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rev: 06_08_2015_QC_CS-17166

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1. Prepare Laredo Luggage’s schedule of cost of goods manufactured for the year

2. Prepare Laredo Luggage’s schedule of cost of goods sold for the year

3. Prepare Laredo Luggage’s income statement for the year.

1. plain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income.
2. A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
3. Cite and give credit to the author that you are citing

1. Explain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income.
2. A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
3. Cite and give credit to the author that you are citing

On December 31, 2012, Lunes Company collected $174,000 in unearned subscription revenue which is to be earned equally over the next three (3) years. Pretax financial income in 2012 amounted to $595,000. Lunes’ applicable tax rate is 34% in 2012. Recently enacted tax laws have indicated that Lunes’ tax rate will increase to 37% in 2013. There is no evidence to suggest any future tax rate changes beyond what is currently known.  

Background:

Gracious Industries is a private limited company with 35 employees and sales revenue of more than $10.5 million during the past year. It has been in business for over 40 years and supplies electronic parts to a number of different businesses, including hardware stores and supermarket. The company has experienced a growth in orders over the last few years for some of its new green product ranges. However, Gracious has recently lost some key accounts because of being unable to produce some of its products at a competitive price. Although the company hired an accountant who was keeping their books for them and producing the financial statements each year, the company thought they needed much more information to run their business efficiently. They felt that they needed to make an investment in an accounting software to take their business to the next level.

Required: You are required to prepare a report to evaluate and recommend an Enterprise Resource Planning (ERP) system for Gracious Industries. The report should include the following components:

 Business requirements o What are the key business processes for Gracious Industries? o What are the major control risks for the business processes of the company?

 Systems requirements o What are some of the possible ERP features and functionalities that the company should consider to achieve their business objectives and minimise the control risks?

 Software selection o Visit the websites of at least three (3) ERP vendors and provide a brief description of each vendor and its products.

 Vendor selection o Compare and contrast the features and functionalities of two ERP software packages offered by the three vendors described in the report. o Which one would be the most suitable vendor and ERP software package for the company and why?

Company X is planning to add another project, which will generate $125,000 annual revenue for the company in the next 6 years, with operating costs of $50,500 per year. To take this new project, the company has to purchase a new equipment with a price of $168,000 and add additional $40,000 in net working capital. The equipment will be depreciated using 7-year MACRS depreciation method (7-year MACRS depreciation rates are showing below). The company thinks the equipment could be sold out by the end of year 6 for $20,000. With a tax rate of 35% and required return of 18%, should the company take this project or not? Why? (Please show both NPV and IRR decisions). 7-year MACRS 1. 14.29% 2. 24.49% 3. 17.49% 4. 12.49% 5. 8.93% 6. 8.92% 7. 8.93% 8. 4.46%

The following information pertains to Alberto Manufacturing Company for year 2017.

Sales revenue                                                         $1,800,000                               

Repairs and maintenance of factory                        $45,000

Direct material purchases                                          500,000                               

Travel & entertainment cost by sales people             32,400

Direct manufacturing labor                                       250,000                                

Depreciation – factory equipment                              24,000

Administrative salaries                                             162,000                                

Depreciation—office equipment                                21,600

Sales commissions                                                 135,000                               

Materials handling                                                    18,000

Sales salaries                                                           81,000                                

Property taxes – factory equipment                          18,000

Indirect manufacturing labor                                      69,000                                 

Depreciation—factory building                                  15,000

Leasing costs – factory equipment                           54,000                                

Gain on disposal of assets                                         8,500

Advertising expense                                                 54,000                                

Sandpaper                                                                  6,000

Utilities                                                                       54,000                                  

Fire insurance – factory equipment                            6,000

Coolants & lubricants - factory equip                         45,000                                    

Interest Expense                                                        4,000

RM Materials Inventory , 1/1/17                               $45,000       

RM Materials Inventory, 12/31/17                             $58,000

Work-in-Process Inventory, 1/1/17                            150,000     

Work-in-Process Inventory, 12/31/17                          77,000

Finished Goods Inventory, 1/1/17                                 88,000      

Finished Goods Inventory, 12/31/17                             112,000

Requirement: In the space provided on the Answer Sheets prepare a Statement of Cost Goods Manufactured and Sold.

YOU ARE A STAFF ACCOUNTANT AUDITING A “PRIVATE COMPANY” AND FIND A MISREPRESENTATION DURING REVENUE RECOGNITION TESTING. WHO IS THE FIRST PERSON YOU SHOULD INFORM ABOUT YOUR FINDING. WHO ARE THE OTHER PARTIES YOU WILL INFORM ABOUT THE MISREPRESENTATION IF THE FIRST PARTY DOES NOTHING ABOUT THE MISREPRESENTATION.