In the Ponderosa Development Corp. (PDC) example, if the land for each house costs $108,100 and lumber, supplies, and other materials cost another $41,200 per house. The company leases office and manufacturing space for $3,100 per month and their monthly salaries total to $65,250. Assume that total labor costs are approximately $26,800 per house. The cost of supplies, utilities, and leased equipment is $6,650 per month. The one salesperson of PDC is paid a commission of $3,900 on the sale of each house. The selling price of each house is $195,000.
(1) Identify all costs and revenue for each house.

(2) Write the monthly cost function c (x), revenue function r (x), and profit function p (x).

(3) What is the breakeven point (BEP) for monthly sales of the houses based on the cost, revenue and profit functions specified in (2)?

(4) What is the monthly profit if 13 houses per month are built and sold?

(5) What is the monthly profit if the variable cost per house = $160,500 and PDC built and sold 10 houses per month?

(4) What is the monthly profit if 13 houses per month are built and sold?

The following items were included as cash on the statement of financial position Lawton Company.

How should each of the items have been reported? Write your answer on the space after each item.

The lists of possible answers are as follows: Cash, Notes Receivable, Accounts Receivable, Advances to Employees, Office Supplies and Other Noncurrent Asset

(Central Limit Theorem) An insurance company serves 10 large customers. The insurance claim placed by each customer in a year is uniformly distributed between 0 and 100. Assume that the insurance claims from different customers are independent. Use the central limit theorem to approximately compute the probability that the total insurance claim placed by all customers in a year exceeds 625. Let Φ(x) denote the cumulative distribution function of a standard normal distribution, i.e. a normal distribution with mean 0 and variance 1. Express your answer in terms of Φ, and then use software of your choice to evaluate it. (Hint: Compute the mean and standard deviation of the total insurance claim placed in a year. By the central limit theorem, the total insurance claim is approximately normally distributed. Why?)

Journalize the entries for the following transactions. Refer to the Chart of Accounts for exact wording of account titles. (Note: the company uses a clearinghouse to take care of all bank as well as non-bank credit cards used by its customers.)

The Ajax Manufacturing Company is selling in a purely competitive market. Its output is 100 units, which sell at $4 each. At this level of output, total cost is $600, total fixed cost is $100, and marginal cost is $4. The firm should

A purely competitive seller should produce (rather than shut down) in the short run

The restaurant owner Lobster Jack wants to find out what the peak demand periods are, during the hours of operation, in order to be better prepared to serve his customers. He thinks that, on average, 60% of the daily customers come between 6:00pm and 8:59pm (equally distributed in that time) and the remaining 40% of customers come at other times during the operating hours (again equally distributed). He wants to verify if that is true or not, so he asked his staff to write down during one week the number of customers that come into the restaurant at a given hour each day. His staff gave him the following data:

Help the manager figure out if his instincts are correct or not. Use a Chi-Squared test to see if the observed distribution is similar to the expected. Use the average demand for a given time as your observed value.

The owner now wants you to help him analyze his sales data. The restaurant is famous for its Lobo lobster roll. You were given some information based on which you deduced that the demand for the lobster roll was normally distributed with a mean of 220 and standard deviation of 50. You also know that the lobster supplier can provide lobster at a rate that mimics a uniform distribution between 170 and 300. One Lobster is used per roll and the lobsters need to be fresh (i.e. the restaurant can only use the lobsters that are delivered that day).

You decide to run 200 simulations of 1000 days each.

Calculate the expected sales of Lobster roll per day based on your simulation results. Use the expected sales from each of your 200 simulations to create a confidence interval for the average expected sales. What is the 95% confidence interval, L (Your confidence interval is mean +/- L), for this estimate?

On January 1st, 2000, Audrey Corporation issued $100,000 of 10% coupon rate bonds to yield an effective rate of 12%. Interest is paid semiannually on June 30th and December 31st. The bonds mature in 5 years ie on January 1, 2005. Audrey incurred $10,000 in issuance costs and has a September 30th fiscal year end.

1. Prepare the Journal entry that Audrey corporation would make on September 30th, 2001.

2. prepare Audrey's statement of cash flows for the fiscal year ended September 30th, 2001.

3. assume that on September 30, 2001, Audrey calls the bonds for 97. Prepare the journal entry to record the bond call.

4. prepare Audrey's statement of Cash flows for the fiscal year ended September 30, 2001 assuming the call took place.

Rapp Company is considering switching to an activity-based costing (ABC) system. The company produces and sells two products: LoEnd and HiEnd. The company consists of two departments: Production (where the products are made) and Marketing (which engages in selling and admin activity). The company's traditional costing system computes unit product costs as dictated by GAAP; direct labor hours (DLHs) are used as the allocation base for manufacturing overhead cost (the overhead rate is rounded to the nearest cent). The ABC system will include in unit costs all costs easily associated with units. In addition, in the ABC system, there are four major indirect activities: Machine Setups, Special Processing, General Factory, and Customer Relation (10% of Customer Relation cost relates to manufacturing and is incurred in the Production Department; the rest of the Customer Relation cost is incurred in the Marketing Department). In the ABC system, Customer Relation costs will be associated with customers; the rest of the costs will be associated with units of the two products Price Dm DLH Units Hourly Wage-DL Shipping Cost Hi end 200 72 2 5000 $20 $3 Low end 150 44 1 6000 $20 $1 OH Cost Low High total Machine Setup #of setups 360,000 40 120 160 Special Processing MH 300,000 8000 12000 20000 General Factory(Excluding customer relations) DLH's 144000 ? Customer Relations # of customers 200,000 5 What is the difference between the HiEnd product's unit costs computed by the traditional and ABC systems?

1. On October 1, the accounts receivable account balance was $208,400. During October, $298,500 was collected from customers on account. Assuming the October 31 balance was $125,300, determine the fees billed to customers on account during October.

2. On November 30, the company accountant discovers that $550 of a transaction recording the purchase of office supplies was really office equipment. Prepare the journal entry to correct this situation.

3. State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries when recording business transactions during the month.  Also, indicate the normal balance of each account.

4. On December 1, JumpStart Company provides $2,800 in services to clients.

(a) Journalize this event as if the clients had paid cash at the time the services were rendered.

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(b)(1) Journalize this event as if the clients had been rendered the services on account.

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(b)(2) Assume that the clients paid $1,200 of the amount on account on December 30. Journalize this transaction.

5. Prepare a journal entry for the purchase of a truck on April 4 for $85,700, paying $15,000 cash and the remainder on account. Omit explanation.

6. On August 30, JumpStart incurred the following expenses:

         Payment to the landlord for August rent, $2,300

         Payment to the Gas & Electric Company for August’s bill, $525

         Payment of employee wages for the last half of August, $1,750

         Payment of shopping center’s parking lot cleaning fee, $275

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Journalize these payments as one journal entry.

7. On December 1, Nikle Company made a cash payment of $200,000 on a note payable that was generated in the purchase of a building and land. Provide the journal entry for this transaction.

8. On January 31, the cash account balance was $96,750.  During January, cash receipts totaled $305,000 and cash payments totaled $375,880.  Determine the cash balance on January 1.

The Alpha Company manufactures a single product. Its operations began on January 2, 2019. Its production capacity is 150,000 units per year. It is currently preparing to do its financial statements for the year ending December 31, 2019. The following information is related to the production and sale of its product:

The Alpha Company produced and sold 130,000 units in 2019. In order to reward its managers, Alpha has established a bonus system that is based on bottom line.

Work to do:

1) Write the income statement using the full cost method and the variable cost method.

2) Suppose the Alpha Company produces 150,000 units instead in 2019 and its sales remain at 130,000 units. What effect will this change have on the bottom line of both methods? Demonstrate your calculations.

3) Reconcile the two results obtained in question 2.

4) Managers have the choice of calculating net profit using one or the other of two methods, either the full cost method or the variable cost method. If we got used to the data in 2) what method should managers choose knowing that their bonus depends on the deferred net profit? Why ?