2. At the end of 2018, Builders Inc. has one project underway to build a warehouse. The project was begun in early 2017. The contract amount is $50,000,000 and the project is expected to be completed in late 2019. Data on this project are presented below:

Costs incurred in 2017 $8,000,000

Billings in 2017 $6,000,000

Estimated cost to complete at 12/31/17 $32,000,000

Additional costs incurred in 2018 $19,000,000

Billings in 2018 $15,000,000

Estimated cost to complete at 12/31/18 $18,000,000

Required:

1) For the Percentage of Completion Method, prepare the journal entries to record (a) the costs incurred, (b) the billings, and (c) recognition of any revenue or expense for both 2017 and 2018.

2) For the Percentage of Completion Method, present the income statement and balance sheet disclosure that would be required for 2017 and 2018.

Reese Brothers Publishers Inc (RBP) expects to have sales this year of $15 million under its current credit policy. The present terms are net 30; the days sales outstanding (DSO) is 60 days; and the bad debt loss percentage is 5 percent. Since RBP wants to improve its profitability, the treasurer has proposed that the credit period be shortened to 15 days. This change would reduce expected sales by $500,000, but it would also shorten the DSO on the remaining sales to 30 days. Expected bad debt losses on the remaining sales would fall to 3 percent. The variable cost percentage is 60 percent, and the cost of capital is 15 percent. What are the incremental pre-tax profits from this proposal?

During

20182018​,

Chun'sChun's

Book Store paid

$ 273 comma 000$273,000

for land and built a store in

Lockport comma New YorkLockport, New York.

Prior to​ construction, the city of

LockportLockport

charged

Chun'sChun's

$ 1 comma 300$1,300

for a building​ permit, which

Chun'sChun's

paid.

Chun'sChun's

also paid

$ 15 comma 300$15,300

for​ architect's fees. The construction cost of

$ 745 comma 000$745,000

was financed by a​ long-term note​ payable, with interest costs of

$ 36 comma 200$36,200

paid at the completion of the project. The building was completed June​ 30,

20182018.

Chun'sChun's

depreciates the building using the​ straight-line method over 35​ years, with estimated residual value of

$ 332 comma 300$332,300.

Question: Artistic Clothing is considering an extension project which includes the construction of a new manufacturing warehouse. The required initial investment for the construction is $2 million. the warehouse will be depreciated over 10 years on a straight-line basis with no residual value at the end of year 10. Also, company also plans to use its own land for the project which is currently hired to other company to use as a warehouse. The estimated rental income that will be missed over the project life is $300,000 valued as of today. To start the production, Artistic Clothing needs to invest in net working
capital the total amount of $200,000 at the beginning of the project. This investment will be recovered at the end of the project.

Company also expects to generate an annual revenue of $650,000, its associated cost of sales and operating expense are $250,000. Tax rate is 30%.

a. Determine the cash flows of the project from year 1 to year 10.

b. If company requires a rate of return of 10% from the project, should this project be accepted?

c. Calculate the payback period. If the company requires a payback period of less than 6 years, should the project be accepted?

Question: Artistic Clothing is considering an extension project which includes the construction of a new manufacturing warehouse. The required initial investment for the construction is $2 million. the warehouse will be depreciated over 10 years on a straight-line basis with no residual value at the end of year 10. Also, company also plans to use its own land for the project which is currently hired to other company to use as a warehouse. The estimated rental income that will be missed over the project life is $300,000 valued as of today. To start the production, Artistic Clothing needs to invest in net working
capital the total amount of $200,000 at the beginning of the project. This investment will be recovered at the end of the project.

Company also expects to generate an annual revenue of $650,000, its associated cost of sales and operating expense are $250,000. Tax rate is 30%.

a. Determine the cash flows of the project from year 1 to year 10.

b. If company requires a rate of return of 10% from the project, should this project be accepted?

c. Calculate the payback period. If the company requires a payback period of less than 6 years, should the project be accepted?

1. There was a recession and the construction industry has been badly affected. As a result, Henry lost his job as a construction worker. He will be considered as part of:
   1. structural unemployment
   2. cyclical unemployment
   3. seasonal unemployment
   4. frictional unemployment
      
2. When the economy is at full employment, it means:
   1. no one is unemployed.
   2. there is no cyclical unemployment.
   3. there is cyclical or frictional unemployment.
   4. there is no structural or frictional unemployment.

3. When more labor is unemployed than the amount at the natural unemployment rate, then real GDP ________ potential GDP.
   1. is equal to
   2. is less than
   3. is greater than
   4. cannot be compared to
      
4. Which of the following describe the consumer price index (CPI)? It:

1. compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2.
2. compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period.
3. measures the increase in the prices of the goods included in GDP.
4. is the ratio of the average price of a typical basket of goods to the cost of producing those goods.

Table 15.0

5. Refer to Table 10. Assume the market basket for the consumer price index has two products — bread and milk — with the following values in 2006 and 2013 for price and quantity: The Consumer Price Index for 2013 equals:
   1. 118.
   2. 116.
   3. 86.
   4. 85.

6. Suppose the CPI last year is 121 and the CPI this year is 137. The CORRECT method to calculate the inflation rate is:
   1. (137 - 121)/100 = 0.16.
   2. 137 × 121 = 258.
   3. [(137 - 121)/121] × 100 = 13.2.
   4. (137/121) × 100 = 113.2.
      
7. Which of the following describe the substitution bias that exists in the calculation of CPI? It:
   1. takes into account the substitution of goods by consumers when relative prices change.
   2. takes no account of the substitution of goods by consumers when relative prices change.
   3. substitutes quality changes whenever they occur without taking account of the cost of the quality changes.
   4. substitutes relative prices for absolute prices of goods.

NORTH DAKOTA CORPORATION (2-2)

NORTH DAKOTA CORPORATION does construction for residential customers and uses a job-order costing system to account for manufacturing operations. As of the beginning of February they had two jobs in process with the following work in process balances:

During February, two additional jobs were started: A125 and A126. Job A123 was completed during month and sold, with the client being billed at the company’s customary rate of cost plus 30%.   Job A124 was built on a speculative basis and, while finished, was not yet sold. The remaining jobs were still in process at month’s end.

Construction costs for February are as follows:

The company uses a normal costing system and applies overhead at the rate of $9 per direct labor hour. Direct labor rates average $15 per hour.

REQUIRED:

Determine the number of direct labor hours that were worked on each job for the month.

Job A123= 3,690 / 15 = 246

Job A124= 6,990 / 15 = 466

Job A125= 3,090 / 15 = 206

Job A126= 1,890 / 15 = 126

Compute the overhead applied to each job for the month

Job A123=

Prepare a simplified job-cost record for each job as of the end of February and post summary numbers to WIP, FG and CGS T-accounts (general ledger).

What were the work in process and finished goods inventory as of February 28?

What was the cost of goods manufactured for the month?

How much is the normal cost of goods sold?

Compute the sales and gross margin for February.

NOW ASSUME that the actual overhead for the month was $9,596. Was overhead over applied or under applied for the month? How is this handled?

NOW what is the adjusted cost of goods sold and gross margin on the GAAP income statement for February?

A GC needs to fill and compact a trench that has the following dimensions 150 x 50 x 1.5 ft.   The sub is going to use a dump truck that can carry 12 CY, and travels at an average speed of 40 mph. The borrow pit is located 45 miles from the construction site. The truck driver makes $50/hr and works 8 hours per day. Loading time for the truck is 30 minutes and unloading time is 5 minutes. The sub has to rent the truck at $500 per day + a driver @ $50/hour. The cost of soil $20 per BCY. The soil has a swell factor of 18% and a compaction factor of 12%.

How much will the driver cost?

2. Patient BN is a 36-year-old female with a type of organ failure that reduces her quality of life to half of what it would be in good health. Without treatment she can expect to live only two years. With a successful transplant, BN can expect to live four years and have a quality of life that is near 80% what she would enjoy in good health. However, the transplant costs $100,000, plus $10,000 each year for drugs and follow-up care, and carries a 15% risk of rejection resulting in immediate death. a) (20’) What is the cost per additional year of life gained (without discounting for time or quality of life)? b) (20’) What is the cost per discounted Quality-adjusted Life-year (QALY) gained (assuming a 5% time discount rate)?

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.30 per car washed. The company actually washed 8,400 cars in August.

Required:

Calculate the company's activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)