Answer:
Hill Corporation
Journal Entries
March 31, 2022:
Debit Bond Liability $2,247,000
Debit Interest Payable $42,000
Credit Cash $2,289,000
To record the recall of the bonds, including accrued interest.
Explanation:
a) Data and Calculations:
January 2, 2019: Face value of bonds issued = $2,100,000
Proceeds from the issue of the bonds at 98 = 2,058,000
Discount from the issue = $42,000
Semi-annual amortization under straight-line = $2,100 ($42,000/20)
Coupon interest rate = 8% with payment made semiannually
Annual interest payment = $168,000 ($2,100,000 * 8%)
Semiannual interest payment = $84,000 ($2,100,000 * 4%)
Bonds duration = 10 years
March 31, 2022 Recall price of 107 = $2,247,000
Accrued interest from January 1 to March 31 = $42,000
Total payment to bondholders = $2,289,000
Splish Corporation has retained earnings of $721,100 at January 1, 2020. Net income during 2020 was $1,562,700, and cash dividends declared and paid during 2020 totaled $79,000. Prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $86,370 (net of tax) was charged to maintenance and repairs expense in 2019. (List items that increase retained earnings first.)
Answer and Explanation:
The preparation of the retained earnings statement is presented below:
Opening retained earning balance $721,100
Add: prior period adjustment $86,370
Add: net income $1,562,700
Less: dividend paid $79,000
Ending retained earnings $2,291,170
The above items would be added and deducted that increase and decrease the retained earnings balance
If a company's current ratio increases from 1.2 to 1.4 from one year to the next, and its quick ratio decreases from 0.2 to 0.15 over the same time period, this indicates: a. the current liabilities have decreased. b. the inventory management should be further examined. c. the liquidity must have increased. d. the accounts receivable have decreased.
Answer: b. the inventory management should be further examined.
Explanation:
The Quick ratio is calculated by deducting inventory from the current assets and then dividing that amount by current liabilities while the Current ratio is simply dividing the current assets by the current liabilities.
If the Current ratio increased, it means that the company has more current assets per current liabilities from last year. The fact that the quick ratio dropped however, points to most of the current asset increase being the inventory which means that the company is carrying a lot of inventory.
Their management of inventory such that they are carrying such amounts therefore needs to be further examined before a decision is made on their liquidity.
Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for $325 or $400. Krueger found that (a) 94 percent of those surveyed would not have paid $3,000 for their tickets, and (b) 92 percent of those surveyed would not have sold their tickets for $3,000. These results are an example of A. the failure to ignore sunk costs. B. rational consumer behavior. C. the endowment effect. D. the fallacy of composition.
Answer:
C. the endowment effect
Folklore Music manufactures harmonicas. Folklore uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and only partial data for July exist. Folklore knows that the total direct labor variance for the month was $350 F and that the standard labor rate was $11 per hour. A recent pay cut caused a favorable labor rate variance of $0.40 per hour. The standard direct labor hours for actual July outputs were 5,910.
Required:
a. Find the actual number of direct labor hours worked during July. First, find the actual direct labor rate per hour. Then, determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given.
b. Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade-offs? Explain.
Answer: See explanation
Explanation:
a. The actual direct labor rate per hour will be:
= Standard direct labor rate per hour - favorable labor rate variance
= $11 - $0.40
= $10.60
Then, the actual direct labor hours worked during July will be calculated as:
= (5910 × $11) - $350 / $10.6
= ($65010 - $350) / $10.6
= $64660 / $10.6
= 6100
b. The direct labor rate variance will be:
= (Actual rate per hour - standard rate per hour) × Actual labor hours
= (10.60 - 11.00) × 6100
= 2440F
Direct labor efficiency variance will be:
= (6900 - 5910) × $11
= 2090U
The direct labor rate variance that was favorable shows that the manager paid a lower rate to its staffs while the direct labor efficiency variance that was unfavorable implies that the manager used less efficient workers. This indicates that a trade-off took place.
= (6900
Lusk Corporation produces and sells 10,000 units of Product X each month. The selling price of Product X is $40 per unit, and variable expenses are $32 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $70,000 of the $120,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be: rev: 07_07_2020_QC_CS-218335
Answer: ($30000)
Explanation:
If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product will be calculated thus:
Sales = 10000 × $40 = $40000
Variable expense = 10000 × $32 = $320000
Contribution margin lost = $400000 - $320000 = $80000
Savings in fixed expense = $120000 - $70000 = $50000
Financial disadvantage = Savings in fixed expenses - Contribution margin lost
= $50000 - $80000
= -$30000
Which of the following is NOT a correct statement about diversification? A) As Dr. Melton stated in class, most diversification benefits are realized with just 20 to 25 stocks. B) Diversification is the process of reducing the riskiness associated with individual assets by spreading an investment across numerous assets. C) There is no limit to the amount of risk that can be eliminated through diversification. D) Non-diversifiable risk is the only risk that matters to a diversified investor. E) None of the above.
Answer: C. There is no limit to the amount of risk that can be eliminated through diversification.
Explanation:
Diversification is referred to as the process of reducing the riskiness associated with individual assets such that an investment is spread across numerous assets.
All the options given in the question are correct about diversification except that "There is no limit to the amount of risk that can be eliminated through diversification".
There is a limit to the amount of risk that diversification can eliminate. We should note that the risk in the investment cannot be completely eliminated no matter how the economic agent diversifies their portfolio. Even though the risks are reduced, every stock are still affected by general market risks.
a. State and describe the concept that leads to "conflict of goals between a firm's managers and its shareholders. Give a modern day example of this concept, and discuss some potential solutions.
b. State and describe the concept that states, "factors of production are somewhat immobile." Give an example with detail.
Answer: See explanation
Explanation:
a. State and describe the concept that leads to "conflict of goals between a firm's managers and its shareholders. Give a modern day example of this concept, and discuss some potential solutions.
This is referred to as the agency problem. This brings about conflict of goals between the manager and the shareholders. An example is when the managers use the resources of the company for their own personal benefits or in a scenario whereby the managers fake the earnings so that the stock prices will rise temporarily.
b. State and describe the concept that states, "factors of production are somewhat immobile." Give an example with detail.
This is referred to as imperfect market theory. When transferring labor, capital or other resources, there are costs attached to the transfer and restrictions as well. .
A band sells shirts, CDs, and other merchandise online. They are using Excel to track sales by date and by name
of the buyer. They would like for any purchases over $50 to be highlighted automatically so that they can send a
special gift to those buyers.
Which is the best way to make Excel automatically highlight these sales?
Answer:
its 3
Explanation:
Ruben, Gerald, and Norma all work for the same company. Gerald and Norma both evaluate the company’s financial picture, but Gerald looks at liabilities and Norma looks at expenditures. Both Gerald and Norma make reports for Ruben, who makes the decisions for the company.
Which best describes the jobs of the three employees?
Ruben is the Risk Management Specialist, Gerald is the Budget Analyst, and Norma is the Treasurer.
Ruben is the Treasurer, Gerald is the Risk Management Specialist, and Norma is the Budget Analyst.
Ruben is the Treasurer and Gerald and Norma are the Risk Management Specialists.
Ruben is the Treasurer and Gerald and Norma are the Budget Analysts.
Answer:
The correct answer is (B)
Explanation:
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Answer:
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The answer is "Ruben is the Treasurer, Gerald is the Risk Management Specialist, and Norma is the Budget Analyst."
Welcome
Explanation:
Arrange strategic planning analysis in correct order.
Business Planning
Corporate Planning
Product Planning
Division Planning
On January 1, Year 1 Residence Company issued bonds with a $50,000 face value. The bonds were issued at 96 resulting in a 4% discount. They had a 20 year term and a stated rate of interest of 7%. Assuming a straight-line amortization of the discount, the amount of interest expense recognized on the December 31, Year 1 income statement is
Answer:
$3,600
Explanation:
According to the scenario, computation of the given data are as follows,
Bonds Face value = $50,000
Discount = 4%
Time period = 20 years
Interest rate = 7%
Premium = $50000 - ( $50,000 × 96%) = $2,000
So, we can calculate interest expense by using following formula,
Interest expense = ($50,000 × 7%) + ($2,000 ÷ 20)
= $3,600
Schedule of Cash Payments Tadpole Learning Systems Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows: March $120,000 April 140,000 May 160,000 Depreciation, insurance, and property taxes represent $10,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in November. Seventy percent of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May. Enter all amounts as positive numbers.
Solution :
Tadpole Learning System Inc.
Schedule of cash payments for selling and administration expenses
For the three months ending May 31
Particulars March April May
March Expenses
Paid in March $ 77,000
Paid in April $ 33,000
($110000 x 70%) ($110000 x 30%)
April Expenses
Paid in April $ 91,000
Paid in May $ 39,000
($130000 x 70%) ($130000 x 30%)
May expenses
Paid in May $ 1,05,000
($150000 x 70%)
Total cash payments $ 77,000 $ 1,24,000 $ 1,44,000
Given the expenses including depreciation, insurance and property tax of 10,000 to be deducted as it is not paid in the months of March, April, May. Hence it is excluded :
1 2 3 2-3
Revised expense Expense Depreciation, insurance Expense excluding
property tax depreciation,
insurance and
property tax
March $ 1,20,000 $ 10,000 $ 1,10,000
April $ 1,40,000 $ 10,000 $ 1,30,000
May $ 1,60,000 $ 10,000 $ 1,50,000
Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $0.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is: Group of answer choices $1,562.50 -$1,250.00 -$625.00 -$1,562.50
Answer:
-$1,562.50
Explanation:
Calculation to determine The highest net profit possible for the speculator based
Premium of the option = $.05 per unit * (31,250 units)
Premium of the option= -$1,562.50
Therefore Based on the information given and the above calculation The HIGHEST NET PROFIT that will be possible for the speculator will be -$1,562.50
Metlock, Inc. operates a retail operation that purchases and sells snowmobiles, among other outdoor products. The company purchases all inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2020 through 2023, inclusive.
2015 2016 2017 2018
Income Statement Data
Sales revenue $131,770 (e) $111,819
Cost of goods sold (a) 38,162 36,026
Gross profit 92,208 81,083 (i)
Operating expenses 86,550 (f) 71,903
Net income (b) $4,774 (j)
Balance Sheet Data
Inventory $17,680 (c) $19,992 (k)
Accounts payable 7,888 8,840 6,256 (l)
Additional Information
Purchases of inventory on account 35,210 (g) $32,708
Cash payments to suppliers (d) (h) 33,524
Required:
Compute the gross profit rate and the profit margin for each fiscal year.
Answer:
Metlock, Inc.
2020 2021 2022
Gross profit rate = 70% 68% 68%
Profit margin = $5,658 $4,774 $3,890
Percentage margin 4.3% 4% 3.5%
Explanation:
a) Data and Calculations:
2020 2021 2022 2023
Income Statement Data
Sales revenue $131,770 (e) $111,819
Cost of goods sold (a) 38,162 36,026
Gross profit 92,208 81,083 (i)
Operating expenses 86,550 (f) 71,903
Net income (b) $4,774 (j)
Balance Sheet Data
Inventory $17,680 (c) $19,992 (k)
Accounts payable 7,888 8,840 6,256
Additional information:
Purchases of inventory
on account 35,210 (g) $32,708
Cash payments to
suppliers (d) (h) 33,524
2020 2021 2022 2023
Income Statement Data
Sales revenue $131,770 119,245 $111,819
Cost of goods sold 39,562 38,162 36,026
Gross profit 92,208 81,083 75,793
Operating expenses 86,550 76,309 71,903
Net income $5,658 $4,774 $3,890
Balance Sheet Data
Inventory $17,680 (c) $19,992 (k)
Accounts payable 7,888 8,840 6,256
Additional information:
Purchases of inventory
on account 35,210 (g) $32,708
Cash payments to
suppliers 27,322 (h) 33,524
a) = $131,770 - $92,208 = $39,562
b) = $92,208 - 86,550 = $5,658
c) =
d) = $35,210 - 7,888 = $27,322
e) = $38,162 + 81,083 = $119,245
f = $81,083 - 4,774 = $76,309
i) = $111,819 - 36,036 = $75,793
j) = $75,793 - 71,903 = $3,890
2020 2021 2022
Gross profit rate = Gross profit/Sales * 100
Gross profit 92,208 81,083 75,793
Sales revenue $131,770 119,245 $111,819
Gross profit rate = 70% 68% 68%
Profit margin = $5,658 $4,774 $3,890
Percentage margin = Net Income/Sales * 100
4.3% 4% 3.5%
Josephine quits her $40,000 a year job to start her own business. She rents an office for $15,000 a year, pays wages and salaries of $50,000 a year, utilities of $4,000 a year, and materials of $20,000. She uses her own car for sales work rather than leasing an equivalent car for $6000 a year. If revenues are $140,000, her accounting profit and economic profit are respectively.
a. $45,000 and $11,000.
b. $51,000 and $5000.
c. $45,000 and $5000
d. $51,000 and $45,000.
Answer:
b. $51,000 and $5000.
Explanation:
According to the scenario, computation of the given data are as follows,
Total Revenues = $140,000
Explicit cost = $15,000 + $50,000 + $4,000 + $20,000 = $89000
Implicit cost (opportunity cost) = $40,000 + $6,000 = $46,000
So, we can calculate accounting profit and economic profit by using following formula,
Accounting Profit = Total revenue - Explicit cost
By putting the value, we get
= $140,000 - $89,000
= $51,000
Economic Profit = Total revenue - Explicit cost - Implicit cost
By putting the value, we get
= $140,000 - $89,000 - $46,000
= $5,000
Which of the following is not true of taxable asset purchases?
a. Net operating losses carry over to the acquiring firm.
b. The acquiring firm may step up its basis in the acquired assets.
c. Target firm shareholders are subject to a potential immediate tax liability.
d. Target firm net operating losses and tax credits cannot be transferred to the acquiring firm.
e. None of the above
Answer:
e. None of the above
Explanation:
The taxable asset purchases allows the individual to increase or step up the tax basis of acquired assets so as to reflect the price of the purchases made.
If one buy an assets, then he or she wants to allocate total purchase price in a way which gives a favorable postacquisition tax results.
In case of taxable asset purchases, the tax credits or the net operating losses cannot be transferred from the target firm to the acquiring firm.
The net operating loss carries over to the acquiring firm is not true of a taxable transaction.
What is an asset?An asset may be defined as any source owned by any individual or business that provides a long-term benefit that usually lasts for at least one year.
In a taxable asset purchase, net operating losses are not acquired by the firm. All the other statements are true for the taxable asset purchase.
Therefore, A is the correct option.
Learn more about Asset here:
https://brainly.com/question/13848560
Recording Cash Dividends [LO 11-3 National Chocolate Corp. produces chocolate bars and snacks under the brand names Blast and Soothe. A press release contained the following information March 5-National Chocolate Corp. today announced that its Board of Directors has declared a special one-time" cash dividend of $1.20 per share on its 102,000 outstanding common shares. The dividend will be paid on April 29 to shareholders of record at the close of business on March 26. The Company's fiscal year will end April 30 Required 1. Prepare any journal entries that National Chocolate Corp. should make on the four dates mentioned in press release. (If no entry is required for a transaction/date, select "No Journal Entry Required" in the first account field.)
Answer and Explanation:
The journal entries are shown below:
On Mar-05
DIvidends $122,400 (102,000 shares × $1.20)
To Cash dividends payable $122,400
(Being declaration of the dividend is recorded)
On Mar-26
No entry should be recorded on the recording date
On Apr-29
Cash dividends payable $122,400
To Cash $122,400
(being payment of the cash dividend is recorded)
On Apr-30
Retained earnings $122,400
To Dividends $122,400
(Being closing of the dividend account is recorded)
g A manufacturer is considering replacing a production machine tool. The new machine would cost $3700, have a life of four years, have no salvage value, and save the firm $500 per year in direct labor cost and $200 per year indirect labor costs. The existing machine tool was purchased four years ago at a cost of $4000. It will last four more years and have no salvage value at the end of that time. It could be sold now for $1000 cash. Assume money is worth 8%, and that the difference in taxes, insurance, and so forth, for the two alternatives is negligible. Determine whether or not the new machine should be purchased
Answer:
The new machine should not be purchased
Explanation:
Calculation to determine whether or not the new machine should be purchased
Calculation for the New Machine
EUAC = $3,700 (A/P, 8%, 4) - $500 - $200
EUAC= $3,700 (0.3019) - $700
EUAC=$1,117.03+$700
EUAC= $417.03
Calculation for EXISTING MACHINE
EUAC = $1,000 (A/P, 8%, 4)
EUAC= $1,000 (0.3019)
EUAC= $301.90
Therefore based on the above calculation The new machine should NOT be purchased reason been that it is more COSTLIER than the Existing Machine
Identify whether each of the following examples belongs in M1 or M2. If an example belongs in both, be sure to check both boxes.
Example M1 M2
Clancy has $25,000 in a money market account.
Alex has a roll of quarters that he just withdrew from the bank to do laundry.
Eileen has $8,000 in a two-year certificate of deposit (CD).
Answer: a. M2 money supply
b. M1 and M2
c. M2 money supply
Explanation:
M1 is the money supply which consist of the physical currency, coin, travelers check, demand deposits, checkable deposits.
M2 is the money supply which consists of checking deposits, cash, convertible near money.
Based on the above description of M1 and.M2 money supply, the following questions are answered below.
a. Clancy has $25,000 in a money market account.
It is included in the M2 money supply.
b. Alex has a roll of quarters that he just withdrew from the bank to do laundry.
This will be included in both the M1 money supply and the M2 money supply.
c. Eileen has $8,000 in a two-year certificate of deposit (CD).
It is included in the M2 money supply.
Condensed financial data are presented below for the Phoenix Corporation: 20X2 20X1 Accounts receivable $ 267,500 $ 230,000 Inventory 312,500 257,500 Total current assets 670,000 565,000 Intangible assets 50,000 60,000 Total assets 825,000 695,000 Current liabilities 252,500 200,000 Long-term liabilities 77,500 75,000 Sales 1,640,000 Cost of goods sold 982,500 Interest expense 10,000 Income tax expense 77,500 Net income 127,500 Cash flow from operations 71,000 Cash flow from investing activities (6,000 ) Cash flow from financing activities (62,500 ) Tax rate 30 % If the intangible assets in 20X2 are $50,000, then the long-term debt to tangible assets for 20X2 is:
Answer:
Phoenix Corporation
The long-term debt to tangible assets for 20X2 is:
= 0.74.
Explanation:
a) Data and Calculations:
20X2 20X1
Accounts receivable $ 267,500 $ 230,000
Inventory 312,500 257,500
Cash 90,000 77,500
Total current assets 670,000 565,000
Intangible assets 50,000 60,000
Tangible assets 105,000 70,000
Total assets 825,000 695,000
Current liabilities 252,500 200,000
Long-term liabilities 77,500 75,000
Equity 495,000 420,000
Total liabilities/Equity 825,000 695,000
Income Statement for year 20X2
Sales 1,640,000
Cost of goods sold 982,500
Gross profit 657,500
Operating expenses 442,500
EBIT 215,000
Interest expense 10,000
Pretax income 205,000
Income tax expense 77,500
Net income 127,500
Statement of Cash Flows:
Cash flow from operations 71,000
Cash flow from investing activities (6,000 )
Cash flow from financing activities (62,500 )
Net cash flows = 2,500
Tax rate 30 %
Long-term debt to Tangible assets = 77,500/105,000 = 0.74
b) This ratio describes the percentage of the tangible assets financed by long-term debts. It is a financial leverage ratio. The computation compares the long-term debts to the tangible assets.
Problem solving importance to the future of workplace
Answer:
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Mercury Inc. purchased equipment in 2019 at a cost of $497,000. The equipment was expected to produce 580,000 units over the next five years and have a residual value of $33,000. The equipment was sold for $253,600 part way through 2021. Actual production in each year was: 2019 = 83,000 units; 2020 = 133,000 units; 2021 = 67,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date.
Required:
1. Calculate the gain or loss on the sale.
2. Prepare the journal entry to record the sale.
3. Assuming that the equipment was instead sold for $280,000, calculate the gain or loss on the sale.
4. Prepare the journal entry to record the sale in requirement 3.
Answer:
1.
Gain or (Loss) on sale = (17000) Loss
2.
Cash 253600 Dr
Accumulated Depreciation 226400 Dr
Loss on Sale 17000 Dr
Equipment 497000 Cr
3.
Gain or (Loss) on sale = 9400 Gain
4.
Cash 280000 Dr
Accumulated Depreciation 226400 Dr
Gain on Sale 9400 Cr
Equipment 497000 Cr
Explanation:
We first need to calculate the carrying value of the equipment at the date of disposal. The carrying value is calculated as follows,
Carrying value = Cost - Accumulated depreciation
Depreciation 2019 = (497000 - 33000) * 83000 / 580000
Depreciation 2019 = 66400
Depreciation 2020 = (497000 - 33000) * 133000 / 580000
Depreciation 2020 = 106400
Depreciation 2021 = (497000 - 33000) * 67000 / 580000
Depreciation 2021 = 53600
Carrying value = 497000 - [ 66400 + 106400 + 53600 ]
Carrying value = $270600
1.
Gain or (Loss) on sale = Sales price - Carrying Value
Gain or (Loss) on sale = 253600 - 270600
Gain or (Loss) on sale = (17000) Loss
2.
Cash 253600 Dr
Accumulated Depreciation 226400 Dr
Loss on Sale 17000 Dr
Equipment 497000 Cr
3.
Gain or (Loss) on sale = Sales price - Carrying Value
Gain or (Loss) on sale = 280000 - 270600
Gain or (Loss) on sale = 9400 Gain
4.
Cash 280000 Dr
Accumulated Depreciation 226400 Dr
Gain on Sale 9400 Cr
Equipment 497000 Cr
Suppose that the reserve requirement for checking deposits is 20 percent and that banks do not hold any excess reserves. If the Fed sells $3 million of government bonds, the economy's reservesdecrease by $ million, and the money supply will by $ million. Now suppose the Fed lowers the reserve requirement to 15 percent, but banks choose to hold another 5 percent of deposits as excess reserves. True or False: The money multiplier will remain unchanged. True False True or False: As a result, the overall change in the money supply will remain unchanged. True False
Answer:
1. decrease, $ 3 million, decrease, $ 15 million
2. TRUE
3. TRUE
Explanation:
1. The reverse requirement is given as r = 0.2
The money multiplier is [tex]$\frac{1}{r}=\frac{1}{0.2}=5$[/tex]
Now when the monetary base is changed by $3 million, then the total money supply will change by [tex]$\frac{3}{0.2}= \$ 15 \ mn$[/tex].
Of the $ 15 mn, the reverse will change by $ 15 mn x 0.2 = $ 3 mn.
If Fed sells the government bond of $ 3 million, then the money supply will reduce and the economy's reverses will decrease by $ 3 million and the money supply will decrease by $ 15 million.
2. TRUE
Now if the bank reduces the reserve ratio but he bank maintains excess reserves, then the money multiplier = [tex]$\frac{1}{(r+e)}=\frac{1}{0.15+0.05}=5$[/tex]
Therefore, the money multiplier will remain same, it will remain unchanged.
3. TRUE.
Since the money multiplier remains constant, the overall change in money supply will not increase. It remains the same.
Analyse the benefits of employee training to a business.
Explanation:
Boosts Employee Performance. ...
Improve Morale and Job Satisfaction. ...
Ensures Opportunities for Learning. ...
Opportunity to Identify Weaknesses. ...
Provide a Framework to Develop Strengths. ...
Encourages Innovation and Risk Acceptance. ...
Boosts Adherence to Quality Standards
The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $51 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $225,000.
Required:
Prepare an analysis showing whether Jensen should process the assemblies further.
Answer and Explanation:
The preparation of the analysis shows whether the assemblies should process further or not is presented below:
Differential revenue (38,000 units × ($51 - $44)) $266,000
Differential costs:
Direct material (38,000units × $2 per unit) ($76,000)
Direct labor (38,000units × $2 per unit) ($76,000)
Variable overhead (38,000units × $1 per unit) ($38,000)
Fixed costs ($160,000 - $225,000) ($65,000)
Additional income (loss) from processing further $11,000
Since the amount comes in positive so it should be processed further
Perez Company acquires an ore mine at a cost of $2,940,000. It incurs additional costs of $823,200 to access the mine, which is estimated to hold 2,100,000 tons of ore. 235,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $420,000. Calculate the depletion expense from the information given. 1.
Answer:
$1,500,000
Explanation:
Step 1 : Determine depletion rate
Depletion rate = $3.57
Step 2 : Depletion expense
Carrie is creating a personal balance sheet. The heading includes the period of time that the balance sheet represents Which could be the heading of Carrie's balance sheet?
Carrie's Balance Sheet (January 1, 2021)
Carrie's Balance Sheet (January)
Carrie's Balance Sheet (Friday, January 3) Carrie's Balance Sheet (January 2011 - January 2021)
Answer: Carrie's Balance Sheet (January 1, 2021)
Explanation:
The heading of the balance sheet should include as much as possible, the month and year of the balance sheet. It can also include the exact date.
This is done so that the Balance sheet can have a particular reference date such that stakeholders who use the balance sheet can know relate the financial performance of the company as of a certain day which would enable for better analysis.
The heading of Carrie's balance sheet is: Carrie's Balance Sheet (January 2021).
What is balance sheet?Balance sheet help to summarize a company or an organization financial position or financial statement.
Since she is preparing the balance sheet for herself, what will be the heading of the balance sheet is Carrie's Balance Sheet (January 2021).
Therefore the heading of Carrie's balance sheet is: Carrie's Balance Sheet (January 2021).
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On the worksheet the adjusted balance of a contra asset account would be extended to:
Answer: the Balance Sheet Credit column.
Explanation:
A contra account is simply an asset account which has a credit balance, unlike the normal asset account that typically has a debit balance.
The two main types of contra account include the accumulated depreciation and the allowance for bad debt. We should note that on the worksheet the adjusted balance of a contra asset account would be extended to the credit column of the balance sheet.
Hoyle Company owns a manufacturing plant with a fair value of $4,600,000, a recorded cost of $8,500,000, and accumulated depreciation of $3,650,000. Patterson Company owns a warehouse with a fair value of $4,400,000, a recorded cost of $6,900,000, and accumulated depreciation of $2,800,000. Hoyle and Patterson exchange assets, with Hoyle also receiving cash of $200,000 from Patterson. The exchange is considered to have commercial substance.
Required:
Record the exchange on the books of:
a. Hoyle
b. Patterson
Answer:
A. Hoyle
Dr Warehouse $4,400,000
Dr Cash $200,000
Dr Accumulated depreciation $3,650,000
Dr Loss on sale of asset $250,000
Cr Manufacturing plant $8,500,000
B. Patterson
Dr Manufacturing plant $4,600,000
Dr Accumulated depreciation $2,800,000
Cr Gain on sale of asset
$300,000
Cr Warehouse $6,900,000
Cr Cash $200,000
Explanation:
A. Preparation of the Jounal entry to Record the exchange on the books of Hoyle
Dr Warehouse $4,400,000
Dr Cash $200,000
Dr Accumulated depreciation $3,650,000
Dr Loss on sale of asset $250,000
(8,500,000-4,400,000-200,000-3,650,000)
Cr Manufacturing plant $8,500,000
B. Preparation of the Jounal entry to Record the exchange on the books of Patterson
Dr Manufacturing plant $4,600,000
Dr Accumulated depreciation $2,800,000
Cr Gain on sale of asset
$300,000
(4,600,000+2,800,000-6,900,000-200,000)
Cr Warehouse $6,900,000
Cr Cash $200,000
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:
Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 2.40 ounces $27.00 per ounce $64.80
Direct labor 0.60 hours $12.00 per hour 7.20
Variable manufacturing overhead 0.60 hours $3.50 per hour 2.10
Total standard cost per unit $74.10
During November, the following activity was recorded related to the production of Fludex
a. Materials purchased, 13,000 ounces at a cost of $330,200
b. There was no beginning inventory of materials; however, at the end of the month, 2,850 ounces of material remained in ending inventory
c. The company employs 20 lab technicians to work on the production of Fludex. During November, they each worked an average 160 hours at an average pay rate of $11.00 per hour
d. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead during November totaled $6,000
e. During November, the company produced 4,200 units of Fludex.
Required
1. For direct materials:
a. Compute the price and quantity variances
b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract?
2. For direct labor:
a. Compute the rate and efficiency variances
b. In the past, the 20 technicians employed in the production of Fludex consisted of 7 senior technicians and 13 assistants. Durin November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Woulc recommend that the new labor mix be continued?
3. Compute the variable overhead rate and efficiency variances
Answer:
Becton Labs, Inc.
1. Direct materials:
a. Price variance
= $20,600 Favorable
Quantity variance
= $1,890 Unfavorable
b. The company can sign the contract provided it is made clear to the new supplier that price variations would not be welcome shortly after signing the contract, but will depend on the market realities.
2. Direct labor:
a. Direct labor rate and efficiency variances:
Direct labor rate variance
= $3,200 Favorable
Efficiency variance
= $8,160 Unfavorable
b. I would not recommend that the new labor mix be continued. The old mix may be working better because the labor efficiency cost increased with the new mix labor mix.
3. The variable overhead rate and efficiency variances:
Variable overhead rate variance
= $5,200 Favorable
Variable overhead efficiency variance
= $2,380 Unfavorable
Explanation:
a) Data and Calculations:
Standard Costs for 1 Unit of Fludex:
Standard Standard Standard Cost
Quantity or Hours Price or Rate
Direct materials 2.40 ounces $27.00 per ounce $64.80
Direct labor 0.60 hours $12.00 per hour 7.20
Variable manufacturing
overhead 0.60 hours $3.50 per hour 2.10
Total standard cost per unit $74.10
Activities recorded during November:
a. Materials purchased = 13,000 ounces at $330,300
Each ounce = $25.41 (330,300/13,000)
b. Materials used for production = 10,150 ounces (13,000 - 2,850)
Standard materials = 4,200 * 2.40 = 10,080 ounces
c. Direct labor hours = 20 * 160 = 3,200 hours
Standard labor hours = 0.60 * 4,200 = 2,520
Average labor rate = $11.00 per hour
Direct labor costs = $35,200 ($11.00 * 3,200)
d. Standard variable overhead = $11,200 (3,200 *$3.50)
Actual overhead incurred = $6,000
Actual overhead rate = $1.43 ($6,000/4,200)
e. Units produced = 4,200
1. Direct materials:
a. Price variance = (Actual price - standard price)* Actual units
= ($25.41 - $27.00)13,000 = $20,600 F
Quantity variance = (Actual quantity - Standard quantity) Standard Cost
= (10,150 - 10,080) * $27.00
= $1,890 U
b. The company can sign the contract provided it is made clear to the new supplier that price variations would not be welcome shortly after signing the contract, but will depend on the market realities.
2. Direct labor:
a. Direct labor rate and efficiency variances:
Direct labor rate variance = (Actual rate - Standard rate) * Actual hours
= ($11 - $12) * 3,200 = $3,200 Favorable
Efficiency variance = (Actual hours - Standard hours) * Standard rate
= (3,200 - 2,520) * $12
= $8,160 Unfavorable
b. I would not recommend that the new labor mix be continued. The old may be working better because the labor efficiency cost increased.
3. The variable overhead rate and efficiency variances:
Variable overhead rate variance = Actual costs − (AH × SR)
= $6,000 - (3,200 * $3.50)
= $6,000 - $11,200
= $5,200 Favorable
Variable overhead efficiency variance = (AH − SH) × SR
= (3,200 - 2,520) * $3.50
= $2,380 Unfavorable