Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

2. Assuming that the July 1 work in process inventory includes $24,000 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and July. If required, round your answers to the nearest cent.

Prepare a schedule showing the amortization of a $12,000 loan to be repaid in 10 end-of-year installments that include interest at a rate of 6%. Jared and Courtney Jill own a parcel of fertile farm land which a local farmer has offered to rent for a period of 10 years. He is willing to make a payment of $20,000 today or pay an ordinary annuity of $3,400 at the end of each of the next 10 years. Which payment method should Jared and Courtney accept if the appropriate rate of return is 9%? A group of five faculty members at a Midwest University have recently purchased several acres near the school. They plan to gravel it and rent the parking spaces to commuting students. The cost of the project is $100,000. They paid $25,000 cash and are financing the balance with a note at 7.0% annual interest to be paid off in five equal annual payments with the first payment to be made at the end of the first year. The rental receipts are to be placed in an account for future improvements and cannot be used to repay the loan. If the annual payments are shared equally, how much would each member need to contribute annually to pay off the loan?

Assume that output is given by Q(L,K)=50 K^0.5 L^0.5 with price of labour L = w and price of capital K = r

1.If capital in the short run is fixed at K what is the short-run total cost?

2.Write the values for the derivatives of the Total cost with respect to w and r. Does Shephard’s lemma hold in this case?

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified the following major activities:

A group of diners who ask to sit at the same table is counted as a party. Some costs, such as the costs of cleaning linen, are the same whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the number of diners served.

Data concerning these activities are shown below:

Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month was $290,100 and that 30,000 diners had been served. Therefore, the average cost per diner was $9.67 ($290,100 ÷ 30,000 diners = $9.67 per diner).

Required:

1. Compute the activity rates for each of the three activities.

2. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners?

a. A party of four diners who order three drinks in total.

b. A party of two diners who do not order any drinks.

c. A lone diner who orders two drinks.

3. Convert the total costs you computed in part (2) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties?

a. A party of four diners who order three drinks in total.

b. A party of two diners who do not order any drinks.

c. A lone diner who orders two drinks.

1.   Williams Furniture Company has the following data:

        Williams Furniture

         Balance Sheet

      December 31, 201x

Assets:

Cash                                                $50,000

Marketable Securities            80,000

Accounts Receivable        3,000,000

Inventory                                1,000,000

Gross plant &

                  Equipment           6,000,000

                  Less Accum

                  Depreciation       2,000,000

Total Assets                            8,130,000

Liabilities And Equity

Accounts Payable               $2,200,000

Accrued Expense                        150,000

Notes Payable (current)        400,000

Bonds Payable                          2,500,000

Common Stock (1.7

Million shares, par $1)     1,700,000

Retained Earnings                  1,180,000

Total Liabilities &

    Equity                                       8,130,000

          Williams Furniture

           Income Statement

           Year ended Dec 31, 201x

Sales (credit)                                            $7,000,000

Fixed costs*                                             2,100,000

Variable costs (.60)                              4,200,000

Earnings before interest and

                  Taxes                                                700,000

Less interest                                                   250,000

Earnings before taxes                               450,000

Less Taxes (35%)                                          157,500

Earnings after taxes                                   292,500

Dividends (40% payout)                         117,000

Increased retained earnings                 175,500

*Fixed costs include a) lease expense of $200,000 and 9b) depreciation of $500,000.

Williams Furniture has a $65,000 per year sinking fund obligation associated with its bond issues. The sinking fund represents an annual repayment of the principal amount of the bond. It is not tax deductible.

a. Calculate the following and compare to industry average. Be thorough and specific with weak points, strong points and your recommendation on how to improve the company’s performance.

                                                      Williams                                  Industry

Profit Margin                                                                              5.75%

Return on Assets                                                                       6.90%

Return on Equity                                                                      9.20%

Receivables Turnover                                                             4.35x

Inventory Turnover                                                                 6.50x

Fixed Asset Turnover                                                              1.85x    

Current Ratio                                                                              1.45x

Quick Ratio                                                                                  1.10x

Interest Coverage                                                                     5.35x

Debt to total assets                                                                 25.05%

b. Calculate break even in sales dollars. Calculate DOL .

2. Litten Oil and Gas Company is a large company with common stock listed on the New York Stock Exchange and bonds traded over the counter.

The vice president of finance is planning to sell $75 million of bonds this year. Present market yields are 12.1%. Litten has $90 million of 7.5% non callable preferred stock outstanding and has no intentions of selling any preferred stock at any time in the future. The preferred stock is currently priced at $80 per share and its dividend per share is $7.80.

The company has had volatile earnings but its dividend per share had had 8% growth and this will continue. The expected dividend is $1.90 per share and common stock is selling for $40 per share. The company’s flotation costs are $2.50 per share preferred stock and $2.20 per share for common stock.

Litten keeps its debt at 50% of assets and its equity at 50%. Litten sees no need to sell common or preferred stock in the near future as is has generated enough internal funds for investment needs. The tax rate for the company is 40%

Calculated the following cost of capital:

a. bond

b. preferred stock

c. common stock in retained earnings

d. new common stock

e. weighted average cost of capital.

3. Smith Corporation is considering two new investments. Project A and Project B are listed below

Project A will cost $20,000 and has the following cash flow

Yr 1 5,000

Yr 2 6,000

Yr 3 7,000

Yr 4 10,000

Project B will also cost $20,000 has the following cash flow

Yr 1 16000

Yr 2    5000

Yr 3    4000

Calculate specific payback for each

Calculate NPV of each. Use the weighted cost of capital of 8%.

1. Pennyback Corporation's relevant range of activity is 4,000 units to 8,000 units. When it produces and sells 6,000 units, its average costs per unit are as follows:

Required

For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units?

For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units?

If the selling price is $20.20 per unit, what is the contribution margin per unit sold?

If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred?

If 7,000 units are produced, what is the total amount of indirect manufacturing cost incurred?

fWhat incremental manufacturing cost will the company incur if it increases production from 6,000 to 6,001 units?

Flexible Budget for Selling and Administrative Expenses

Cloud Productivity Inc. uses flexible budgets that are based on the following data:

Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.)