Mel's Hair Salon uses a perpetual inventory system, recorded the following inventory transactions for this year:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Apr 1 Beginning inventory 90 $ 16
25 Purchase 300 18
May 4 Purchase 130 20
16 Sale 240 $32
Jun 4 Purchase 100 24
Instructions
(a) Using the FIFO cost formula, calculate the cost of goods sold for the quarter ended June 30. Show calculations.
(b) Using the average cost formula, calculate the ending inventory at June 30. Show calculations and use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.
In: Accounting
Ag-Coop is a large farm cooperative with a number of agriculture-related manufacturing and service divisions. As a cooperative, it pays no federal income taxes. The company owns a fertilizer plant that processes and mixes petrochemical compounds into three brands of agricultural fertilizer: greenup, maintane, and winterizer. The three brands differ with respect to selling price and the proportional content of basic chemicals.
Ag-Coop’s Fertilizer Manufacturing Division transfers the completed product to the cooperative’s Retail Sales Division at a price based on the cost of each type of fertilizer plus a markup.
The Manufacturing Division is completely automated so that the only costs it incurs are the costs of the petrochemical feedstocks plus overhead that is considered fixed. The primary feedstock costs $1.40 per pound. Each 100 pounds of feedstock can produce either of the following mixtures of fertilizer.
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Ag-Coop is a large farm cooperative with a number of agriculture-related manufacturing and service divisions. As a cooperative, it pays no federal income taxes. The company owns a fertilizer plant that processes and mixes petrochemical compounds into three brands of agricultural fertilizer: greenup, maintane, and winterizer. The three brands differ with respect to selling price and the proportional content of basic chemicals. Ag-Coop’s Fertilizer Manufacturing Division transfers the completed product to the cooperative’s Retail Sales Division at a price based on the cost of each type of fertilizer plus a markup. The Manufacturing Division is completely automated so that the only costs it incurs are the costs of the petrochemical feedstocks plus overhead that is considered fixed. The primary feedstock costs $1.40 per pound. Each 100 pounds of feedstock can produce either of the following mixtures of fertilizer.
Production is limited to the 810,000 kilowatt-hours monthly capacity of the dehydrator. Due to different chemical makeup, each brand of fertilizer requires different dehydrator use. Dehydrator usage in kilowatt-hours per pound of product follows:
Monthly fixed costs are $81,000. The company currently is producing according to output schedule A. Joint production costs including fixed overhead are allocated to each product on the basis of weight. The fertilizer is packed into 100-pound bags for sale in the cooperative’s retail stores. The sales price for each product charged by the cooperative’s Retail Sales Division follows:
Selling expenses are 20 percent of the sales price. The Retail Sales Division manager has complained that the prices charged by the Manufacturing Division are excessive and that he would prefer to purchase from another supplier. The Manufacturing Division manager argues that the processing mix was determined based on a careful analysis of the costs of each product compared to the prices charged by the Retail Sales Division. Required: a. Assume that joint production costs including fixed overhead are allocated to each product on the basis of weight. What is the cost per pound of each product, including fixed overhead and the feedstock cost of $1.40 per pound, given the current production schedule? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Assume that joint production costs including fixed overhead are allocated to each product on the basis of net realizable value if sold through the cooperative’s Retail Sales Division. What is the allocated cost per pound of each product, given the current production schedule? (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. Assume that joint production costs including fixed overhead are allocated to each product on the basis of weight. Calculate the operating profit under both Schedule A and Schedule B. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
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Production is limited to the 810,000 kilowatt-hours monthly capacity of the dehydrator. Due to different chemical makeup, each brand of fertilizer requires different dehydrator use. Dehydrator usage in kilowatt-hours per pound of product follows:
| Product | Kilowatt-Hour Usage per Pound |
| Greenup | 32 |
| Maintane | 22 |
| Winterizer | 40 |
Monthly fixed costs are $81,000. The company currently is producing according to output schedule A. Joint production costs including fixed overhead are allocated to each product on the basis of weight.
The fertilizer is packed into 100-pound bags for sale in the cooperative’s retail stores. The sales price for each product charged by the cooperative’s Retail Sales Division follows:
| Sales Price per Pound | |||
| Greenup | $ | 10.50 | |
| Maintane | 9.00 | ||
| Winterizer | 10.40 | ||
Selling expenses are 20 percent of the sales price.
The Retail Sales Division manager has complained that the prices charged by the Manufacturing Division are excessive and that he would prefer to purchase from another supplier.
The Manufacturing Division manager argues that the processing mix was determined based on a careful analysis of the costs of each product compared to the prices charged by the Retail Sales Division.
Required:
a. Assume that joint production costs including fixed overhead are allocated to each product on the basis of weight. What is the cost per pound of each product, including fixed overhead and the feedstock cost of $1.40 per pound, given the current production schedule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. Assume that joint production costs including fixed overhead are allocated to each product on the basis of net realizable value if sold through the cooperative’s Retail Sales Division. What is the allocated cost per pound of each product, given the current production schedule? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
c. Assume that joint production costs including fixed overhead are allocated to each product on the basis of weight. Calculate the operating profit under both Schedule A and Schedule B. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
In: Accounting
Jordan is a construction contract company involved in building
commercial properties. Its current policy for determining the
percentage of completion of its contracts is based on the
proportion of cost incurred to date compared to the total expected
cost of the contract.
One of Jordan’s contracts has an agreed price of $250 million and
estimated total costs of $200 million.
The cumulative progress of this contract is:
Year ended: 30 September 2011 30 September 2012
$million $million
Costs incurred 80 145
Work certified and billed 75 160
Billings received 70 150
Based on the above, Jordan prepared and published its financial statements for the year ended 30 September 2011. Relevant extracts are:
Statement of Profit and Loss
$million
Revenue (balance) 100
Cost of sales (80)
––––
Profit (50 x 80/200) 20
––––
Statement of financial position
$million
Current assets
Amounts due from customers
Contract costs to date 80
Profit recognised 20
––––
100
Progress billings (75)
––––
25
––––
Contract receivables (75 – 70) 5
Jordan has received some adverse publicity in the financial
press for taking its profit too early in the contract process,
leading to disappointing profits in the later stages of contracts.
Most of Jordan’s competitors take profit based on the percentage of
completion as determined by the work certified compared to the
contract price.
Required:
(i) Assuming Jordan changes its method of determining
the percentage of completion of contracts to that used by its
competitors, and that this would represent a change in an
accounting estimate, calculate equivalent extracts to the above for
the year ended 30 September 2012 (5marks)
(ii) Explain the Criteria for Recognising Revenue from contract with customers. .
(iii) Explain the difference between Revenue Recognition from construction contracts when The contract is profit making and when losses are probable.
In: Accounting
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Automobiles are often leased, and there are several terms unique to auto leases. Suppose you are considering leasing a car. The price you and the dealer agree on for the car is $31,200. This is the base capitalized cost. Other costs that may be added to the capitalized cost price include the acquisition (bank) fee, insurance, or extended warranty. Assume these costs are $1,100. Capitalized cost reductions include any down payment, credit for a trade-in, or dealer rebate. Assume you make a down payment of $2,000 and there is no trade-in or rebate. If you drive 12,000 miles per year, the lease-end residual value for this car will be $22,000 after three years. |
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The lease or “money” factor, which is the interest rate on the loan, is the APR of the loan divided by 2,400. The money factor of 2,400 is the product of three numbers: 2, 12, and 100. The 100 is used to convert the APR, expressed as a percentage, to a decimal number. The 12 converts this rate to a monthly rate. Finally, the monthly rate is applied to the sum of the net capitalization cost plus the residual. If we divide this sum by 2, the result is the average anticipated book value. Thus, the end result of the calculation using the money factor is to multiply a monthly rate by the average book value to get a monthly payment. The lease factor the dealer quotes you is .00263. |
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The monthly lease payment consists of three parts: Depreciation fee, finance fee, and sales tax. The depreciation fee is the net capitalized cost minus the residual value divided by the term of the lease. The finance fee is the net capitalization cost plus the residual times the money factor, and the monthly sales tax is the monthly lease payment times the tax rate. A. What APR is the dealer quoting you? B. What is your monthly lease payment for a 36-month lease if the sales tax is 7 percent? |
In: Finance
It is the end of
20172017.
Mulberry All minus FixedMulberry All−Fixed
Corporation began operations in January
20162016.
The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output.
Mulberry All minus FixedMulberry All−Fixed
Corp. is located on the bank of a river and has its own hydroelectric plant to supply power, light, and heat. The company manufactures a synthetic fertilizer from air and river water and sells its product at a price that is not expected to change. It has a small staff of employees, all paid fixed annual salaries. The output of the plant can be increased or decreased by pressing a few buttons on a keyboard. The following budgeted and actual data are for the operations of
Mulberry All minus FixedMulberry All−Fixed.
The company uses budgeted production as the denominator level and writes off any production-volume variance to cost of goods sold.
|
2016 |
2017ª |
|
|---|---|---|
|
Sales |
50,000 tons |
50,000 tons |
|
Production |
100,000 tons |
0 tons |
|
Selling price |
$100 per ton |
$100 per ton |
|
Costs (all fixed): |
||
|
Manufacturing |
$4,800,000 |
$4,800,000 |
|
Operating (nonmanufacturing) |
$106,000 |
$106,000 |
(a) Management adopted the policy, effective January 1,
20172017,
of producing only as much product as needed to fill sales orders. During
20172017,
sales were the same as for
20162016
and were filled entirely from inventory at the start of
20172017.
Requirement 1. Prepare income statements with one column for
20162016,
one column for
20172017,
and one column for the two years together using (a) variable costing and (b) absorption costing. (Use parentheses or a minus sign for an operating loss.)
Start by preparing the (a) variable costing income statement for
20162016,
20172017,
and the two year total.
|
2016 |
|
|
Revenue |
|
|
Fixed costs: |
|
|
Manufacturing costs |
|
|
Operating costs |
|
|
Total fixed costs |
|
|
Operating income (loss) |
In: Accounting
Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6-inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
| Machine Hours | Quantity Produced | |||
| 6-inch | 12,000 | 31,250 rolls | ||
| 8-inch | 20,000 | 25,000 rolls | ||
| 11-inch | 18,000 | 12,000 rolls | ||
After installing JIT, three manufacturing cells were created and
the cell workers were trained to perform maintenance. Maintenance
costs for the three cells still totaled $400,000; however, these
costs are now traceable to each cell.
| Cell, 6-inch | $100,000 |
| Cell, 8-inch | 120,000 |
| Cell, 11-inch | 180,000 |
The maintenance cost per roll of 8-inch insulation before JIT is
installed would be
a.$20.00.
b.$16.00.
c.$9.33.
d.$6.40.
Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas:
| Activity Area | Cost Driver and Rate |
| Order taking | $100 per purchase order |
| Sales visits | $50 per visit |
| Delivery vehicles | $1 per delivery mile |
The following customer information is given:
| AX | BY | DZ | |
| Units sold | 100,000 | 80,000 | 60,000 |
| List price | $50 | $50 | $50 |
| Actual sales price | $45 | $48 | $50 |
| Number of purchase orders | 30 | 20 | 10 |
| Number of sales visits | 6 | 5 | 3 |
| Number of delivery miles | 100 | 80 | 60 |
What is the profitability of customer BY?
a.$3,840,000
b.$4,000,000
c.$3,837,670
d.$2,330,000
In: Accounting
Shamrock Co. reported $157,600 of net income for 2017. The
accountant, in preparing the statement of cash flows, noted the
following items occurring during 2017 that might affect cash flows
from operating activities.
| 1. | Shamrock purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share. | |
| 2. | Shamrock sold 100 shares of IBM common at $180 per share. The acquisition cost of these shares was $160 per share. There were no unrealized gains or losses recorded on this investment in 2017. | |
| 3. | Shamrock revised its estimate for bad debts. Before 2017, Shamrock’s bad debt expense was 1% of its net sales. In 2017, this percentage was increased to 2%. Net sales for 2017 were $538,600, and net accounts receivable decreased by $11,700 during 2017. | |
| 4. | Shamrock issued 500 shares of its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share. | |
| 5. | Depreciation expense is $38,500. | |
| 6. | Shamrock Co. holds 40% of the Nirvana Company’s common stock as a long-term investment. Nirvana Company reported $24,300 of net income for 2017. | |
| 7. | Nirvana Company paid a total of $2,200 of cash dividends to all investees in 2017. | |
| 8. | Shamrock declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share. |
Prepare a schedule that shows the net cash flow from operating
activities using the indirect method. Assume no items other than
those listed above affected the computation of 2017 net cash flow
from operating activities. (Show amounts that decrease
cash flow with either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
Ayayai Co. reported $ 142,000 of net income for 2017. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2017 that might affect cash flows from operating activities.
1) Ayayai purchased 100 shares of treasury stock at a cost of $
20 per share. These shares were then resold at $ 25 per
share.
2) Ayayai sold 100 shares of IBM common at $ 200 per share. The
acquisition cost of these shares was $ 130 per share. There were no
unrealized gains or losses recorded on this investment in
2017.
3) Ayayai revised its estimate for bad debts. Before 2017, Ayayai’s
bad debt expense was 1% of its net sales. In 2017, this percentage
was increased to 2%. Net sales for 2017 were $ 545,900, and net
accounts receivable decreased by $ 12,000 during 2017.
4) Ayayai issued 500 shares of its $ 10 par common stock for a
patent. The market price of the shares on the date of the
transaction was $ 23 per share.
5) Depreciation expense is $ 39,800.
6) Ayayai Co. holds 40% of the Nirvana Company’s common stock as a
long-term investment. Nirvana Company reported $ 28,900 of net
income for 2017.
7) Nirvana Company paid a total of $ 1,800 of cash dividends to all
investees in 2017.
8) Ayayai declared a 10% stock dividend. One thousand shares of $
10 par common stock were distributed. The market price at date of
issuance was $ 20 per share.
Prepare a schedule that shows the net cash flow from operating
activities using the indirect method. Assume no items other than
those listed above affected the computation of 2017 net cash flow
from operating activities.
In: Accounting
You own three stocks:
600600
shares of Apple Computer,
10 comma 00010,000
shares of Cisco Systems, and
5 comma 0005,000
shares of Colgate-Palmolive. The current share prices and expected returns of Apple, Cisco, and Colgate-Palmolive are, respectively,
$ 500$500,
$ 20$20,
$ 100$100
and
12 %12%,
10 %10%,
8 %8%.
a. What are the portfolio weights of the three stocks in your portfolio?
b. What is the expected return of your portfolio?
c. Suppose the price of Apple stock goes up by
$ 25$25,
Cisco rises by
$ 5$5,
and Colgate-Palmolive falls by
$ 13$13.
What are the new portfolio weights?
d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices?
a. What are the portfolio weights of the three stocks in your portfolio?
The portfolio weight of Apple Computer is
nothing%.
(Round to two decimal places.)The portfolio weight of Cisco Systems is
nothing%.
(Round to two decimal places.)The portfolio weight of Colgate-Palmolive is
nothing%.
(Round to two decimal places.)
b. What is the expected return of your portfolio?
The expected return on the portfolio is
nothing%.
(Round to two decimal places.)c. Suppose the price of Apple stock goes up by
$ 25$25,
Cisco rises by
$ 5$5,
and Colgate-Palmolive falls by
$ 13$13.
What are the new portfolio weights?The new portfolio weight of Apple is
nothing%.
(Round to two decimal places.)The new portfolio weight of Cisco is
nothing%.
(Round to two decimal places.)The new portfolio weight of Colgate-Palmolive is
nothing%.
(Round to two decimal places.)
d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new
prices?
The new expected return is
nothing%.
(Round to two decimal places.)
Enter your answer in each of the answer boxes.
In: Finance
| Jan 15 Work in Process 168,000 Factory Overhead 168,000 | |||||||||||||||||||||||||||||||||||||||||||
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Jan 15 Work in Process 168,000 Cash 168,000 Jan 15 Materials 168,000 Work in Process 168,000
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In: Accounting