Accorsi & Sons specializes in selling upscale home theater systems. As a package deal, Accorsi sells a premium home theater package that includes a projector and a one year subscription to premium cable channels for $2,100. Accorsi sells individual projectors for $2,000 and sells individual one-year subscriptions to premium cable channels for $500.

On March 1, 2018, Accorsi delivers a premium home theater package to Valley Hills Nursing Home, which includes the projector and the one-year subscription to the premium cable channels at a price of $2,100. On April 15, 2018, Accorsi receives $2,100 from Valley Hills Nursing Home.

Required:

1. Identify the performance obligation(s) in the premium home theater package?

2. How much revenue will be allocated to each performance obligation?

3. What journal entry (if any) will Accorsi record on March 1, 2018 to record the revenue from the sale of the premium home theater package?

4. What journal entry (if any) will Accorsi record on March 31, 2018?

5. What journal entry will Accorsi record when they receive payment from Valley Hills Nursing Home?

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,375,000. During 2021, costs of $2,150,000 were incurred, with estimated costs of $4,150,000 yet to be incurred. Billings of $2,680,000 were sent, and cash collected was $2,400,000.

In 2022, costs incurred were $2,680,000 with remaining costs estimated to be $3,825,000. 2022 billings were $2,930,000, and $2,625,000 cash was collected. The project was completed in 2023 after additional costs of $3,950,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required:
1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.
2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2022 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022.

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. Data concerning the pizzeria’s costs appear below: Fixed Cost per Month Cost per Pizza Cost per Delivery Pizza ingredients $ 4.90 Kitchen staff $ 6,010 Utilities $ 660 $ 0.80 Delivery person $ 2.60 Delivery vehicle $ 680 $ 2.00 Equipment depreciation $ 440 Rent $ 1,970 Miscellaneous $ 780 $ 0.10 In November, the pizzeria budgeted for 1,710 pizzas at an average selling price of $20 per pizza and for 190 deliveries. Data concerning the pizzeria’s operations in November appear below: Actual Results Pizzas 1,810 Deliveries 170 Revenue $ 36,800 Pizza ingredients $ 8,110 Kitchen staff $ 5,950 Utilities $ 910 Delivery person $ 442 Delivery vehicle $ 996 Equipment depreciation $ 440 Rent $ 1,970 Miscellaneous $ 820 Required: 1. Compute the revenue and spending variances for the pizzeria for November

Irion County Pipeline (ICP) enjoys monopoly power because it is the only pipeline available to transport crude oil out of Irion County. The demand (average revenue) curve for oil transport services is given by AR = 600 − (Q/2)—this implies a marginal revenue curve of 600 − Q. Here Q represents thousands of barrels of oil shipped each day. The average and marginal cost curves curves for moving oil are given as: AC = 20Q + (200/Q) MC = 40Q (a) Determine the profit-maximizing price for oil pipeline transport, keeping in mind that ICP will maximize its profits when it fully exercises its monopoly power. (b) Calculate the difference in the amount of oil that would be transported if ICP did not exercise any market power versus the amount transported in (a). (c) Calculate the monopoly rent that ICP earns by fully exercising its market power. What share of total profits is the rent? (d) Calculate the deadweight loss associated with ICP exercising its monopoly power. Give a one sentence description of how this deadweight loss might manifest itself on the ground in Irion County.

The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 Investment $ 27,000 Sales revenue $ 14,100 $ 15,700 $ 17,100 $ 13,600 Operating costs 3,250 3,275 4,900 3,500 Depreciation 6,750 6,750 6,750 6,750 Net working capital spending 335 235 295 185 ? a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign.) c.Suppose the appropriate discount rate is 11 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The Village of Seaside Pines prepared the following enterprise fund Trial Balance as of December 31, 2020, the last day of its fiscal year. The enterprise fund was established this year through a transfer from the General Fund.

a. Prepare the reconciliation of operating income to net cash provided by operating activities that would appear at the bottom of the December 31 Statement of Cash Flows. Recall that the beginning balance of all assets and liabilities is zero.

b. . Prepare the Net Position section of the December 31 balance sheet. (Assume that the revenue bonds were issued to acquire capital assets and there are no restricted assets.)

Suppose you are the marketing analyst for Albertsons in Texas. You are requested to estimate the effect on weekly gross revenues of a promotion involving a retail price cut of 10% in Butterball whole turkeys. Currently 10,000 turkeys are sold per week at an average price of $25.00 per turkey. You found out that turkey demand has an own price elasticity of –1.80 Your supervisor is waiting for your analysis.

a. What is the current weekly total revenue (before the price change) from whole turkeys? 3 points

b. What is the projected increased (quantity) in turkeys sold? (after the price cut) Hint: use the definition of own price elasticity! 5 points

c. .What is the projected weekly total revenue (after price change)? 4 points.

d. What would you recommend? 2 points

e. If cross price elasticity between turkey and chicken is + 0.40 and weekly sales of chicken are 30,000 pounds. What would be the impact of the new turkey price on weekly quantity sales of chicken (quantity of chicken pounds sold) (4 points)
Hint; use the concept of cross-price elasticity).

Allocating Joint Costs Using the Constant Gross Margin Method

A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,800. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:

Required:

1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.

2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

(Note: The joint cost allocation does not equal due to rounding.)

McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 25 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $944,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following: Chairs Desks Sales revenue $ 1,156,800 $ 2,769,000 Direct materials 600,000 960,000 Direct labor 140,000 450,000 Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? Chairs Desks b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $810,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.)