Jason Ackerman is the management accountant for Central Restaurant Supply ​(CRS. Beth Donaldson, the CRS sales​ manager, and Jason are meeting to discuss the profitability of one of the​ customers, Mama Leone's Leone's Pizza. Jason hands Beth the following analysis of Mama Leone's activity during the last​ quarter, taken from Central ​activity-based costing​ system:

Sales $23,400

Cost of goods sold (all variable) 14,025

Order processing (25 orders processed at $300 per order) 7,500

Delivery (2,500 miles driven at $0.75 per mile) 1,875

Rush orders (3 rush orders at $165 per rush order) 495

Sales calls (3 sales calls at $150 per call) 450

Operating income $ (945)

Beth looks at the report and​ remarks, "I'm glad to see all my hard work is paying off with Mama Leone's. Sales have gone up 10 % over the previous​ quarter!"

Jason ​replies, "Increased sales are​ great, but​ I'm worried about Mama Leone's ​margin, Beth. We were showing a profit with Mama Leone's at the lower sales​ level, but now​ we're showing a loss. Gross margin percentage this quarter was 40 %​, down five percentage points from the prior quarter.​ I'm afraid that corporate will push hard to drop them as a customer if things​ don't turn​ around."

​"That's crazy," Beth responds.​ "A lot of that overhead for things like order​ processing, deliveries, and sales calls would just be allocated to other customers if we dropped Mama Leone's. This report makes it look like​ we're losing money on Mama Leone's when​ we're not. In any​ case, I am sure you can do something to make its profitability look closer to what we think it is. No one doubts that Mama Leone's is a very good​ customer."

Requirements

Assume that Beth is partly correct in her assessment of the report. Upon further​ investigation, it is determined that 10 % of the order processing costs and 20 % of the delivery costs would not be avoidable if CRS were to drop Mama Leone's. Would CRS benefit from dropping Mama Leone's​? Show your calculations.

Beth​'s bonus is based on meeting sales targets. Based on the preceding information regarding gross margin​ percentage, what might Beth have done last quarter to meet her target and receive her​ bonus? How might CRS revise its bonus system to address​ this?

Should Jason rework the​ numbers? How should he respond to Beth​'s comments about making Mama Leone's look more​ profitable?

FX, Inc. is a volume manufacturer of high technology automotive mirrors (including cell link and voice activation). FX is looking to expand their operations to add a second product line capable of producing 1.3 Million units per year. The equipment investment cost for this new operation is $27 Million. The project falls under a 7 year MACRS class life and the company estimates that the salvage value will be $2.7 Million at the end of the 6 year project. The average selling price for each mirror is $85 per unit. The annual expected sales shown below:

The material cost for each mirror is $20 (with 25 % of the material imported from Canada and 35% from Mexico). The labor to produce each mirror is $15 with additional variable cost of manufacturing at $17 per unit. The fixed cost of manufacturing operations is $10 Million per year. FX maintains 1 month of raw materials and 1 month of WIP and finished goods combined to balance overall automotive demand. Assume that FX has a federal tax rate of 25% and a state tax rate of 5%. Also assume that FX uses a MARR of 15% for all economic analyses.

a) What is the NPV of the investment?

Discussion on Formulas, T-Accounts, Journal Entries

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After reading Chapter 3 and reviewing the online videos, you should have a good understanding of the various approaches and tools necessary to compute and prepare schedules for direct materials placed in production, cost of goods manufactured, and cost of goods sold. The book exercises and the videos give you three "methods" to compute and work problems to calculate these figures. The first is simply by way of a formula...(i.e. beginning finished goods + cost of goods manufactured - ending finished goods = cost of goods sold). The second was by visualizing the flow of goods throughout the various T accounts for Raw Materials, Work in Process, and Finished Goods. The third was to prepare journal entries in order to compute each of these amounts, which is similar to the approach of the T-accounts, although perhaps arguably less visual.

For this discussion, I'd like you to tell me which method you prefer of the three discussed above to perform calculations for direct materials placed in production, cost of goods manufactured and cost of goods sold. For example, which is more intuitive and why? Instead, is there some combination of methods that makes more sense to you?

Problem 2-23A Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO2-6] Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $ 219,000 Purchases of raw materials $ 266,000 Direct labor ? Administrative expenses $ 158,000 Manufacturing overhead applied to work in process $ 332,000 Total actual manufacturing overhead costs $ 354,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 56,000 $ 37,000 Work in process ? $ 26,000 Finished goods $ 34,000 ? The total manufacturing costs for the year were $690,000; the cost of goods available for sale totaled $745,000; the unadjusted cost of goods sold totaled $664,000; and the net operating income was $34,000. The company’s overapplied or underapplied overhead is closed entirely to Cost of Goods Sold. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.) Required: a. Prepare a schedule of cost of goods manufactured. b. Prepare a schedule of cost of goods sold. c. Prepare an income statement for the year.

Fiscal policies are those which are enacted and changed by the government which majorly involves changing the government spending in the economy or changing the tax rates. Let us consider one of the most important taxes, the income tax. An income tax is a proportion of the income that you have to pay as taxes to the government. Since, the tax is progressive, the higher the income, the higher is the tax and thus it affects you as an individual directly. If you make 100,000 a year and the tax rate for your income is 50% than you are left with $50000. My mother usually pays taxes and a lot of the times owes because of her business. It impacts me because when business is down she still owes taxes.

HOW WOULD I REPLY TO THIS?

Investopedia defines, “Monetary policy and fiscal policy refer to the two most widely recognized "tools" used to influence a nation's economic activity. Monetary policy is primarily concerned with the management of interest rates and the total supply of money in circulation and is generally carried out by central banks such as the Federal Reserve. Fiscal policy is the collective term for the taxing and spending actions of governments. In the United States, the national fiscal policy is determined by the Executive and Legislative Branches.”

This task will have you explore fiscal policy.

1. How did the national debt get to be so big?
2. Is there a limit on the national debt?
3. Why can't the government just print more money to get out of debt?
4. If you had a chance to speak to legislators, what would your recommendation be?

Munoz Manufacturing Company was started on January 1, 2018. The company was affected by the following events during its first year of operation:

Acquired $1,700 cash from the issue of common stock.

Paid $540 cash for direct raw materials.

Transferred $420 of direct raw materials to work in process.

Paid production employees $650 cash.

Paid $370 cash for manufacturing overhead costs.

Applied $220 of manufacturing overhead costs to work in process.

Completed work on products that cost $1,070.

Sold products that cost $820 for $1,630 cash.

Paid $400 cash for selling and administrative expenses.

Made a $70 cash distribution to the owners.

Closed the Manufacturing Overhead account.

Required

Record these events in a horizontal statements model. The first event is shown as an example.

Prepare a schedule of cost of goods manufactured and sold.

Record these events in a horizontal statements model. The first event is shown as an example. (Enter decreases to account balances with a minus sign.)

Prepare a schedule of cost of goods manufactured and sold.

3.

4.

Below is a Proper Data Set of classes that Business students have taken at Highline. Each line or record in the Table represents a class that a student took at Highline. There are 227 Rows (Records) in the Table. The Quarter Column represents the quarter the class was taken The Year Column represents the quarter the class was taken The Department Column represents the quarter the class was taken The Class # Column represents the quarter the class was taken The Credits Column represents the quarter the class was taken The Grade Column represents the quarter the class was taken Using a PivotTable, create a Joint Probability Table for the variables (Column) Department and Quarter).

Results for the fourth quarter of 2019 are provided below. CVI's management is concerned as to why the operating income was lower than budgeted. 2019 fourth-quarter operating statement

Actual Budget Revenues: High-speed Internet service $1,822,800 $1,890,000 Regular-speed Internet service 2.856.000 2.646.000 4,678,800 4,536,000 Expenses Billing and collection (55 per customer per quarter) 226,800 210.000 Variable costs of high-speed service ($15 per customer per quarter) 176,400 189.000 Variable costs of regular-speed service ($5 per customer per quarter) 168,000 147.000 Fixed costs 2.650.000 2.300.000 3221 2002 846 000 Operating income $1.457 600 $1.690.000 The budget was based on CVi holding a 35% market share assuming a total budgeted market size of 120.000 customers.

The actual market size for the fourth quarter of 2019 turned out to be 125.000 customers, due to new apartment buildings in the area. The budget also assumed that 30% of CVI's customers would select the high-speed package and the remaining 70% of CVI's customers would select the regular-speed package CVI's high-speed package was budgeted with a selling price of $150 per customer per quarter. The regular-speed package had a budgeted selling price of $90 per customer per quarter. The actual prices in the fourth quarter were $155 and $85 per customer for the high-speed and regular-speed packages respectively.

[PLEASE PROVIDE TYPE-WRITTEN ANSWER -> Not hand-written, hard to understand handwriting]

Calculate each of the following variances:

a) Sales price variance

b) sales volume variance

c) Sales quantity variance

d) Sales mix variance

e) Market size variance

f) Market share variance