The following gives the number of accidents that occurred on Florida State Highway 101 during the last 4 months

Problem 4.25 The following gives the number of accidents that occurred on Florida State Highway 101 during the last 4 months:

Month Number of Accidents
January 30
February 40
March 60
April 90

Forecast the number of accidents that will occur in May, using least squares regression to derive a trend equation.


Click here for the solution: The following gives the number of accidents that occurred on Florida State Highway 101 during the last 4 months

Last year, Douthett Inc. had sales of $2,400,000, based on a unit selling price of $600

PR21-4A Last year, Douthett Inc. had sales of $2,400,000, based on a unit selling price of $600. The variable cost per unit is $440, and fixed costs were $544,000. The maximum sales within Douthett's relevant range are 5,000 units. Douthett is considering a proposal to spend an additional $80,000 on billboard advertising during the current year in an attempt to increase sales and utilize and unused capacity.

INSTRUCTIONS:
1. Construct a cost volume profit chart indicating the break-even sales for last year. Verify your answer, using the break-even equation.
2. Using the cost volume profit chart prepared in part (1) determine (a) the income from operations for last year and (b) the maximum income from operations that could have been realized during the year. Verify your answers arithmetically.
3. Construct a cost volume profit chart indicating the break even sales for the current year, assuming that a noncancelable contract is signed price or other costs. Verify your answer, using the break-even equation.
4. Using the cost volume profit chart prepared in part (3), determine (a)the income from operations if sales total 4,00 units and (b) the maximum income from operations that could be realized during the year. Verify your answers arithmetically.


Click here for the solution: Last year, Douthett Inc. had sales of $2,400,000, based on a unit selling price of $600

Following are components of the M1 money supply at the end of last year

4. Following are components of the M1 money supply at the end of last year. What will be the size of the M1 money supply at the end of next year if currency grows by 10 percent, demand deposits grow by 5 percent, other checkable deposits grow by 8 percent, and the
amount of traveler’s checks stays the same?
Currency $700 billion
Demand deposits $300 billion
Other checkable deposits $300 billion
Traveler’s checks $10 billion

Click here for the solution: Following are components of the M1 money supply at the end of last year

Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31

E5-15 (Preparation of a Statement of Cash Flows) Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.

2010 2009
Cash $157,000 $ 78,000
Accounts receivable 180,000 185,000
Investments 52,000 74,000
Equipment 298,000 240,000
Less: Accumulated depreciation (106,000) (89,000)
Current liabilities 134,000 151,000
Capital stock 160,000 160,000
Retained earnings 287,000 177,000

Additional information:
Investments were sold at a loss (not extraordinary) of $7,000; no equipment was sold; cash dividends paid were $50,000; and net income was $160,000.

Instructions
(a) Prepare a statement of cash flows for 2010 for Sondergaard Corporation.
(b) Determine Sondergaard Corporation’s free cash flow.

Click here for the solution: Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31

As of January 1 of last year, Dylan’s outside basis and at-risk limitation for his 40% interest in the DEF Partnership were $60,000

As of January 1 of last year, Dylan’s outside basis and at-risk limitation for his 40% interest in the DEF Partnership were $60,000. Dylan and the partnership use the calendar year for tax purposes. The partnership incurred an operating loss of $200,000 for last year and a profit of $120,000 for the current year. Dylan is a material participant in the partnership.

a. How much loss, if any, may Dylan recognize for last year?
b. How much net reportable income must Dylan recognize for the current year?

Click here for the solution: As of January 1 of last year, Dylan’s outside basis and at-risk limitation for his 40% interest in the DEF Partnership were $60,000

After reviewing the month-to-month variances, Panarude senior management became concerned about the increased spending occurring in the last three months of each fiscal year

Panarude Airfreight is an international air freight hauler with more than 45 jet aircraft operating in the United States and the Pacific Rim. The firm is headquartered in Melbourne, Australia, and is organized into five geographic areas: Australia, Japan, Taiwan, Korea, and the United States. Sup-porting these areas are several centralized corporate function services (cost centers): human resources, data processing, fleet acquisition and maintenance, and telecommunications. Each responsibility center has a budget, negotiated at the beginning of the year with the vice president of finance. Funds unspent at the end of the year do not carry over to the next fiscal year. The firm is on a January-to-December fiscal year.

After reviewing the month-to-month variances, Panarude senior management became concerned about the increased spending occurring in the last three months of each fiscal year. In particular, in the first nine months of the year, expenditure accounts typically show favorable variances (actual spending is less than budget), but in the last three months, unfavorable variances are the norm. In an attempt to smooth out these spending patterns, each responsibility center is reviewed at the end of each calendar quarter and any unspent funds can be deleted from the budget for the remainder of the year. The accompanying table shows the budget and actual spending in the telecommunications department for the first quarter of this year.

At the end of the first quarter, telecommunications’ total annual budget for this year can be reduced by $7,000, the total budget underrun in the first quarter. In addition, the remaining nine monthly budgets for telecommunications are reduced by $778 (or $7,000 / 9). If, at the end of the second quarter, telecommunications’ budget shows an unfavorable variance of, say, $8,000 (after the original budget is reduced for the first-quarter underrun), management of telecommunications is held responsible for the entire $8,000 unfavorable variance. The first-quarter underrun is not restored. If the second quarter budget variance is also favorable, the remaining six monthly budgets are each reduced further by one-sixth of the second-quarter favorable budget variance.

Required:
a. What behavior would this budgeting scheme engender in the responsibility center managers?
b. Compare the advantages and disadvantages of the previous budget regime, where any end-of-year budget surpluses do not carry over to the next fiscal year, with the system of quarterly budget adjustments just described.

Click here for the solution: After reviewing the month-to-month variances, Panarude senior management became concerned about the increased spending occurring in the last three months of each fiscal year

An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year

E8–1 An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year. At the beginning of the year, the firm had a stock market value of $10 million. At the end of the year, it had a market value of $12 million even though it experienced a loss, or negative net income, of $2.5 million. Did the analyst’s prediction prove correct? Explain using the values for total annual return.

Click here for the solution: An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year

On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000

On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000. Ted's basis in his residence is $35,000. The expenses associated with the sale of his home total $20,000. On December 15, 2011, Ted purchases and occupies a new residence at a cost of $175,000. Calculate Ted's realized gain, recognized gain, and adjusted basis of his new residence.

Click here for the solution: On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000

Janes, Inc., is considering the purchase of a machine that would cost $430,000 and would last for 6 years, at the end of which, the machine would have a salvage value of $47,000

(Ignore income taxes in this problem.) Janes, Inc., is considering the purchase of a machine that would cost $430,000 and would last for 6 years, at the end of which, the machine would have a salvage value of $47,000. The machine would reduce labor and other costs by $109,000 per year. Additional working capital of $4,000 would be needed immediately, all of which would be recovered at the end of 6 years. The company requires a minimum pretax return of 17% on all investment projects.

Required: Determine the net present value of the project. Show your work!

Click here for the solution: Janes, Inc., is considering the purchase of a machine that would cost $430,000 and would last for 6 years, at the end of which, the machine would have a salvage value of $47,000

The Dayco Manufacturing Company had the following financial statement results for last year

The Dayco Manufacturing Company had the following financial statement results for last year. Net sales were $1.2 million with net income of $90,000. Total assets at year end amounted to $900,000.
a. Calculate Dayco’s asset turnover ratio and its profit margin.
b. Show how the two ratios in Part (a) can be used to determine Dayco’s rate of return on assets.
c. Dayco operates industry average ratios are these: Return on assets: 11 percent; Asset turnover: 2.5 times; Net profit margin: 3.6 percent. Compare Dayco’s performance against the industry averages.

Click here for the solution: The Dayco Manufacturing Company had the following financial statement results for last year

Duif Company's absorption costing income statement for the last year of operations is presented below

Duif Company's absorption costing income statement for the last year of operations is presented below:

Sales.........................................................$70,000
Less cost of goods sold:
Beginning inventory.............................................. 0
Add cost of goods manufactured..................48,000
Goods available for sale...............................48,000
Less ending inventory....................................6,000
Cost of goods sold......................................42,000
Gross margin..............................................28,000
Less selling & admin. expenses....................25,000
Net operating income................................$ 3,000

Data on units produced and sold for the year are given below:
Units in beginning inventory...................................0
Units produced..............................................8,000
Units sold......................................................7,000

Fixed factory overhead totaled $16,000 for the year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.

Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.

Click here for the solution: Duif Company's absorption costing income statement for the last year of operations is presented below