High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.

Fresno OY, a Norwegian corporation, wholly owns Ceretony Inc., a subsidiary located and operating in Canada. Given the limited information provided, please (a) determine the appropriate transfer pricing method and (b) calculate the transfer price in the following three scenarios.
Fresno OY manufactures window units at a cost of $150 each and sells them to an unrelated distributor in the United States for $450 each. Fresno sells the same exact window units to Ceretony Inc., who then sells them to customers in Canada.

Ceretony Inc. manufactures t-shirts at a cost of $15 each and sells them to Fresno, who then sells the t-shirts to Norwegian customers at a retail price of $30. Fresno adds no significant changes/value to the shirts before sale. Norwegian clothing retailers normally earn a gross profit of 40 percent on sales price.

Fresno OY manufactures yo-yos at a cost of $20 each and sells them to Ceretony for distribution in Canada (sales price $25). Other Norwegian yo-yo manufacturers sell their products to unrelated customers and normally earn a gross profit equal to 20 percent of the production cost.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.

Answer one of the following questions. 250-word synopsis.

Consider the question of “attractive nuisance” -- under the law in the United States, one who sets up an attractive nuisance is liable for the damage it may cause. An example of an attractive nuisance is an unfenced swimming pool in a neighborhood with many children. If a child sneaks onto your property, gets into the pool, and drowns, you will be held liable. Is this fair?

A corporation is often defined as an artificial being (or artificial person) created by law. Can we, therefore, expect a corporation to act according to the same standards that we would expect a person to follow; specifically, can we apply ethical standards to a corporation?

You rent an off-campus apartment with several friends. Each of you has your own rental agreement with the landlord covering your room and a share of the common areas. One of your friends decides to leave and works out arrangements with the landlord (the only person to whom he or she had a legal obligation), but you do not find out they are gone until you see that their room is empty and that the microwave they brought is gone from the kitchen. Have they done the right thing?

As we have studied international taxation issues and tax treaties, you need to use that information to go a step further. Do a web search for companies who are, or have had, tax problems with a foreign country. Identify two different countries and research the issues the company had/has with the foreign country, what is the tax law or calculation in question, how was it handled, if it has been resolved, what was the resolution. What potential ethical issues do international taxation conflicts identify or spotlight.

For those two countries, locate data on the size of the international economy, including data on international trade, foreign direct investment by U.S. firms, and investment in the United States by foreign firms. Find out whether each of these countries applies a worldwide or territorial approach to international income taxation. What is the top income tax rate for those two countries?

Prepare an analysis of the data for a three-year period using Excel and graph your results. Provide a summary of the information and the inferences you can draw from it. Would you open a company in those countries?

*All information can be found online*

PA8-6 Preparing Operating Budgets for a Merchandising Firm [LO 8-5, 8-3a, f, g, h]

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

• Each T-shirt is expected to sell for $18.
• The purchasing manager buys the T-shirts for $7 each.
• The company needs to have enough T-shirts on hand at the end of each quarter to fill 28 percent of the next quarter’s sales demand.
• Selling and administrative expenses are budgeted at $68,000 per quarter plus 14 percent of total sales revenue.Required:
  1. Determine budgeted sales revenue for each quarter
  
  2. Determine budgeted cost of merchandise purchased for each quarter.
  
  3. Determine budgeted cost of good sold for each quarter.
  
  4. Determine selling and administrative expenses for each quarter.
  
  5. Complete the budgeted income statement for each quarter.
  

Fresno OY, a Norwegian corporation, wholly owns Ceretony Inc., a subsidiary located and operating in Canada. Given the limited information provided, please (a) determine the appropriate transfer pricing method and (b) calculate the transfer price in the following three scenarios.

1. Fresno OY manufactures window units at a cost of $150 each and sells them to an unrelated distributor in the United States for $450 each. Fresno sells the same exact window units to Ceretony Inc., who then sells them to customers in Canada.

2. Ceretony Inc. manufactures t-shirts at a cost of $15 each and sells them to Fresno, who then sells the t-shirts to Norwegian customers at a retail price of $30. Fresno adds no significant changes/value to the shirts before sale. Norwegian clothing retailers normally earn a gross profit of 40 percent on sales price.

3. Fresno OY manufactures yo-yos at a cost of $20 each and sells them to Ceretony for distribution in Canada (sales price $25). Other Norwegian yo-yo manufacturers sell their products to unrelated customers and normally earn a gross profit equal to 20 percent of the production cost.

1- suppose the money supply is $14 trillion, and the fed sells bonds on the open market in sufficient quantities to decrease the money supply by $500 billion. what impact will this have on the interest rate, investment spending, real GDP, and the price level? draw graphs to illustrate your points, and describe them and the points thereon thoroughly.

2- the federal reserve system, also known simply as the fed, is the central bank of the united states. the fed has several important functions such as supplying the economy with currency, holding deposits of banks, lending money to banks, regulating the money supply, and supervising the banking system. explain how the federal reserve and the banking system creates money (i.e., increases the supply of money). is this an inherently inflationary practice? explain the factors that affect the demand for money.

3- suppose the fed decreases the discount rate and buys bonds sufficient to increase the money supply by $200 billion. what impact will this have on the interest rate, investment spending, real GDP, and the price level? would that be a good idea in today's economic environment? why or why not? draw graphs to illustrate your points, and describe them and the points thereon thoroughly.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Beginning inventory 0 Units produced 46,000 Units sold 41,000 Selling price per unit $ 79 Selling and administrative expenses: Variable per unit $ 3 Fixed (per month) $ 562,000 Manufacturing costs: Direct materials cost per unit $ 14 Direct labor cost per unit $ 7 Variable manufacturing overhead cost per unit $ 2 Fixed manufacturing overhead cost (per month) $ 874,000 Management is anxious to assess the profitability of the new camp cot during the month of May.

Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.