Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total cash receipts $188,000 $349,000 $217,000 $242,000 Total cash disbursements $244,000 $226,000 $205,000 $224,000 The company's beginning cash balance for the upcoming fiscal year will be $26,400. The company requires a minimum cash balance of $10,200 and may borrow any amount needed from a local bank at a quarterly interest rate of 1.6%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.
In: Accounting
The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Budgeted direct labor-hours | 11,200 | 9,800 | 10,100 | 10,900 |
The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $6.00 per direct labor-hour and its total fixed manufacturing overhead is $80,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $20,000 per quarter.
Required:
1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.
2. Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
In: Accounting
he direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Budgeted direct labor-hours | 11,200 | 9,800 | 10,100 | 10,900 |
The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $6.00 per direct labor-hour and its total fixed manufacturing overhead is $80,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $20,000 per quarter.
Required:
1. Prepare the company’s manufacturing overhead budget for the upcoming fiscal year.
2. Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.
In: Accounting
The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows:
Date | Transaction | Number of Units | Per Unit | Total | |
|---|---|---|---|---|---|
| Jan. | 1 | Inventory | 7,500 | $ 75.00 | $ 562,500 |
| 10 | Purchase | 22,500 | 85.00 | 1,912,500 | |
| 28 | Sale | 11,250 | 150.00 | 1,687,500 | |
| 30 | Sale | 3,750 | 150.00 | 562,500 | |
| Feb. | 5 | Sale | 1,500 | 150.00 | 225,000 |
| 10 | Purchase | 54,000 | 87.50 | 4,725,000 | |
| 16 | Sale | 27,000 | 160.00 | 4,320,000 | |
| 28 | Sale | 25,500 | 160.00 | 4,080,000 | |
| Mar. | 5 | Purchase | 45,000 | 89.50 | 4,027,500 |
| 14 | Sale | 30,000 | 160.00 | 4,800,000 | |
| 25 | Purchase | 7,500 | 90.00 | 675,000 | |
| 30 | Sale | 26,250 | 160.00 | 4,200,000 | |
| Instructions | |
| 1. | Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3 , using the first-in, first-out method. |
| 2. | Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. |
| 3. | Determine the gross profit from sales for the period. |
| 4. | Determine the ending inventory cost as of March 31. |
| 5. | Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? |
| CHART OF ACCOUNTS | |
| Midnight Supplies | |
| General Ledger | |
| ASSETS110Cash111Petty Cash120Accounts Receivable131Notes Receivable132Interest Receivable141Inventory145Office Supplies146Store Supplies151Prepaid Insurance181Land191Office Equipment192Accumulated Depreciation-Office Equipment193Store Equipment194Accumulated Depreciation-Store EquipmentLIABILITIES210Accounts Payable221Notes Payable222Interest Payable231Salaries Payable241Sales Tax PayableEQUITY310Common Stock311Retained Earnings312Dividends313Income Summary | REVENUE410Sales610Interest RevenueEXPENSES510Cost of Goods Sold515Credit Card Expense516Cash Short and Over520Salaries Expense531Advertising Expense532Delivery Expense533Insurance Expense534Office Supplies Expense535Rent Expense536Repairs Expense537Selling Expenses538Store Supplies Expense561Depreciation Expense-Office Equipment562Depreciation Expense-Store Equipment590Miscellaneous Expense710Interest Expense |
1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in
Exhibit 3
, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.
Date | Purchases | Cost of goods Sold | Inventory | ||||||
Date | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost |
Jan. 1 | |||||||||
10 | |||||||||
10 | |||||||||
28 | |||||||||
28 | |||||||||
30 | |||||||||
Feb. 5 | |||||||||
10 | |||||||||
10 | |||||||||
16 | |||||||||
16 | |||||||||
28 | |||||||||
Mar. 5 | |||||||||
5 | |||||||||
14 | |||||||||
14 | |||||||||
25 | |||||||||
25 | |||||||||
30 | |||||||||
30 | |||||||||
31 | Balances | ||||||||
2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 |
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of March 31.
5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?
In: Accounting
On January 1, 2020, Mehan, Incorporated purchased 15,000 shares of Cook Company for $150,000 giving Mehan a 15% ownership of Cook. The fair value of the 15% investment was the same as the carrying value of the investment when, on January 1, 2021, Mehan purchased an additional 25,000 shares (25%) of Cook for $300,000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2020 was $1,000,000. The book value of Cook on January 1, 2021, was $1,100,000. Any excess of cost over book value for this second transaction is assigned to a database and amortized over four years.
Cook reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout the years:
| Net Income | Dividends | ||||||||
| 2020 | $ | 200,000 | $ | 50,000 | |||||
| 2021 | 225,000 | 50,000 | |||||||
| 2022 | 250,000 | 60,000 | |||||||
On April 1, 2022, just after its first dividend receipt, Mehan sells 10,000 shares of its investment.
What was the balance in the investment account at April 1, 2022 just before the sale of shares?
The answer is $535,875.
$517,500 + ($25,000 − $625) − $6,000 = $535,875
2022 Beginning Investment Account Balance + (40% of 1st Quarter Income – 1st Quarter Amortization) – 1st Quarter Dividend
My question is how do you get 2022 Beginning Investment Account Balance?
In: Accounting
1. The following journal entry was recorded by Epic Inc:
Work in Process $94,000
Raw Materials $94,000
Which of the following statements is correct regarding this journal entry?
Multiple Choice
This journal entry shows that $94,000 of raw materials were purchased during the period.
This journal entry shows that $94,000 of products were sold.
This journal entry shows that $94,000 of direct materials were called into the production process.
This journal entry shows that $94,000 in products were completed during the period.
The Tobler Corporation has budgeted production for next year as follows:
| Quarter | ||||||||||
| First | Second | Third | Fourth | |||||||
| Production in units | 10,000 | 12,000 | 16,000 | 14,000 | ||||||
2. Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 pounds. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs. Budgeted purchases of raw materials in the second quarter would be:
Multiple Choice
49,600 pounds
50,400 pounds
63,200 pounds
45,600 pounds
3. In order for a company to decide to drop a product line, the contribution margin lost from the product must be:
Multiple Choice
more than the fixed costs avoided (saved).
less than the fixed costs avoided (saved).
negative.
positive.
In: Accounting
Suppose you are a salesperson and your company's CRM forecasts that your quarterly sales will be substantially under quota. You call your best customers to increase sales, but no one is willing to buy more.
Your boss says that it has been a bad quarter for all the salespeople. It's so bad, in fact, that the vice president of sales has authorized a 20 percent discount on new orders. The only stipulation is that customers must take delivery prior to the end of the quarter so that accounting can book the order. "Start dialing for dollars," she says, "and get what you can. Be creative!"
Using your CRM information system, you identify your top customers and present the discount offer to them. The first customer balks at increasing her inventory: "I just don't think we can sell that much."
"Well," you respond, "how about if we agree to take back any inventory you don't sell next quarter?" (By doing this, you increase your current sales and commission in this quarter, and you also help your company make its quarterly sales projections . The additional product is likely to be returned next quarter, but you think "Hey, that's then and this is now.")
"OK," she says, "but I want you to stipulate the return option on the purchase order."
You know that you cannot write that on the purchase order because accounting won't book all of the order if you do. So you tell her that you'll send her an email with that stipulation. She increases her order, and accounting books the full amount.
With another customer, you try a second strategy. Instead of offering the discount, you offer the product at full price but agree to pay a 20 percent credit in the next quarter. That way you can book the full price now. You pitch this offer as follows: "Our marketing department analyzed past sales using our new information system, and we know that increasing advertising will cause additional sales. So, if you order more product now, next quarter we'll give you 20 percent of the order back to pay for the advertising."
In truth, you doubt the customer will spend the money on advertising. Instead, it will just take the credit and sit on a bigger inventory . That will kill your sales to the company next quarter, but you'll solve the problem when you get to it next quarter.
Even with these additional orders, you're still under quota. In desperation, you decide to sell product to a fictitious company that you say is owned by your brother-in-law. You set up a new account, and when accounting calls your brother-in-law for a credit check, he cooperates with your scheme. You then sell $40,000 of product to the fictitious company and ship the product to your brother-in-law's garage. Accounting books the revenue in the quarter, and you have finally made quota. A week into the next quarter, your brother-in-law returns the merchandise.
Meanwhile, unknown to you, your company's ERP system is scheduling production. The program that creates the production schedule reads the sales from your activities (and those of other salespeople) and finds a sharp increase in product demand (imagine that!). Accordingly, it generates a schedule that calls for substantial production increases and schedules worker for the production runs. The production system, in turn, schedules the material requirements with the inventory application, which increases raw materials purchases to meet the increased production schedule
Regarding your shipping to the fictitious company:
1/ Is your action ethical according to the categorical imperative perspective? Explain.
2/ Is your action ethical according to the utilitarian perspective? Explain.
3/ Is your action legal?
In: Operations Management
Discuss the impact of Covid-19 on consumer spending based on the content of this article.
https://www.visualcapitalist.com/how-u-s-consumers-are-spending-differently-during-covid-19/
In: Economics
How does bureaucratic behavior in uence public spending? How can bureaucrats in uence information in ways that increase government spending beyond the e- cient levels?
In: Economics
If MPS is 20% and a person experiences an increase in disposable income for $200. How much is being saved? How much is being spent? What is the MPC?
In: Economics