Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs

3-35 Predicting Costs

Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs:

1. Fuel costs of driving vehicles, $0.20 per mile, driven 17,000 miles per month
2. Equipment rental cost, $6,000 per piece of equipment per month for seven pieces for three
months
3. Ambulance and EMT personnel cost for a soccer tournament, $1,200 for each 250 tournament participants; the tournament is expecting 2,400 participants
4. Purchasing department cost, $7,500 per month plus $4 per material order processed at 4,000 orders in one month

Click here for the solution: Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs

(Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns

P6-2 (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.

(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund earns 8% interest, compounded annually?

(b) Robert Hitchcock is 40 years old today and he wishes to accumulate $500,000 by his sixty-fifth birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his fortieth through his sixty-fourth birthdays. What annual deposit must Robert make if the fund will earn 12% interest compounded annually?

(c) Diane Ross has $20,000 to invest today at 9% to pay a debt of $47,347. How many years will it take her to accumulate enough to liquidate the debt?

(d) Cindy Houston has a $27,600 debt that she wishes to repay 4 years from today; she has $19,553 that she intends to invest for the 4 years. What rate of interest will she need to earn annually in order to accumulate enough to pay the debt?

Click here for the solution: (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns

Grant Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals

Grant Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows:

Investments Year Income from Net cash operations flow

Proposal A: $425,000 1 $ 40,000 $125,000
2 40,000 125,000
3 40,000 125,000
4 15,000 100,000
5 (35,000) 50,000
------------- -------------
$100,000 $525,000
-------------- -------------
Proposal B: $610,000 1 $ 158,000 $280,000
2 158,000 280,000
3 78,000 200,000
4 28,000 150,000
5 (22,000) 100,000
----------------- -------------
$400,000 $1,010,000
--------------- ---------------
Proposal C: $275,000 1 $45,000 $ 100,000
2 45,000 100,000
3 45,000 100,000
4 45,000 100,000
5 35,000 90,000
----------- -------------
$215,000 $490,000
------------ -------------

Investment Year Income From Net Cash
operations Flow

Proposal D: $190,000 1 $22,000 $60,000
2 22,000 60,000
3 22,000 60,000
4 2,000 40,000
5 2,000 40,000
---------- -------------
$70,000 $260,000

The company’s capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals.

Present Value of $1 at Compound Interest

Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162

2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. Round to 1 decimal place.

Average rate of return
Proposal A:_______________%
Proposal B:_______________%
Proposal C:_______________%
Proposal D:_______________%

5.Compute the present value index for each of the proposals in (4). Round to 2 decimal places.

Select proposal to compute Present value index. __A or B___ __ C or D___
Present value index (rounded): ___________ ___________

Click here for the solution: Grant Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals

Grant Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals

Grant Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows:

Investments Year Income from Net cash operations flow

Proposal A: $425,000 1 $ 40,000 $125,000
2 40,000 125,000
3 40,000 125,000
4 15,000 100,000
5 (35,000) 50,000
------------- -------------
$100,000 $525,000
-------------- -------------
Proposal B: $610,000 1 $ 158,000 $280,000
2 158,000 280,000
3 78,000 200,000
4 28,000 150,000
5 (22,000) 100,000
----------------- -------------
$400,000 $1,010,000
--------------- ---------------
Proposal C: $275,000 1 $45,000 $ 100,000
2 45,000 100,000
3 45,000 100,000
4 45,000 100,000
5 35,000 90,000
----------- -------------
$215,000 $490,000
------------ -------------

Investment Year Income From Net Cash
operations Flow

Proposal D: $190,000 1 $22,000 $60,000
2 22,000 60,000
3 22,000 60,000
4 2,000 40,000
5 2,000 40,000
---------- -------------
$70,000 $260,000

The company’s capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals.

Present Value of $1 at Compound Interest

Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162

2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. Round to 1 decimal place.

Average rate of return
Proposal A:_______________%
Proposal B:_______________%
Proposal C:_______________%
Proposal D:_______________%

5.Compute the present value index for each of the proposals in (4). Round to 2 decimal places.

Select proposal to compute Present value index. __A or B___ __ C or D___
Present value index (rounded): ___________ ___________

Click here for the solution: Grant Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals

Financial statement information about four different companies is as follows

ACC 557 Week 1 Assignment

P1–5A Financial statement information about four different companies is as follows.

Instructions
(a) Determine the missing amounts. (Hint: For example, to solve for (a), Assets _ Liabilities _ Stockholders’ Equity _ $45,000.)
(b) Prepare the retained earnings statement for Yates Company. Assume beginning retained earnings was $20,000.
(c) Write a memorandum explaining the sequence for preparing financial statements and the interrelationship of the retained earnings statement to the income statement and balance sheet.

Karma Yates McCain Dench
Company Company Company Company
January 1, 2008
Assets $ 95,000 $110,000 (g) $170,000
Liabilities 50,000 (d) 75,000 ( j)
Stockholders’ equity (a) 60,000 45,000 90,000
December 31, 2008
Assets (b) 137,000 200,000 (k)
Liabilities 55,000 75,000 (h) 80,000
Stockholders’ equity 60,000 (e) 130,000 170,000
Stockholders’ equity changes in year
Additional investment (c) 15,000 10,000 15,000
Dividends 25,000 (f) 14,000 20,000
Total revenues 350,000 420,000 (i) 520,000
Total expenses 320,000 385,000 342,000 (l)

Click here for the solution: Financial statement information about four different companies is as follows

Airport Connection provides shuttle service between four hotels near a medical center and an international airport

ACC 560 Week 4 Assignment

E5-11 Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection uses two 10 passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below.

Fare revenues (1,440 fares) $36,000
Variable costs
Fuel $5,040
Tolls and Parking 3,100
Maintenance 500 8,640
Contribution margin 27,360
Fixed costs
Salaries 13,000
Depreciation 1,300
Insurance 1,128 15,428
Net income $11,932

Instructions
(a) Identify the above costs as variable, fixed, or mixed.
(b) Calculate the expected costs when production is 5,000 units.

Click here for the solution: Airport Connection provides shuttle service between four hotels near a medical center and an international airport

A local government has four federal grants

A local government has four federal grants. Expenditures amounted to $1,000,000 during the year that ended June 30, 2003, as follows:

Type A HHS grant, audited last year, no major findings $400,000
HHS grant, new this year and never audited 350,000
Type B Department of Transportation 205,000
FFA 45,000
Total all funds $1,000,000

a. Which grants would the auditor be required to audit, assuming the government is not found to be low risk?
b. Which grants would the auditor be required to audit, assuming the government is found to be low risk?

Click here for the solution: A local government has four federal grants

Lewis Manufacturing Company has four operating divisions

ACC 560 Week 5 Assignment

P7-5A Lewis Manufacturing Company has four operating divisions. During the first quarter of 2008, the company reported aggregate income from operations of $176,000 and the following divisional results.

Division I II III IV
Sales $250,000 $200,000 $500,000 $400,000
Cost of goods sold 200,000 189,000 300,000 250,000
Selling and administrative expenses 65,000 60,000 60,000 50,000
Income (loss) from operations - $15,000 - $49,000 $140,000 $100,000

Analysis reveals the following percentages of variable costs in each division.

I II III IV
Cost of goods sold 70 % 90 % 80 % 75 %
Selling and administrative expenses 40 70 50 60

Discontinuance of any division would save 50% of the fixed costs and expenses for that division.
Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.

Instructions
(a) Compute the contribution margin for Divisions I and II.
(b) Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action do you recommend for each division?
(c) Prepare a columnar condensed income statement for Lewis Manufacturing, assuming Division II is eliminated. Use the CVP format. Division II’s unavoidable fixed costs are allocated equally to the continuing divisions.
(d) Reconcile the total income from operations ($176,000) with the total income from operations without Division II.


Click here for the solution: Lewis Manufacturing Company has four operating divisions

The following data are accumulated by Reynolds Company in evaluating the purchase of $104,000 of equipment, having a four-year useful life

EX 10-7 The following data are accumulated by Reynolds Company in evaluating the purchase of $104,000 of equipment, having a four-year useful life:

Net income net cash flow
Year 1 $38,000 $64,000
Year2 $23,000 $49,000
Year 3 $11,000 $37,000
Year 4 (1,000) $25,000

a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. Use the table of the present value of $1 appearing in Exhibit 1 of this chapter.
b. Would management be likely to look with favor on the proposal?

Click here for the solution: The following data are accumulated by Reynolds Company in evaluating the purchase of $104,000 of equipment, having a four-year useful life

Oregon Lumber processes timber into four products

Oregon Lumber processes timber into four products. During January, the joint costs of processing were $280,000. There was no inventory at the beginning of the month. Production and sales value information for the month is as follows:

Sales Value at

Product
Board feet
Splitoff Point
Ending Inventory

2 x 4's
6,000,000
$0.30 per board foot
500,000 bdft.

2 x 6's
3,000,000
0.40 per board foot
250,000 bdft.

4 x 4's
2,000,000
0.45 per board foot
100,000 bdft.

Slabs
1,000,000
0.10 per board foot
50,000 bdft.

Determine the value of ending inventory if the sales value at splitoff method is used for product costing. Round to three decimal places when necessary.


Click here for the solution: Oregon Lumber processes timber into four products

On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note

On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note having a maturity value of $900,000 (interest payable annually on December 31). Berry Corporation pays 6% for its borrowed funds. Flynn Company, however, pays 8% for its borrowed funds. The product sold is carried on the books of Berry at a manufactured cost of $570,000. Assume Berry uses a perpetual inventory system.

Instructions
(a) Prepare the journal entries to record the transaction on the books of Berry Corporation at December 31, 2009. (Assume that the simple interest method is used.)
(b) Make all appropriate entries for 2010 on the books of Berry Corporation.
(c) Make all appropriate entries for 2011 on the books of Berry Corporation.


Click here for the solution: On December 31, 2009 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note

LaGreca Company is involved in four separate industries

LaGreca Company is involved in four separate industries. The following information is available for each of the four industries.

Operating Segment Total Revenue Operating Profit (Loss) Identifiable Assets
W $ 60,000 $15,000 $167,000
X 10,000 1,500 83,000
Y 23,000 (2,000) 21,000
Z 9,000 1,000 19,000
$102,000 $15,500 $290,000

Instructions
Determine which of the operating segments are reportable based on the:
(a) Revenue test.
(b) Operating profit (loss) test.
(c) Identifiable assets test.

Indicate in the table below whether the segment is reportable or not, based on either revenue, profit or identifiable assets.


Click here for the solution: LaGreca Company is involved in four separate industries

Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations

E19-11 Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations.

Indicate the missing amount for each letter.

Direct Materials Used Direct Labor Used Manufacturing Overhead total manufacturing costs work in process 1/1 work in process 12/31 cost of goods manufactured

1. $127,000 140,000 77,000 a: $ $33,000 b:$ $360,000
2. c: $ $200,000 132,000 450,000 d: $ 40,000 $470,000
3. $80,000 $100,000 e: $ $245,000 $60,000 $80,000 f:$
4. 70,000 g:$ 75,000 288,000 $45,000 h: $ $270,000

Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for situation (1) for the year ended December 31,2010.


Click here for the solution: Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations

Bailey is one of four equal unrelated shareholders of Checker Corporation

C:4-52 Comparison of Dividends and Redemptions. Bailey is one of four equal unrelated shareholders of Checker Corporation. Bailey has held Checker stock for four years and has a basis in her stock of $40,000. Checker has $280,000 of current and accumulated E&P and distributes $100,000 to Bailey.
a. What are the tax consequences to Checker and to Bailey if Bailey is an individual and the distribution is treated as a dividend?
b. In Part a, what would be the tax consequences if Bailey were a corporation?
c. What are the tax consequences to Checker and to Bailey (an individual) if Bailey surrenders all her stock in a redemption qualifying for sale treatment?
d. In Part c, what would be the tax consequences if Bailey were a corporation?
e. Which treatment would Bailey prefer if Bailey were an individual? Which treatment would Bailey Corporation prefer?

Click here for the solution: Bailey is one of four equal unrelated shareholders of Checker Corporation

Shawn Bates was working to establish a business enterprise with four of his wealthy friends

Problem 8-23 (Different forms of business organization) Shawn Bates was working to establish a business enterprise with four of his wealthy friends. Each of the five individuals would receive a 20 percent ownership interest in the company. A primary goal of establishing the enterprise was to minimize the amount of income taxes paid. Assume that the five investors are taxed at the rate of 15% on dividend income and 30% on all other in-come and that the corporate tax rate is 30 percent. Also assume that the new company is expected to earn $ 400,000 of cash income before taxes during its first year of operation. All earnings are expected to be immediately distributed to the owners. Required Calculate the amount of after- tax cash flow available to each investor if the business is established as a partnership versus a corporation. Write a memo explaining the advantages and disadvantages of these two forms of business organization. Explain why a limited liability company may be a better choice than either a partnership or a corporation.

Click here for the solution: Shawn Bates was working to establish a business enterprise with four of his wealthy friends

List and briefly describe four of the five differences between managerial accounting and financial accounting

List and briefly describe four of the five differences between managerial accounting and financial accounting.

Click here for the solution: List and briefly describe four of the five differences between managerial accounting and financial accounting.

An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years

An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years. What is the investment's internal rate of return?

Click here for the solution: An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years

Four analysts cover the stock of Fluorine Chemical

E8–2 Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. A second expects the return to be negative 5%. A third predicts a 10% return. A fourth expects a 3% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign probabilities of being correct of 35%, 5%, 20%, and 40%, respectively, to the analysts’ forecasts. Given these probabilities, what is Fluorine Chemical’s expected return for the coming year?

Click here for the solution: Four analysts cover the stock of Fluorine Chemical

Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals

Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows:



The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals.

Required:
1. Compute the cash payback period for each of the four proposals.
2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. If required, round your answers to one decimal place.
3. Using the following format, summarize the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two columns and indicating which proposals should be accepted for further analysis and which should be rejected.
4. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 15% and the present value of $1 in table above. Round to the nearest dollar.
5. Compute the present value index for each of the proposals in part (4). If required, round your answers to two decimal places.
6. Rank the proposals from most attractive to least attractive, based on the present values of net cash flows computed in part (4).
7. Rank the proposals from most attractive to least attractive, based on the present value indexes computed in part (5).
8. Based upon the analyses, comment on the relative attractiveness of the proposals ranked in parts (6) and (7).

Click here for the solution: Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals

Del Hardware has four employees who are paid on an hourly basis plus time-and-a half for all hours worked in excess of 40 a week

Problem 11-3A (P11-3A) Del Hardware has four employees who are paid on an hourly basis plus time-and-a half for all hours worked in excess of 40 a week. Payroll data for the week ended March 15, 2010, are presented below.

Employee Hours Hourly Rate Federal Income Tax Withholdings United Fund
Joe Devena 40 $ 15 $ 5
Mary Keener 42 $ 15 $ 5
Andy Dye 44 $ 13 $ 60 $ 8
Kim Shen 46 $ 13 $ 61 $ 5

Devena and Keener are married. They claim 0 and 4 withholding allowances, respectively. The following tax rates are applicable: FICA 8%, state income taxes 3%, state unemployment taxes 5.4%, and federal unemployment 0.8%. The first three employees are sales clerks (store wages expense). The fourth employee performs administrative duties (office wages expense).

Instructions
a. Prepare a payroll register for the weekly payroll. (Use the wage-bracket withholding table in the text for federal income tax withholdings.)
b. Journalize the payroll on March 15, 2010, and the accrual of employer payroll taxes.
c. Journalize the payment of the payroll on March 16, 2010.
d. Journalize the deposit in a Federal Reserve bank on March 31, 2010, of the FICA and federal income taxes payable to the government.

Click here for the solution: Del Hardware has four employees who are paid on an hourly basis plus time-and-a half for all hours worked in excess of 40 a week