Johnson Company uses a job-order costing system and started the month of
March with three jobs in process. The cost of beginning work in process
plus the costs added during March are shown below:

                                   Job #1        Job #2        Job #3
beginning work in process .....    $4,930        $4,970        $2,840

COSTS ADDED DURING MARCH:
direct materials ..............    $3,400        $4,200        $4,600
direct labor ..................    $5,000        $4,000           ?

Johnson applies overhead to jobs based on a percentage of direct materials
used. During March, Johnson completed both Job #2 and Job #3. Job #1 was
not completed by the end of March. Job #2 consisted of 1,700 units; some
of these units were sold during March. None of the units from Job #3 were
sold in March. Johnson Company's accounting records for March disclosed
the following information:

Work in process inventory balance at March 31 ..........  $15,880
Actual overhead cost for the month of March ............  $ 8,500
Cost of goods sold for March ...........................  $11,830
Finished goods inventory balance at March 31 ...........  $18,870

The cost of goods sold number above represents the cost of goods sold for
March after the overhead variance has been closed for March.

Calculate the number of units from Job #2 that were sold during March.
Simply enter your answer as a number. Do not type the word units after
your answer.

Required: Make sure you show your work or use cell references for all calculations. You will not earn credit if you just type in your answer.                                                                                                                      

1. Determine the markup percentage on total variable costs required to earn the desired profit-46%       

2. Use the variable cost markup you determined in #1 above to determine a suggested selling price for a flash drive. You are determining selling price per unit.                                                                                                                                           

                Selling price is based on total variable cost plus markup from #1 above.                                                                                                                 

                Total variable cost per unit                                                                                                          

                Markup above total Variable cost                                                                                                             

                Selling price per unit                                                                      

Part 1

1. Compute the weighted cost of capital (WACC) of McDonald’s (MCD)

2. show how to compute the WACC using SML

3. Once you know the WACC for McDonald’s (WEN), using the WACC as a cutoff, you should make a decision whether or not you accept the following project

McDonald’s has 765.32 million shares of stock outstanding. The book value per share is $-8.16, but the stock sells for $185.53. Total equity is $6.258M on a book value basis. The cost of equity using CAPM is 21.47%. Analyst estimate the growth in earnings per share for the company will be 6.55% for the next five years. The cost of equity using the dividend discount model is 26.25%.

McDonald’s cost of debt is 3.2377%. The book value basis, of McDonald’s equity and debt are worth $6.258M and $3.030M respectively. The total value is $9.288M. So the equity and debt percentages are 0.67 and 0.32. Assuming a tax rate of 21%, McDonald’s WACC is?

Part 2

As the president of McDonald’s, you should determine whether to go ahead with a plan to renovate the company’s distribution system. The plan will cost the company $50 million, and it is expected to save $12 million per year after taxes over the next six years. Will you accept? Or Reject?

Part 1

1. Compute the weighted cost of capital (WACC) of McDonald’s (MCD)

2. show how to compute the WACC using SML

3. Once you know the WACC for McDonald’s (MCD), using the WACC as a cutoff, you should make a decision whether or not you accept the following project

McDonald’s has 765.32 million shares of stock outstanding. The book value per share is $-8.16, but the stock sells for $185.53. Total equity is $6.258M on a book value basis. The cost of equity using CAPM is 21.47%. Analyst estimate the growth in earnings per share for the company will be 6.55% for the next five years. The cost of equity using the dividend discount model is 26.25%.

McDonald’s cost of debt is 3.2377%. The book value basis, of McDonald’s equity and debt are worth $6.258M and $3.030M respectively. The total value is $9.288M. So the equity and debt percentages are 0.67 and 0.32. Assuming a tax rate of 12%, McDonald’s WACC is?

Part 2

As the president of McDonald’s, you should determine whether to go ahead with a plan to renovate the company’s distribution system. The plan will cost the company $50 million, and it is expected to save $12 million per year after taxes over the next six years. Will you accept? Or Reject?

Part 1

1. Compute the weighted cost of capital (WACC) of Wendy's (WEN)
2. show how to compute the WACC
3. Once you know the WACC for Wendy's (WEN), using the WACC as a cutoff, you should make a decision whether or not you accept the following project

Wendy's has 230.23 million shares of stock outstanding. The book value per share is $2.80, but the stock sells for $16.63. Total equity is 648.45M on a book value basis. The cost of equity using CAPM is 15.38%. Analyst estimate the growth in earnings per share for the company will be 10.30% for the next five years. The cost of equity using the dividend discount model is 2.65%.

Wendy's cost of debt is 4.3192%. The book value basis, of Wendy's equity and debt are worth $1.723B and $2.758M respectively. The total value is $4.481B. So the equity and debt percentages are 0.38 and 0.62. Assuming a tax rate of 12%, Wendy's WACC is?

Part 2

As the president of Wendy's, you should determine whether to go ahead with a plan to renovate the company’s distribution system. The plan will cost the company $50 million, and it is expected to save $12 million per year after taxes over the next six years. Will you accept? Or Reject?

Johnson Company uses a job-order costing system and started the month of
March with three jobs in process. The cost of beginning work in process
plus the costs added during March are shown below:

                                   Job #1        Job #2        Job #3
beginning work in process .....    $4,930        $4,970        $2,840

COSTS ADDED DURING MARCH:
direct materials ..............    $3,400        $4,200        $4,600
direct labor ..................    $5,000        $4,000           ?

Johnson applies overhead to jobs based on a percentage of direct materials
used. During March, Johnson completed both Job #2 and Job #3. Job #1 was
not completed by the end of March. Job #2 consisted of 1,700 units; some
of these units were sold during March. None of the units from Job #3 were
sold in March. Johnson Company's accounting records for March disclosed
the following information:

Work in process inventory balance at March 31 ..........  $15,880
Actual overhead cost for the month of March ............  $ 8,500
Cost of goods sold for March ...........................  $11,830
Finished goods inventory balance at March 31 ...........  $18,870

The cost of goods sold number above represents the cost of goods sold for
March after the overhead variance has been closed for March.

Calculate the number of units from Job #2 that were sold during March.
Simply enter your answer as a number. Do not type the word units after
your answer.

Tasman Products, Ltd., of Australia has a Maintenance Department that services the equipment in the company’s Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below.

Data for the Maintenance Department follow:

*Budgeted at $24 per machine-hour.

Data for the Forming and Assembly Departments follow:

The level of fixed costs in the Maintenance Department is determined by peak-period requirements.

Required:

1. How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department?

2. How much, if any, of the actual Maintenance Department costs for the year should be treated as a spending variance and not charged to the Forming and Assembly departments?

How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department?

How much, if any, of the actual Maintenance Department costs for the year should be treated as a spending variance and not charged to the Forming and Assembly departments?

Forester Company has five products in its inventory. Information about the December 31, 2018, inventory follows.

The cost to sell for each product consists of a 10 percent sales commission. The normal profit percentage for each product is 25 percent of the selling price.

Required:
1. Determine the carrying value of inventory at December 31, 2018, assuming the lower of cost or market (LCM) rule is applied to individual products.

2a. Determine the carrying value of inventory at December 31, 2018, assuming the LCM rule is applied to the entire inventory. (Do not round intermediate calculations.)

2b. Record any necessary year-end adjusting entry assuming that inventory write-downs are common for Forester Company.

Note: Enter debits before credits.

Required

Using the weighted-average method, calculate the following:

1-a. Costs per equivalent unit. (Round your answers to 4 decimal places.)

1-b. Cost of goods completed and transferred out. (Round "Cost per EU" to 4 decimal places. Round final answer to nearest whole dollars.)

1-c. Costs remaining in the Work-in-Process Inventory account. (Round "Cost per EU" to 4 decimal places. Do not round other intermediate calculations. Round final answer to nearest whole dollars.)

2. Assume that you are the company’s controller. The production department’s June equivalent unit cost is higher than expected. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 20 to 40% to lower the unit costs, how much would unit cost be affected by this request? (Round your answer to 4 decimal places.)

In this week's discussion your are going to be the CEO of a company.  In anticipation of the upcoming quarterly disclosure of profits, you prepare your Board of Directors for the challenge that cost-push inflation having on profits.  Please make yourself CEO of only one of these hypothetical companies.

All America Grocery Inc - We serve communities in the middle of the income market providing low prices for all basic grocery needs. Our modest income consumers expect goods deals on good quality foods.  The Covid-19 pandemic has put upward pressure on the price of everything we sell. We have also experience rising cost in every aspect of our operation as we have to put extra resources in to protecting both our employees and the public. We are both fortunate and unfortunate that the price elasticity of demand for food is .20.  

Very Big US Auto - Very Big US Auto is one of the oldest and one of the largest auto manufacturers of autos in the US.  Very Big US Auto's supply chain is highly dependent components manufactured in China and assembled in the US. Like the US economy the Chinese continue to have major stoppage in production due to Covid-19. Additionally manufacturing facilities like ours must take extra precaution to keep workers safe. Costs are rising we are experiencing rising costs.  Very Big US Auto know that demand is relatively elastic with a price elasticity of demand of 1.2. We also know that the supply of auto is relatively inelastic and all our competitors are facing the same cost increase.

Big Time Entertainment - Big Time Entertainment is a nationwide firm providing movies, arcades and other entertainment venues such as bowling and roller skating. Our operations have been heavily impacted during the Covid-19 pandemic. On reopening we have been faced with a host of regulations that have greatly increased our cost of operation, everything to operating far below our optimal number of patron to higher cost for cleaning and other measure to protect the public and our employees. Price elasticity of demand is 1.6 and we are also face with competitors, online entertainment and gaming, that are not experiencing these cost pressures.

Now explain:

• Is the demand curve for your product relatively elastic, inelastic or unitary elastic?  Demonstrate for your company's product, by how much the quantity demanded will change if you pass on a 10% increase in cost. In other words, show your calculation of the percentage change in the quantity demanded given a 10% change in your price. You must provide a calculations showing the percentage change in quantity demanded.
• Given your company's and price elasticity of demand and the industry supply/competitive environment you face prepare a statement for your board as to the potential impact on profits.   Who will pay the larger share of the cost increases, your firm or your customers?