Alice Shoemaker is the advertising manager for Value Shoe Store

ACC 560 Week 4 Assignment

P5-4A Alice Shoemaker is the advertising manager for Value Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $34,000 in fixed costs to the $270,000 currently spent. In addition, Alice is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $22 per pair of shoes. Management is impressed with Alice's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

Instructions:
a) Compute the current break-even point in units, and compare it to the break-even point in units if Alice’s ideas are used.
b) Compute the margin of safety ratio for current operations and after Alice’s changes are introduced. (Round to nearest full percent)
c) Prepare a CVP income statement for current operations and after Alice’s changes are introduced. Would you make the changes suggested.

Click here for the solution: Alice Shoemaker is the advertising manager for Value Shoe Store

Ethics Case 20-5 Softening the blow

Ethics Case 20-5 Softening the blow

Late one Thursday afternoon, Joy Martin, a veteran audit manager with a regional CPA firm, was reviewing documents for a long-time client of the firm, AMT Transport. The year-end audit was scheduled to begin Monday.

For three months, the economy had been in a down cycle and the transportation industry was particularly hard hit. As a result, Joy expected AMT's financial results would not be pleasant news to shareholders. However, what Joy saw in the preliminary statements made her sigh aloud. Results were much worse than she feared.

"Larry (the company president) already is in the doghouse with shareholders," Joy thought to herself. "When they see these numbers, they'll hang him out to dry."

"I wonder if he's considered some strategic accounting changes," she thought, after reflecting on the situation. "The bad news could be softened quite a bit by changing inventory methods from LIFO to FIFO or reconsidering some of the estimates used in other areas."

Required:
1. How would the actions contemplated contribute toward "softening" the bad news?
2. Do you perceive an ethical dilemma? What would be the likely impact of following up on Joy's thoughts? Who would benefit? Who would be injured?

Click here for the solution: Ethics Case 20-5 Softening the blow

Why is the salary of a production worker capitalized while the salary of a marketing manager expensed?

7. Why is the salary of a production worker capitalized while the salary of a marketing manager expensed?


Click here for the solution: Why is the salary of a production worker capitalized while the salary of a marketing manager expensed?

The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager

PR 22-3A The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January 2010.

a. Estimated sales for January:
Batting helmet 3,700 units at $70 per unit
Football helmet 7,200 units at $142 per unit

AND SO ON

INSTRUCTIONS:
1. Prepare a sales budget for January.
2. Prepare a production budget for January.
3. Prepare a direct materials purchases budget for January.
4. Prepare a direct labor cost budget for January.
5. Prepare a factory overhead cost budget for January.
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $12,500, and work in process at the end of January is desired to be $13,500.
7. Prepare a selling and administrative expenses budget for January.
8. Prepare a budgeted income statement for January.


Click here for the solution: The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager

Frank Lou had recently been promoted to construction manager at a development firm

Fraud Case 14-1 Frank Lou had recently been promoted to construction manager at a development firm. He was responsible for dealing with contractors who were bidding on a multi-million dollar excavation job for the new high-rise. Times were tough, several contractors had gone under recently, and the ones left standing were viciously competitive. That morning, four bids were sitting on Frank’s desk. The deadline was midnight, and the bids would be opened the next morning. The first bidder, Bo Freely, was a tough but personable character that Frank had known for years. Frank had lunch with him today, and after a few beers, Bo hinted that if Frank "inadvertently" mentioned the amount of the lowest bid, he'd receive a "birthday card" with a gift of cash. After lunch, Frank carefully unsealed the bids and noticed that another firm had underbid Bo's company by a small margin. Frank took Bo's bid envelope, wrote the low bid amount in pencil on it, and carried it downstairs where Bo's son William was waiting. Later that afternoon, a new bid came in from Bo's company. The next day, Bo's company got the job, and Frank got a birthday card in his mailbox.

Requirements
• Was Frank's company hurt in any way by this fraudulent action?
• How could this action hurt Frank?
• How can a business protect against this kind of fraud?


Click here for the solution: Frank Lou had recently been promoted to construction manager at a development firm

The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager

The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for October 2012

a. Estimated sales for December:
Bird House . . . . . . . . . . . . . . . . . . . . 3,500 units at $45 per unit
Bird Feeder. . . . . . . . . . . . . . . . . . . . 3,700 units at $65 per unit

AND SO ON

Instructions
1. Prepare a sales budget for October.
2. Prepare a production budget for October.
3. Prepare a direct materials purchases budget for October.
4. Prepare a direct labor cost budget for October.
5. Prepare a factory overhead cost budget for October.
6. Prepare a cost of goods sold budget for October. Work in process at the beginning of October is estimated to be $27,000, and work in process at the end of October is estimated to be $32,400.
7. Prepare a selling and administrative expenses budget for October.
8. Prepare a budgeted income statement for October.

Check: 4. Total Direct Labor Cost in Fabrication Dept., $32,760

Click here for the solution: The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager