Answer:
b. 21.54%.
Explanation:
The formula and the computation of the overhead application rate is shown below:
As we know that
Overhead application rate is
= (Applied factory overhead ÷ Direct labor cost)
where,
Applied factory overhead is $5,600
And, the direct labor cost is $26,000
Now putting these values to the above formula
So, the overhead application rate is
= ($5600 ÷ $26000)
= 21.54%
We simply divided the applied factory overhead which is indirect cost by the direct labor cost i.e direct cost so that the overhead application rate could come
Explain three types of production technology defined by James D. Thomson and discuss what kind of structure (Mechanic Vs. Organic) best suits each of them?
Answer:
The three types of production technology defined by James D. Thomson are;
1. Long-linked technology
2 Mediating technology and,
3. Intensive technology.
Explanation:
James D. Thomson proposed that different types of technology would determine the organizational strategy used by some organizations. A Mechanistic structure is an organizational structure that requires a high degree of formalized and centralized activity. An Organic organizational structure is very dynamic and programmed to easily adapt to change. Three of the technology types proposed by him include;
1. Long-linked Technology- These are jobs that require an organized sequence. Task A is completed before task B and then Task C. They require formalization and an average level of complexity. An example is mass production of goods. It is an organic structure because changes can easily occur and it would therefore require dynamism.
2.Mediating Technology- These are jobs that unite the two different aspects of an organization, namely, the input and output units. They require low complexity and high formalization. An example is in the banking industry where peoples input and output are simultaneously attended to. It is a mechanistic structure because it requires a very formal arrangement.
3. Intensive Technology- These are jobs that give specialized care to different types of problems. It can be found in the hospital setting. It requires high complexity and low formalization. It is a mechanistic structure because of the specialized care rendered and the high level of interdependence of the units involved .
n 50 Which of the following statements is true of test marketing? A. The amount of test marketing needed remains constant for each new product. B. When the costs of developing and introducing the product are low, the company will have to do significant test marketing. C. Test marketing is seldom done on products that are risky. D. Test marketing is seldom done when management is not sure of the product or its marketing program. E. Test marketing costs can be high, and it takes time that may allow competitors to gain advantages.
Answer:
Option E
Explanation:
In simple words, Test marketing relates to the exercise performed in a research environment (the study market) that consists of live retailers as well as real-life purchasing scenarios, without the consumers realizing that they are taking part in an assessment workout. To assess customer response, it simulates the expected market-mix.
Thus, from the above we can conclude that the correct option is E.
Laura Bryant joined Kellogg's straight after university in 2002. She joined the Field Sales team initially. This involved visiting five to ten supermarkets a day to develop relationships at a local level. After two years her hard work was rewarded and she was promoted to Customer Marketing Manager at Head Office. This helped to raise her profile as she wanted to move into marketing. With support from her manager, Laura made the transition from Sales to Marketing as Assistant Brand Manager on Rice Krispies and Frosties. In 2009 she was promoted again to manage the marketing plan for Special K and she is now Brand Manager for Kellogg's Cornflakes. The company has helped motivate her to climb the hierarchy of needs and achieve her career ambitions. Identify and explain the theory of motivation applied by the manager at Kellog’s company. Identify each level and support your answer from examples from the case. Herzberg's motivational factors and Maslow's esteem and self-actualization needs are similar. Explain how organizations can meet these needs.
Answer: The answer is provided below
Explanation:
The theory of motivation that is applied by the manager at Kellog’s company is Hertzberg's two factor theory.
Hertzberg divided needs into two categories which are the hygiene factors and motivating factors. The hygiene factors are factors that are essential to work, hygiene factors do not work as motivating factor but absence will lead to dissatisfaction. Hygiene factors include salary, safe working environment, break time, etc.
Motivating factors are factors that motivates the employees to work harder. Motivating factors lead to satisfaction among the employees and they include responsibility, growth, status, recognition, achievement, etc.
In this scenario, Hertzberg motivating factor theory was used. The manager helped Laura Bryant climb the corporate hierarchy. At first, she was a sales field worker, she was then promoted after 2 years to customer marketing manager post. This helped Laura enter the marketing field after which she was promoted again to help manage marketing plan of special K.
Recognition, responsibility, social status, and growth are all motivating factors that were applied by the manager in this scenario. Laura is satisfied and motivated and the manager here helped her to reach her goals and grow over the years.
Herzberg's motivational factors and Maslow's esteem and self-actualization needs are similar and can be met by organizations in the following ways:
• Management should give employees challenging and complex tasks as this tends to motivate workers.
• Recognition and appreciation: Employees are motivated when they are recognised and appreciated for their work. When employees are recognised, they tend to put in more effort at their workplace and work harder.
•Decision making: Employers should allow their employees participate in the decision making process of the organization.
• Growth opportunities: Employees must be provided with opportunities that allow them grow. This can help in taking their career up and be more productive for the company.
Hertzberg motivational factors theory and Maslow self esteem and self actualisation needs are identical because both needs are satisfied by growth, power, recognition, appreciation, responsibility, and social status.
Brooks Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2014, the corporation sells for cash 451 computers at a unit price of $3,110. On the basis of past experience, the 2-year warranty costs are estimated to be $159 for parts and $209 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2014.) The warranty is not sold separately from the computer.1. Record any necessary journal entries in 2014, applying the cash-basis method.2. Record any necessary journal entries in 2014, applying the expense warranty accrual method.3. What liability relative to these transactions would appear on the December 31, 2014, balance sheet and how would it be classified if the expense warranty accrual method is applied?4. In 2015, the actual warranty costs to Brooks Corporation were $24,040 for parts and $41,080 for labor. Record the journal entry in 2015, applying the cash-basis method. Use "Inventory" account to record the warranty expense.
5. In 2015, the actual warranty costs to Brooks Corporation were $24,040 for parts and $41,080 for labor. Record the journal entry in 2015, applying the expense warranty accrual method. Use "Inventory" account to record the warranty expense.
Answer and Explanation:
Brooks Corporation
1. The 2014 cash-basis journal entries will be:
Date Description Debit Credit
2014
DR Cash $1,402,610
($3,110 x 451)
CR Sales Revenue $1,402,610
No Journal entry is recorded for the possible warranty expense in a situation where the cash-basis is used.
2. The 2014 accrual method journal entries will be:
Date Description Debit Credit
2014
DR Cash $1,402,610
CR Sales Revenue $1,402,610
2014
DR Warranty expenses 165,968
($368 x 451)
CR Accrued Warranty Expense 165,968
3. On December 31, 2014, financial statements, there will be an Accrued Warranty Liability in which it will be classified as a current liability unless in a situation where the company can reasonably estimate which portion will be spent in the second year of the warranty period, in which case that portion can be classified as a long-term liability.
4. The 2014 cash-basis journal entries will be:
Date Description Debit Credit
2015
DR Warranty Expense 65,120
CR Wages Expense 41,080
CR Inventory 24,040
5. The 2014 accrual method journal entries will be:
Date Description Debit Credit
2015
DR Accrued Warranty Expense 65,120
CR Wages Expense 41,080
CR Inventory 24,040
On January 1, 2012, Piper Co., purchased a machine (its only depreciable asset) for $600,000. The machine has a five-year life, and no salvage value. Sum-of-the-years'-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2015, for financial statement reporting, Piper decided to change to the straight-line method for depreciation of the machine. Assume that Piper can justify the change.
Piper's income before depreciation, before income taxes, and before the cumulative effect of the accounting change (if any), for the year ended December 31, 2015, is $500,000. The income tax rate for 2015, as well as for the years 2012-2014, is 30%.
Required:
A) What amount should Piper report as net income for the year ended December 31, 2015?
O $120,000
O $182,000
O $308,000
O $350,000
Answer:
Piper should report $308,000 as net income for the year . Option C
Explanation:
Accumulated Depreciation till 2014 = [$600,000×(5+4+3)] ÷ 15 = $ 480,000
Book Value at beginning 2015 = $600,000 - $480,000 = $120,000
Depreciation Expense in 2015 = $120,000 ÷ 2 = $60,000
Net Income before depreciation & taxes = $ 500,000
Depreciation = $ 60,000
Electronic Benefits Transfer = Net Income before depreciation & taxes - Depreciation
= $ 500,000 - $ 60,000
=$ 440000
Tax Expenses = $440,000 × 30% = $132,000
Net Income =$ 308,000
Gonzo Co. owns a building in Georgia. The building’s historical cost is $970,000, and $440,000 of accumulated depreciation has been recorded to date. During 2011, Gonzo incurred the following expenses related to the building:
Repainted the building
$ 48,000
Major improvement to the plumbing
109,000
Replaced carpet in the plant’s accounting offices
47,600
Added a 7,000 square foot lobby
234,600
Repaired a broken water main
155,800
Required:
1. Which of the costs incurred by Gonzo Co. should be capitalized to the building account?
2. What is the subsequent carrying amount of the building?
Answer:
1. The cost to be capitalized to building account is $343,600
2. The subsequent carrying amount of the building is $873,600
Explanation:
1. In order to calculate the which of the costs incurred by Gonzo Co. should be capitalized to the building account we would have to use the following formula:
cost to be capitalize=Major improvement to the plumbing+Added a loby
cost to be capitalize=$109,000+$234,600
cost to be capitalize=$343,600
The cost to be capitalized to building account is $343,600
2. To calculate the subsequent carrying amount of the building we have to use the following formula:
subsequent carrying amount=Historical cost+improvements-Accumulated Depreciation
subsequent carrying amount=$970,000+$343,600-$440,000
subsequent carrying amount=$873,600
The subsequent carrying amount of the building is $873,600
There are five (5)
specific forces that are acting as stimulants for change, state and explain them with relevant examples
Answer:
Political, Environmental, Socio cultural, Technological and Economic
Explanation:
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:
Direct labor-hours required to support estimated production 150,000
Machine-hours required to support estimated production 75,000
Fixed manufacturing overhead cost $ 420,000
Variable manufacturing overhead cost per direct labor-hour $ 4.60
Variable manufacturing overhead cost per machine-hour $ 9.20
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials $ 195
Direct labor cost $ 288
Direct labor-hours 15
Machine-hours 5
Required:
1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated Direct labor-hours= 150,000
Estimated machine-hours= 75,000
Fixed manufacturing overhead cost $ 420,000
Variable manufacturing overhead cost per direct labor-hour $ 4.60
Variable manufacturing overhead cost per machine-hour $ 9.20
Job 550:
Direct materials $ 195
Direct labor cost $ 288
Direct labor-hours 15
Machine-hours 5
1. To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 420,000/150,000 + 4.6
Estimated manufacturing overhead rate= $7.4 per direct labor hour
Job 550:
Total cost= 195 + 288 + (7.4*15)= $594
Selling price= 594*2= $1,188
2) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 420,000/75,000 + 9.2
Estimated manufacturing overhead rate= $14.8 per machine-hour
Job 550:
Total cost= 195 + 288 + (14.8*5)= $557
Selling price= 557*2= $1,114
Suppose the market for computer chips is dominated by two firms: Intel and AMD. Intel has discovered how to make superior chips and is considering whether or not to adopt the new technology. Adoption would entail a fixed setup cost of C but would increase revenues. However, if Intel adopts the new technology, AMD can easily copy it at a lower setup cost of C/2. If Intel adopts and AMD does not, Intel would earn $20 in revenues while AMD would earn $0. If Intel adopts and AMD does likewise, each firm will earn $15 in revenues. If Intel does not adopt the new technology, it will earn $5 and AMD will earn $2. a. Write this game in extensive form. b. Under what conditions (i.e., for what values of C) does AMD have an incentive to adopt the new technology if Intel introduces it
Answer:
Explanation:
See the figure below.
b. AMD's payoff from adopting must exceed its payoff from not adopting. This is true if 15 - C/2 > 0. Solving for C, we find that AMD has an incentive to adopt if Intel adopts whenever C < 30.
c. No. When C = 12, AMD's best strategy is to adopt if Intel adopts, which means Intel would earn only 3by adopting. By not adopting, Intel can earn a payoff of 5; Intel's best option is not to adopt. This is the only Nash equilibrium, and it is also a subgame perfect Nash equilibrium
Bob is a recognized french horn player. Bob has played for several major symphonies. Last year Bob went through bankruptcy and in order to pay his rent for a couple of months took out loans from a small bank - Avarice Bank - and pledged his french horn as collateral. He was unable to make the first payment on the loan so the bank was getting ready to take the french horn for non-payment. Bob approached the director of the Gilroy Philarmonic International Symphony - Joe - for help - asking him to guarantee payment so he does not lose his french horn. Joe agreed to guarantee the payment - partially because Bob is scheduled as the featured performer at the Classic Polka Festival in Gilroy which Joe manages. Joe called Avarice Bank and said if Bob could not pay, he would, and Avarice accepted his guaranty by phone. Bob played for the Polka Festival (it was very successful), but immediately after, left town and his whereabouts are unknown. Avarice has contacted Joe and indicated they have not collected from Bob and they expect Joe to pay the debt. Joe told Avarice they did not have anything in writing from him (though there are witnesses who heard Joe guarantee payment) and he believes he will not be liable for Bob's debt. Avarice has indicated it will file suit for payment against Joe.
A. Issue: What is the legal issue/dispute?
B. Support: Provide support for your decision. Describe what the law says about situations like this, and how it applies to this case.
Answer:
Explanation:
Issue - Does guarantee on phone for a debt payment is valid and enforceable in a court of law.
Decision - The guarantee is a contract and needs to be in writing and should bear the signatures of the parties in order to be enforceable. In this case, the guarantee for the debt repayment by Bob was given by Joe on phone, which does not fulfil the requirement of the contract to be enforceable.Hence the bank would not succeed in claiming payments from Joe.
Support - Guarantee for repayment of debt is a contract that authorises the creditor to recover the money from the guarantor if the debtor defaults on payment. However, the guarantee contract should be in writing ( in legal systems of most of the countries) and should be signed by the guarantor. In absence of a written contract and signature of the guarantor, the contract can't be enforced in a court of law, which is in this case. The bank should have insisted only on the written and signed consent of guarantee from Joe. As it did not, it can't hold him liable for the breach of guarantee contract.
Potatoes cost Janice $1.25 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30, how many pounds of potatoes will she purchase? What if she only had $2.00 to spend?
Janice will purchase with her original $5.00 of income.
Janice will purchase when her income is $2.00
Answer:
1 pound is the correct answer to the given question .
Explanation:
AS the Janice is priced at the cost of $1,50 for the 1 pound of potatoes also the cost of the $1,14 for the second pound of the potatoes .
It simply means that if the cost is $1.25 per pound for the Potatoes , it provides the market excess from the 1 pound of the potatoes but the average willing to spend the drop below the second pound cost of Potatoes .
So Janice will purchase with the original $5.00 of income. as well as the income is $2.00 for the [tex]1 \ pound[/tex]
On January 1, 2016, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2017. Expenditures on the project were as follows:
January 1, 2016 $200,000
September 1, 2016 $300,000
December 31, 2016 $300,000
March 31, 2017 $300,000
September 30, 2017 $200,000
Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2016. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2016 and 2017.
Interest capitalized for 2017 was ?
Answer:
$86,805
Explanation:
For computing the interest capitalized for 2017 we need to do following calculations
Average accumulated expenditures for year 2016 is
= (Jan 1 expenditure × number of months ÷ total number of months) + (Sep 1 expenditure × number of months ÷ total number of months) + (Dec 31 expenditure × number of months ÷ total number of months)
= (200,000 × 12 ÷ 12) + (300,000 × 4 ÷ 12) + (300,000 × 0 ÷ 12)
= 200,000 + 100,000 + 0
= $300,000
Now
Interest capitalized for 2016 was:
= (Jan 1 expenditure × number of months ÷ total number of months) + (Sep 1 expenditure × number of months ÷ total number of months) + (Dec 31 expenditure × number of months ÷ total number of months) × interest on construction loan
= (200,000 × 12 ÷ 12) + (300,000 × 4 ÷ 12) + (300,000 × 0 ÷ 12) × 12%
= $300,000 × 12%
= 36,000
Now
Average accumulated expenditures for 2017 was:
Accumulated expenditure in 2016 is
= (Jan 1 expenditure + Sep 1 expenditure + Dec 1 expenditure + interest capitalized) × number of months ÷ total number of months
= (200,000 + 300,000 + 300,000 + 36,000) × 9 ÷ 9
= (836,000) × 9 ÷9
= 836,000
And,
March 31, 2017 = 300,000 × 6 ÷9 = 200,000
September 30, 2017 = 200,000 × 0 ÷ 9 = 0
So,
Average accumulated expenditures for 2017 was
= 836,000 + 200,000 + 0
= 1,036,000
Finally
Interest capitalized for 2017 was:
Specific borrowing is
= 750,000 × 9 ÷ 12 × 12%
= 67,500
Therefore
Excess = (Accumulated expenditure in 2017) – (Total borrowing in 2016)
= (1,036,000 - 750,000) × number of months ÷ total number of months × bond payable discount
= 286,000 × 9 ÷ 12 × 9%
= 19,305
Hence,
Interest capitalized for 2017
= 67,500 + 19,305
= 86,805
ReVitalAde produced 13,000 cases of powdered drink mix and sold 12,000 cases in April 2018. The sales price was $ 29, variable costs were $ 12 per case ($ 9 manufacturing and $ 3 selling and administrative), and total fixed costs were $ 100,000 ($ 91,000 manufacturing overhead and $ 9,000 selling and administrative). The company had no beginning Finished Goods Inventory.
Required:
1. Prepare the April income statement using variable costing.2. Determine the product cost per unit.
Answer:
1. Profit = $204,000.
2. Product cost per unit = $12 per unit.
Explanation:
1. Prepare the April income statement using variable costing.
Details $
Revenue ($29 * 12,000) 348,000
Total variable cost of unit sold ($12 * 12,000) 144,000
Profit 204,000
2. Determine the product cost per unit.
Total variable cost of production = $12 * 13,000 = $156,000
Total fixed cost of production = $100,000
Total cost of production = $156,000 + $100,000 = $256,000
Product cost per unit = $256,000 / 13,000 = $12 per unit.
The Laser world income Statement for 2021 is as follows:
Sales revenue $198,000
Cost of sales 108,900
Gross profit 89,100
Operating expenses 69,000
Net income $20,100
Other Facts:
Included in operating expenses:
Depreciation Expense 7500
Vehicle expense 2800
Interest Expense 15600
Gain on Sale of Asset 5000
Pension Contribution 7500
Other:
Dividends 13800
Cash Rec'd From Sale of Assets 35000
Basis of Assets Sold 30000
Required:
1. Jornalize the above transactions.
Answer:
journal entries to record revenues and gains:
Dr Cash 193,000
Cr Sales revenue 193,000
Dr Cash 35,000
Cr Asset 30,000
Cr Gain on sale of asset 5,000
journal entry to record COGS:
Dr Cost of goods sold 108,900
Cr Merchandise inventory 108,900
journal entries to record expenses:
Dr Depreciation expense 7,500
Dr Vehicle expense 2,800
Dr Interest expense 15,600
Dr Pension expense 7,500
Cr Cash 50,600
Dr Other operating expenses 18,400
Cr Cash 18,400
journal entries to record dividends (declaration and payment):
Dr Retained earnings 13,800
Cr Dividends payable 13,800
Dr Dividends payable 13,800
Cr Cash 13,800
The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method. The tollowing factory overhead was budgeted for Firebolt:
1 Fabrication Department factory overhead $557,750.00
2 Assembly Department factory overhead 57,550.00
3 Total $815,300.00
Direct labor hours were estimated as follows:
Fabrication Department 4,850 hours
Assembly Department 5,050
Total 9,900 hours
In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined trom engineering records, as follows:
Production Departments Gasoline Engine Diesel Engine
Fabrication Department 31 dlh 2.1 dlh
Assembly Department 2.1 3.1
Direct labor hours per unit 5.2 dlh 5.2 dlh
a. Determine the per-unit factory overhead to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as the activity base. If required, round all per-direct labor hours and per-unit answers to the nearest cent.
b. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production departmnet factory overhead rate method, using direct labor hours as the activity base for each department. If required, round all per-unit answers to the nearest cent.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Fabrication Department factory overhead $557,750
Assembly Department factory overhead $257,550
Total $815,300.00
Direct labor hours:
Fabrication Department 4,850 hours
Assembly Department 5,050
Total 9,900 hours
Production Departments Gasoline Engine Diesel Engine
Fabrication Department 3.1 dlh 2.1 dlh
Assembly Department 2.1 3.1
Direct labor hours per unit 5.2 dlh 5.2 dlh
A) First, we need to calculate the plantwide overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= (815,300/9,900)
Estimated manufacturing overhead rate= $82.35 per direct labor hour
Now, we can allocate overhead to each product:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Gasoline= 82.35*5.2= $428.22
Diesel= 82.35*5.2= $428.22
B) We need to calculate the overhead rate for each department:
Fabrication:
Estimated manufacturing overhead rate= 557,750/4,850= $115 oer direct labor hour
Assembly:
Estimated manufacturing overhead rate= 257,550/5,050= $51 oer direct lbor hour
Now, we can allocate overhead:
Gasoline:
Allocated MOH= 115*3.1 + 51*2.1= $463.6
Diesel:
Allocated MOH= 115*2.1 + 51*3.1= $399,6
Without checking the facts, a broker who is the seller�s agent tells a buyer that the property taxes in a particular neighborhood are among the lowest in the area. The buyer relies on the broker�s statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to rescind the contract on the basis of:___________.
Answer:
misrepresentation
Explanation:
A broker is a person or firm who arranges the sale and purchase of a property between a buyer and a seller. He gets a commission if the deal is executed.
In the given question, a buyer is told by a broker that the property taxes in a particular neighborhood are the lowest in the area. Based on this information, makes an offer on a house in the neighborhood. Just before closing, he comes to know that the taxes are actually among the highest in the area.
So, The buyer could seek to rescind the contract based on misrepresentation
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31 are as follows:
Date Transaction Number of Units Per Unit Total
Jan. 1 Inventory 7,500 $ 75.00 $ 562,500
10 Purchase 22,500 85.00 1,912,500
28 Sale 11,250 150.00 1,687,500
30 Sale 3,750 150.00 562,500
Feb. 5 Sale 1,500 150.00 225,000
10 Purchase 54,000 87.50 4,725,000
16 Sale 27,000 160.00 4,320,000
28 Sale 25,500 160.00 4,080,000
Mar. 5 Purchase 45,000 89.50 4,027,500
14 Sale 30,000 160.00 4,800,000
25 Purchase 7,500 90.00 675,000
30 Sale 26,250 160.00 4,200,000
Required:
1. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period.
2. Determine the ending inventory cost as of March 31.
Answer:
Total Sales $19875,000
Cost Of Goods Sold: $ 11902,000
Gross Profit $ 7973,000
Ending Inventory 11,250 units
Explanation:
Midnight Supplies
DATA
Date Transaction Number of Units Per Unit Total
Jan. 1 Inventory 7,500 $ 75.00 $ 562,500
10 Purchase 22,500 85.00 1,912,500
28 Sale 11,250 150.00 1,687,500
30 Sale 3,750 150.00 562,500
Feb. 5 Sale 1,500 150.00 225,000
10 Purchase 54,000 87.50 4,725,000
16 Sale 27,000 160.00 4,320,000
28 Sale 25,500 160.00 4,080,000
Mar. 5 Purchase 45,000 89.50 4,027,500
14 Sale 3 0,000 160.00 4,800,000
25 Purchase 7,500 90.00 675,000
30 Sale 26,250 160.00 4,200,000
Total Sales $19875,000
Date Transaction Number of Units Per Unit Total
Jan.
28 Sale 11,250 150.00 1,687,500
30 Sale 3,750 150.00 562,500
Feb. 5 Sale 1,500 150.00 225,000
16 Sale 27,000 160.00 4,320,000
28 Sale 25,500 160.00 4,080,000
Mar 14 Sale 3 0,000 160.00 4,800,000
30 Sale 26,250 160.00 4,200,000
Total Sales 125250 19875,000
Cost Of Goods Sold:$ 11902,000
Date Transaction Number of Units Per Unit Total
Jan. 1 Inventory 7,500 $ 75.00 $ 562,500
10 Purchase 22,500 85.00 1,912,500
Feb 10 Purchase 54,000 87.50 4,725,000
Mar. 5 Purchase 45,000 89.50 4,027,500
25 Purchase 7,500 90.00 675,000
Total 136,500 $ 11902,000
Gross Profit = Sales Less COGS
= $19875,000- $ 11902,000
= $ 7973,000
2. Ending Inventory = Units Purchased Less Units Sold
= 136,500-125250 = 11,250 units
Exercise 2.2 Preparing a Balance Sheet (LO2-4)
The night manager of Willis Transportation Service, who had no accounting background, prepared the following balance sheet for the company at February 28, current year. The dollar amounts were taken directly from the company’s accounting records and are correct. However, the balance sheet contains a number of errors in its headings, format, and the classification of assets, liabilities, and owners’ equity.
WILLIS TRANSPORTATION SERVICE
Manager’s Report
8 P.M. Thursday
Assets Owners' Equity
Capital stock $ 94,000 Accounts receivable $ 72,000
Retained earnings 62,000 Notes payable 281,000
Cash 74,000 Supplies 14,000
Building 90,000 Land 70,000
Automobiles 175,000 Accounts payable 58,000
$ 495,000 $ 495,000
Prepare a corrected balance sheet.
Answer:
Explanation:
The corrected sheet is given below
WILLIS TRANSPORTATION SERVICE
Balance sheet
Feb-28
Assets
Cash 74000
Accounts Receivable 72000
Supplies 14000
Land 70000
Buildings 90000
Automobiles 175000
Total 495000
Liabilities & Owners' Equity
Liabilities:
Notes payable 281000
Accounts Payable 58000
Total Liabilities 339000
Owners Equity:
Capital Stock 94000
Retained earnings 62000
Total 495000
On August 31, 2021, the general ledger of The Dean Acting Academy shows a balance for cash of $7,874. Cash receipts yet to be deposited into the checking account total $3,268, and checks written by the academy but not yet processed by the bank total $1,355. The company's balance of cash does not reflect a bank service fee of $28 and interest earned on the checking account of $39. These amounts are included in the balance of cash of $5,972 reported by the bank as of the end of August.
Required:1. Prepare a bank reconciliation to calculate the correct ending balance of cash on August 31, 2021.2. Record the necessary entry(ies) to adjust the balance for cash.
Answer:
Bank Reconciliation Statement
Balance at bank as per the Cash Book (updated) $7,885
Add Unpresented Cheques $1,355
Less Bank Lodgements not yet credited ($3,268)
Balance as per bank statement $5,972
J1
Bank $39 (debit)
Interest Earned $39 (credit)
J2
Bank service fee $28 (debit)
Bank $28 (credit)
Explanation:
Step 1 Bring the Cash Balance in the Cash Book up to date
Debit :
Balance as at August 31, 2021, $7,874
Interest Earned $39
Totals $7,913
Credit:
Bank service fee $28
Balance Up dated (Balancing figure) $7,885
Totals $7,913
Step 2 Prepare the Bank Reconciliation Statement
Bank Reconciliation Statement
Balance at bank as per the Cash Book (updated) $7,885
Add Unpresented Cheques $1,355
Less Bank Lodgements not yet credited ($3,268)
Balance as per bank statement $5,972
Crane is a book publisher that reissues old titles. The company offers these books with either a standard machine-glued hard cover or a deluxe, hand-embossed, hand-stitched, leather cover. Crane currently allocates overhead to the books based on direct labor hours. A recent activity analysis conducted by the controller revealed the following information.
Standard Edition Deluxe Edition
Units produced 404000 13000
Direct labor hours 444400 35100
Printing press hours 68380 2210
Sales orders 12120 14300
Calculate the following for each product:
Standard edition Deluxe edition
Direct labor hours per unit __________DLH / unit _______DLH / unit
Printing press hours per unit _________PPH / unit _______PPH / unit
Sales orders per unit __________order / unit _______order / unit
Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard Edition - Deluxe Edition
Units produced= 404,000 - 13,000
Direct labor hours= 444,400 - 35,100
Printing press hours= 68,380 - 2,210
Sales orders= 12,120 - 14,300
Direct labor hours per unit= total direct labor hours/ total units
Standard= 444,400/404,000= 1.1 hours per unit
Deluxe= 35,100/13,000= 2.7 hours per unit
Printing press hours per unit:
Standard= 68,380/404,000= 0.1693 hours per unit
Deluxe= 2,210/13,000= 0.17 hours per unit
Sales orders per unit:
Standard= 12,120/404,000= 0.03 hours per unit
Deluxe= 14,300/13,000= 1.1 hours per unit
Mendrisio Company purchased a piece of machinery for $30,000 on January 1, 2019, and has been depreciating the machine using the sum-of-the-years'-digits method based on a five-year estimated useful life and no salvage value. On January 1, 2021, Mendrisio decided to switch to the straight-line method of depreciation. The salvage value is still zero and the estimated useful life is changed to a total of six years from the date of purchase. Ignore income taxes.
Requirements:
a. Prepare the appropriate journal entry (if any) to record the accounting change (include the account and the dollar amount; no abbreviations!)
b. Prepare the journal entry to record depreciation for 2018.
Answer:
a. There is no entry required to record the accounting change
b. The journal entry to record depreciation for 2021 would be as follows:
Debit Credit
Depreciation Expense $3,000
Accumulated Depreciation $3,000
Explanation:
According to the given data we have the following:
Sum of year digits=5(5+1)/2
Sum of year digits=(5*6)/2
Sum of year digits=15
Depreciation for year 2019=$30,000*5/15
Depreciation for year 2019=$10,000
Depreciation for year 2020=$30,000*4/15
Depreciation for year 2020=$8,000
Therefore, book value as on january 1, 2021=$30,000-$10,000-$8,000
book value as on january 1, 2021=$12,000
Revised useful life=6 years-2 years=4 years
Therefore, Revised depreciation for 2021=$12,000/4
Revised depreciation for 2021=$3,000
a. There is no entry required to record the accounting change
b. The journal entry to record depreciation for 2021 would be as follows:
Debit Credit
Depreciation Expense $3,000
Accumulated Depreciation $3,000
Photo Co. operates four film developing plants in upstate New York. The four plants are identical. They employ the same production technology, process the same mix, and buy raw materials from the same companies at the same prices. Wage rates are also the same at four plants. In reviewing the operating results for December, the newly hired assistant controller, Mike, became quite confused over the numbers.
Plant A Plant B Plant C Plant D
Number of Rolls processed 50,000 55,000 60,000 65,000
Revenue ($000s) $500 $550 $600 $650
Less:
Variable costs (195) (242) (300) (298) (352)
Fixed costs (300) (300) (300) (300)
Profit (loss) $5 $8 $2 $2
Mike remembered from his Accounting class that as volume increases, the average fixed cost per unit falls, and so Mike expected Plant D to be more profitable that Plants A and B. But numbers show just the opposite.
Required:
1. Write a concise memo to Mike to help him understand what is going on and to eliminate his confusion.
Justify your points with appropriate calculations.
Seadrill Engineering sold software to oil-drilling firms. In addition to providing the software, the company also provides consulting services and support for 5 years to ensure smooth operation of the software. The total transaction price is $350,000. Based on standalone values, the company estimates the consulting services and support have a value of $150,000 and the software license has a value of $250,000. Seadrill generally records software sales using Sales Revenue account and consulting service using Service Revenue account. Assuming the performance obligations are not interdependent, the journal entry to record the transaction includes:A) a credit to sales revenue for $250,000 and a credit to unearned service revenue of $100,000.B) a credit to service revenue of $100,000.C) a credit to unearned service revenue of $100,000.D) a credit to sales revenue of $350,000.
Answer:
a credit to sales revenue for $250,000 and a credit to unearned service revenue of $150,000
Explanation:
The Journal entry is shown below:-
Cash Dr, $400,000
To Sales revenue $250,000
To unearned service revenue $150,000
(Being cash receipts is recorded)
The unearned revenue from service is the revenue in which the customer has paid the money, and the company does not provide the services. Acceptance of the money for the warranty which has been extended. The seller expects to continue to provide the services.The income will not be gained from this, because the company will not be reported until the company refuses to deliver the services in the future.
For recording this we debited the cash as it increased the assets and credited the sales revenue and unearned service revenue as it increased the revenue and liability
This is the answer but the same is not provided in the given options
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:
Activity Cost Pool Activity Rate
Setting up batches $59.06 per batch
Processing customer orders $72.66 per customer order
Assembling products $3.75 per assembly hour
Data concerning two products appear below:
Product K91B Product F65O
Number of batches 86 57
Number of customer orders 36 50
Number of assembly hours 490 897
Required:
How much overhead cost would be assigned to Product K91B using the activity-based costing system? (Round your intermediate calculations and final answers to 2 decimal places.)
Answer:
Total allocated overhead= $9,532.42
Explanation:
Giving the following information:
Activity Rate
Setting up batches= $59.06 per batch
Processing customer orders= $72.66 per customer order
Assembling products= $3.75 per assembly hour
Product K91B
Number of batches 86
Number of customer orders 36
Number of assembly hours 490
To allocate overhead, we need to use the following formula on each activity rate:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Setting up= 59.06*86= 5,079.16
Processing= 72.66*36= 2,615.76
Assembling= 3.75*490= 1,837.5
Total allocated overhead= $9,532.42
When considering barriers to international communication, companies should be aware that noise tends to increase the probability of effective communication. source effects can be beneficial for an international business when potential consumers in a target country have a bias against foreign firms. many international businesses try to promote positive source effects by deemphasizing their foreign origins. fewer firms vie for the attention of prospective customers in developing countries, thus the noise level is lower. research suggests consumers use country of origin when evaluating a product, when they have detailed knowledge of the product.
True or false?
Identify each statement as true or false. If false, indicate how to correct the statement.
1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.
2. Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.
3. When a corporation is formed, organization costs are recorded as an asset.
4. Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.
5. The number of issued shares is always greater than or equal to the number of authorized shares.
6. A journal entry is required for the authorization of capital stock.
7. Publicly held corporations usually issue stock directly to investors.
8. The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.
9. The market price of common stock is usually the same as its par value.
10. Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
Answer:
1. True: Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.
2. False: Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation. False because limited liability of Stockholders is considered as an advantage.
3. False: When a corporation is formed, organization costs are recorded as an asset. It is false because organization costs are recorded as expenses.
4. True: Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.
5. False: The number of issued shares is always greater than or equal to the number of authorized shares. It is false because the number of issued shares is always less than or equal to the number of authorized shares.
6. False: A journal entry is required for the authorization of capital stock. It is false because journal entry is not required for the authorization of capital stock but for issuance.
7. False: Publicly held corporations usually issue stock directly to investors. It is false because publicly held corporations issue stock indirectly to investors via investment banking institutions while privately held corporations issues stock directly.
8. True: The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.
9. False: The market price of common stock is usually the same as its par value. It is false because there isn't any relationship between market value of common stock and its par value.
10. False: Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock. False because retained earnings refer to the total amount of net income held by a corporation for its future use.
A representative from a prestigious industry association just emailed. She asks for your participation on an expert panel that will be held at an upcoming professional conference. The conference is not local, so it will require you to travel and stay several days in the conference location. The representative offers to pay for travel and lodgings for you and a guest to the conference. Which of the following responses would be most effective for helping you to make an ethical decision?a) Ask the representative to cover your expenses, but not your guest’s.b) Thank the representative and accept the offer to cover expenses of your participation.c) Ask the representative to cover travel expenses, but not hotel expenses.d) Ask the representative if this offer has been made to any others that she’s inviting.
Answer:
b) Thank the representative and accept the offer to cover expenses of your participation.
Explanation:
Since the representative asked for your participation on an expert panel that will be held at an upcoming international professional conference. The representative offered to pay for travel and lodgings for you and a guest to the conference.
The response that be most effective for helping you to make an ethical decision is to first of all, thank the representative and accept the offer to cover expenses of your participation.
As a sign of gratitude, you should thank them for the honor and privilege bestowed on you to be a part of the panel.
Also, having them offering to pay your travel and lodging costs would help you channel your energy into preparing and equipping yourself with necessary information and knowledge about the conference.
Sorrento Skies Corporation issues 16.000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $1.920,000 and a credit or credits to a. Preferred Stock for $1,920,000. b. Paid-in Capital from Preferred Stock for $1.920,000 c. Preferred Stock for $1,600,000 and Retained Earnings for $320,000 d. Preferred Stock for $1,600,000 and Paid-in Capital in Excess of Par-Preferred Stock for $320,000
Answer:
The correct option is D,credit to Preferred Stock for $1,600,000 and Paid-in Capital in Excess of Par-Preferred Stock for $320,000
Explanation:
The total par value of the preferred stock issue is $100 multiplied by 16,000 which gives $1,600,000 while the remaining $20 per share multiplied by 16,000 that gave rise $320,000 goes to the credit of paid-in capital in excess of par-preferred stock account.
Option A is wrong because the preferred has a par value of $100 hence the total cash proceeds cannot be posted to preferred stock account alone.
Option B is wrong because the excess of $20 per share cannot be posted to retained earnings since it is net income
Tanner-UNF Corporation acquired as a long-term investment $310 million of 6% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $280 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $290 million.
How would this investment be classified on Tanner-UNF's balance sheet?
A. Held-to-maturity securities
B. Other securities
C. Significant-influence investments
D. Trading securities
E. Available-for-sale securities
Answer:
D. Trading securities
Explanation:
Tanner-UNF Corporation
This investment would be classified on Tanner-UNF's balance sheets asTrading securities.
TRADE SECURITIES can be defined as the securities which have been purchased or bought by a company for the sole aim of realizing a short-term profit.
Hence, Companies do not always intend to keep such securities for a long period of time which is why they will only invest it if t they believe or thought they have a good chance of being compensated for the risk. they are taking which is why TRADE SECURITIES always includes both debt securities and equity securities.
Match each scenario with the source of monopoly market power.
1. Mary McFly invents a time machine and gets legal protection from competition.
2. Main Line Utilities can operate at a lower cost than multiple electric companies.
3. The author of Economics for Dumbbells is given exclusive rights to produce this book.
4. Your city council gives All Talk Communication Services exclusive rights to build high speed internet infrastructure in your town.
5. DeJeers Jewelers owns 80% of the world's diamond mines.
Options:
O PatentO Economies of ScaleO Control over ResourcesO Government licencingO Copyright
Answer:
1. Mary McFly invents a time machine and gets legal protection from competition. Patent
2. Main Line Utilities can operate at a lower cost than multiple electric companies. Economies of Scale
3. The author of Economics for Dumbbells is given exclusive rights to produce this book. Copyright
4. Your city council gives All Talk Communication Services exclusive rights to build high speed internet infrastructure in your town.Government licencing
5. DeJeers Jewelers owns 80% of the world's diamond mines. Control over Resources
Explanation:
A monopoly is when there's only one firm operating in an industry.
Economies of scale is cost reduction that accures to a firm as a result of its large scale production. For example, a supplier might give a producer a discount for buying in bulk.
A patent is when the government or an agency of the government gives the right to produce an invention or a good for a set period, others are usually excluded making, using or selling the invention.
Copyright gives the owner of an intellectual property the exclusive right to make copies of a creative work, usually for a limited time.
If a firm has exclusive access to resocurces, it is possible for the firm to prevent other firms from entering into the industry and thus retain monopoly power.
I hope my answer helps you