PROBLEM 4–30 (Garrison text)  

Changes in Cost Structure; Break-Even Analysis; Operating Leverage

Duchamp Company’s contribution format income statement for the most recent month is given below:

Sales (30,000 units)                $ 900,000

Variable expenses                     630,000

Contribution margin                  270,000

Fixed expenses                         180,000

Operating income                     $ 90,000

The industry in which Duchamp Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits.

Required:

New equipment has come on the market that would allow Duchamp Company to automate a portion of its operations. Variable costs would be reduced by $9 per unit. However, fixed costs would increase to a total of $450,000 each month. Prepare two contribution format income statements, one showing current operations and one showing how operations would appear if the new equipment is purchased.

Show an Amount column, a Per Unit column, and a Percentage column on each statement. Do not show percentages for the fixed costs. (current versus proposed)

Refer to the income statements in (1) above. For both current operations and the proposed new operations, compute

(a) the degree of operating leverage,

(b) the break-even point in dollars.

Refer again to the data in (1) above. As a manager, what factor(s) would be paramount in your mind in deciding whether to purchase the new equipment?

(You may assume that ample funds are available to make the purchase.)

Question 1: Given the following reactions and standard molar enthalpy changes ΔrH0:

D-glucose 6-phosphate2-(aq) = D-fructose 6-phosphate2-(aq)                                (1)

D-glucose + ATP4-(aq) = D-glucose 6-phosphate2-(aq) + ADP3-(aq) + H+(aq)        (2)

D-fructose + ATP4-(aq) = D-fructose 6-phosphate2-(aq) + ADP3-(aq) + H+(aq)       (3)

ΔrH0 (1) = 11.7 kJ mol-1

ΔrH0 (2) = -23.8 kJ mol-1

ΔrH0 (3) = -15.0 kJ mol-1

Calculate ΔrH0 for the reaction: D-glucose(aq) = D-fructose(aq)                (4)

Problem 17-16 (Static) Comprehensive—reporting a pension plan; pension spreadsheet; determine changes in balances; two years [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]

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Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2021:

($ in millions)

Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2022:

($ in millions)

Problem 17-16 (Static) Part 5

5. Determine the new gains and/or losses in 2022, and prepare the appropriate journal entry(s) to record them. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Using T-accounts, determine the balances at December 31, 2022, in the net loss—AOCI and prior service cost—AOCI. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Prepare a pension spreadsheet to assist you in determining end of 2022 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Enter credit amounts with a minus sign and debit amounts with a positive sign.)

Problem 17-16 (Static) Comprehensive—reporting a pension plan; pension spreadsheet; determine changes in balances; two years [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]

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[The following information applies to the questions displayed below.]

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2021:

($ in millions)

Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2022:

($ in millions)

Problem 17-16 (Static) Part 3

3. Prepare a pension spreadsheet to assist you in determining end of 2021 balances in the PBO, plan assets, prior service cost—AOCI, the net loss—AOCI, and the pension liability. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Enter credit amounts with a minus sign and debit amounts with a positive sign.)

4-a. Determine Lakeside’s pension expense for 2022.
4-b. Prepare the appropriate journal entries to record the expense, the cash funding of plan assets, and payment of benefits to retirees.

Problem 17-16 (Static) Comprehensive—reporting a pension plan; pension spreadsheet; determine changes in balances; two years [LO17-3, 17-4, 17-5, 17-6, 17-7, 17-8]

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[The following information applies to the questions displayed below.]

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Lakeside Cable during 2021:

($ in millions)

Assume the following actuary and trustee reports indicating changes in the PBO and plan assets of Lakeside Cable during 2022:

($ in millions)

4-a. Determine Lakeside’s pension expense for 2019. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
  

4-b. Prepare the appropriate journal entries to record the expense, the cash funding of plan assets, and payment of benefits to retirees. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

2. Determine the new gains and/or losses in 2021 and prepare the appropriate journal entry(s) to record them. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

P15-17 Partnership Formation, Operation, and Changes in Ownership LO 15-3, 15-4, 15-5, 15-6 The partnership of Jordan and O’Neal began business on January 1, 20X7. Each partner contributed the following assets (the noncash assets are stated at their fair values on January 1, 20X7): Jordan O’Neal Cash $ 61,400 $ 50,900 Inventories 80,200 –0– Land –0– 131,500 Equipment 101,100 –0– The land was subject to a $50,300 mortgage, which the partnership assumed on January 1, 20X7. The equipment was subject to an installment note payable that had an unpaid principal amount of $21,100 on January 1, 20X7. The partnership also assumed this note payable. Jordan and O’Neal agreed to share partnership income and losses in the following manner: Jordan O’Neal Interest on beginning capital balances 3 % 3 % Salaries $ 13,500 $ 13,500 Remainder 60 % 40 % During 20X7, the following events occurred: 1. Inventory was acquired at a cost of $31,300. At December 31, 20X7, the partnership owed $7,400 to its suppliers. 2. Principal of $6,800 was paid on the mortgage. Interest expense incurred on the mortgage was $2,100, all of which was paid by December 31, 20X7. 3. Principal of $3,300 was paid on the installment note. Interest expense incurred on the installment note was $2,100, all of which was paid by December 31, 20X7. 4. Sales on account amounted to $162,500. At December 31, 20X7, customers owed the partnership $21,900. 5. Selling and general expenses, excluding depreciation, amounted to $34,100. At December 31, 20X7, the partnership owed $6,800 of accrued expenses. Depreciation expense was $6,600. 6. Each partner withdrew $220 each week in anticipation of partnership profits. 7. The partnership’s inventory at December 31, 20X7, was $21,600. 8. The partners allocated the net income for 20X7 and closed the accounts. Additional Information On January 1, 20X8, the partnership decided to admit Hill to the partnership. On that date, Hill invested $93,480 of cash into the partnership for a 20 percent capital interest. Total partnership capital after Hill was admitted totaled $452,000. Required: a. Prepare journal entries to record the formation of the partnership on January 1, 20X7, and to record the events that occurred during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the final answers to nearest dollar amount)

Physiology

☆Acid-base balance Normal plasma pH ranges from 7.35-7.45, changes in plasma pH may disturb metabolism and many body functions.

1- Describe in detail the role of the kidney in adjusting blood pH either in acidosis or alkalosis.

2- Differentiate between metabolic and respiratory acidosis and alkalosis.

3- Explain in full details the endocrinal causes of metabolic acidosis.

4- Formulate a case for a patient with metabolic acidosis demonstrating possible signs, symptoms and laboratory investigations.

5- Referring to five recent publication (2015-2020), explain the pathophysiology and treatment of diabetic ketoacidosis.

6- Construct 5 MCQ about Addison's disease

E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5]

Cove’s Cakes is a local bakery. Price and cost information follows:

Required:
1. Calculate Cove’s new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.)

a. Sales price increases by $1.50 per cake.



b. Fixed costs increase by $475 per month.



c. Variable costs decrease by $0.25 per cake.



d. Sales price decreases by $0.40 per cake.



2. Assume that Cove sold 355 cakes last month. Calculate the company’s degree of operating leverage. (Do not round intermediate calculations. Round your answer to 2 decimal places.)



3. Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 6 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

You have been conducting an audit of the financial reports of Rainbow Forest Ltd (Rainbow Forest). Rainbow Forest Ltd is a publishing company, specialising in books and other promotional material for special industry sectors and professional bodies. Over the last three years Rainbow Forest has been experiencing difficult trading conditions resulting in operating losses and deferred dividends.

In particular, Rainbow Forest has had difficulty managing its cash flow. Book sales are down on the prior year and longstanding customers are no longer making bulk purchases, but instead they are producing e-books which are emailed to members on the mailing list.

Whilst Rainbow Forest can still provide online technical support services and web design advice, they have lost a major source of revenue and 20% of employees have been made redundant.

You have been told by different sources that Senior Management is under a lot of pressure to turn this difficult situation around and improve both sales and profitability. You note that some of the reports you have been provided are either incomplete or are not consistent with what you have been told. Based on your initial understanding of the entity and its environment, you have concluded that Rainbow Forest Ltd is a going concern risk.

Required:

1. Based on the concept of professional scepticism, what indicators are most relevant when evaluating Rainbow Forest’s ability to continue as a going concern?
2. Assume Rainbow Forest Ltd is a subsidiary of a parent company based in London, UK, what steps should be taken by the auditor to confirm the appropriateness of the going concern assumption when an entity is dependent on its parent entity for financial support?
3. Assuming that the financial statements of Rainbow Forest Ltd were prepared on a “going concern” basis, discuss the effect on the audit opinion, if this assumption was now in dispute?