Problem 20-3A Weighted Average: Process cost summary; equivalent units LO C2, C3, P4

Fast Co. produces its product through a single processing department. Direct materials are added at the start of production, and conversion costs are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory account has a balance of $98,100 as of October 1, which consists of $21,000 of direct materials and $77,100 of conversion costs.

During the month the company incurred the following costs:

During October, the company started 153,000 units and transferred 163,000 units to finished goods. At the end of the month, the work in process inventory consisted of 26,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the company’s process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the completed units to finished goods inventory.

Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $99,300 as of October 1, which consists of $21,600 of direct materials and $77,700 of conversion costs.

During the month, the Cutting department incurred the following costs:

At the beginning of the month, 37,500 units were in process. During October, the company started 155,000 units and transferred 165,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 27,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the Cutting department's process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.

Fast Co. produces its product through two processing departments. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory-Cutting account has a balance of $91,300 as of October 1, which consists of $19,200 of direct materials and $72,100 of conversion costs.

During the month, the Cutting department incurred the following costs:

At the beginning of the month, 33,500 units were in process. During October, the company started 147,000 units and transferred 157,000 units to the Assembly department. At the end of the month, the Cutting department's work in process inventory consisted of 23,500 units that were 80% complete with respect to conversion costs.

Required:
1. Prepare the Cutting department's process cost summary for October using the weighted-average method.
2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.

7.

Johnson Co. uses the production method to depreciate its manufacturing equipment. The equipment cost $120,000 and has an estimated useful life of 100,000 machine hours, with a $10,000 residual value. What would be the depreciation expense for the current period if the machine was used for 800 machine hours?

8.

A truck was purchased for $25,000. It had a five-year life and a $4,000 residual value. Under the double-declining-balance method, what is depreciation expense in year two?

9.

A note made on July 24 and due in 90 days will mature on what date?

10.

Assume that the semi-annual cash payments on a particular bond issue are $25,000, and that the accrued interest on the bonds for the first 6 month period is only $24,300. The carrying value of the bonds will change by an amount of:

EuroDisney opened in 1992, but unlike the American version, the theme park was a financial bust. Why?

Select one:

a. Disney made the incorrect assumptions about the size of the pool of European travellers and tourists comprising market demand.

b. They had difficulty hiring and training skilled staff resulting in poor customer service and bad word-of-mouth advertising.

c. Disney assumed the attractions featured in America would be equally exciting to European travellers because many European travelers came to America to visit our theme parks.

d. Although Disney attracted enough visitors, the value of the dollar versus the Euro caused the park to show numerous financial losses.

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A marketing dashboard is a collection of pertinent parts of company scorecards known as metrics that measure marketing performance.

Select one:

True

False

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A company that creates a broad plan that identifies its most promising markets and analyzes competitor solutions and market opportunities has developed what kind of plan?

Select one:

a. Operational Plan

b. Strategic Plan

c. Functional Plan

d. Marketing Plan

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The first task of a marketing plan for a company with a Mission is to evaluate the organization's business environment including its potential opportunities and threats.

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True

False

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AARP is a very good direct marketing company. So when the marketing manager became concerned that AARP products and services were not selling as well to the upcoming generation of senior citizens (the Baby Boom generation) compared to prior generations, she employed a market researcher to analyze responses to AARP's recent test marketing of different product offerings directed to Baby Boomers. Based on one of the answers below, it is clear that the researcher didn't understand the research problem that the marketer wanted addressed by the research project. Which of these conclusions from the researcher would indicate that the marketer and the researcher had a misunderstanding of the research problem?

Select one:

a.

b.

c.

d.

1) Describe the financial reporting environment in Australia.
2) Discuss what accounting is and the accounting process.
3) Discuss the Conceptual Framework and the objective of financial reporting.
4) Discuss the main elements of each of the four main financial statements.
5) Discuss the accounting equation, double entry principle, what is an account, rules for debiting and
crediting, chart of accounts and the accounting cycle.
6) Discuss the basic steps in the recording process, using the transaction of Wong Ltd for the month
ended 31 October (attached). Your discussion and presentation should include the following:
a) Analysis each transaction in terms of its effect on the accounts.
b) Recording of each transaction information in a journal.
c) Transferring (posting) the journal information to the appropriate accounts in the ledger.
d) Preparation of a trial balance (from account balances in the general ledger).

Wong Pty Ltd

The following transactions are for it’s first month of operation, October.
(1) Issues shares for cash. On 1 October Wong Pty Ltd issues shares in exchange for $10 000 cash.
(2) Borrows money from a bank. On 1 October Wong Pty Ltd borrows $5000 from the ANZ Bank.
(3) Purchase of office equipment for cash. On 2 October Wong Pty Ltd acquires office equipment by paying
$5000 cash to Superior Equipment Sales Ltd.
(4) Receipt of cash in advance from customer. On 2 October Wong Pty Ltd receives a $1200 cash advance
from R. Knox, a client.
(5) Renders services for cash. On 3 October Wong Pty Ltd receives $10 000 in cash from Copa & Co. for
advertising services performed.
(6) Payment of rent in cash. On 3 October Wong Pty Ltd pays its office rent for the month of October in cash,
$900.
(7) Payment of insurance in cash. On 4 October Wong Pty Ltd pays $600 for a 1-year insurance policy that will
expire next year on 30 September.
(8) Purchase of supplies on credit. On 5 October Wong Pty Ltd purchases an estimated 3-month supply of
advertising materials on account from Aero Supply for $2500.
(9) Hiring of new employees. On 9 October Wong Pty Ltd hires four new employees to begin work on 15
October. Each employee is to receive a weekly salary of $500 for a 5-day working week, payable every 2 weeks.
Employees are to receive their first pay on 26 October.
(11) Payment of cash for employee salaries. Employees have worked 2 weeks, earning $4000 in salaries,
which are paid on 26 October.

The following transactions are for it’s first month of operation, October.
(1) Issues shares for cash. On 1 October Wong Pty Ltd issues shares in exchange for $10 000 cash.
(2) Borrows money from a bank. On 1 October Wong Pty Ltd borrows $5000 from the ANZ Bank.
(3) Purchase of office equipment for cash. On 2 October Wong Pty Ltd acquires office equipment by paying
$5000 cash to Superior Equipment Sales Ltd.
(4) Receipt of cash in advance from customer. On 2 October Wong Pty Ltd receives a $1200 cash advance
from R. Knox, a client.
(5) Renders services for cash. On 3 October Wong Pty Ltd receives $10 000 in cash from Copa & Co. for
advertising services performed.
(6) Payment of rent in cash. On 3 October Wong Pty Ltd pays its office rent for the month of October in cash,
$900.
(7) Payment of insurance in cash. On 4 October Wong Pty Ltd pays $600 for a 1-year insurance policy that will
expire next year on 30 September.
(8) Purchase of supplies on credit. On 5 October Wong Pty Ltd purchases an estimated 3-month supply of
advertising materials on account from Aero Supply for $2500.
(9) Hiring of new employees. On 9 October Wong Pty Ltd hires four new employees to begin work on 15
October. Each employee is to receive a weekly salary of $500 for a 5-day working week, payable every 2 weeks.
Employees are to receive their first pay on 26 October.
(11) Payment of cash for employee salaries. Employees have worked 2 weeks, earning $4000 in salaries,
which are paid on 26 October.

Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond’s yield.

1. Yield to maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of those assumptions?

a. The bond has an early redemption feature.

b. The bond will not be called.

Consider the case of BTR Co.:

2. BTR Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,130.35. However, BTR Co. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on BTR Co.’s bonds?

3. If interest rates are expected to remain constant, what is the best estimate of the remaining life left for BTR Co.’s bonds?

a. 8 years

b. 18 years

c, 10 years

d. 13 years

4. If BTR Co. issued new bonds today, what coupon rate must the bonds have to be issued at par? _______  

A magazine is considering the launch of an online edition. The magazine plans to go ahead only if it is convinced that more than 29.1% of current readers would subscribe. The magazine contacted a simple random sample of 464 current subscribers, and 141 of those surveyed expressed interest. Test the appropriate hypotheses using a significance level of 0.05 to determine if the magazine should launch an online edition.   

H0: Select an answer p < ? > =       Ha: Select an answer p  ? < >  

?= 0.05 decision rule: reject H0 if probability > < ? ?

Test Statistic: z =   (Note: round the z-score to two decimal places - carry at least four decimal places throughout all of your calculations)

probability =   (Note: round the probability to four decimal places)

decision: Select an answer Fail to reject H? Reject H?

Conclusion: At the 0.05 level, there Select an answer is or is not  significant evidence to conclude the percentage of current subscribers who would subscribe to an online edition of the magazine is Select an answer less than different than greater than  29.1%.

3.3) A small market orders copies of a certain magazine for its magazine rack each week. Let X = demand for the magazine, with the following pmf.

Suppose the store owner actually pays $2.00 for each copy of the magazine and the price to customers is $4.00. If magazines left at the end of the week have no salvage value, is it better to order three or four copies of the magazine? [Hint: For both three and four copies ordered, express net revenue as a function of demand X, and then compute the expected revenue.]

*What is the expected profit if three magazines are ordered? (Round your answer to two decimal places.)

*What is the expected profit if four magazines are ordered? (Round your answer to two decimal places.)

*How many magazines should the store owner order?

-3 magazines

-4 magazines