A leading manufacturing company has 2 main product lines, Traditional and Modern with unit sales prices for $340 and $440 respectively. Manufacturing overhead are applied as $544.025 per direct labor hour.

Material, Labors and overhead are expected to increase by 10% each in 2019

Unit sales prices for both products are expected to increase by $10 each in 2019

Percentage of overhead remains the same in 2019.

The cost drivers units are staying the same in 2019.

There are two clients with special orders for Traditional. The two clients ordered the same number of units.

You tracked their COGS by their extra number of specifications per month in 2018.

Calculate the fixed cost and variable cost components of COGS for the two clients using the lease squares regression method. Show your work and write out the regression model equations for each client.

Discuss the two clients COGS in terms of fixed cost and variable cost according to special specifications.

Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses

Naper Inc. manufactures power equipment. Naper has two primary products—generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31:

The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing.

The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as follows:

The controller determined the following activity-base usage information about each product:

a. Determine the activity cost of each product for sales order processing and post-sale customer service activities.

Feedback

a. Calculate for each product:
Activity-Base Usage x Activity Rate = Activity Cost. Add both costs to obtain the total for each activity.

Learning Objective 5.

b. Use the information in (a) to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each product. Round percentages to two decimal places. Enter all amounts as positive numbers.

Cuneo Company’s income statements for the last 3 years are as follows:

Labels and Amount Descriptions

Refer to the list below for the exact wording of an account title within your income statement.

Common-Size Income Statement

1. Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

2. Prepare a common-size income statement for Year 3 by expressing each line item for Year 3 as a percentage of that same line item from Year 1. (Note: Enter all amounts as positive numbers. Round answers to the nearest tenth of a percent. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Use the following information for Delta Corporation to answer question 1: (20 marks total)

1.   Delta has 600,000 common shares outstanding. The firm is projecting a 20% increase in net sales for the coming year (20X3). Delta uses the percentage of sales approach to plan for its financing needs. In using this approach, the firm assumes that cost of goods sold, all assets (current and fixed), and accounts payable will all remain a constant percentage of sales. Depreciation expense is assumed to be 15% of net fixed assets, while notes payable and long-term debt will remain at the same level as 20X2. The interest rate charged on notes payable and long-term debt is also expected to remain the same. The firm will aim to maintain its dividend payout of 30% for the foreseeable future.

a.   Construct the pro-forma Statement of Comprehensive Income and Statement of Financial Position for Delta Corporation for 20X3. Calculate the external financing needed (EFN) for 20X3. Round all your numbers in the pro-forma statements to the nearest dollar.                                                                                               

b.   Based on its 20X2 information, what is Delta’s capital intensity ratio? Round your answer to four decimal places.    (1 mark)

c.   What is Delta’s full capacity sales if it is currently operating at 80% capacity (20X2)? Round your answer to the nearest integer.    (1 mark)

d.   Recalculate the firm’s external financing needed (EFN) for 20X3 if Delta is only operating at 80% capacity. Assume that if the 20X3 net sales is lower than full capacity sales, then the net fixed assets in 20X3 will be the same as the net fixed assets in 20X2 (i.e., assume that the firm will purchase just enough fixed assets to cover depreciation expense for 20X3). Interpret this EFN number.                                                                                               

e.   What is Delta’s internal growth rate for 20X2? Round your final answer in percentage to two decimal places.         

f.    What is Delta’s sustainable growth rate for 20X2? Round your final answer in percentage to two decimal places.    

g.       Assume that Delta is operating at 100% capacity. Calculate the EFN for the firm if it wants to grow its sales by 100% for 20X3. Interpret this EFN number.     

1) What is the fixed cost, marginal cost, average total cost, average variable cost and average fixed cost of the following cost function?    .

2) What is the level of output that minimizes AVC? (in other words, what is the level of output that corresponds to the minimum of AVC?)

What are cost drivers? How do cost drivers relate to cost pools? What are some cost pools? Name two or three different cost drivers for each of these cost pools.

What are value-added processes? How do you determine if a process adds value? How does identifying value-added processes help a company run more efficiently and effectively?

Calculate the peak cooling load from an EAST facing wall. No interior or exterior shades, no floor carpeting , medium construction

Windows: ¼ in double glass with air gap and aluminum frame

Window area = 300 ft2

Wall: 4-in Concrete + R-5 Insulation+ ½ in. gypsum wall board

Gross Wall Area = 1200 ft2

Location: Miami, Florida

Indoor Temperature = 70 oF

Examine the competitiveness of your firm’s home country in a particular sector(eg Oil and Gas, Construction etc) in the light of Porter's Diamond Model. Identify a specific cluster (a city or region) in the home country where chosen industry is competitive and give your recommendation to further improve the competitiveness of that cluster by benchmarking with one of the best clusters (Stuttgart, Germany for Automotive cluster) in the world for same industry

Which of the following situations would most likely be resolved in a correspondence audit?

A. verification of a taxpayer's qualifications for the EITC

B. The determination whether 23 of a construction company's workers are employees or independent contractors

C. Whether a particular transaction resulted in capital gain or ordinary income

D. Review of all tax records of an S Corporation (sales of $20 million and 40 employees) for the past three years