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 | 39,000 | |
| Units sold | 34,000 | |
| Selling price per unit | $ | 82 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 557,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 15 |
| Direct labor cost per unit | $ | 6 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 741,000 |
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.
In: Accounting
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 | 41,000 | |
| Units sold | 36,000 | |
| Selling price per unit | $ | 80 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 568,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 14 |
| Direct labor cost per unit | $ | 7 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 738,000 |
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.
In: Accounting
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 | 38,000 | |
| Units sold | 33,000 | |
| Selling price per unit | $ | 83 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 556,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 18 |
| Direct labor cost per unit | $ | 6 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 722,000 |
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.
In: Accounting
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 | 41,000 | |
| Units sold | 36,000 | |
| Selling price per unit | $ | 77 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 562,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 17 |
| Direct labor cost per unit | $ | 8 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 779,000 |
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.
In: Accounting
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 | 41,000 | |
| Units sold | 36,000 | |
| Selling price per unit | $ | 77 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 567,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 15 |
| Direct labor cost per unit | $ | 6 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 656,000 |
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.
In: Accounting
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 | 42,000 | |
| Units sold | 37,000 | |
| Selling price per unit | $ | 80 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 561,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 16 |
| Direct labor cost per unit | $ | 9 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 798,000 |
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.
In: Accounting
The income statement and additional data of Bayleaf Pty Ltd are as follows:
Income statement for the year ended 31 December 2016
Revenue:
Service Revenue R225 000
Dividend Revenue R6 300 (231 300)
Expenses:
Cost of goods sold R100 000
Salary Expense R52 000
Depreciation Expense R23 000
Advertising Expense R2 300
Interest Expense R2 400
Income tax expense R5 000 (R184 700)
Net income R46 600
Additional Data:
a) Acquisition of PPE was R170 000. Of this amount , R140 000 was paid in cash and R30 000 by signing a note payable
b) Proceeds from the sale of land totalled R48 000
c) Proceeds from issuance of shares totalled R31 000
d) Payment of long-term note payable was R16 000
e) Payment of dividends was R10 000
From the Balance Sheet:
Balance sheet as at 31 December
Currents Assets 2016 2015
Cash R32 000 R13 300
Accounts Receivable R41 000 R57 000
Inventory R48 000 R87 000
Prepaid expenses R9 100 R8 200
Current Liabilities
Accounts Payable R32 000 R17 000
Accrued liabilities R14 000 R43 000
Required:
1. Prepare Bayleaf 's statement of cash flow for year ended 31 December 2016, using indirect Method.
2. Evaluate Bayleaf's cash flow for the year ended 31 December 2016, including its free cash flow and cash realization ratio. In your evaluation, review all three categories of cash flows and give the reason for your evaluation.
3. When analyzing the cash flow patterns of the Company, what other three (3) important indicators of the health of the company 's cash flows do you look at?
In: Accounting
Juett Company produces a single product. The cost of producing and selling a si product at the company's normal activity level of 70,000 units per month is as
producing and selling a single unit of this
Direct materials …………………………………………………………….. $29.60
Direct labor…………………………………………………………………… $5.80
Variable manufacturing overhead………………………………….. $2.50
Fixed manufacturing overhead………………………………………. $17.20
Variable selling & administrative expense……………………… $1.80
Fixed selling & administrative expense………………………….. $6.70
The normal selling price of the product is $72.90 per unit. An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.10 less per unit on this order than on normal sales. Direct labor is a variable cost in this company.
Required: (SHOW YOUR WORK OR NO POINTS WILL BE ALLOWED)
1-Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $66.10 per unit. By how much would this special order increase (decrease) the company's net operating income for the month?
2-Refer back to the original data Suppose that duett Company is already operating at full capacity when the special order is received from the overseas customer. What would be the opportunity cost on each unit delivered to the overseas customer instead of selling it to the normal regular customers?
3-Refer back to the original data. Suppose that Juett Company does not have enough idle capacity to produce all of the units for the overseas customer, and accepting the special order would require shifting 1,400 units from the normal regular customers to the overseas customer. What would be the minimum acceptable price per unit on the special order?
4-Discuss briefiu two of the qualitative factors Juett Company should consider in making the decision to accept or reject the special order from the overseas customer.
In: Accounting
Shoes, not the most exciting product category, right? Try telling that to Tony Hsieh (pronounced Shay), CEO of Zappos.com. In less than a decade, Hsieh has built Zappos into a billion dollar business through delivering a vast selection of shoes, clothing, handbags and other products (over three million items available) and unsurpassed customer service. The company was acquired by Amazon in 2009 and operates as an independent entity. Mr. Hsieh is a self-professed scholar of “happiness” and, as part of his vision to create the world’s most customer-centric online company, aims to deliver “Happiness in a Box.” This three-part formula is to: 1) meet expectations by delivering the right items, 2) meet desires through free shipping, free return shipping when necessary and a 365 day return policy and 3) often delight customers via surprise upgrades to overnight shipping (four to five day shipping is standard).
The Zappos customer experience (obsession) is all about
developing relationships, emotional connections and high-touch
“WOW” customer service. The Zappos program for customer service is
summarized below:
> Make customer service a priority for the whole company, not
just a department
> Make WOW a verb part of your company’s everyday
vocabulary
> Empower and trust your customer service reps
> Don’t measure call times, upsell or use scripts
> Don’t hide your 1-800 number
> View each call as an investment in building a brand
> Celebrate (company-wide) great service
> Find people passionate about customer service
> Give great service to everyone: customers, employees and
vendors.
To Discuss: (Answer 2 of the 5 questions below and reply to 2 or more comments by classmates)
1. What prevents other companies from adopting customer service
best practices (review the
nine guidelines)?
2. How can the Zappos philosophy of creating exceptional value be
adopted by your company?
In: Operations Management
Part A
Each of the following accounts from The Furst Company has a normal balance as of December 31, 2016, the end of Furst’s first year of operations.
Cash $100 Common stock $500
Accounts receivable 300 Dividends 100
Inventory 250 Sales revenue 800
Property, plant, and equip 750 Selling expenses 300
Accounts payable 150 Administrative expenses 50
Notes payable 400
Directions:
Prepare a trial balance for Furst Company as of December 31, 2016.
Part B
Lampe Distributors was formed to serve as a distributor of fine furnishings imported from overseas manufacturers. Assume the following trial balance was prepared as of December 31, 2016, at the end of Lampe’s first year of operations.
LAMPE DISTRIBUTORS
Unadjusted Trial Balance
December 31, 2016
Debit Credit
Cash $23,000
Accounts receivable 4,500
Buildings 72,000
Equipment 20,500
Inventory 38,000
Accounts payable $5,500
Notes payable 47,750
Common stock 42,000
Dividends 6,000
Sales revenue 280,250
Wage expense 100,000
Selling expenses 31,000
Rent expense 23,000
Administrative expenses 15,750
Tax expense 23,000
Totals $356,750 $375,500
It is apparent that there is an error somewhere in the company’s accounts since the sum of the debit
account balances ($356,750) does not equal the sum of the credit account balances ($375,500). After
further research, we learn the following:
1. A cash purchase of $20,000 in inventory, occurring near year-end, was not recorded.
2. By mistake, $5,000 that should have been recorded as Accounts Payable was recorded as Notes
Payable.
3. A credit of $26,000 was accidentally recorded in the Wage Expense account rather than in Sales
Revenue.
4. A sale on account of $18,750 was correctly recorded as Sales Revenue, but the other side of the
entry was mistakenly never recorded.
Directions:
a. Which of the four errors, if any, is the reason that the trial balance is not in balance?
b. Which of the errors, if any, must be corrected?
c. Prepare a corrected trial balance.
In: Accounting