Profit and Loss Worksheet - (Figure %’s to 2 decimal places)

Cost of sales

Open and use the chart below for the Cost of Sales Quiz. 7 questions A – G

Cost of sales ÷ sales = cost of sale %

Sales × cost of sale % = cost of sales

Cost of sales ÷ Cost % = Sales

A.

B.

C.

D.

E.

F.

G.

Brawndo manufactures jumbo-sized energy drinks (sold by the gallon) and ships them direct to customers using United Parcel Service (UPS) at a flat rate per gallon. Which two terms below describe the cost of shipping their energy drinks?

a) Mixed cost and product cost

b) Fixed cost and period cost

c) Variable cost and period cost

d) Mixed and period cost

e) Variable cost and product cost

f) Fixed cost and product cost

You Make The Call! Professor Edwards’s “Fundamentals of Supervision” class was in the fifth week, and the class was discussing servant leadership. Professor Edwards identified three things for the students to consider. “Leaders need to create a vision for their team that will create a future for the organization based on resilience. Leaders need to use the talents and skills of their team members to get the best results. Leaders need to find ways to engage their followers to be the best they can be in doing the job they were hired to do.” The classroom door opened and someone the students did not know walked into the class. Professor Edwards introduced her as Alisha McDonald, a former student, who was now district manager for IHOP and active in the area Habitat for Humanity Women Build Projects. He said that she would share her story of how her work with Habitat had helped her. Most of the students had never done or even heard about the “hammer” experience. Alisha began her talk by saying that Professor Edwards had gotten her professional business fraternity, Delta Sigma Phi, to get off the bench and get in a game that none of the group had ever heard about. My fraternity got involved in building a home for Habitat for Humanity. It was the most fun project I had ever been involved in. Marketing and finance majors worked on securing funds for the build. Other majors worked on all aspects of the house. Habitat for Humanity put on “Women Build” classes to give us some knowledge, skills, and familiarity with working on a Habitat project. The area Habitat affiliate is planning on building over 100 homes in the next four years and they need volunteers. Projects like this have not just allowed me to be a better person, but also gave me a real appreciation for the leadership and teamwork needed to help those who are truly in need. I knew nothing about building a home, but I learned lots about working with a diverse group of people. Projects like this one and others allowed me to develop and demonstrate my leadership and followership skills and to get others to do some things they never thought they would be able to do. This year, we will begin our Women Build project on Friday, May 1, and conclude on Saturday, May 16. There is also a men’s build at the same time. As a team leader I have a critical role in making the Women Build program a success. A Habitat build is fun and rewarding, and I want you there to help. Habitat for Humanity also has a year-round program known as the Collegiate Challenge. Summer, fall, winter, and Spring Break trips are available for those of you who might like to travel out of the area and spend a week working in partnership with a local Habitat affiliate to eliminate poverty housing in their area. Last year, we took a group of students to Jacksonville, Florida, on Spring Break. More than 14,000 college students took part in the Collegiate Challenge last year. If you would be interested in doing that during your Spring Break, Professor Edwards will help you get in touch with me so that we can get you involved. Habitat’s Women Build program started in Charlotte, North Carolina, in 1991 with a home completely built by a crew of female volunteers. Women Build projects provide an environment where women can feel comfortable learning construction skills they might not otherwise have an opportunity to learn. Women all over the United States will participate in a Mother’s Day build. I encourage you to become a volunteer to help those in need and change communities. Each Habitat home is sponsored, and we use private funds to purchase building materials and land for the homes. Each home built has a cost of $75,000, and we ask that each volunteer secure a gift of at least $250 to ensure that the home is properly funded. Last year, Professor Edwards and his wife gave us $2000 for a Women Build project, and he has told me that they will do that again. What questions do you have for me? Leadership: The Core of Supervisory Management Harry S. Truman, 33rd president of the United States, once remarked that leadership is the ability to get people to do what they don’t like to do and enjoy it.1 Simple as it seems, there still is considerable misunderstanding concerning the supervisor’s leadership role in influencing employee motivation and performance. This misunderstanding often stems from a misconception regarding the meaning of leadership itself. Occupying a position of responsibility and authority does not necessarily make someone a leader whom subordinates will follow. You Make the Call! 1 Define leadership, explain its importance at the supervisory level, and describe elements of contemporary leadership thought. Disclaimer: The above scenario presents a supervisory situation based on real events to be used for educational purposes. The identities of some or all individuals, organizations, industries, and locations, as well as financial and other information may have been disguised to protect individual privacy and proprietary information. Fictional details may have been added to improve readability and interest.

Ferris Company began 2018 with 6,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January 2018 are as follows:

*Includes purchase price and cost of freight.

8,000 units were on hand at the end of the month.

Required:
Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system.
2. LIFO, periodic system.
3. LIFO, perpetual system.
4. Average cost, periodic system.
5. Average cost, perpetual system.

Calculate January's ending inventory and cost of goods sold for the month using FIFO, periodic system.

Calculate January's ending inventory and cost of goods sold for the month using LIFO, periodic system.

Calculate January's ending inventory and cost of goods sold for the month using LIFO, perpetual system.

Calculate January's ending inventory and cost of goods sold for the month using Average cost, periodic system.

Calculate January's ending inventory and cost of goods sold for the month using Average cost, perpetual system. (Round average cost per unit to 4 decimal places. Enter sales with a negative sign.)

You may build some tables for this assignment in Excel and please show all details. If you use excel, please just copy and paste.

Your goal is to figure out whether starting a microbrewery in Nova Scotia is a good idea or not. You need to perform net present value analysis. In addition, you need to estimate payback period, discounted payback, internal rate of return and profitability index. If you cannot estimate a certain parameter, indicate why. The inputs for your analysis are as follows:

you will run the business for ten years, and then you close the shop.

net sales forecasts are as follows:   

year one year two year three

$200,000 $1,000,000 $2,000,000

Starting year four, your sales will grow at a rate of three percent until year ten, when you close the business. You could grow sales faster if you expanded into other provinces, but provincial governments in Canada impose regulatory hurdles on beer imports from other provinces.[1]

costs of goods sold are sixty five percent of sales.

selling, general and administrative expenses are 25 percent of sales.

initial investment in equipment equals $600,000. Unless you choose to use a CCA formula, you will need to build a CCA schedule for ten years of operations. For simplicity, assume that there are no more capital expenditures and that at the end of year ten, equipment is sold at remaining book value (UCC). CCA rate equals 30 percent.

Your federal tax rate is 11 percent[2]. You pay no provincial tax in the first three years of operations[3]. After that, you start paying provincial tax at a rate of 4.5 percent [4]. For simplicity, assume that losses accumulated in the first years cannot be applied to reduce taxable income in later years, ie there are no tax loss carry forwards.

Equipment purchase for a microbrewery costs $600,000 (see extract from The Wall Street Journal article on the next page). Half of that amount is funded with a loan that carries interest rate of 7 percent.

starting a brewery requires immediate working capital outlay of $10,000. Net working capital is maintained at 5 percent of sales throughout the life of the project.

cost of capital equals 20 percent, slightly below returns required by late stage venture capital firms.

To facilitate your task, I built income statement for year one (see attachment 2). I suggest you build the rest of the income statement and CCA schedule in Excel, and copy/paste them into your deliverable. If you choose to use the CCA formula, you need to eliminate depreciation from the income statement.

Attachment 1 Pro forma income statement for the first year of operations.

net sales                                   $200,000

cost of goods sold                    $130,000

gross profit $70,000

overheads $50,000

depreciation $90,000

operating profit (EBIT)           -$70,000

interest $21,000

pre-tax profit -$91,000

tax $0 (no tax is paid on negative earnings)                  

net income -$91,000

Note that for net present value analysis, operating cash flow should be estimated based on after-tax operating profit that excludes interest tax shield. Use equation 11.2 from recommended text.

depreciation schedule year one

book value starting balance $600,000

depreciation $90,000

book value ending balance $510,000

O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to customer specifications). O’Leary uses a normal job costing system. Direct labor at O’Leary is paid $37 per hour, but the employees are not paid if they are not working on jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows.

At the beginning of year 3, O’Leary has two jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27, year 2. It is scheduled to ship on January 7, year 3. Job MC-275 is still in progress. For the purpose of computing the predetermined overhead rate, O’Leary uses the previous year’s actual overhead rate. Data on direct material costs and direct labor-hours for these jobs in year 2 follow.

During year 3, O’Leary incurred the following direct material costs and direct labor-hours for all jobs worked in year 3, including the completion of Job MC-275.

At the end of year 3, there were four jobs that had not yet shipped. Data on these jobs follow.

Required:

a. What was the amount in the beginning Finished Goods and beginning Work-in-Process accounts for year 3?

b. O’Leary incurred direct materials costs of $61,000 and used an additional 700 hours in year 3 to complete job MC-275. What was the final (total) cost charged to job MC-275?

c. What was over- or underapplied overhead for year 3?

d. O’Leary prorates any over- or underapplied overhead to Cost of Goods Sold, Finished Goods Inventory, and Work-in-Process Inventory. Prepare the journal entry to prorate the over- or underapplied overhead.

e. A customer has asked O’Leary to bid on a job to be completed in year 4. O’Leary estimates that the job will require about $94,500 in direct materials and 5,200 direct labor-hours. Because of the economy, O’Leary expects demand for its services to be low in year 4, and the CEO wants to bid aggressively, but does not want to lose any money on the project. O’Leary estimates that there would be virtually no sales or administrative costs associated with this job. What is the minimum amount O’Leary can bid on the job and still not incur a loss?

O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to customer specifications). O’Leary uses a normal job costing system. Direct labor at O’Leary is paid $34 per hour, but the employees are not paid if they are not working on jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows.

At the beginning of year 3, O’Leary has two jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27, year 2. It is scheduled to ship on January 7, year 3. Job MC-275 is still in progress. For the purpose of computing the predetermined overhead rate, O’Leary uses the previous year’s actual overhead rate. Data on direct material costs and direct labor-hours for these jobs in year 2 follow.

During year 3, O’Leary incurred the following direct material costs and direct labor-hours for all jobs worked in year 3, including the completion of Job MC-275.

At the end of year 3, there were four jobs that had not yet shipped. Data on these jobs follow.

Required:

a. What was the amount in the beginning Finished Goods and beginning Work-in-Process accounts for year 3?

b. O’Leary incurred direct materials costs of $60,400 and used an additional 640 hours in year 3 to complete job MC-275. What was the final (total) cost charged to job MC-275?

c. What was over- or underapplied overhead for year 3?

d. O’Leary prorates any over- or underapplied overhead to Cost of Goods Sold, Finished Goods Inventory, and Work-in-Process Inventory. Prepare the journal entry to prorate the over- or underapplied overhead.

e. A customer has asked O’Leary to bid on a job to be completed in year 4. O’Leary estimates that the job will require about $94,200 in direct materials and 5,170 direct labor-hours. Because of the economy, O’Leary expects demand for its services to be low in year 4, and the CEO wants to bid aggressively, but does not want to lose any money on the project. O’Leary estimates that there would be virtually no sales or administrative costs associated with this job. What is the minimum amount O’Leary can bid on the job and still not incur a loss?

Case study adapted from: [Brooks hear. ICT Services Management (Custom Edition EBook), Pearson Education Australia, 2015. ProQuest Ebook Central, http://ebookcentral.proquest.com] Reusable Passwords The most common authentication credential is the reusable password, which is a string of characters that a user types to gain access to the resources associated with a certain username (account) on a computer. These are called reusable passwords because the user types the password each time he or she needs access to the resource. Unfortunately, the reusable password is the weakest form of authentication, and it is appropriate only for the least sensitive assets. Ease of Use and Low Cost: The popularity of password authentication is hardly surprising. For users, passwords are familiar and relatively easy to use. For corporate IT departments, passwords add no cost because operating systems and many applications have built-in password authentication. Dictionary Attacks The main problem with passwords is that most users pick very weak passwords. To break into a host by guessing and trying passwords, hackers often use password dictionaries. These are lists of passwords likely to succeed. Running through a password dictionary to see if a password is accepted for a username is called a dictionary attack. Password dictionaries typically have three types of entries: a list of common password, the words in standard dictionaries, and hybrid versions of words such as capitalizing the first letter and adding a digit at the end. If a password is in one of these dictionaries, the attacker may have to try a few thousand passwords, but this will only take seconds. No password that is in a cracker dictionary is adequately strong, no matter how long it is. Fortunately, good passwords cannot be broken by dictionary attacks. Good passwords have two characteristics. First, they are complex. It is essential to have a mix of upper and lower case letters that does not have a regular pattern such as alternating uppercase letters lowercase letters. It is also good— and some would say necessary— to include non-letter keyboard characters such as the digits (0 through 9) and other special characters (&, #./,?, etc.). If a password is complex, it can only be cracked by a brute-force attack, in which the cracker first tries all combinations of one character passwords, all combinations of two-character passwords, and so forth, until the attacker finds one that works. Complexity is not enough, however. Complex passwords must also be long. For short complex passwords, brute force attacks will still succeed. Beyond about 10 or 12 characters, however, there are too many combinations to try in a reasonable period of time. Overall, while long complex passwords can defeat determined attacks, most users select passwords that can be cracked with dictionary attacks. Reusable passwords are no longer appropriate in an era when password cracking programs can reveal most passwords in seconds or minutes. Passwords are only useful for non-sensitive assets.

Answer the following questions: 1. Discuss and explain the types of passwords are susceptible to dictionary attacks? [5 marks]

2. Can a password that can be broken by a dictionary attack be adequately strong if it is very long? Justify your answer. [5 marks]

3. Explain the types of passwords can be broken only by brute-force attacks. [5 marks]

4. What are the characteristics of passwords that are safe from even brute-force attacks? [5 marks]

5. Discuss why is it undesirable to use reusable passwords for anything but the least sensitive assets