Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company’s profits have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly.

Manufacturing overhead is assigned to products on the basis of direct labor-hours. For the current year, the company has estimated that it will incur $5,503,800 in manufacturing overhead cost and produce 15,000 units of the deluxe model and 112,000 units of the regular model. The deluxe model requires 1.0 hours of direct labor time per unit, and the regular model requires 0.5 hour. Material and labor costs per unit are as follows:

    Model
    Deluxe   Regular
Direct materials   $   145      $   116     
Direct labor   $   10      $   11     

Required:

1-a. Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate.

1-b. Using the predetermined overhead rate computed in 1-a above and other data from the problem, determine the unit product cost of each model.

2. Management is considering using activity-based absorption costing to apply manufacturing overhead cost to products. The activity-based system would have the following four activity cost pools:

Activity Cost Pool   Activity Measure   Estimated Overhead Cost
Purchasing   Purchase orders issued   $   352,800
Processing   Machine-hours      3,210,000
Scrap/rework   Scrap/rework orders issued      459,000
Shipping   Number of shipments      1,482,000
       $   5,503,800

   
Expected Activity

Activity Measure   Deluxe   Regular   Total
Purchase orders issued   490   980   1,470
Machine-hours   21,400   32,100   53,500
Scrap/rework orders issued   375   300   675
Number of shipments   6,240   9,360   15,600

Determine the predetermined overhead rate for each of the four activity cost pools.

3. Using the predetermined overhead rates you computed in part (2), do the following:

a. Compute the total amount of manufacturing overhead cost that would be applied to each model using the activity-based absorption costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each model.

b. Compute the unit product cost of each model (direct materials, direct labor, and manufacturing overhead).

One of the olf columns in your plant failed. You have been putting together jury-rigged system to separate propane fron n-butane. The column you have found is empty, so within reason you can put in as many stages as needed. It is equipped with a partial condenser and a total reboiler. The column is restricted to a maximum pressure of 800,0 kPa, which means that refrigerator is needed. You have a source of refrigerator, but output is limited to 6000.0 kW. Freed is a saturated liquid at 800.0 kPa that is 56.0 mol% propane. Unless stated otherwise distillate should be 99.9 mol% propane, and bottoms should be 1.0 mol% propane or less. You have more feed available that can be processed.

a) generate a y-x graph at 800.0 kPa from the DePriester chart. From the depriester chart find the boiling points of propane at 800.0 kPa (set Kp=1) and n-butane at 800.0 kPa (set K(n-b)=1). The boiling range for the complete y-x diagram lies between these two temperature. Pick a temperature between the two boiling points, find Kp and K(n-b), calculate X(n-b)=(Kp-1)/(Kp-Kb), Xp=1-X(n-b), and Y(n-b)-K(n-b)X(n-b). Doing this for five to ten temperatures generates the y-x graph.

b) if you built a system with a very large number of stages (like N greater than 100) estimate the kmol/h of 99.9mol% distillate that can be produced and kmol/h of feed processed (bottoms less or equal to 1 mol% propane).

c) Repeat part b for 90.0mol% pure propane distillate and 1% or less propane in the bottoms for a saturated liquid feed.

d) if the required purity of the bottoms stream is changed to 10.0 mol% propane, repeat part b (distillate is 99.9% mol% propane).

e) repeat part b for a 99.9 mol% pure propane distillate and 1% or less propane in the bottoms if the feed is a saturated vapor that is 56.0 mol% propane.

f) epeat part b for a 99.9 mol% pure propane distillate and 1% or less propane in the bottoms if the feed is a saturated vapor that is 66.0 mol% propane.

Data: Heat of vaporization of propane at 800 kPa is 18,800 KJ/Kmol, and for butane at 800 kPa is 22,600 KJ/Kmol

Kaelea, Inc., has no debt outstanding and a total market value of $110,000. Earnings before interest and taxes, EBIT, are projected to be $8,800 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 23 percent higher. If there is a recession, then EBIT will be 32 percent lower. The company is considering a $36,000 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 4,400 shares outstanding. Assume the company has a market-to-book ratio of 1.0.

a. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued, assuming no taxes. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

b. Calculate the percentage changes in ROE when the economy expands or enters a recession, assuming no taxes. (A negative answer should be indicated by a minussign. Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e.g., 32.)

  
Assume the firm goes through with the proposed recapitalization and no taxes.

c. Calculate return on equity, ROE, under each of the three economic scenarios after the recapitalization. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

d. Calculate the percentage changes in ROE for economic expansion and recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Assume the firm has a tax rate of 35 percent.

e. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued. Also, calculate the percentage changes in ROE for economic expansion and recession. (A negative answer should be indicated by a minus sign.Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

f. Calculate return on equity, ROE, under each of the three economic scenarios after the recapitalization. Also, calculate the percentage changes in ROE for economic expansion and recession, assuming the firm goes through with the proposed recapitalization. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below.

1. What is the firm's 2019 current ratio? Round your answer to two decimal places.

1a. The 2019 current ratio indicates that Rosnan has -Select- insufficient,sufficient current assets to meet its current obligations as they come due.

2. What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places.

2a. Given the 2019 current and total assets turnover ratios calculated above, if Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are managed -Select-efficiently,inefficiently.

3. What is the firm's 2019 debt-to-capital ratio? Round your answer to two decimal places.

%

3a. If the industry average debt-to-capital ratio is 30%, then Rosnan's creditors have a -Select-smaller,bigger cushion than indicated by the industry average.

4. What is the firm's 2019 profit margin? Round your answer to two decimal places.

%

4a. If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-capital ratio might be one reason for its high profit margin. -Select-True,False

5. What is the firm's 2019 price/earnings ratio? Round your answer to two decimal places.

6. Using the DuPont equation, what is the firm's 2019 ROE? Round your answer to two decimal places.

The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also. DUX COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) 2021 2020 Assets Cash $ 129.0 $ 36.0 Accounts receivable 64.0 66.0 Less: Allowance for uncollectible accounts (5.0 ) (4.0 ) Dividends receivable 19.0 18.0 Inventory 71.0 66.0 Long-term investment 31.0 26.0 Land 86.0 40.0 Buildings and equipment 161.0 266.0 Less: Accumulated depreciation (6.0 ) (130.0 ) $ 550.0 $ 384.0 Liabilities Accounts payable $ 29.0 $ 36.0 Salaries payable 18.0 21.0 Interest payable 20.0 18.0 Income tax payable 23.0 24.0 Notes payable 46.0 0 Bonds payable 91.0 50.0 Less: Discount on bonds (2.0 ) (3.0 ) Shareholders' Equity Common stock 210.0 200.0 Paid-in capital—excess of par 24.0 20.0 Retained earnings 99.0 18.0 Less: Treasury stock (8.0 ) 0 $ 550.0 $ 384.0 DUX COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands) Revenues Sales revenue $ 440.0 Dividend revenue 19.0 $ 459.0 Expenses Cost of goods sold 152.0 Salaries expense 57.0 Depreciation expense 2.0 Bad debt expense 1.0 Interest expense 40.0 Loss on sale of building 35.0 Income tax expense 48.0 335.0 Net income $ 124.0 Additional information from the accounting records: A building that originally cost $168,000, and which was three-fourths depreciated, was sold for $7,000. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment. Property was acquired by issuing a 13%, seven-year, $46,000 note payable to the seller. New equipment was purchased for $63,000 cash. On January 1, 2021, bonds were sold at their $41,000 face value. On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time. Cash dividends of $29,000 were paid to shareholders. On November 12, 12,500 shares of common stock were repurchased as treasury stock at a cost of $8,000. Required: Prepare the statement of cash flows for Dux Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 10,000 should be entered as 10).)

The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also.

Additional information from the accounting records:

1. A building that originally cost $72,000, and which was three-fourths depreciated, was sold for $7,000.
2. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.
3. Property was acquired by issuing a 13%, seven-year, $34,000 note payable to the seller.
4. New equipment was purchased for $27,000 cash.
5. On January 1, 2021, bonds were sold at their $29,000 face value.
6. On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time.
7. Cash dividends of $17,000 were paid to shareholders.
8. On November 12, 12,500 shares of common stock were repurchased as treasury stock at a cost of $8,000.

Required:
Prepare the statement of cash flows for Dux Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 10,000 should be entered as 10).)

Kaelea, Inc., has no debt outstanding and a total market value of $153,000. Earnings before interest and taxes, EBIT, are projected to be $9,500 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20 percent higher. If there is a recession, then EBIT will be 30 percent lower. The company is considering a $45,300 debt issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 5,100 shares outstanding. Assume the company has a market-to-book ratio of 1.0.

a. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued, assuming no taxes. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

ROE
Recession %
Normal %
Expansion %

b. Calculate the percentage changes in ROE when the economy expands or enters a recession, assuming no taxes. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e.g., 32.)

%?ROE
Recession %
Expansion %

  
Assume the firm goes through with the proposed recapitalization and no taxes.

c. Calculate return on equity, ROE, under each of the three economic scenarios after the recapitalization. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

ROE
Recession %
Normal %
Expansion %

d. Calculate the percentage changes in ROE for economic expansion and recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

%?ROE
Recession %
Expansion %

Assume the firm has a tax rate of 35 percent.

e. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued. Also, calculate the percentage changes in ROE for economic expansion and recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

ROE
Recession %
Normal %
Expansion %

%?ROE
Recession %
Expansion %

f. Calculate return on equity, ROE, under each of the three economic scenarios after the recapitalization. Also, calculate the percentage changes in ROE for economic expansion and recession, assuming the firm goes through with the proposed recapitalization. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

ROE
Recession %
Normal %
Expansion %

%?ROE
Recession %
Expansion %

Hints

Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company’s profits have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly.

Manufacturing overhead is assigned to products on the basis of direct labor-hours. For the current year, the company has estimated that it will incur $6,758,325 in manufacturing overhead cost and produce 20,000 units of the deluxe model and 124,000 units of the regular model. The deluxe model requires 1.0 hours of direct labor time per unit, and the regular model requires 0.5 hour. Material and labor costs per unit are as follows:

Required:

1-a. Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate.

1-b. Using the predetermined overhead rate computed in 1-a above and other data from the problem, determine the unit product cost of each model.

2. Management is considering using activity-based absorption costing to apply manufacturing overhead cost to products. The activity-based system would have the following four activity cost pools:

Determine the predetermined overhead rate for each of the four activity cost pools.

3. Using the predetermined overhead rates you computed in part (2), do the following:

a. Compute the total amount of manufacturing overhead cost that would be applied to each model using the activity-based absorption costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each model.

b. Compute the unit product cost of each model (direct materials, direct labor, and manufacturing overhead).

Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company’s profits have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly.

Manufacturing overhead is assigned to products on the basis of direct labor-hours. For the current year, the company has estimated that it will incur $6,758,325 in manufacturing overhead cost and produce 20,000 units of the deluxe model and 124,000 units of the regular model. The deluxe model requires 1.0 hours of direct labor time per unit, and the regular model requires 0.5 hour. Material and labor costs per unit are as follows:

    Model
    Deluxe   Regular
Direct materials   $   150      $   116     
Direct labor   $   18      $   10     

Required:

1-a. Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate.

1-b. Using the predetermined overhead rate computed in 1-a above and other data from the problem, determine the unit product cost of each model.

2. Management is considering using activity-based absorption costing to apply manufacturing overhead cost to products. The activity-based system would have the following four activity cost pools:

Activity Cost Pool   Activity Measure   Estimated Overhead Cost
Purchasing   Purchase orders issued   $   238,650
Processing   Machine-hours      4,800,000
Scrap/rework   Scrap/rework orders issued      585,675
Shipping   Number of shipments      1,134,000
       $   6,758,325

   
Expected Activity

Activity Measure   Deluxe   Regular   Total
Purchase orders issued   430   860   1,290
Machine-hours   19,200   28,800   48,000
Scrap/rework orders issued   475   380   855
Number of shipments   5,040   7,560   12,600

Determine the predetermined overhead rate for each of the four activity cost pools.

3. Using the predetermined overhead rates you computed in part (2), do the following:

a. Compute the total amount of manufacturing overhead cost that would be applied to each model using the activity-based absorption costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each model.

b. Compute the unit product cost of each model (direct materials, direct labor, and manufacturing overhead).