Below is an Unadjusted Trial Balance of Jasa Tading Bhd at 31 December 2019.
|
Dr. (RM) |
Cr. (RM) |
|
|
Account receivables |
109,658 |
|
|
Buildings |
1,372,680 |
|
|
Cash |
1,314,264 |
|
|
Cost of goods sold |
856,152 |
|
|
Equipment |
504,000 |
|
|
Patent |
60,276 |
|
|
Income tax expense |
60,340 |
|
|
Inventory |
551,950 |
|
|
Land |
766,800 |
|
|
Maintenance and repair expenses |
11,953 |
|
|
Office expense |
14,086 |
|
|
Prepaid insurance |
48,000 |
|
|
Property tax expense |
1,680 |
|
|
Salaries and wages expenses |
25,334 |
|
|
Sales returns and allowance |
1,176 |
|
|
Accounts payable |
36,936 |
|
|
Accumulated depreciation – buildings |
137,268 |
|
|
Accumulated depreciation - equipment |
252,000 |
|
|
Deferred tax liability |
21,600 |
|
|
Gain on revaluation of properties |
29,640 |
|
|
Gain on sale of land |
109,560 |
|
|
Gain on translation of foreign operations |
5,880 |
|
|
Notes payable |
194,400 |
|
|
Rent revenue |
57,600 |
|
|
Retained earnings |
912,720 |
|
|
Revaluation reserve |
560,640 |
|
|
Translation of foreign operations reserve |
263,160 |
|
|
Sales revenue |
2,238,180 |
|
|
Share capital |
878,765 |
|
|
5,698,349 |
5,698,349 |
Additional information:
In: Accounting
Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division’s return on investment (ROI). Assume the following information relative to the two divisions:
| Case | |||||||||
| 1 | 2 | 3 | 4 | ||||||
| Alpha Division: | |||||||||
| Capacity in units | 51,000 | 286,000 | 109,000 | 192,000 | |||||
| Number of units now being sold
to outside customers |
51,000 | 286,000 | 85,000 | 192,000 | |||||
| Selling price per unit to
outside customers |
$ | 100 | $ | 42 | $ | 66 | $ | 48 | |
| Variable costs per unit | $ | 63 | $ | 20 | $ | 43 | $ | 32 | |
| Fixed costs per unit (based
on capacity) |
$ | 24 | $ | 8 | $ | 23 | $ | 9 | |
| Beta Division: | |||||||||
| Number of units needed annually | 9,400 | 70,000 | 18,000 | 64,000 | |||||
| Purchase price now being paid
to an outside supplier |
$ | 92 | $ | 41 | $ | 66 | * | — | |
*Before any purchase discount.
Managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.
Required:
1. Refer to case 1 shown above. Alpha Division can avoid $5 per unit in commissions on any sales to Beta Division.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?
2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $4 per unit in shipping costs on any sales to Beta Division.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be?
d. Assume Alpha Division offers to sell 70,000 units to Beta Division for $40 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole?
3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 5% price discount from the outside supplier.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?
d. Assume Beta Division offers to purchase 18,000 units from Alpha Division at $57.70 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged?
4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 64,000 units of a different product from the one Alpha Division is producing now. The new product would require $27 per unit in variable costs and would require that Alpha Division cut back production of its present product by 32,000 units annually. What is the lowest acceptable transfer price from Alpha Division’s perspective?
In: Accounting
Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division’s return on investment (ROI). Assume the following information relative to the two divisions:
| Case | |||||||||
| 1 | 2 | 3 | 4 | ||||||
| Alpha Division: | |||||||||
| Capacity in units | 57,000 | 303,000 | 102,000 | 203,000 | |||||
| Number of units now being sold to outside customers |
57,000 | 303,000 | 77,000 | 203,000 | |||||
| Selling price per unit to outside customers |
$ | 98 | $ | 43 | $ | 70 | $ | 45 | |
| Variable costs per unit | $ | 63 | $ | 20 | $ | 47 | $ | 32 | |
| Fixed costs per unit (based on capacity) |
$ | 24 | $ | 10 | $ | 26 | $ | 6 | |
| Beta Division: | |||||||||
| Number of units needed annually | 9,700 | 65,000 | 21,000 | 58,000 | |||||
| Purchase price now being paid to an outside supplier |
$ | 91 | $ | 40 | $ | 70 | * | — | |
*Before any purchase discount.
Managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.
Required:
1. Refer to case 1 shown above. Alpha Division can avoid $4 per unit in commissions on any sales to Beta Division.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?
2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $6 per unit in shipping costs on any sales to Beta Division.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be?
d. Assume Alpha Division offers to sell 65,000 units to Beta Division for $39 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole?
3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 5% price discount from the outside supplier.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?
d. Assume Beta Division offers to purchase 21,000 units from Alpha Division at $61.50 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged?
4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 58,000 units of a different product from the one Alpha Division is producing now. The new product would require $27 per unit in variable costs and would require that Alpha Division cut back production of its present product by 29,000 units annually. What is the lowest acceptable transfer price from Alpha Division’s perspective?
In: Finance
Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division’s return on investment (ROI). Assume the following information relative to the two divisions:
| Case | |||||||||
| 1 | 2 | 3 | 4 | ||||||
| Alpha Division: | |||||||||
| Capacity in units | 56,000 | 318,000 | 102,000 | 208,000 | |||||
| Number of units now being sold to outside customers |
56,000 | 318,000 | 79,000 | 208,000 | |||||
| Selling price per unit to outside customers |
$ | 96 | $ | 41 | $ | 64 | $ | 46 | |
| Variable costs per unit | $ | 59 | $ | 20 | $ | 40 | $ | 32 | |
| Fixed costs per unit (based on capacity) |
$ | 23 | $ | 10 | $ | 21 | $ | 8 | |
| Beta Division: | |||||||||
| Number of units needed annually | 10,000 | 68,000 | 18,000 | 56,000 | |||||
| Purchase price now being paid to an outside supplier |
$ | 87 | $ | 40 | $ | 64 | * | — | |
*Before any purchase discount.
Managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.
Required:
1. Refer to case 1 shown above. Alpha Division can avoid $6 per unit in commissions on any sales to Beta Division.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?
2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $5 per unit in shipping costs on any sales to Beta Division.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be?
d. Assume Alpha Division offers to sell 68,000 units to Beta Division for $39 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole?
3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 6% price discount from the outside supplier.
a. What is the lowest acceptable transfer price from the perspective of the Alpha Division?
b. What is the highest acceptable transfer price from the perspective of the Beta Division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?
d. Assume Beta Division offers to purchase 18,000 units from Alpha Division at $55.16 per unit. If Alpha Division accepts this price, would you expect its ROI to increase, decrease, or remain unchanged?
4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 56,000 units of a different product from the one Alpha Division is producing now. The new product would require $27 per unit in variable costs and would require that Alpha Division cut back production of its present product by 28,000 units annually. What is the lowest acceptable transfer price from Alpha Division’s perspective?
In: Accounting
The marks on a statistics midterm test are normally distributed with a mean of 75 and a standard deviation of 6. What is the probability that a sample of 50 exams has a sample mean between 74 and 75?
a. 0.3810
b. 0.1210
c. 0.4641
d. 0.3790
e. 0.1190
In: Statistics and Probability
An unknown radioactive element decays into non-radioactive substances. In 340 days the radioactivity of a sample decreases by 37 percent. (a) What is the half-life of the element? (b) How long will it take for a sample of 100 mg to decay to 74 mg? time needed: (days)
In: Advanced Math
In this problem, assume that the distribution of differences is
approximately normal. Note: For degrees of freedom
d.f. not in the Student's t table, use
the closest d.f. that is smaller. In
some situations, this choice of d.f. may increase
the P-value by a small amount and therefore produce a
slightly more "conservative" answer.
Do professional golfers play better in their last round? Let row
B represent the score in the fourth (and final) round, and
let row A represent the score in the first round of a
professional golf tournament. A random sample of finalists in the
British Open gave the following data for their first and last
rounds in the tournament.
| B: Last | 74 | 66 | 75 | 71 | 71 | 72 | 68 | 68 | 74 |
| A: First | 69 | 67 | 62 | 71 | 65 | 71 | 71 | 71 | 71 |
Do the data indicate that the population mean score on the last
round is higher than that on the first? Use a 5% level of
significance. (Let d = B − A.)
What is the value of the sample test statistic? (Round your answer
to three decimal places.)
In this problem, assume that the distribution of differences is
approximately normal. Note: For degrees of freedom
d.f. not in the Student's t table, use
the closest d.f. that is smaller. In
some situations, this choice of d.f. may increase
the P-value by a small amount and therefore produce a
slightly more "conservative" answer.
The artifact frequency for an excavation of a kiva in Bandelier
National Monument gave the following information.
| Stratum | Flaked Stone Tools | Nonflaked Stone Tools |
| 1 | 10 | 4 |
| 2 | 9 | 3 |
| 3 | 8 | 3 |
| 4 | 1 | 3 |
| 5 | 4 | 7 |
| 6 | 38 | 32 |
| 7 | 51 | 30 |
| 8 | 25 | 12 |
Does this information indicate that there tend to be more flaked stone tools than nonflaked stone tools at this excavation site? Use a 5% level of significance. (Let d = flaked − nonflaked.)
What is the value of the sample test statistic?
In: Statistics and Probability
Question 2
Part A
Luxury Living Concepts Corp. (LLC) is a publicly accountable
enterprise that builds large complexes, including schools, office
towers, apartment buildings and shopping centres, on a contract
basis. Additional information with respect to the company is as
follows:
- LLC’s year end is December 31.
- The company uses the cost-to-cost approach to determine the stage of completion of its construction projects.
- The enterprise rounds the percentage of completion to two decimal places (for example, 13.54%).
- A discount rate of 4% adequately reflects the underlying
credit risk of LLC’s customer for this transaction.
In 20X1, LLC entered into a $120 million contract to construct a
shopping mall over a three-year period. Construction of the project
was completed in late 20X3. Total costs were originally estimated
to be $98 million. LLC’s progress on the contract and other
pertinent information is detailed below:
| in 000's | 20X1 | 20x2* | 20x3** | Total |
| Costs incurred during year | 23,000 | 55,000 | 43,000 | 121,000 |
| Cumulative costs incurred to date | 23,000 | 78,000 | 121,000 | |
| Estimated costs to complete | 72,000 | 46,000 | 0 | |
| Progress Billings during the year | 29,000 | 51,000 | 40,000 | 120,000 |
| Collections during the year | 22,000 | 50,000 | 48,000 | 120,000 |
* The revised cost data was not known in 20X1.
** The revised cost data was not known in 20X2.
Required:
a) Prepare the required journal entries to record transactions
relating to the contracts for the 20X1, 20X2 and 20X3 fiscal
periods. Show all supporting calculations for each journal entry.
The calculations are to be referenced or included in the
description of the journal entry.
b) Prepare the excerpts of LLC’s statements of financial position
as at December 31, 20X1, and December 31, 20X2 (exclude the impact
on cash and retained earnings).
Part B
Refer to the facts in Part A. Independent of the requirements in
Part A, assume that the additional cost in 20X2 resulted from
changes to the project requested by the customer in 20X2 and that
the customer agreed to increase the contract price to $140 million.
The additional $20 million was added by LLC to its final progress
billing in 20X3 and was paid by the customer during that
year.
Required:
a) Determine the revenue to be recognized by LLC in each of 20X1,
20X2 and 20X3.
b) Determine the expense to be recognized by LLC in each of 20X1,
20X2 and 20X3.
Show all supporting calculations for requirements a) and b) to be
eligible to receive partial marks.
In: Accounting
Question 2
Part A
Luxury Living Concepts Corp. (LLC) is a publicly accountable enterprise that builds large complexes, including schools, office towers, apartment buildings and shopping centres, on a contract basis. Additional information with respect to the company is as follows:
- LLC’s year end is December 31.
- The company uses the cost-to-cost approach to determine the stage of completion of its construction projects.
- The enterprise rounds the percentage of completion to two decimal places (for example, 13.54%).
- A discount rate of 4% adequately reflects the underlying credit risk of LLC’s customer for this transaction.
In 20X1, LLC entered into a $120 million contract to construct a shopping mall over a three-year period. Construction of the project was completed in late 20X3. Total costs were originally estimated to be $98 million. LLC’s progress on the contract and other pertinent information is detailed below:
| (in 000's) | 20x1 | 20x2* | 20x3** | Total |
| Costs Incurred during year | $23,000 | $55,000 | $43,000 | $121,000 |
| Cumulative costs incurred to date | $23,000 | $78,000 | $121,000 | |
| Estimated costs to complete | $22,000 | $46,000 | 0 | |
| Progress Billings during the year | $29,000 | $51,000 | $40,000 | $120,000 |
| Collections during the year | $22,000 | $50,000 | $48,000 | $120,000 |
* The revised cost data was not known in 20X1.
** The revised cost data was not known in 20X2.
Required:
a) Prepare the required journal entries to record transactions relating to the contracts for the 20X1, 20X2 and 20X3 fiscal periods. Show all supporting calculations for each journal entry. The calculations are to be referenced or included in the description of the journal entry.
b) Prepare the excerpts of LLC’s statements of financial position as atDecember 31, 20X1, and December 31, 20X2 (exclude the impact on cash and retained earnings).
Part B
Refer to the facts in Part A. Independent of the requirements in Part A, assume that the additional cost in 20X2 resulted from changes to the project requested by the customer in 20X2 and that the customer agreed to increase the contract price to $140 million. The additional $20 million was added by LLC to its final progress billing in 20X3 and was paid by the customer during that year.
Required:
a) Determine the revenue to be recognized by LLC in each of 20X1, 20X2 and 20X3.
b) Determine the expense to be recognized by LLC in each of 20X1, 20X2and 20X3.
Show all supporting calculations for requirements a) and b) to be eligible to receive partial marks.
In: Accounting
O’Neil Enterprises produces a line of canned soups for sale at supermarkets across the country. Demand has been “soft” recently and the company is operating at 70 percent of capacity. The company is considering dropping one of the soups, beef barley, in hopes of improving profitability. If beef barley is dropped, the revenue associated with it will be lost and the related variable costs saved. The CFO estimates that the fixed costs will also be reduced by 25 percent.
The following product line statements are available.
| Product | Broth | Beef Barley | Minestrone | ||||||||
| Sales | $ | 38,100 | $ | 48,200 | $ | 56,600 | |||||
| Variable costs | 23,800 | 42,200 | 43,700 | ||||||||
| Contribution margin | $ | 14,300 | $ | 6,000 | $ | 12,900 | |||||
| Fixed costs allocated to each product line | 8,300 | 9,600 | 10,700 | ||||||||
| Operating profit (loss) | $ | 6,000 | $ | 3,600 | $ | 2,200 | |||||
Required:
a-1. Complete the following differential cost schedule.
a-2. From an operating profit perspective, should O'Neil drop the beef barley line?
b. When the product manager for the minestrone soup hears that managers are considering dropping the beef barley line, she points out that many O’Neil customers buy more than one soup flavor and if beef barley is not available from O’Neil, some of them might stop buying the other soups as well. She estimates that 5 percent of the current sales of both broth and minestrone will be lost if beef barley is dropped.
b-1. Complete the following differential cost schedule.
b-2. Based on the estimate from the project manager, should O'Neil drop the beef barley line?
In: Accounting