Comprehensive Process Costing: FIFO Method

The Maxma Beverage Corporation manufactures flavored bottled water and uses process costing to account for the cost of the products manufactured. Raw material and conversion costs are incurred at the same rate during the production process. Data for the company's mixing department for March are as follows:

Maxma uses the first-in, first-out method to calculate equivalent units.

Required:

A. How many units were completed in March?

B. How many equivalent units were completed in March?

C. What is the cost per equivalent unit? Round your answer to nearest cent. Use your rounded answer for subsequent calculations.

D. What is the cost of the ending WIP?

E. What is the cost of the units transferred out of the mixing department? That is, what is the cost of goods manufactured during March?

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

At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $16.80 per unit:

Required:

1a. Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase.

1b. Assuming the use of a periodic inventory system, prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase.

Ethics Case

James is a charted accountant at Golden Electronics Bhd. The company operates the business in Klang and involves in manufacturing of electronic appliances. The company currently has recorded total sales of RM25 million. It is the end of the first quarter 2020. James is hurriedly attempting to prepare a financial statement so that quarterly interim financial reports can be prepared and released to the board of directors and the regulatory agencies. While finalizing the accounts, he found that the total credits on the trial balance exceeded the debits by RM3,700. In order to meet the deadline, James decides to force the debits and credits into balance by adding the amount of the discrepancies to the Equipment account. He chose Equipment because it is one of the larger account balance; percentage-wise, it will be least misstated. James “plugs” the discrepancies! He believes that the discrepancies will not affect anyone’s decision. He wishes that he had another few days to find the error but realizes that the financial statements are already late.

Required:

1. Determine three stakeholders in this scenario? Discuss the significant of these stakeholders in the above scenario.
2. Critically discuss the ethical issues involved in this scenario?
3. What are James’s alternatives to overcome his problem? Discuss at least three alternatives.

Schedule of Cash Payments for a Service Company

EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January–March). The Accrued Expenses Payable balance on January 1 is $34,100. The budgeted expenses for the next three months are as follows:

Other operating expenses include $4,300 of monthly depreciation expense and $1,000 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 65% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December.

Prepare a schedule of cash payments for operations for January, February, and March. Enter all amounts as positive numbers.

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Calculate cash payments in January, February, and March.

Suppose you live on the Moon and your home is located near the centre of the face that we see from Earth.

i) How long would your "lunar day" be? By "lunar day" I mean from when the Sun is on your meridian - your local "lunar noon" - to the next "lunar noon".

ii) If the Moon is full (as seen from Earth), what phase would you see for the Earth (new earth, first-quarter earth, full earth, etc)? Would it be day or night on the Moon? Explain.

iii) When you see sunrise on the Moon, in what phase would the Moon be (as seen from the Earth)? In what phase would you see the Earth at this time?

iv) What would you see if you were on the Moon during a total lunar eclipse?

v) What would you see if you were on the Moon during a total solar eclipse?

vi) Suppose the distance from Earth to the Moon were twice its actual value. Would it still be possible to see a total solar eclipse from Earth? Why or why not?

Schedule of Cash Payments for a Service Company

EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January–March). The Accrued Expenses Payable balance on January 1 is $27,900. The budgeted expenses for the next three months are as follows:

Other operating expenses include $3,500 of monthly depreciation expense and $800 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 80% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December.

Prepare a schedule of cash payments for operations for January, February, and March. Enter all amounts as positive numbers.

Part A. Wollongong Credit Centre (WCC) provides loan to two types of clients; individuals and corporate client. WCC has two support departments: IT Support (IT) and Admin Support (Admin) department. In addition, WCC has two operation departments to deal with its two distinct clients named Individual clients and corporate clients department. For the next quarter, the following cost record including budgeted cost of support department to be allocated to operating department is as follows: Support Department Operation Department IT Admin Individual Corporate Total Budgeted costs $ 1,200,000 1,500,000 7,500,000 8,000,000 18,200,000 Support work supplied by IT 25% 40% 35% 100% Support work supplied by Admin 10% 30% 60% 100% Required (show your workings):

(a) Using the direct method, determine the amount of support department costs will be allocated to the two operation departments

(b) Using the step-down method, determine the amount of support department costs will be allocated to the two operation departments if the Admin department with the highest amount is allocated first.

(c) Compare and explain differences in the support-department allocated to each operation department.

This assignment will require you to prepare the cash budget and determine the cash surplus and shortage each month. The management estimates total sales for the period January through June based on actual sales from the immediate past six months. The following assumptions are made:

1. The Sales were $150,000 in January 2018 and then the sales grew by 10% each month for the first five months (February to June). The sales are expected to grow by 5% each month thereafter.

2. 50% of the Sales are collected in the same month. 45% of the sales are collected in the following month and remainder are not collected.

3. The Purchases are 20% of sales and paid in the same month.

4. Wages and Salaries are $10,000 each month and paid in the same month.

5. Depreciation expense is $5,000 each month.

6. An equipment worth $100,000 will be purchased with cash in October.

7. The company’s debt is $50,000 and the company pays coupon payments in June and December of each year. The coupon rate is 10% per year.

8. Rent Expenses will be $5000 and will be paid at the end of each calendar quarter.

Determine the cash surplus and shortages for each month from July to December. Provide your analysis.

The constant-growth dividend model will provide invalid solutions when:

Select one:

A. the growth rate of the share exceeds the required rate of return for the share.

B. the growth rate of the share is less than the required rate of return for the share.

C. the growth rate of the share equals the dividend yield for the share.

D. None of the above

A company has just paid its first dividend of $4.86. Next year's dividend is forecast to grow by 6 percent, followed by another 6 per cent growth in year two. From year three onwards dividends are expected to grow by 3.6 percent per annum, indefinitely. Investors require a rate of return of 15 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

Select one:

a. $46.13

b. $42.00

c. $22.50

d. $24.47

Each quarter, a company pays a dividend on its perpetual preference share. Today, the share is selling at $16.89. If the required rate of return for such shares is 10.7 percent p.a. compounding quarterly, what is the quarterly dividend paid by this company? (to the nearest cent; don’t include $ sign)