended September 30, 2017? c. The three months ended December 31, 2017? Please explain calculations

2)Create a revenue recognition summary table which summarises the calculations used to find the revenue in each quarter

3)How should the entity recognize revenue for the satisfaction of its performance obligation in FASB code?

(All other chegg answers were wrong for this question)

Inventory

Explanation: Catco purchases parts, such as tires, engines, seats, and axles for construction equipment (such as a bulldozer). Catco is concerned with how much inventory is in the supply chain for several important reasons. When Catco purchases the parts (sends a purchase order (PO) to a supplier), Catco is now responsible to pay for the parts, which they do with cash (financial term, not really $20 bills). Cash must be financed through debt or equity (think interest rate on your credit card). This interest rate (weighted average cost of capital) is usually between 6-12% depending on the credit worthiness of the company. In addition, Catco needs to use warehouse space to store the parts when they arrive, they need to insure the parts, some get damaged, and possibly some will become obsolete (they will move to a new model of construction equipment that does not use the same part so it is no longer useful and they need to dispose of it). These costs added together make up an inventory “holding cost” which is typically between 12-24% of the value of the item.

Sample Calculation: Catco produces about 120 bulldozers per week and works four (Mon-Thurs) 10-hour shifts. They need 4 tires per bulldozer and 480 tires can fit on a single truck. Catco orders once a week (assume they pay when they order). Transportation takes one week. They hold 2 weeks worth of tires in safety stock. Map out the inventory in the supply chain. How much do they have at any given time (how much at the beginning of the week vs. the end of the week)? If the tires cost $50 each and the annual inventory holding cost is 18%: Note: assume 52 weeks in a year

1. What is the annual holding cost of transportation inventory?

2. What is the annual holding cost of safety stock inventory?

3. What is the cost per tire for transportation inventory and safety stock inventory?

One alternative to accelerate oil well production is to install a booster pump at the wellhead to reduce the pressure drop between the oil reservoir and the oil gathering station (onshore) or production platform (offshore). Make an economic analysis to verify if the production increment (between with and without booster pump) is economically attractive. The following data from an oil well subsea boosting project is available: Subsea equipment installation cost: $ 1.5 million 1 MW (Mega Watts) Pump system unit cost: $ 25.0 million Deep-water vessel rent for pipeline laying: $ 40 million total cost Overhead cost: assume 10% to total investment cost The installation and construction of the boosting system will be performed in one year. The revenue of this project is generated by oil well production increment using the booting system. An increment of 5,000 bopd (barrels of oil per day) in the first year of operation (after one year for installation and construction) is predicted, then, it will decline by 10% every year for a study period of 10 years. For example, 5000 bopd (initial increment), then 4500 bopd (in the next year), 4050 bopd, 3645 bopd, etc. Assume the oil well operates 330 days per year. The remaining 30 days, the well will not produce because it will be in maintenance (also called workover). Assume the well will produce oil only (no water). The market value of this equipment will be negligible at the end of the 10-year study period. Use MARR = 20% Calculate the present worth (PW) for this project assuming an oil-selling price of $40 per barrel and a production cost of $15 per barrel. In addition, add a constant value of $5 million per year for energy cost to run the pump boosting system. Is this project economically attractive? Draw a cash flow diagram for this project

Problem 2 (10%)

Estimate the simple payback period and the discounted payback period of problem 1.

Just answer problem 2 please

Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio-tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results:

The regression output was based on the following data:

Required:

1. What is the variable cost per color copy for TOSS?

2. What is the fixed cost for the Color Copy Department?

3. Based on the regression output obtained by the controller, what cost formula should be used to estimate future total costs for the Color Copy Department? Enter answer as an equation in the form of y = a + bx.

5-a. Use the high-low method to estimate the variable and fixed costs for the Color Copy Department.

5-b. What cost formula should be used based on your analysis? Enter answer as an equation in the form of y = a + bx.

6. If 21,300 copies are made during January, what is the total cost predicted by each method?

The Ocean City water park is considering the purchase of a new log flume ride. The cost to

purchase the equipment is $5,000,000, and it will cost an additional $380,000 to have it installed. The equipment has an expected life of six years, and it will be depreciated using a MACRS 7-year class life. Management expects to run about 150 rides per day, with each ride averaging 25 riders. The season will last for 120 days per year. In the first year the ticket price per rider is expected to be $5.25, and it will be increased by 4% per year. The variable cost per rider will be $1.4, and total fixed costs will be $425,000 per year. After six years, the ride will be dismatled at a cost of $215,000 and the parts will be sold for $450,000. The cost of capital is 8.5%, and its marginal tax rate is 35%.

a. Calculate the initial outlay, annual after-tax cash flow for each year, and the terminal cash flow.

b. Calculate the NPV, IRR, and MIRR of the new equipment. Is the project acceptable?

c. Create a Data Table that shows the NPV, IRR, and MIRR for MACRS classes of 3, 5, 7, 10, 15 and 20 years. What do you conclude about the speed of depreciation and the profitability of an investment?

d. Using Goal Seek, calculate the minimum ticket price that must be charged in the first year in order to make the project acceptable.

A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activitieshave been totally completed and the third activity is 60 percent complete. The planners were only expecting to be 50 percent through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,420,000 and it was done for only $1,300,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,500,000 but was actually done for $9,000,000. The third and final activity is the actual construction ofthe bridge superstructure. This was expected to cost a total of $8,500,000. To date they have spent $5,000,000 on the superstructure. Calculate the schedule variance, schedule performance index, and cost index for the project to date. How is the project going?

A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 60 percent complete. The planners were only expecting to be 50 percent through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,420,000 and it was done for only $1,300,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,500,000 but was actually done for $9,000,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,500,000. To date they have spent $5,000,000 on the superstructure. Calculate the schedule variance, schedule performance index, and cost index for the project to date. How is the project going?

A Sheraton Hotel bond has a par value of $1,000, and has a coupon rate of 7.25%. The coupon in paid monthly. The investor's rate of return is 9%. The bond will mature in 12 years, and the investor is planning to keep this bond until maturity. Based on this information, the value of this bond is equal to:

A. $817.85

B. $871.85

C. $858.71

D. $885.71

Peter Morgan sells pigeon pies from his pushcart in Central Park. Due to the abundant supplies of raw materials, his costs are zero. The demand schedule for his pigeon pies is p(y) =80-y/4 . What level of output will maximize Peter’s profits?

1. 164

2. 480

3. 32

4. 320

5. None of the above