1) Net income:

A) is calculated by subtracting total expenses and total dividends from total revenues.

B) occurs when total revenues are less than total expenses.

C) is often referred to as the "bottom line" on an income statement.

D) decreases total stockholders' equity.

2) On January 1, 2017, total assets for Wininger Technologies were $140,000; on December 31, 2017, total assets were $155,000. On January 1, 2017, total liabilities were $111,000; on December 31, 2017, total liabilities were $118,000. What is the amount of the change and the direction of the change in Wininger Technologies' owners' equity for 2017?

A) decrease of $8000

B) increase of $8000

C) increase of $22,000

D) decrease of $22,000

3) Golden Company had the following accounts and balances at the end of the year. What are total assets at the end of the year?

A) $75,000

B) $117,000

C) $130,000

D) $172,000

4) The CORRECT data flow from one financial statement to the next is:

A) statement of retained earnings, income statement, balance sheet, statement of cash flows.

B) balance sheet, statement of retained earnings, income statement, statement of cash flows.

C) statement of retained earnings, income statement, statement of cash flows, balance sheet.

D) income statement, statement of retained earnings, balance sheet, statement of cash flows.

5) Potter Company reports the following line items:

What is net income?

A) $26,000

B) $34,000

C) $59,500

D) $104,000

6) Analyze each of the following transactions in terms of their effects on the accounting equation of Osgood Delivery Service. The company is a sole proprietorship. Enter the correct amounts in the columns of the spreadsheet.

a)   James Osgood contributes $75,000 cash to the business in exchange for capital.

b) The business purchases $750 of office supplies on account.

c)   The business pays cash to purchase a delivery van for $25,000.

d) Services are performed for clients and $5,000 cash is received.

e)   Cash is paid for rent expense, $800 and utilities expense, $400.

f)   James Osgood withdraws $1,000 from the business for personal use.

Total assets = $500,000, total asset turnover = 1.40, total debt ratio = 0.30, return on assets = 8.60%. What is the return on equity?

Cornerstone Exercise 20.1 (Algorithmic)
EOQ

Thomas Corporation produces heating units. The following values apply for a part used in their production (purchased from external suppliers):

Required:

1. For Thomas, calculate the ordering cost, the carrying cost, and the total cost associated with an order size of 180 units. If required, round your answers to the nearest cent.

2. Calculate the EOQ and its associated ordering cost, carrying cost, and total cost. If required, round your answers to the nearest cent.

3. What if Thomas enters into an exclusive supplier agreement with one supplier who will supply all of the demands with smaller, more frequent orders? Under this arrangement, the ordering cost is reduced to $ 0.3 per order.

Calculate the new EOQ. (Round your answer to one decimal place.)

units

**Government activities may be less “profitable” than they appear**

A city prepares its budget in traditional format, classifying expenditures by fund and object. In 2010, amid considerable controversy, the city authorized the sale of $20 million in bonds to finance construction of a new sports and special events arena. Critics charged that, contrary to the predictions of arena proponents, the arena could not be fiscally self‐sustaining. Five years later, the arena was completed and began to be used. After its first year of operations, its general managers submitted the following condensed statement of revenues and expenses (in millions):

At the city council meeting, when the report was submitted, the council member who had championed the center glowingly boasted that his prophecy was proving correct; the arena was “profitable.” Assume that the following information came to your attention:

• The arena is accounted for in a separate enterprise fund.

• The arena increased the number of overnight visitors to the city. City administrators and economists calculated that the additional visitors generated approximately $0.1 million in hotel occupancy tax revenues. These taxes are dedicated to promoting tourism in the city. In addition, they estimated that the ticket and concession sales, plus the economic activity generated by the arena, increased general sales tax revenues by $0.4 million.

• The city had to improve roads, highways, and utilities in the area surrounding the arena. These improvements, which cost $6 million, were financed with general obligation debt (not reported in the enterprise fund). Principal and interest on the debt, paid out of general funds, were $0.5 million. The cost of maintaining the facilities was approximately $0.1 million.

• On evenings when events were held in the arena, the city had to increase police protection in the arena’s neighborhood. Whereas the arena compensated the police department for police officers who served within the arena itself, those who patrolled outside were paid out of police department funds. The police department estimated its additional costs at $0.1 million.

• The city provided various administrative services (including legal, accounting, and personnel) to the arena at no charge at an estimated cost of $0.1 million.

• The city estimates the cost of additional sanitation, fire, and medical services due to events at the center to be approximately $0.2 million.

1. Would you agree with the council member that the arena was fiscally self‐sustaining?

2. In which funds would the additional revenues and expenditures be budgeted and accounted for?

3. Comment on the limitations of both the traditional object classification budget and fund accounting system in assessing the economic costs and benefits of a project—such as the sports and special events arena.

4. What changes in the city’s budgeting and accounting structure would overcome these limitations? What additional problems might these changes cause?

Fill in the missing amounts for items (a) through (o) as well as a1 through m1 in the following perpetual inventory records:

Calculate the cost of goods sold and ending inventory using weighted average. (Round the weighted average cost per unit to 2 decimal places, e.g. 5.25 and final answers to 0 decimal places, e.g. 5,250.)

Calculate the cost of goods sold and ending inventory using FIFO. (HINT: Use two rows to show your cost of goods sold calculation in layers)

1. If the average product of 14 workers is 50 bushels of wheat and the average product of 15 workers of wheat is 55 bushels of wheat, then the marginal product of the 15th worker was ___________ bushels of wheat.

2. Which of the following is most likely to be a fixed cost for a bakery firm?

A. Wages paid to workers

B. Paying for ingredients from a food supplier

C. The monthly electricity bill

D. Paying rent each month for an unowned building

3. Suppose that when the level of output for the firm increases from 28 to 29 units, its total costs increase from $120 to $155. What is the firm's marginal cost per unit?

4. If average variable costs are increasing while average total costs are decreasing, then

A. marginal cost must lie between average variable and average total costs

B. marginal cost must equal average variable cost

C. marginal cost must equal average total cost

D. fixed costs must be zero

5. If fixed costs of a firm increase, what will happen?

A. total costs will increase, and total variable costs will increase

B. average total costs will increase, and average variable costs will decrease

C. average total costs will increase, and average variable costs will not change

D. total variable costs will increase, and average variable costs will increase

An important application of regression analysis in accounting is cost estimation. By developing an estimated
regression equation relating volume and cost, an analyst can estimate the cost associated with a particular
manufacturing volume. Consider the following sample production volumes and total cost data.
Production Volume (units) Total Cost ($)
400 6590
450 8235
550 8895
600 9720
700 10,540
750 11,530
a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a
given production volume.
b. Compute the coefficient of determination. Interpret the coefficient of determination in terms of the percentage of the variability in total cost that can be explained by the regression of cost on production volume.
c. The company’s production schedule shows that 580 units must be produced next month. Determine the
estimated cost for this operation.
d. Use a one percent level of significance to test whether the production volume is significantly related to the
total cost and state your conclusion.
e. Support your results in part (d) with an interval estimate of the slope of the regression (i.e. the variable cost of production)
f.prepare ANOVA table

Manufacturing Cost Variances.

a) Make up your own Standard and Actual data for a production run of 20,000 units of a product. Make sure your actual data is different than your standard data. Use the following formats for 20,000 units:

              Cost Type                   Standard Price/Rate   x    Standard Quantity = Standard Cost

Direct Materials (DM)         $?.??                   x                     ???          =            ???                         

Direct Labor (DL)                 $?.??                   x                     ???          =            ???                          

Factory Overhead (FO)        $?.??                   x                     ???            =           ???                         

                                     Total Standard Product Cost for 20,000 units   =           ????

             Cost Type                   Actual Price/Rate          x    Actual Quantity =       Actual Cost

Direct Materials (DM)         $?.??                   x                     ???          =            ???                          

Direct Labor (DL)                 $?.??                   x                    ???          =            ???                         

Factory Overhead (FO)        $?.??                   x                     ???            =           ???                         

                                     Total Actual Product Cost for 20,000 units        =          ????

b) Calculate your Standard and Actual product cost per unit.

c) Calculate your Direct Materials (DM) Price Variance, DM Quantity Variance, and total DM Cost Variance.

d) Calculate your Direct Labor (DL) Rate Variance, DL Time Variance, and total DL Cost Variance.

e) Calculate your total Factory Overhead (FO) cost variance.

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:

4. With respect to cost classifications for predicting cost behavior:

a. What is the total variable manufacturing cost?

b. What is the total fixed cost for the company as a whole?

c. What is the variable cost per unit produced and sold?

Kings, Inc. manufactures and sells a single product. A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below. Complete the schedule of the company’s total and unit costs above.

Extra Credit: What does this table tell you?

Please show work!