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.

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?

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.

Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Zeus Investments Inc., which has a fiscal year ending on December 31:

Required:

1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar.

2. Prepare the investment-related current asset balance sheet presentation for Zeus Investments Inc. on December 31, Year 2.

3. How are unrealized gains or losses on trading investments presented in the financial statements of Zeus Investments Inc.?

Unrealized gains or losses are reported in the , often as .

Cissi Jean Oliver opened Cleaning Angels, Inc. on March 31, 2019. During April, the following transactions were completed:

Adjusting Data:

A. Services performed for customers through April 30, 2019, but unbilled and uncollected were $3,800.
B. Cleaning Angels used the allowance method to estimate bad debts. Cleaning Angels estimates that 3% of its month-end receivables will not be collected.
C. Record 1 month of depreciation for the floor equipment. Use the straight-line method, an estimated life of 4 years, and $500 salvage value.
D. Record 1 month of insurance expense.
E. An inventory count shows $500 of supplies on hand at April 30.
F. One week of services were performed for the customer who paid in advance on April 15.
G. Accrue for wages owed through April 30, 2019.
H. Accrue for interest expense for 1 month.
I. Cissi Jean estimates a 20% income tax rate. (Hint: Prepare an income statement up to “income before taxes” to help with the income tax calculation.)

Instructions:

1. Journalize the April transactions.
2. Post to ledger accounts.
3. Prepare a Trial Balance as of April 30, 2019.
4. Journalize the adjustments. (Round all amounts to whole dollars.)
5. Post adjusting entries to the ledger accounts.
6. Prepare an adjusted trial balance.
7. Journalize the closing entries.

Possible account titles to use, please:

Describe why the adjusting process is necessary and give an example of one of the following 4 types of adjusting entries:

1) Prepaid expense

2) Unearned revenue

3) Accrued revenue

4) Accrued expense

Make sure to include which type of adjusting entry your are providing an example.

Ashley Somers owns San Diego Art Company, a firm providing designs for advertisers, market analysts, and others. On July 1, the business's general ledger showed the following normal account balances:

The following transactions occurred during the month of July:

Required:

a. Set up accounts for the general ledger accounts with July 1 balances and enter the beginning balances. Also provide the following accounts: Equipment; Dividends; Service Fees Earned; Rent Expense; Salaries Expense; Delivery Expense; Advertising Expense; Utilities Expense; and Supplies Expense. Prepare journal entries and record the listed transactions in the appropriate T-accounts.

The pre-1914 value of the British pound to the U.S. dollar was $4.87. (To purchase one pound, one had to pay $4.87.) Following World War I, if the dollar had traded for the pound on an open currency market, the value would have been about $3.50. However, the British government insisted that the pound trade at its pre-war value to the U.S. dollar. Under such an arrangement:

1. Would Great Britain run annual trade surpluses or trade deficits with the USA? Why?

2. Would British goods have been more attractive or less attractive to U.S. consumers? Why?

3. Would there have been an influx of British tourists to the USA, or would there have been an increase in American tourists to Britain? Why?