Grouper Landscaping began construction of a new plant on December 1, 2020. On this date, the company purchased a parcel of land for $146,400 in cash. In addition, it paid $2,880 in surveying costs and $4,560 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,360, with $960 being received from the sale of materials.

Architectural plans were also formalized on December 1, 2020, when the architect was paid $36,000. The necessary building permits costing $3,360 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2021 as follows.

The building was completed on July 1, 2021.

To finance construction of this plant, Grouper borrowed $608,400 from the bank on December 1, 2020. Grouper had no other borrowings. The $608,400 was a 10-year loan bearing interest at 8%.

Compute the balance in each of the following accounts at December 31, 2020, and December 31, 2021. (Round answers to 0 decimal places, e.g. 5,275.)

A construction company Y is considering to participate in the tendering process for building a toll bridge. The duration of the construction project is 5 years. The successful tenderer is allowed to collect toll from the bridge users after the completion of the project and subsequently will be responsible for maintaining the bridge. The expected cash flow transactions from this project are as follows:

• Receive bank loan of RM 2,000,000 now
• Annual material expenses of RM 200,000 in year 1 and expected to increase by RM 20,000 per year until year 5
• Annual bridge maintenance cost of RM 70,000 from year 6 until end of bridge life
• Annual bank loan payment of RM 500,000 starting from the first year until at the end of year 10
• Progress payment received from the government: RM 4,000,000 (end of year 3) and RM 8,000,000 (end of year 5)
• Toll revenue of RM 500,000 per year from year 6 until year 10

a) Construct cash flow diagram to summarize the above transactions.

b) Another company is interested in this project and is willing to buy over this project worth RM 1,500,000 now. Should this offer being accepted? Show all your calculations to justify your decision and assume the growth rate is 12% per year.                                                                                             

On July 31, 2017, Amsterdam Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help finance construction, on July 31 Amsterdam issued a $300,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $200,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Amsterdam made a final $100,000 payment to Minsk. Other than the note to Netherlands, Amsterdam's only outstanding liability at December 31, 2017, is a $30,000, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31.

Instructions

(a)  

Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2017. (Round all computations to the nearest dollar.)

(b)  Prepare the journal entries needed on the books of Amsterdam Company at each of the following dates.

• 1.July 31, 2017.
• 2.November 1, 2017.
• 3.December 31, 2017.

Contribution Margin approach

Problem: Consider the following situation independently. Fill in the blanks with the appropriate information.

NEED ESSAY TYPE ANSWER

Provide a thorough discussion of the following statement:

“By defining the concept of the percentage markup of prices over marginal cost as:   

(P -MC/P) = - 1/ƐD, where ƐD refers to the price elasticity of demand of the monopoly firm, one can use this concept to determine the market power of this profit-maximizing monopoly firm.”

Measuring Economic Exposure. Assume you live in the U.S. Using the following cost and revenue information shown for DeKalb, Inc.,

a) determine how the costs, revenue, and net cash flow would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$):

            1) NZ$ = $0.55,

            2) NZ$ = $0.60, and

            3) NZ$ = $0.65.

            b) What is your conclusion?

            15 Marks    

Note: PCF_t is the percentage change in inflation-adjusted cash flows measured in the firm's home currency (U.S. dollars) over period t, and e_t is the percentage change in the exchange rate of the foreign currency over period t.   

Forecasted Net Cash Flows: DeKalb Inc.

(in millions of U.S. dollars and New Zealand dollars)

                                                                                                                               New Zealand

                                                                                            U.S. Business               Business

      Sales                                                                                   $800                         NZ$800

      Cost of Materials                                                               500                               100

      Operating Expenses                                                           300                                     0

      Interest Expense                                                                100                                     0

      Cash Flow                                                                       ($100)                         NZ$700

Personal Electronix sells iPad and iPhone. The business is divided into two divisions along with product lines. CVP income statements for a recent quarter’s activity are presented below.

Instructions:

a. Determine (1) sales mix percentage, (2) contribution margin ratio for each division.

b. Calculate the company’s weighted average contribution margin ratio.

c. Calculate the company’s breakeven in units and in dollar amount.

d. Determine the sales level in dollars for each division at the break even.

............................................................................................................................................

Question Four 5p

Ariba Corporation reaches its breakeven point at $3,200,000 of revenues. At present, it is selling 105,000 units and its variable costs are $30. Fixed manufacturing costs $800,000.

1. Compute the contribution margin percentage.              

2. Compute the selling price.                                             

3. Compute the margin of safety in units and dollars.     

Jamie Peters invested ?$117,000 to set up the following portfolio one year? ago:

A $33,000 0.81 $1,400 $33,000

B $40,000 0.98 $1,200 $41,000

C $31,000 1.47 $0 $37,500

D $13,000 1.38 $500 $13,500

a.??Calculate the portfolio beta on the basis of the original cost figures.

b.??Calculate the percentage return of each asset in the portfolio for the year.

c.??Calculate the percentage return of the portfolio on the basis of original? cost, using income and gains during the year.

d.??At the time Jamie made his? investments, investors were estimating that the market return for the coming year would be 9 %. The estimate of the? risk-free rate of return averaged 5 % for the coming year. Calculate an expected rate of return for each stock on the basis of its beta and the expectations of market and? risk-free returns.

e.??On the basis of the actual? results, each stock in the portfolio performed differently relative to those? CAPM-generated expectations of performance. What factors could explain these? differences?

Solomon Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows:

Assume Solomon needs to allocate two major overhead costs ($70,600 of employee fringe benefits and $29,540 of indirect materials costs) among the three jobs.

Required

Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. (Round "Allocation rate" to 2 decimal places.)