An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation life of 6 years. a) Determine the book value for year 3 using sum-of-the-years-digits depreciation. b) Determine the depreciation for year 3 using double declining balance depreciation. c) Determine the equivalent annual capital recovery plus a 12% return for year 3, assuming declining balance depreciation.
In: Accounting
An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2017.
| Inventory | Beginning | Ending |
| Raw materials | $9,000 | $13,100 |
| Work in process | 5,000 | 7,000 |
| Finished goods | 9,000 | 8,000 |
Costs incurred: raw materials purchases $54,000, direct labor $47,000, manufacturing overhead $19,900. The specific overhead costs were: indirect labor $5,500, factory insurance $4,000, machinery depreciation $4,000, machinery repairs $1,800, factory utilities $3,100, and miscellaneous factory costs $1,500. Assume that all raw materials used were direct materials. Instructions (a) Prepare the cost of goods manufactured schedule for the month ended June 30, 2017. (b) Show the presentation of the ending inventories on the June 30, 2017, balance sheet.
In: Accounting
The Toyota Camry is one of the best-selling cars in North America. The cost of a previously owned Camry depends on many factors, including the model year, mileage, and condition. To investigate the relationship between the car’s mileage and the sales price for Camrys, the following data show the mileage and sale price for 19 sales (PriceHub web site, February 24, 2012).
DATA
Miles (1,000s) Price ($1,000s) 22 16.2 29 16.0 36 13.8 47 11.5 63 12.5 77 12.9 73 11.2 87 13.0 92 11.8 101 10.8 110 8.3 28 12.5 59 11.1 68 15.0 68 12.2 91 13.0 42 15.6 65 12.7 110 8.3
(a) Choose a scatter chart below with ‘Miles (1000s)’ as the independent variable. (i) (ii) (iii) (iv) What does the scatter chart indicate about the relationship between price and miles? The scatter chart indicates there may be a linear relationship between miles and price. Since a Camry with higher miles will generally sell for a lower price, a negative relationship is expected between these two variables. This scatter chart is consistent with what is expected.
(b) Develop an estimated regression equation showing how price is related to miles. What is the estimated regression model? Let x represent the miles. If required, round your answers to four decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) = + x
(c) Test whether each of the regression parameters β0 and β1 is equal to zero at a 0.01 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable? The input in the box below will not be graded, but may be reviewed and considered by your instructor.
(d) How much of the variation in the sample values of price does the model estimated in part (b) explain? If required, round your answer to two decimal places. %
(e) For the model estimated in part (b), calculate the predicted price and residual for each automobile in the data. Identify the two automobiles that were the biggest bargains. If required, round your answer to the nearest whole number. The best bargain is the Camry # in the data set, which has miles, and sells for $ less than its predicted price. The second best bargain is the Camry # in the data set, which has miles, and sells for $ less than its predicted price.
(f) Suppose that you are considering purchasing a previously owned Camry that has been driven 100,000 miles. Use the estimated regression equation developed in part (b) to predict the price for this car. If required, round your answer to one decimal place. Do not round intermediate calculations. Predicted price: $ Is this the price you would offer the seller?
Explain. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
In: Finance
Deep Sea Drilling is evaluating drilling for oil in the Gulf of Mexico. It will cost $830 million to buy an oil rig. Drilling would start immediately. The company has a cost of capital of 9%.
There is a 50% probability that the new well will be successful, in which case the free cash flow from the well will be $200 million per year for 20 years. Otherwise, it will only generate $40 million per year for 10 years.
Part 1: What is the NPV of the project (in $ million)?
Part 2: In fact, the company can abandon the project after the first year and sell the oil rig for $664 million. What is the NPV of the project now (in $ million)?
Part 3: What is the value of the option (in $ million)?
In: Finance
What is the meaning of the term "cost behavior"?
Why is it important to know "how different costs behave" in the process of planning, decision-making, and control?
In: Accounting
As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. Job 102 Job 103 Job 104 Direct materials $ 43,000 $ 73,000 $ 53,000 Direct labor 11,000 28,600 43,000 Overhead applied 4,400 11,440 17,200 Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $13,000; direct labor, $4,000; and overhead, $1,600. Jobs 103 and 104 were started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 were finished in June, and Job 104 is expected to be finished in July. No raw materials were used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months.) 1&2. Complete the table below to calculate the cost of the raw materials requisitioned and direct labor cost incurred during June for each of the three jobs? 3. Using the accumulated costs of the jobs, what predetermined overhead rate is used? 4. How much total cost is transferred to finished goods during June?
part 2
The following information is available for Lock-Tite Company,
which produces special-order security products and uses a job order
costing system.
| April 30 | May 31 | ||||||
| Inventories | |||||||
| Raw materials | $ | 44,000 | $ | 54,000 | |||
| Work in process | 10,400 | 21,700 | |||||
| Finished goods | 64,000 | 37,600 | |||||
| Activities and information for May | |||||||
| Raw materials purchases (paid with cash) | 212,000 | ||||||
| Factory payroll (paid with cash) | 349,000 | ||||||
| Factory overhead | |||||||
| Indirect materials | 17,000 | ||||||
| Indirect labor | 82,000 | ||||||
| Other overhead costs | 122,000 | ||||||
| Sales (received in cash) | 1,420,000 | ||||||
| Predetermined overhead rate based on direct labor cost | 70 | % | |||||
Determine whether there is over or underapplied overhead.
part 3
The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs.
| Job 602 | Job 603 | Job 604 | ||||||||||||
| Direct materials | $ | 1,700 | $ | 3,600 | $ | 3,000 | ||||||||
| Direct labor | 900 | 1,480 | 2,300 | |||||||||||
| Overhead | 450 | 740 | 1,150 | |||||||||||
Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $500; direct labor, $150; and overhead, $75. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.)
Required:
1. What is the cost of the raw materials used in
June for each of the three jobs and in total?
2. How much total direct labor cost is incurred in
June?
3. What predetermined overhead rate is used in
June?
4. How much cost is transferred to finished goods
inventory in June?
part 4
The following information applies to the questions displayed below.]
The following information is available for Lock-Tite Company, which
produces special-order security products and uses a job order
costing system.
| April 30 | May 31 | ||||||
| Inventories | |||||||
| Raw materials | $ | 50,000 | $ | 38,000 | |||
| Work in process | 9,200 | 18,500 | |||||
| Finished goods | 59,000 | 34,300 | |||||
| Activities and information for May | |||||||
| Raw materials purchases (paid with cash) | 171,000 | ||||||
| Factory payroll (paid with cash) | 100,000 | ||||||
| Factory overhead | |||||||
| Indirect materials | 17,000 | ||||||
| Indirect labor | 23,000 | ||||||
| Other overhead costs | 106,000 | ||||||
| Sales (received in cash) | 1,800,000 | ||||||
| Predetermined overhead rate based on direct labor cost | 55 | % | |||||
Incurred other overhead costs (record credit to Other Accounts).
Application of overhead to work in process.
Prepare journal entries for the above transactions for the month of
May.
part 5
The following information applies to the questions displayed below.]
The following information is available for Lock-Tite Company, which
produces special-order security products and uses a job order
costing system.
| April 30 | May 31 | ||||||
| Inventories | |||||||
| Raw materials | $ | 50,000 | $ | 38,000 | |||
| Work in process | 9,200 | 18,500 | |||||
| Finished goods | 59,000 | 34,300 | |||||
| Activities and information for May | |||||||
| Raw materials purchases (paid with cash) | 171,000 | ||||||
| Factory payroll (paid with cash) | 100,000 | ||||||
| Factory overhead | |||||||
| Indirect materials | 17,000 | ||||||
| Indirect labor | 23,000 | ||||||
| Other overhead costs | 106,000 | ||||||
| Sales (received in cash) | 1,800,000 | ||||||
| Predetermined overhead rate based on direct labor cost | 55 | % | |||||
Direct labor usage.
Indirect labor usage.
Total payroll paid in cash.
Prepare journal entries for the above transactions for the month
of May.
In: Accounting
For the cost and price functions below, find
(a) the number, q, of units that produces maximum profit;
(b) the price, p, in dollars per unit that produces maximum profit; and
(c) the maximum profit, P, in dollars.
C(q)=100+20qe^-0.01q ; p=60e^-0.01q
(a) The number, q, of units that produces maximum profit is $__
(Do not round until the final answer. Then round to the nearest whole number as needed.)
(b) The price, p, per unit that produces maximum profit is $__
(Do not round until the final answer. Then round to the nearest cent as needed.)
(c) The maximum profit is $__
(Do not round until the final answer. Then round to the nearest cent as needed.)
In: Math
In a random sample of five microwave ovens, the mean repair cost was $60.00 and the standard deviation was $14.00. Assume the variable is normally distributed and use a t-distribution to construct a 95% confidence interval for the population mean u.
What is the margin of error of u?
The 95% confidence interval for the population mean u is l(_, _ ) (Round to two decimal places as needed.
In: Statistics and Probability
In the standard cost system, what is the appropriate treatment of a change in wage rates (per new labor union contract) that dominate the cost of labor?
In: Accounting
Norwest is planning on purchasing a welding machine. The
expected cost of this machine is $60,000, and it is expected to
have a useful life of 7 years with an estimated salvage value of
$4,000. The machine is expected to produce cash savings of $20,000
per year in reduced labor costs and the cash operating costs to run
this machine are estimated to be $6,000 per year. Assuming Norwest
is in the 34% tax bracket and has a minimum desired rate of return
of 14% on this investment.
Determine the payback period, the accounting rate of
return, and the net present value for this investment. (Indicate
answers to 2 decimal places)
In: Finance