Towing Company manufactures and sells a single product for $40 per unit.
Variable costs are $30 per unit and fixed costs total $168,000. During
2019, the company sold 26,500 units of this product to customers. In
order to improve profitability, the president of Towing Company believes
the following changes should be made in 2020:

1. decrease the selling price of the product by 10%

2. automate a portion of the production process which will reduce
   variable costs by 5% per unit but will add an additional fixed
   cost of $16,310 per year

3. increase advertising by $49,420

Assume these changes are made. 
A) Calculate the number of units that Towing Company must sell in 2020 in order to earn a net income that is 20% greater than the net income earned in 2019.

B) Calculate the number of units that Towing Company must sell in 2020 in order to earn a target profit equal to 12% of sales.

Facts: On April 1, 2020, Foster Company purchased used equipment. The company recorded the cost of the equipment as $66,000. The company expected the equipment to last four years or 8,000 hours, with an estimated salvage value of $6,000 at the end of the useful life. The equipment was used 500 hours during 2020.

1. What amount of depreciation expense will Foster Company record in 2020 using the straight-line method of depreciation? Show your calculations.

2. What amount of depreciation expense will Foster Company record in 2020 using the units-of-activity method of depreciation? Show your calculations.

3. After reviewing Foster Company's records, regulators discover that the company improperly capitalized $10,000 of revenue expenditures in determining the cost of its equipment. Explain how Foster's error affects the company's financial statements if Foster uses straight-line depreciation

1. CC Car Wash specializes in car cleaning services. The services offered by the company, the exact service time, and the resources needed for each of them are described in the table following:

   Service	Description	Processing Time	Resource
   A. Wash	Exterior car washing and drying	10 minutes	1 automated washing machine
   B. Wax	Exterior car waxing	15 minutes	1 automated waxing machine
   C. Wheel Cleaning	Detailed cleaning of all wheels	16 minutes	1 employee
   D. Interior Cleaning	Detailed cleaning inside the car	20 minutes	1 employee

   The company offers the following packages to their customers:

   • Package 1: Includes only car wash (service A).

   • Package 2: Includes car wash and waxing (services A and B).

   • Package 3: Car wash, waxing, and wheel cleaning (services A, B, and C).

   • Package 4: All four services (A, B, C, and D).

   Customers of CC Car Wash visit the station at a constant rate (you can ignore any effects of variability) of 50 customers per day. Of these customers, 30 percent buy Package 1, 30 percent buy Package 2, 15 percent buy Package 3, and 25 percent buy Package 4. The mix does not change over the course of the day. The store operates 10 hours a day.

   a. Define “minute of work” as the flow unit, what is the capacity rate of the employee at the interior cleaning step per day? Round the answer to the nearest whole number. For example, if your answer is 2543.65, round to 2544; if you answer is 2543.12, round to 2543.

   Your answer is .

   b. What is the implied utilization rate for the employee at service C (wheel cleaning)? Round your answer to the nearest whole number and ignore the percentage sign. For example, if your answer is 0.45 or 45%, fill in 45; if your answer is 0.76 or 76%, fill in 76.

   Your answer is .

   c. What is the implied utilization rate for the automated washing machine? Round your answer to the nearest whole number and ignore the percentage sign. For example, if your answer is 0.45 or 45%, fill in 45; if your answer is 0.76 or 76%, fill in 76.

   Your answer is .

   d. What resource has the highest utilization rate? Input 1 for washing machine, input 2 for waxing machine, input 3 for employee at C, input 4 for employee at D.

   Your answer is .

   ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

   For the next summer, CC Car Wash anticipates an increase in the demand to 80 customers per day. Together with this demand increase, there is expected to be a change in the mix of packages demanded: 40 percent of the customers ask for Package 1, 30 percent for Package 2, 20 percent for Package 3, and 10 percent for Package 4. The company will install an additional washing machine to do service A. Answer the following questions based on this new situation.

   e. What is the implied utilization rate for the washing machines? Round your answer to the nearest whole number and ignore the percentage sign. For example, if your answer is 0.45 or 45%, fill in 45; if your answer is 0.76 or 76%, fill in 76.

   Your answer is .

   f. What is the implied utilization rate for the employee at service C (wheel cleaning)? Round your answer to the nearest whole number and ignore the percentage sign. For example, if your answer is 0.45 or 45%, fill in 45; if your answer is 0.76 or 76%, fill in 76.

   Your answer is .

   g. What resource has the highest utilization rate? Input 1 for washing machine, input 2 for waxing machine, input 3 for employee at C, input 4 for employee at D.

   Your answer is .

Jake was the owner of Top Flight Furnishings, Inc., a small corporation. Jake is the CEO, and there are no other officers. Jake used the company’s bank account as his own, used the company’s cars, and regularly took home furnishings from the store. Jake also failed to maintain liability insurance on the business. After several accidents where chair legs bought at Top Flight were falling off and causing injuries to customers, a group of customers sued the company. However, because Jake had been spending all the company’s money and had let its insurance policy lapse, the business was broke, and the customers wanted to hold Jake personally liable. Jake argues that because the business is a corporation, the liability lies with the corporation, not with him. Who is correct, Jake or the customers? Why or why not?

Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,800 units, but its actual level of activity was 6,760 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Data used in budgeting:

Actual results for June:

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for June would be closest to:

Multiple Choice

$9,658 U

$9,658 F

$10,194 U

$10,194 F

The purpose of this assignment is to apply a waiting line model to a business service operation in order to recommend the most efficient use of time and resources. (This assignment has been adapted from Case Problem 2 in Chapter 15 of the textbook.) Use the information in the scenario provided to prepare a managerial report for Office Equipment, Inc. (OEI). Scenario Office Equipment, Inc. (OEI) leases automatic mailing machines to business customers in Fort Wayne, Indiana. The company built its success on a reputation of providing timely maintenance and repair service. Each OEI service contract states that a service technician will arrive at a customer’s business site within an average of 3 hours from the time that the customer notifies OEI of an equipment problem. Currently, OEI has 10 customers with service contracts. One service technician is responsible for handling all service calls. A statistical analysis of historical service records indicates that a customer requests a service call at an average rate of one call per 50 hours of operation. If the service technician is available when a customer calls for service, it takes the technician an average of 1 hour of travel time to reach the customer’s office and an average of 1.5 hours to complete the repair service. However, if the service technician is busy with another customer when a new customer calls for service, the technician completes the current service call and any other waiting service calls before responding to the new service call. In such cases, after the technician is free from all existing service commitments, the technician takes an average of 1 hour of travel time to reach the new customer’s office and an average of 1.5 hours to complete the repair service. The cost of the service technician is $80 per hour. The downtime cost (wait time and service time) for customers is $100 per hour. OEI is planning to expand its business. Within 1 year, OEI projects that it will have 20 customers, and within 2 years, OEI projects that it will have 30 customers. Although OEI is satisfied that one service technician can handle the 10 existing customers, management is concerned about the ability of one technician to meet the average 3-hour service call guarantee when the OEI customer base expands. In a recent planning meeting, the marketing manager made a proposal to add a second service technician when OEI reaches 20 customers and to add a third service technician when OEI reaches 30 customers. Before making a final decision, management would like an analysis of OEI service capabilities. OEI is particularly interested in meeting the average 3-hour waiting time guarantee at the lowest possible total cost. Managerial Report Develop a managerial report (1,000-1,250 words) summarizing your analysis of the OEI service capabilities. Make recommendations regarding the number of technicians to be used when OEI reaches 20 and then 30 customers, and justify your response. Include a discussion of the following issues in your report: 4. OEI is satisfied that one service technician can handle the 10 existing customers. Use a waiting line model to determine the following information: (a) probability that no customers are in the system, (b) average number of customers in the waiting line, (c) average number of customers in the system, (d) average time a customer waits until the service technician arrives, (e) average time a customer waits until the machine is back in operation, (f) probability that a customer will have to wait more than one hour for the service technician to arrive, and (g) the total cost per hour for the service operation. I need help with this part, please show all your work.

Garrison, Inc., which uses a job-costing system, began business on January 1, 20x3 and applies manufacturing overhead on the basis of direct-labor cost. The following information relates to 20x3:

• Budgeted direct labor and manufacturing overhead were anticipated to be $370,000 and $555,000, respectively.

• Job nos. 1, 2, and 3 were begun during the year and had the following charges for direct material and direct labor:

• Job nos. 1 and 2 were completed and sold on account to customers at a profit of 65% of cost. Job no. 3 remained in production.

• Actual manufacturing overhead by year-end totaled $355,000. Garrison adjusts all under- and overapplied overhead to cost of goods sold.

Required:

1. Compute the company's predetermined overhead application rate.

2. Compute Garrison’s ending work-in-process inventory.

3. Determine Garrison’s sales revenue.

4. Was manufacturing overhead under- or overapplied during 20x3? By how much?

5. Present the necessary journal entry to handle under- or overapplied manufacturing overhead at year-end.