ALL COMPONENTS / QUESTIONS MUST BE FULLY ANSWERED -- DO NOT USE THE SIMILAR TEXTBOOK SOLUTIONS ALREADY IN PLACE

IF YOU ARE UNABLE TO ANSWER ALL COMPONENTS, PLEASE DO NOT ANSWER. INCOME STATEMENTS SHOULD BE IN THE MOST BASIC FORM. OPENING AND CLOSING INVENTORY, ETC., ARE NOT TO BE INCLUDED.  

Ciroc Company manufactures and sells one specific product. The following information pertains to each of Ciroc's first three years of operations:

Variable costs per unit:
Manufacturing:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $ 32
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20
Variable manufacturing overhead . . . . . . . . . . $ 4
Variable selling and administrative . . . . . . . . . $ 3
Fixed costs per year:
Fixed manufacturing overhead . . . . . . . . . . . . $ 660,000
Fixed selling and administrative expenses . . . $ 120,000
During its first year of operations, Ciroc produced 100,000 units and sold 80,000 units. During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, Ciroc produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $ 75 per unit.

Required: (ALL COMPONENTS OF ALL 4 QUESTIONS MUST BE ANSWERED -- DO NOT USE THE TEXTBOOK SOLUTIONS ALREADY FOUND IN THIS BOOK)

1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO meanslast-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO meansfirst-in first-out. In other words, it assumes that the oldest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

Scenario Background:

A marketing company based out of New York City is doing well and is looking to expand internationally. The CEO and VP of Operations decide to enlist the help of a consulting firm that you work for, to help collect data and analyze market trends.  

You work for Mercer Human Resources. The Mercer Human Resource Consulting website (www.mercer.com) lists the prices of certain items in selected cities around the world. They also report an overall cost-of-living index for each city compared to the costs of hundreds of items in New York City (NYC). For example, in London at 88.33 is 11.67% less expensive than NYC.

More specifically, if you choose to explore the website further you will find a lot of fun and interesting data. You can explore the website more on your own after the course concludes.

https://mobilityexchange.mercer.com/Insights/cost-of-living-rankings#rankings

In the Excel document, you will find the 2018 data for 17 cities in the data set Cost of Living. Included are the 2018 cost of living index, cost of a 3-bedroom apartment (per month), price of monthly transportation pass, price of a mid-range bottle of wine, price of a loaf of bread (1 lb.), the price of a gallon of milk and price for a 12 oz. cup of black coffee. All prices are in U.S. dollars.

You use this information to run a Multiple Linear Regression to predict the Cost of living, along with calculating various descriptive statistics. This is given in the Excel output (that is, the MLR has already been calculated. Your task is to interpret the data).  

Based on this information, in which city should you open a second office in? You must justify your answer. If you want to recommend 2 or 3 different cities and rank them based on the data and your findings, this is fine as well.  

A stock, priced at $47.00, has 3-month call and put options with exercise prices of $45 and $50. The current market prices of these options are given by the following:

Now, assume that you already hold a sizable block of the stock, currently priced at $47, and want to hedge your stock to lock in a minimum value of $45 per share at a very low up-front initial cost.

a) What hedge strategy from Chapter 7 would you recommend and what would you option transactions be to set up the holding (per 100 shares of stock that you already own) And, what would be the up-front cost to set up these option position?

b) What if the stock price falls appreciably over the next 3 months and ends up at $30. Relative to your starting point at time-zero when the stock was priced at $47, what is your dollar loss for the hedged position versus if you had not hedged and held the “long stock only” (again scaling by 100 shares of stock)? What would your percentage rate of return have been for your combined holdings (stock and options) from time-0 to time-T? What would your percentage rate of return have been for a comparable “long stock only” position over time-0 to time-T in this case? (Remember time-T is at option expiration).

c) Alternatively, what if the stock price had risen appreciably over the next 3 months and ends up at $65. Relative to your starting point at time-zero when the stock was priced at $47, what is your dollar gain for the hedged position versus if you had not hedged and held the “long stock only”? What would your percentage rate of return have been for your combined holdings (stock and options) from time-0 to time-T? What would your percentage rate of return have been for a comparable “long stock only” position over time-0 to time-T in this case?

To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its merchandise inventory during the year:

Required:
1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system.
2. Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 20,000 units with a cost of $11.70).
3. Determine the amount Treynor would report for its LIFO reserve at the end of the year.
4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $10,000.

Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. (Round "Cost per Unit" to 2 decimal places.)

Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 20,000 units with a cost of $11.70).

Determine the amount Treynor would report for its LIFO reserve at the end of the year.

Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $10,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

• Record the year-end adjusting entry for the LIFO reserve.

Note: Enter debits before credits.

De Anza College Accounting 1C online BEP Project Scott Osborne
First Name________________Last Name____________________
Please print first and last names as it shows on the attendance roster.
10 Homework Points
During the upcoming year De Anza Co. expects the following data:
Expected unit selling price is: $125
Expected unit variable cost is: $70
Expected total fixed costs are: $1,512,500
Required
1. Calculate breakeven point in both units and dollars. (Show work in blank space below.)
Round units to the nearest unit and round dollars to the nearest dollar.
2. Compute sales units required to realize income from operations of $630,000.
3. Construct a cost-volume-profit chart assuming maximum sales in the relevant
range of 40,000 units. ( Use the available graph template below.)
Label the following parts of the graph: Sales Revenue, Fixed Costs, Variable Costs,
Total Costs, Profit Area, Loss Area, and Break Even Point.

To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its merchandise inventory during the year:

Required:
1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system.
2. Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 20,000 units with a cost of $11.70).
3. Determine the amount Treynor would report for its LIFO reserve at the end of the year.
4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $10,000.

Department P had the following information regarding equivalent units of production, which were determined using first-in-first-out process costing method:

                                                                                                            Equivalent Units of Production

The cost information is as follows:

Required:

1. What were the stages of completion of the work in process with respect to material and conversion cost at the beginning of this period? (Please show your computation)
2. What were the stages of completion of the work in process with respect to material and conversion cost at the end of this period? (Please show your computation).
3. Using the first-in-first-out process costing method, determine:(Please show your computations fully)  

1. The cost of the 28,000 units completed and transferred; and
2. The cost of work-in-process ending inventory.

4. Assuming that the weighted average costing method had been used to compute the equivalent units of production by Department P, determine:

1. What the equivalent units of production would have been for materials and conversion cost (Please show all your computations completely) and
2. The cost per unit for materials and conversion.

To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its merchandise inventory during the year:

Required:
1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system.
2. Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 20,000 units with a cost of $12.60).
3. Determine the amount Treynor would report for its LIFO reserve at the end of the year.
4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $10,000.

3 Fraley Chemical Company accounts for its production activities using first-in, first-out (FIFO) process costing. Inventory records for the process show a January 1 work-in-process inventory of 10,000 gallons, 80 percent complete as to materials and 40 percent complete as to conversion. The January 31 inventory consisted of 15,000 gallons, 60 percent complete as to materials and 20 percent complete as to conversion. In January, 40,000 gallons were completed and transferred to the finished goods inventory. Costs in the Work-in-Process Inventory account in January are as follows: Materials Conversion Total Costs in beginning inventory $ 1,920 $ 672 $ 2,592 Costs added this period 8,405 5,694 14,099 Total cost to be accounted for $10,325 $6,366 $16,691 a. Using first-in, first-out (FIFO) process costing, calculate the equivalent units (in gallons) for January. b. Using first-in, first-out (FIFO) process costing, calculate the cost per equivalent unit for January. (keep answers to 3 decimal points for calculation of part c) c. Using first-in, first-out (FIFO) process costing, calculate the cost of the 40,000 gallons that were completed and transferred out in January. Show your calculations.

Classify the costs below as: Product-Direct, Product-Indirect, or Period AND Variable cost, Fixed cost, or Mixed cost.   Below are budgeted income statements at different team levels, use the information to answer the questions below:

Using the above data and the high/low method, answer the following questions:

Determine the variable cost per unit

Determine the fixed cost

What is the cost equation?

Estimate the total cost for 20 teams

In addition to the above data, assume the company has the following sales. Answer the following questions

What is the revenue generated per team?

What is the per unit contribution margin?

What is the contribution margin ratio?

Compute break-even point in dollars and in units (round to the next whole number) for each of the three scenarios. Then, choose a scenario for your team.

If CAVALRY wants to have net income of $100.00 from this event, how many teams are needed?

If CAVALRY estimates 20 teams, determine the Margin of Safety in sales dollars.

Perform a sensitivity analysis to determine how an increase in team revenue of $500 would impact Net Income?

If the team revenue changed to $120 per team, and all other expenses remained the same as calculated in your cost equation, what is the new break-even in units?

If the variable costs changed to $50 per team (the fix costs remained the same as in your cost equation and team revenue remained at $100 per team), what is the new break-even in units?

If the fixed costs changed to $980, (variable expenses remained the same as in your cost equation, and sales price remained at $100 per team), what is the new break-even in units?