Chapter 7 in Horngren's cost accounting 16th edition textbook

In summarizing its painstaking analysis of revenue and direct cost variances, the textbook refers to three levels of analysis. What specifics are revealed with regard to the difference between a master budget and actual results at each level?

Student tuition at Boehring University is $160 per semester credit hour. The state supplements school revenue by $100 per semester credit hour. Average class size for a typical 3 -credit course is 50 students. Labor costs are $4 comma 500 per class, materials costs are $18 per student per class, and overhead costs are $24 comma 000 per class. The multifactor productivity ratio currently is 1.33 and the labor productivity ratio is $174.11 per hour if the instructors work on an average of 14 hours per week for 16 weeks for each 3 -credit class of 50 students.

Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herrings to winning form. Because of the current state of the program, Boehring University fans are unlikely to support increases in the $192 season ticket price. Improved recruitment will increase overhead costs to $30 comma 000 per class section from the current $24 comma 000 per class section. The university's budget plan is to cover recruitment costs by increasing the average class size to 70 students. Labor costs will increase to $6 comma 300 per 3 -credit course. Material costs will be about $25 per student for each 3 -credit course. Tuition will be $225 per semester credit, which is supplemented by state support of $100 per semester credit.

a. The multifactor productivity ratio with the university's plan to meet the expenses related to improving recruitment is __.

Consider the following income statements for Nero Company:

Income statement 1

Revenue = 1,800

Direct costs = (300)

Contribution margin = 1,500

Fixed costs = (500)

Operating income = 1,000

Income statement 2

Revenue = 1,400

Direct costs = (200)

Contribution margin = 1,200

Fixed costs = (300)

Operating income = 900

Income statement 3

Revenue = 2,000

Direct costs = (800)

Contribution margin = 1,200

Fixed costs = (400)

Operating income = 800

1. Identify which income statement is prepared using each of the following costing methods:

Absorption costing, Variable costing, and Throughput costing.

2. For each costing method, identify one assumption associated with its use
3. Explain why Nero Company might produce all three types of income statements for the same period.

Duke Company’s records show the following account balances at December 31, 2021:\

Income tax expense has not yet been determined. The following events also occurred during 2021. All transactions are material in amount.

1. $420,000 in restructuring costs were incurred in connection with plant closings.
2. Inventory costing $520,000 was written off as obsolete. Material losses of this type are considered to be unusual.
3. It was discovered that depreciation expense for 2020 was understated by $62,000 due to a mathematical error.
4. The company experienced a negative foreign currency translation adjustment of $320,000 and had an unrealized gain on debt securities of $300,000.

Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2021. The company’s effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

A fast-food restaurant determines the cost and revenue models for its hamburgers.

General Therapeutics Co.’s Revenue in 2018 was $55,000 while its cost of goods sold was $42,000; the company paid $600 in interest while value for depreciation was $6,000.

Also, for 2018 net fixed assets were $25,000 while its current assets were $8,000 and current liabilities were $5,000.

These are the values for 2017: net fixed assets = $19,500, current assets = $6,800 and current liabilities = $4,500. The tax rate is 35%.

Required:

1. What is net income for 2018?  
2. What is the operating cash flow for 2018?
3. What is the cash flow from assets for 2018? How do you interpret this result?
4. What is the cash flow to shareholders?

Explain the appropriate field work needed to review high-risk business transactions for cash and revenue.

1. What would you need to do in the field to investigate these?

2. Could you convey this information through charts or other supporting documentation?

Update: Total cost is provided see below. We have to calculate Marginal Revenue numbers and others.

Please advise,

The chart below shows the demand curve for dog food at Charlie’s dog food factory and the total cost of producing various quantities:

Fill in the rest of the chart.

b. How much dog food should Charlie sell, and what price should he charge? Answer first using Method I and then using Method II.

c. If Charlie is required to pay a $5 annual license fee to operate his dog food factory, what happens to his total cost numbers? What happens to his marginal cost numbers? What happens to the amount of dog food he sells and the price he charges?

d. If Charlie is required to pay an excise tax of $6 per pound of dog food, what happens to his total cost numbers? What happens to his marginal cost numbers? What happens to the amount of dog food he sells and the price he charges?

Evaluate Trump’s 2017 tax plan in terms of revenue collection. Do you think it might increase or decrease tax revenues? Why? What were your assumptions for your conclusion?