Problem 1. MACRS & Bonus Depreciation. “MMMM That’s Good, Inc.” (or MTG) owns a successful chain of over 150 casual dining restaurants nationwide. Please calculate the tax depreciation expense for 2018 for all of the assets listed below (which constitute all the new assets purchased or placed into service by MTG in 2018): (i) first using just MACRS AND then (ii) using Bonus Depreciation and MACRS.

(i) MTG purchases a building for a new restaurant on June 20, 2018 for $750,000. The land is worth $300,000. On September 15, 2018, MTG purchases new ovens/stoves, prep lines, refrigerators, and a dish washing machine (collectively the “Kitchen Equipment”) at a cost of $150,000. The restaurant is opened for business on September 30, 2018.

(ii) MTG updates its accounting and inventory management systems for 2015 by purchasing new computer hardware at a cost of $4,500 per store (total cost of $675,000). The computer equipment was all purchased on December 15, 2017 and placed into service on January 5, 2018.

(iii) In order to implement pilot testing for a new menu line at select locations, on December 3, 2018, MTG makes a bulk purchase of smoker machines for 30 of its restaurants at a cost of $25,000 each or a total cost of $750,000, and immediately installs the machines and begins use.

Problem 2.

IRC Section 179 & Elections. Assume MTG’s 179 deduction is not limited in 2018, but applying cost recovery using bonus depreciation pushes MTG into a tax loss and so management is looking to limit its total cost recovery to approximately $550,000. Please describe how you might utilize IRC section 179, bonus depreciation elections, & MACRS depreciation to achieve a total deduction for all cost recovery on new assets of $550,000 and then perform the calculation.

Problem 3.

Dispositions. Returning to the facts of Problem 1, if after the pilot testing MTG decided to sell all of the smoker machines on August 10, 2019 for $400,000, what would be the tax consequences including the amount and nature of any gain or loss?

Product Cost Report—Weighted Average Method

Reston Manufacturing Corporation produces a cosmetic product in three consecutive processes. The costs of Department 1 for May 2016 were as follows:

Department 1 handled the following units during May:

On average, the May 1 units were 30% complete. The May 31 units were 60% complete. Materials are added at the beginning of the process, and conversion costs occur evenly throughout the process in Department 1. Reston uses the weighted average method for process costing.

Required

Prepare the product cost report for Department 1 for May.

Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.

A conducting ball is neutralized and then electrically isolated.  A + 3.0 μ C charge is then placed near the conducting ball without touching it.

After the charge is brought in, the net charge on the conducting ball will be                            [ Select ]                       ["zero", "positive", "negative"]         .  The surface charge density will be                            [ Select ]                       ["zero", "positive", "negative"]         at points on the conducting ball nearest to the + 3.0 μ C charge, and will be                            [ Select ]                       ["zero", "positive", "negative"]         at points on the conducting ball farthest from the + 3.0 μ C charge.  The net electrical force acting on the + 3.0 μ C charge will be                            [ Select ]                       ["zero", "directed towards the ball", "directed away from the ball"]         .

                           [ Select ]                       ["None", "One", "Two", "Three", "All four"]         of the correct answers above will remain true if the conducting ball were replaced by a non-conducting ball of the same radius and distance to the + 3.0 μ C charge.  The surface charge density of the non-conducting ball will be
Choose one:                            [ Select ]                       ["(A)", "(B)", "(C)", "(D)"]      

Sixteen-year-old Michelle Portman was out driving at night near Sandusky, Ohio with her friend Katie Webster in the front passenger seat. They came to a railroad crossing with multiple tracks, where the mechanical arm had descended and warning bells were sounding. A Conrail train had suffered mechanical problems and was stopped 200 hundred feet from the crossing, where it had been stalled for close to an hour. Michelle and Katie saw several cars ahead of them go around the barrier and cross the tracks, despite the fact that Ohio’s vehicle and traffic laws prohibited this practice. Michelle had to decide whether she would do the same.
Long before Michelle made her decision, the train’s engineer (a Conrail employee) had seen the heavy Saturday night traffic crossing the tracks and realized the danger. The conductor and brakeman also understood the peril, but rather than posting a flagman who could have stopped traffic when a train approached, they walked to the far end of their train to repair the mechanical problem. A police officer had come upon the scene, told his dispatcher to notify the train’s parent company Conrail of the situation, and left.
Michelle made the decision to cross the tracks. She slowly followed the cars ahead of her. Seconds later, both girls were dead. A freight train traveling 60 miles per hour struck the vehicle broadside, killing Michelle and Katie instantly.
Michelle’s mother sued Conrail for negligence. The company argued that it was Michelle’s decision, one that violated Ohio traffic laws, which led to her death. Ohio is a comparative negligence state. Discuss both the plaintiff’s claim and Conrail’s defense. What verdict will result?

Please answer in the IRAC format.

Issue

Rule

Analysis

Conclusion

#14 . Listed below are speeds (mi/h) measured from southbound traffic on I-280 near Cupertino, CA. This simple random sample was obtained at 3:30 p.m. on a weekday. Use a 0.05 significance level to test the claim of the highway engineer that the standard deviation of speeds is equal to 5.0 mi/h. (With a 95% confidence) 62 61 61 57 61 54 59 58 59 69 60 67

A) Construct a confidence interval using the confidence level provided.

B) Test the hypothesis

C) Enter the results in excel as following

confidence level critical value confidence interval

   XL^2

   XR^2

AURAK Paper Plant AURAK Paper Factory, located near downtown RAK, has long been delaying the expense of installing air pollution control equipment in its facility. The Environmental Protection Agency (EPA) has recently given the manufacturer 16 weeks to install a complex air filter system. AURAK Paper has been warned that it may be forced to close the facility unless the device is installed in the allotted time. The Plant Manager, wants to make sure that installation of the filtering system progresses smoothly and on time. Given the following information, develop a table showing activity precedence relationships. AURAK Paper has identified the eight activities that need to be performed in order for the project to be completed. When the project begins, two activities can be simultaneously started: building the internal components for the device (activity A) and the modifications necessary for the floor and roof (activity B). The construction of the collection stack (activity C) can begin when the internal components are completed. Pouring the concrete floor and installation of the frame (activity D) can be started as soon as the internal components are completed and the roof and floor have been modified. After the collection stack had been constructed, two activities can begin: building the high-temperature burner (activity E) and installing the pollution control system (activity F). The air pollution device can be installed (activity G) after the concrete floor has been built. Finally, after the control system and pollution device have been installed, the system can be inspected and tested (activity H). Activities and precedence relationships may seem rather confusing when they are presented in this descriptive form. It is therefore convenient to list all the activity information in a table first. You are required to: 1. Draw AON network diagram for AURAK Paper Plant 2. What is the critical path method of this diagram? 3. What is the impact on the sequence of activities if EPA approval is required after Inspect and Test?

Scottsdale Ltd. manufactures a variety of high-volume and low-volume products to customer demand. Presented is information on 2009 manufacturing overhead and activity cost drivers.

Product X1 required 3,000 machine hours to fill 10 customer orders for a total of 8,000 units.

(a) Assuming all manufacturing overhead is estimated and predicted on the basis of machine hours, determine the predicted total overhead costs to produce the 8,000 units of product X1.
$Answer

(b) Assuming manufacturing overhead is estimated and predicted using separate rates for machine hours, customer orders, and products (a multiple-level cost hierarchy), determine the predicted total overhead costs to produce the 8,000 units of product X1.
$Answer

(c) Calculate the error in predicting manufacturing overhead using machine hours versus using multiple cost drivers. Indicate whether the use of only machine hours results in overpredicting or underpredicting the costs to produce 8,000 units of product X1.
$Answer AnswerOver-predictionUnder-prediction

(d) Determine the error in the prediction of X1 batch-level costs resulting from the use of only machine hours. Indicate whether the use of only machine hours results in overpredicting or underpredicting the batch-level costs of product X1.
$Answer AnswerOver-predictionUnder-prediction

(e) Determine the error in the prediction of X1 product-level costs resulting from the use of only machine hours. Indicate whether the use of only machine hours results in overpredicting or underpredicting the product-level costs of product X1.
$Answer AnswerOver-predictionUnder-prediction

Orange Not Apple Manufacturing Corporation J has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data:

The company's estimated total manufacturing overhead for the year is $1,464,480 and the company's estimated total direct labor-hours for the year is 24,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures                                              Estimated Overhead Cost

Supporting direct labor (DLHs)                                                                                                                                                                                                            552,000 Setting up machines (setups)                                                                                                                                                                                                                 132,480

Parts administration (part types)                                                                                   780,000

                                                                                                                                $   1,464,480

Total

Required:

1. Determine the manufacturing overhead cost per unit for H16Z under the traditional costing system.

2. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.

C. Comment on the difference between the two cost systems for H16Z and how the cost can be distort under one system.