Navigating Through Advanced Financial Management Assignments

Published: 11 months ago

Navigating Through Advanced Financial Management Assignments

D.$1,200 favorable

E.$2,450 unfavorable

88.Overhead cost variance is:  

 

 

A.The difference between the overhead costs actually incurred and the overhead budgeted at the actual operating level.

B.The difference between the actual overhead incurred during a period and the standard overhead applied.

C.The difference between actual and budgeted cost caused by the difference between the actual price per unit and the budgeted price per unit.

D.The costs that should be incurred under normal conditions to produce a specific product (or component) or to perform a specific service.

E.The difference between the total overhead cost that would have been expected if the actual operating volume had been accurately predicted and the amount of overhead cost that was allocated to products using the standard overhead rate.

89.The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:  

 

 

A.Production variance.

B.Quantity variance.

C.Volume variance.

D.Price variance.

E.Controllable variance.

90.When there is a difference between the actual volume of production and the standard volume of production, which of the following, based solely on fixed overhead, occurs?  

 

 

A.Production variance.

B.Volume variance.

C.Overhead cost variance.

D.Quantity variance.

E.Controllable variance.

91.A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000. The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units. The total controllable cost variance is:  

 

 

A.$1,200 favorable.

B.$1,200 unfavorable.

C.$13,200 favorable.

D.$13,200 unfavorable.

E.$15,200 favorable.

92.A company's flexible budget for the range of 35,000 units to 45,000 units of production showed variable overhead costs of $2 per unit and fixed overhead costs of $72,000. The company incurred total overhead costs of $148,800 while operating at a volume of 40,000 units. The total controllable cost variance is:  

 

 

A.$6,800 favorable.

B.$6,800 unfavorable.

C.$3,200 favorable.

D.$3,200 unfavorable.

E.$10,000 favorable.

93.Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. per unit @ $3/hr.). Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:  

 

 

A.$6,000F.

B.$6,000U.

C.$78,000U.

D.$78,000F.

E.$0.

94.Grant Co. uses the following standard to produce a single unit of its product: Variable overhead (2 hrs. per unit @ $4/hr.) Actual data for the month show total variable overhead costs of $190,000, and 23,000 units produced. The total variable overhead variance is:  

 

 

A.$6,000F.

B.$6,000U.

C.$78,000U.

D.$78,000F.

E.$0.

40. Vincent Yarwood practices medicine under the business title Vincent Yarwood, M.D. During July, th...

Vincent Yarwood practices medicine under the business title Vincent Yarwood, M.D. During July, the medical practice completed the following transactions: Jul. 1 Yarwood contributed $68, 000 cash to the business in exchange for capital. 5 Paid monthly rent on medical equipment, $550. 9 Paid $17, 000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, $1, 800. 19 Borrowed $24, 000 from the bank for business use. 22 Paid $1, 700 on account. 28 The business received a bill for advertising in the daily newspaper to be paid in August, $290. 31 Revenues earned during the month included $6, 000 cash and $5, 500 on account. 31 Paid employees' salaries $2, 000, office rent $1, 000, and utilities $550. Record as a compound entry. 31 The business received $1, 260 for medical screening services to be performed next month. 31 d withdrew cash of $7, 400. The business uses the following accounts: Cash; Accounts Receivables Office supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Yarwood, Capital; Yarwood, Withdrawals Service Revenues Salaries Expenses Rent Expense: Utilities Expense; and Advertising Expense. Journalize each transaction. Explanations are not required. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.

41. Strategy, Auto Parts In the mid-1990s, a large retailer of auto parts, Best Parts, Inc. (BPI), was

1. 
   
   
   
   1. Strategy, Auto Parts In the mid-1990s, a large retailer of auto parts, Best Parts, Inc. (BPI), was looking for ways to invest an accumulation of excess cash. BPI’s success was built on a carefully
   
   
   
   

developed inventory control system that guaranteed the availability of a desired part on demand 99 percent of the time and within one business day for the remaining 1 percent. The speed and quality of service set BPI apart from other parts dealers, and the business continued to grow.

On the advice of close friends and consultants, BPI’s owner and CEO decided to invest a signifi- cant portion of the excess cash in a small chain of gift and craft stores in shopping malls.

Required Determine BPI’s competitive strategy (cost leadership or differentiation) in the auto-parts busi- ness. Assess whether this competitive advantage will or will not facilitate success in the new venture.

42. For the past several years, Kareem Ismail has operated a part-time consulting business from his...

For the past several years, Kareem Ismail has operated a part-time consulting business from his home. As of October 1, 2010, Kareem decided to move to rented quarters and to operate the business, which was to be known as Iron Mountain Consulting, on a full-time basis. Iron Mountain Consulting entered into the following transactions during October: Oct. 1. The following assets were received from Kareem Ismail: cash, $18,000 accounts receivable, $5,000 supplies, $1,500; and office equipment, $10,750. There were no liabilities received. Oct. 1. Paid three months’ rent on a lease rental contract, $4,800. 2. Paid the premiums on property and casualty insurance policies, $2,700. 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $3,150. 5. Purchased additional office equipment on account from Office Station Co., $1,250. 6. Received cash from clients on account, $2,000. 10. Paid cash for a newspaper advertisement, $325. 12. Paid Office Station Co. for part of the debt incurred on October 5, $750. 12. Recorded services provided on account for the period October 1–12, $5,750. 14. Paid part-time receptionist for two weeks’ salary, $900. 17. Recorded cash from cash clients for fees earned during the period October 1–17, $9,250. 18. Paid cash for supplies, $600. 20. Recorded services provided on account for the period October 13–20, $4,100. 24. Recorded cash from cash clients for fees earned for the period O

43. If a data line on a graph slopes down as it goes to the right, it is depicting that Check ALL that..

If a data line on a graph slopes down as it goes to the right, it is depicting that

Check ALL that apply 

A.) The relationship between the variables on the axes in inverse

B.) The relationship between the variables on the axes is direct

C.) As the value of one variable falls, the value of the other rises ( all else constant)

44. (Adjusting Entries) Selected accounts of Urdu Company are shown

(Adjusting Entries) Selected accounts of Urdu Company are shown below. From an analysis of the T-accounts, reconstruct

(a) The October transaction entries, and

(b) The adjusting journal entries that were made on October 31,2005.

45. Tristar Production Company began operations on September 1, 2013. Listed below are

Tristar Production Company began operations on September 1, 2013. Listed below are a number of transactions that occurred during its first four months of operations. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $290,000 in cash for the property. According to appraisals, the land had a fair value of $204,600 and the building had a fair value of $105,400. 2. On September 1, Tristar signed a $59,000 noninterest-bearing note to purchase equipment. The $59,000 payment is due on September 1, 2014. Assume that 8% is a reasonable interest rate. 3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $4,400. 4. On September 18, the company paid its lawyer $7,000 for organizing the corporation. 5. On October 10, Tristar purchased machinery for cash. The purchase price was $34,000 and $1,450 in freight charges also were paid. 6. On December 2, Tristar acquired various items of office equipment. The company was short of cash and could not pay the $7,400 normal cash price. The supplier agreed to accept 200 shares of the company's nopar common stock in exchange for the equipment. The fair value of the stock is not readily determinable. 7. On December 10, the company acquired a tract of land at a cost of $39,000. It paid $7,000 down and signed a 10% note with both principal and interest due in one year. Ten percent is an appropriate rate of interest for this note. Required: Prepare journal entries to record each of the above transactions. 1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $290,000 in cash for the property. According to appraisals, the land had a fair value of $204,600 and the building had a fair value of $105,400. . 2. On September 1, Tristar signed a $59,000 noninterest-bearing note to purchase equipment. The $59,000 payment is due on September 1, 2014. Assume that 8%% is a reasonable interest rate. . 3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $4,400. . 4. On September 18, the company paid its lawyer $7,000 for organizing the corporation. . 5. On October 10, Tristar purchased machinery for cash. The purchase price was $34,000 and $1,450 in freight

46. Paul Mincin, CPA, is the auditor of Raleigh Corporation. Mincin is considering the audit work to be

Paul Mincin, CPA, is the auditor of Raleigh Corporation.

Mincin is considering the audit work to be performed in the accounts payable area for the current-year engagement. The

prior-year documentation shows that confirmation requests were

mailed to 100 of Raleigh’s 1,000 suppliers. The selected suppliers were based on Mincin’s sample that was designed to select accounts with large dollar balances. Mincin and Raleigh staff spent a substantial number of hours resolving relatively minor differences between the confirmation replies and Raleigh’s accounting records. Alternative audit procedures were used for those suppliers who did not respond to the confirmation

requests.

a. Identify the accounts payable management assertions that Min- cin must consider in determining the audit procedures to be followed.

b. Identify situations in which Mincin should use accounts pay-

able confirmations, and discuss whether he is required to use them.

c. Discuss why using large dollar balances as the basis for select-

ing accounts payable for confirmation might not be the most effective approach and indicate what more effective procedures could be followed when selecting accounts payable for confirmation.

47. Olga is the proprietor of a small business. In 2018, the business's income, before consideration ...

Olga is the proprietor of a small business. In 2018, the business's income, before consideration of any cost recovery or § 179 deduction, is $250,000. Olga spends $620,000 on new 7-year class assets and elects to take the § 179 deduction on them. She does not claim any available additional first-year depreciation. Olga's cost recovery deduction for 2018, except for the cost recovery with respect to the new 7-year assets, is $95,000.

If required, round your answers to the nearest dollar.

a. What is the tentative amount of Olga's overall § 179 deduction for the seven-year class assets before any income limitation?

$

b. The total amount of Olga's § 179 deduction for the seven-year class assets after any income limitation is $.

c. Olga's total cost recovery depreciation deduction (including any § 179 deduction) is $.

d. What is the amount of any § 179 carryforward?

$

Click here to access the depreciation table to use for this problem.

Exhibit 5.6

MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention

48. 1. As a digital retailer, how does Alibaba provide value to Chinese consumers? What sets of values..

1. As a digital retailer, how does Alibaba provide value to Chinese consumers? What sets of values are unique to the Chinese market? 2. Given that Alibaba does not own or distribute any of the merchandise exchanged on its sites, describe what factors had to develop for the company to succeed. 3. Analyze Alibaba s business model relative to all the different forms of digital and online marketing covered in this chapter. 4. Can Alibaba succeed in countries outside of China? Why or why not? As U.S. consumers rapidly add products to their carts on Amazon, Walmart.com, and various other online retail sites, most have never even heard of Alibaba. But while all the others have gone about building massive online businesses, Alibaba has been hard at work creating an enormous online empire. It has done so with one little advantage-1.3 billion potential customers in its home market. Under the direction of visionary founder Jack Ma, Alibaba has taken a somewhat different approach to e-commerce than its global counterparts, one that has the potential to expand and allow Alibaba to become the most pervasive provider of products and services in the world.

49. 4-42 Journal Entries, Schedule of Cost of Goods Manufactured Apex Corporation manufactures...

4-42    Journal Entries, Schedule of Cost of Goods Manufactured Apex Corporation manufactures eighteenth-century, classical-style furniture. It uses a job costing system that applies factory over- head on the basis of direct labor-hours. Budgeted factory overhead for the year 2010 was $1,235,475, and management budgeted 86,700 direct labor-hours. Apex had no materials, work-in-process, or finished goods inventory at the beginning of August 2010. These transactions were recorded during August:

a.      Purchased 5,000 square feet of oak on account at $25 per square foot.

b.     Purchased 50 gallons of glue on account at $36 per gallon (indirect material).

c.      Requisitioned 3,500 square feet of oak and 30.5 gallons of glue for production.

d.     Incurred and paid payroll costs of $187,900. Of this amount, $46,000 were indirect labor costs; direct labor personnel earned $22 per hour on average.

e.      Paid factory utility bill, $15,230 in cash.

f.      August’s insurance cost for the manufacturing property and equipment was $3,500. The premium had been paid in March.

g.      Incurred $8,200 depreciation on manufacturing equipment for August.

h.     Recorded $2,400 depreciation on an administrative asset.

i.       Paid advertising expenses in cash, $5,500.

j.       Incurred and paid other factory overhead costs, $13,500.

k.     Incurred miscellaneous selling and administrative expenses, $13,250.

l.       Applied factory overhead to production on the basis of direct labor-hours.

m.    Completed goods costing $146,000 manufactured during the month.

n.     Sales on account in August were $132,000. The cost of goods sold was $112,000.

Required

1.    Compute the firm’s predetermined factory overhead rate for the year.

2.    Prepare journal entries to record the August events. Letter your entries from a to n.

3.    Calculate the amount of overapplied or underapplied overhead to be closed to the Cost of Goods Sold account on August 31, 2010.

4.    Prepare a schedule of cost of goods manufactured and sold.

5.    Prepare the income statement for August.

50. 1. An entity installed a new production facility and incurred a number of expenses at the point of..

1. An entity installed a new production facility and incurred a number of expenses at the point of installation. The entity’s accountant is arguing that most expenses do not qualify for capitalization. Included in those expenses are initial operating losses. These should be (a) Deferred and amortized over a reasonable period of time. (b) Expensed and charged to the income statement. (c) Capitalized as part of the cost of the plant as a directly attributable cost. (d) Taken to retained earnings since it is unreasonable to present it as part of the current year’s income statement. 2. IAS 16 requires that revaluation surplus resulting from initial revaluation of property, plant, and equipment should be treated in one of the following ways. Which of the four options mirrors the requirements of IAS 16? (a) Credited to retained earnings as this is an unrealized gain. (b) Released to the income statement an amount equal to the difference between the depreciation calculated on historical cost vis-à-vis revalued amount. (c) Deducted from current assets and added to the property, plant, and equipment. (d) Debited to the class of property, plant, and equipment that is being revalued and credited to a reserve captioned “revaluation surplus,” which is presented under “equity.”