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35. Cost Data for Managerial Purposes—Finding Unknowns Quince Products is a small company in southern...Cost Data for Managerial Purposes—Finding Unknowns
Quince Products is a small company in southern California that makes jams and preserves. Recently, a sales rep from one of the company’s suppliers suggested that Quince could increase its profitability by 50 percent if it introduced a second line of products, packaged fruit. She offered to do the analysis and show the company her assumptions.
When Quince’s management opened the spreadsheet sent by the sales rep, they noticed that there were several blank cells. In the meantime, the sales rep had taken a job with a competitor and told the managers at Quince that she could no longer advise them. Although they were not sure they should rely on the analysis, they asked you to see if you could reconstruct the sales rep’s analysis. They had been considering this new business already and wanted to see if their analysis was close to that of an outside observer. The incomplete spreadsheet is shown below.
Required
Fill in the blank cells.
36. Ex 7-2 Internal controls Faith Cassen has recently been hired as the manager of Gibraltar Coffee...
Ex 7-2 Internal controls
Faith Cassen has recently been hired as the manager of Gibraltar Coffee Shop. Gibraltar Coffee Shop is a national chain of franchised coffee shops. During her first month as store manager, Faith encountered the following internal control situations:
a. Faith caught an employee putting a case of 1,000 single-serving tea bags in his car. Not wanting to create a scene, Faith smiled and said, “I don’t think you’re putting those tea bags on the right shelf. Don’t they belong inside the coffee shop?” The employee returned the tea bags to the stockroom.
b. Gibraltar Coffee Shop has one cash register. Prior to Faith’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Faith made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders.
c. Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Faith expects each cashier to balance the drawer to the penny every time—no exceptions.
State whether you agree or disagree with Faith’s method of handling each situ- ation and explain your answer.
37. 1) Mr. Wiseman has invested a sum of Rs. 2,00,000 in his own business which is a very profitable...
1) Mr. Wiseman has invested a sum of Rs. 2,00,000 in his own business which is a very profitable one. The annual profit earned from his business is Rs. 45000 which includes a sum of Rs 10,000 received as compensation of a part of his business premises. As an alternative to his engagement in his business, he could have invested the money in long term deposit with Bank earning a normal rate of interest of 10% and also could engage himself in employment thereby getting an annual salary of Rs 7200. Considering 2% as fair compensation for the risk involved in the business, calculate the value of goodwill of his business on capitalization of super profits at the normal rate of interest. Ignore taxation.
38. At the beginning of 2009, Metatec inc. acquired Ellsion Technology Corp for $600 mi
At the beginning of 2009, Metatec inc. acquired Ellsion Technology Corp for $600 million. In addition to cash, receivables, and inventory , the following asssets and their fair values were also inquired. plant and Equipment(Depreciable Assets) 150 million Patent 40 million goodwill 100 million The plant and equipment are depreciated over a 10 year useful life on a straight line basis. There is no estiamted residual value. The patent is estimated to have a 5 year useful life, no residual value, and is amortized using straightline method. At the end of 2011 a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined. Plant & equip. Undiscovered Sum of future cash flows 80 Million Fair Value 60 Million Patent: Undiscovered sum of future cash flows 20 Million Fair value 13 Million Goodwill: Fair value of Ellison Tech 450 Million Fair Value of Ellisons net Assets (excluding goodwill) 390 Million Book Value of Ellison net assets ( including goodwill) 470 Million- this is after first recording any impairment losses on plant and equipment and the patent. Required 1.Compute the book value of the plant and equipment and patent at the end of 2011. 2. When should the plant and equipment and the patent be tested for impairment 3. When should goodwill be tested for impairment 4. Determine the amount of any impairment loss to be recorded if any for the three assets.
39. Prepare separate journal entries to record the transfer of each proprietorship"s assets and...
The post-closing trial balances of two proprietorships on January 1, 2012, are presented below.
Williams Compan0079 Jones Company
Dr. Cr. Dr. Cr.
Cash $ 14,000 $12,000
Accounts receivable 17,500 26,000
Allowance for doubtful accounts $ 3,000 $ 4,400
Inventory 26,500 18,400
Equipment 45,000 29,000
Accumulated depreciation—equipment 24,000 11,000
Notes payable 18,000 15,000
Accounts payable 22,000 31,000
Williams, capital 36,000
Jones, capital 24,000
$103,000 $103,000 $85,400 $85,400
Williams and Jones decide to form a partnership, Wijo Company, with the following agreed upon valuations for noncash assets.
Williams Company Jones Company
Accounts receivable $17,500 $26,000
Allowance for doubtful accounts 4,500 4,000
Inventory 28,000 20,000
Equipment 23,000 16,000
All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Williams will invest an additional $5,000 in cash, and Jones will invest an additional $19,000 in cash.
Instructions
(a) Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership.
(b) Journalize the additional cash investment by each partner.
(c) Prepare a classified balance sheet for the partnership on January 1, 2012.
40. Assume the network and data that follow. Compute the total direct cost foreach project duration....
Assume the network and data that follow. Compute the total direct cost foreach project duration. If the indirect costs for each project duration are $400(19 time units), $350 (18), $300 (17), and $250 (16), compute the total projectcost for each duration. Plot the total direct, indirect, and project costs for eachof these durations on a cost-time graph. What is the optimum cost-time sched-ule for the project? What is this cost?
41. Problem 10-47 Standard Costing Botella Company produces plastic bottles. The unit for costing...
Problem 10-47 Standard Costing
Botella Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The following standards for producing one case of bottles have been established:
Direct materials (4 lbs. @ $0.95) $ 3.80
Direct labor (1.25 hours @ $15.00) 18.75
Standard prime cost 22.55
During December, 78,000 pounds of material were purchased and used in production. There were 15,000 cases produced, with the following actual prime costs:
Direct materials $ 74,000
Direct labor $315,000 (for 22,500 hrs.)
Required:
1. Compute the materials variances.
2. Compute the labor variances.
3. CONCEPTUAL CONNECTION What are the advantages and disadvantages that can result from the use of a standard costing system?
42. Appendix A: 2009 Home Depot Financial Statements
2.Locate the Home Depot, Inc., 2009 financial statements in Appendix A of this text. Briefly peruse the financial statements and answer the following questions:
a.Name the titles of each of Home Depot's financial statements that provide specific information about economic resources, claims to resources, and changes in resources and claims.
b.Name three other sections from Home Depot's 2009 financial statements that might be useful to a potential investor or creditor.
3.Locate the balance sheet, income statement, and statement of cash flows of Home Depot, Inc., in Appendix A of your text.Review those statements and then respond to the following for the year ended January 31, 2010 (fiscal year 2009).
a.Did the company have a net income or net loss for the year?How much?
b.What were the cash balances at the beginning and end of the year?What were the most important causes of the cash decrease during the year?(Treat "cash equivalents" as if they were cash.)
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2. Locate the Home Depot, Inc., 2009 financial statements in Appendix A of this text. Briefly peruse the financial statements and answer the following questions: a. Name the titles of each of Home Depot's financial statements that provide specific information about economic resources, claims to resources, and changes in resources and claims. b. Name three other sections from Home Depot's 2009 financial statements that might be useful to a potential investor or creditor. 3. Locate the balance sheet, income statement, and statement of cash flows of Home Depot, Inc., in Appendix A of your text. Review those statements and then respond to the following for the year ended January 31, 2010 (fiscal year 2009). a. Did the company have a net income or net loss for the year? How much? b. What were the cash balances at the beginning and end of the year? What were the most important causes of the cash decrease during the year? (Treat "cash equivalents" as if they were cash.)
43. Relevant costs for decision making
Bosques Corporation has in stock 35,800 kilograms of material L that it bought five years ago for $5.55 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material L can be sold as is for scrap for $1.67 per kilogram. An alternative would be to use mat...
44. 1. Advanced Company reports the following information for the current year. All beginning...
1.
Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.
Units Produced this year 25,000 units
Units sold this year 15,000 units
direct materials $9 per unit
Direct Labor $11 per unit
Variable Overhead $75,000 in total
Fixed Overhead $137,500 in total
Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing.
$205,000, $122,500, $80,500, $55,000
$67,500
Front Company had net income of $72,500 based on variable costing. Beginning and ending inventories were 800 units and 1,200 units, respectively. Assume the fixed overhead per unit was $7.90 for both the beginning and ending inventory. What is net income under absorption costing?
$88,300
$56,700
$69,340
$75,660
$72,900
Swisher, Incorporated reports the following annual cost data for its single product.
This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's gross margin increase or decrease under variable costing?
$90,000 decrease.
$60,000 increase.
$60,000 decrease.
There is no change in gross margin.
$90,000 increase.
Sea Company reports the following information regarding its production cost.
Units Produced 42,000 Units
Direct Laber $35 per unit
Direct Materials $28 per unit
Variable Overhead $17 per unit
Fixed Overhead $105,000 in total
Compute production cost per unit under variable costing.
$80.00
$63.00
$35.00
$28.00
$82.50
Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.
Units Produced this year 25,000 units
Units sold this year 15,000 units
Direct Materials $9 per unit
Direct Labor $11 per unit
Variable Overhead $75,000 in total
Fixed Overhead $137,500
Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under variable costing.
$67,500
$55,000
$80,500
$122,500
$205,000
Shore Company reports the following information regarding its production cost.
Units produced 28,000 units
direct labor $23 per unit
direct materials $24 per unit
Variable overhead $280,000 in total
Fixed overhead $94,920 in total
Compute production cost per unit under absorption costing
$60.39
$47.00
$23.00
$57.00
$24.00
Pact Company had net income of $972,000 based on variable costing. Beginning and ending inventories were 7,800 units and 5,200 units, respectively. Assume the fixed overhead per unit was $3.61 for both the beginning and ending inventory. What is net income under absorption costing?
$925,077
$969,400
$981,379
$962,614
$1,018,923
Decko Industries reported the following monthly data.
Units produced 52,000 units
sales price $33 per unit
Direct materials $1.50 per unit
Direct labor $2.50 per unit
Variable overhead $3.50 per unit
Fixed overhead $234,000 in total
What is the company's contribution margin for this month if 50,000 units were sold?
$1,716,000
$1,650,000
$1,326,000
$1,275,000
$1,450,000
45. Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements L.O....
Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements L.O. A1, P1, P2, P3
[The following information applies to the questions displayed below.]
Watson Technical Institute (WTI), a school owned by Tom Watson, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2011, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2011, follow.
