Question 1: Cost allocation

a) Allocate the fixed costs between products A and B. Use direct labor dollars as the cost driver.
allocation rate=$  per DL$
allocated costs for A=$  
allocated costs for B=$  

b) Compute the profit margins for products A and B:
profit margin for A=$  
profit margin for B=$  
Enter negative numbers with a minus sign, i.e., a loss of $1,000 should be entered as -1000, not as (1000) or ($1000).

c) Should you drop product A or product B in the short term? Why?

Keep both products -- both have positive contribution marginDrop product A -- it has negative profit margin     Drop product A -- it has negative contribution marginDrop product A -- it has smaller contribution margin than product B

Should you drop product A or product B in the long term? Why?

Keep both products -- both have positive contribution marginDrop product A -- it has negative profit margin     Drop product A -- it has negative contribution marginDrop product A -- it has smaller contribution margin than product B

d) If you drop product A in the short term,
    fixed costs will: remain the same decrease by $7,200

    profit will: decrease by $2,400 increase by $4,800


If you drop product A in the long term,
    fixed costs will: remain the same decrease by $7,200

    profit will: decrease by $2,400 increase by $4,800


e) Allocate the fixed costs between products A and B, using the number of units as the cost driver.
allocation rate=$  per unit
allocated costs for A=$  
allocated costs for B=$  
These allocated amounts are very different from what you got in part (a). In general, should we use the allocated costs from part (a) or from part (e)? Why?

use the allocated costs from (a) -- direct labor is always a better cost driver than the number of unitsuse the allocated costs from (e) -- the number of units is always a better cost driver than direct labor    it depends -- direct labor can be a better cost driver in some situations, and the number of units (or some other activity measure) can be a better cost driver in other situations

f) Suppose that a firm uses a labor-intensive production process. The most reasonable cost driver for manufacturing overhead costs is:

number of unitsmachine hours    direct labor (measured in hours or dollars)

Suppose that a firm uses a machine-intensive production process. The most reasonable cost driver for manufacturing overhead costs is:

number of unitsmachine hours    direct labor (measured in hours or dollars)

g) Suppose that a firm uses a machine-intensive process to make the components for the finished product and then uses a labor-intensive process to assemble the finished product. The firm wants to implement a refined cost allocation with two cost pools:
Pool 1: overhead costs related to the production of components (e.g., machine depreciation, rent for the factory building used to make the components, salaries of machine maintenance staff)
Pool 2: overhead costs related to the assembly of the finished product (e.g., depreciation on tools used by assembly workers, rent for the factory building used for assembly, salaries of labor supervisors)
The most reasonable cost drivers for the two pools are:

direct labor hours or dollars for both poolsmachine hours for both pools    machine-hours for pool 1 and direct labor hours or dollars for pool 2number of units for pool 1 and number of workers for pool 2

What is the price per share according to the equity free cash flow model?

Select one:

a. $12.33

b. $18.29

c. $15.51

d. $20.87

e. $10.98

Required information

Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four inventory methods (LO6-3, 6-4, 6-5)

[The following information applies to the questions displayed below.]

Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Pete’s Tennis Shop uses a periodic inventory system.

For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase.

rev: 10_13_2016_QC_CS-65854

Problem 6-2B Part 2

2. Using FIFO, calculate ending inventory and cost of goods sold at August 31.  

What is the price per share according to the equity free cash flow model?

Select one:

a. $18.29

b. $10.98

c. $15.51

d. $20.87

e. $12.33

Solve for the missing numbers. Revenue 17,656, Depreciation 3,838, Deferred Tax Liability, Non-Current 2,413, Operating Income 2,257, Total Liabilities And Equity 75,611, Earnings before Taxes 776, Total Liabilities 52,120, Net Profit 1,389, Inventory 128, Other Current Assets 401, Prepaid Expenses 294, Additional Paid In Capital 23,314, Long-term Investments 453, Gross Profit 10,003, Goodwill 30,475, Gross Property, Plant & Equipment 51,204, Total Current Assets 3,891, Accumulated Depreciation (24,352), Common Stock 1,069, Other Long-Term Assets 1,167, Accounts Payable 1,555, Other Operating Expense 83, Accrued Expenses 1,287, Current Portion of LT Debt 443, Cash 551, Comprehensive Income and Other (1,995), R & D Expense 23, Unearned Revenue, (Current Liability) 892, Other Current Liabilities 310, Total Current Liabilities 4,857, Long-Term Debt 37,283 , Pension & Other Post-Retire. Benefits (Long Term Liability) 5,178, Retained Earnings 1,103, Total Assets _________ , Selling General & Admin Expense ________ , Accounts Receivable ______ , Income Tax Expense ______ , Cost Of Goods Sold ________ , Net Property, Plant & Equipment _______ , Interest Expense _________ , Other Non-Current Liabilities _________ , Long Term Intangibles ________ , Income Taxes Payable _______.

Analyzing Segment Revenue Disclosures from Quarterly Data
Beyond Meat disclosed the following in its Form 10‑Q for the first quarter ended March 30, 2019. The company had its initial public offering (IPO) in May 2019.
The Company’s net revenues by platform and channel are included in the tables below:

Two distributors each accounted for approximately 21% of the Company’s gross revenues in the three months ended March 30, 2019; and three distributors accounted for approximately 34%, 14% and 11%, respectively, of the Company’s gross revenues in the three months ended March 31, 2018.

a. Calculate the average discount given to customers for the two quarters presented.
Note: Round percentage (your final answer) to one decimal place (for example, enter 6.7% for 6.6555%).

Average discount for quarter ended March 30, 2019: Answer %

Average discount for quarter ended March 31, 2018: Answer %

b. What do we observe about the level of the discounts across the two quarters?
The level of discounts has (increased/decreased/remained) from 2018 to 2019.

c. Beyond Meat’s revenue grew tremendously between March 2018 and March 2019. Determine growth rates for each of the platforms and channels disclosed (Fresh, Frozen, Retail, and Restaurant).
Note: Round percentage (your final answer) to the nearest whole percentage point.

16-19 Revenue and Related Transactions. During its current fiscal year. Evanston General Hospital, a not-for-profit health care organization, had the following revenue-related transactions (amount summarized for the year).

1. Services provided to inpatients and outpatients amounted to $9,600,000, of which $450,000 was for charity care, $928,000 was paid by uninsured patients, and $8,222,000 was billed to Medicare, Medicaid, and insurance companies.

2. Donated pharmaceuticals and medical supplies valued at $265,000 were received and utilized as general expenses.

3. Medicare, Medicaid, and third-party payors (insurance companies) approved and paid $5,365,000 of the $8,222,000 billed by the hospital during the year (see transaction 1).

4. An unconditional contribution of $5,000,000 was received in cash from a donor to construct a new facility for care of Alzheimer's patients. The full amount is expendable for that purpose. No activity occurred on this project during the current year.

5. A total of $965,000 was received from the following activities/sources: cafeteria and gift shop sales, $710,000; medical seminars, 125,000; unrestricted transfers from the Evanston General Hospital Foundation $75,000; and fees for medical transcripts, $55,000.

6. Uncollectible accounts totaling $3,250 we're written off. The allowance for uncollectible receivables was increased by $1,170.

REQUIRED

a. Record the preceding transactions in general journal form.

b. Prepare the unrestricted revenues, gains, and other support section of Evanston General Hospital's statement of operations for the current year, following the format in Illustration 16-4.

Question 3

Information pertaining to Yekstop Corp.'s sales revenue is presented below:

Management estimates that 3% of credit sales are eventually uncollectible. Of the collectible credit sales, 60% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 75% of the sales projected for the month. All purchases of inventory are on open account; 20% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 50% of the selling prices.

Total budgeted inventory purchases in November by Yekstop Corp. are:

Multiple Choice

• $222,375.

• $272,625.

• $402,000.

• $423,375.

• $535,782.

Information pertaining to Yekstop Corp.'s sales revenue is presented below:

Management estimates that 5% of credit sales are eventually uncollectible. Of the collectible credit sales, 60% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 70% of the sales projected for the month. All purchases of inventory are on open account; 30% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 50% of the selling prices.

Budgeted January cash payments for December inventory purchases by Yekstop Corp. are:

Multiple Choice

• $61,035.

• $88,650.

• $142,415.

• $206,850.

• $274,040.

What input do both absolute valuation and relative valuation typically require?

Historic earnings data

Historic revenue data

Long-term forecasts

Short-term forecasts