On December 31, Strike Company has decided to sell one of its batting cages

1. On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?

2. The proper journal entry to purchase a computer on account to be utilized within the business would be:

3. Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the 2nd year’s depreciation using straight-line depreciation. Choose one answer.

4. A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is

5. The calculation for annual depreciation using the units-of-production method is

6. A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

7. When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps to this process?

8. All of the following below are needed for the calculation of straight-line depreciation except

9. Expenditures that add to the utility of fixed assets for more than one accounting period are

10. The exclusive right to use a certain name or symbol is called a

11.When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is

12. A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method?

13. Expenditures for research and development are generally recorded as

14. Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

15. Which of the following should be included in the acquisition cost of a piece of equipment?

16. A fixed asset's estimated value at the time it is to be retired from service is called

17. Equipment with a cost of $130,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

18. The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

19. The calculation for annual depreciation using the straight-line depreciation method is

20. On December 31, Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000. The seller of the batting cage is willing to allow a trade-in amount of $40,000. The initial cost of the old equipment was $225,000 with an accumulated depreciation of $195,000. Depreciation has been taken up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

Click here for the solution: On December 31, Strike Company has decided to sell one of its batting cages

Great Outdoze, Inc. manufactures high-quality sleeping bags, which sell for $130 each

8-29 Great Outdoze, Inc. manufactures high-quality sleeping bags, which sell for $130 each. The variable costs of production are as follows:

Direct material ................................................................................................ $40
Direct labor ....................................................................................................... 22
Variable manufacturing overhead ................................................................... 16

Budgeted fixed overhead in 20x4 was $400,000 and budgeted production was 25,000 sleeping bags. The year’s actual production was 25,000 units, of which 22,000 were sold. Variable selling and administrative costs were $2 per unit sold; fixed selling and administrative costs were $60,000.

Required:
1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.
2. Prepare income statements for the year using (a) absorption costing and (b) variable costing.
3. Reconcile reported income under the two methods using the shortcut method.
4. Suppose that Great Outdoze, Inc. implemented a JIT inventory and production management system at the beginning of 20x4. In addition, the firm installed a flexible manufacturing system. Would you expect reported income under variable and absorption costing to be different by as great a magnitude as you found in requirement (3)? Explain.

Check:
1. Total variable cost: $78 per unit 2.(a). Absorption costing, net income: $688,000


Click here for the solution: Great Outdoze, Inc. manufactures high-quality sleeping bags, which sell for $130 each

The One Product economy, which produces and sells only personal computers (PCs), expects that it can sell 500 more, or 12,500 PCs, next year

11. The One Product economy, which produces and sells only personal computers (PCs), expects that it can sell 500 more, or 12,500 PCs, next year. Nominal GDP was $20 million this year, and the money supply was $7 million. The central bank for the One Product economy plans to increase the money supply by 10 percent next year.

a. What was the average selling price for the personal computers this year?
b. What is the expected average selling price next year for personal computers if the velocity of money remains at this year’s turnover rate? What percentage change in price level is expected to occur?
c. If the objective is to keep the price level the same next year (i.e., no inflation), what percentage increase in the money supply should the central bank plan for?
d. How would your answer in (c) change if the velocity of money is expected to be three times next year? What is it now?

Click here for the solution: The One Product economy, which produces and sells only personal computers (PCs), expects that it can sell 500 more, or 12,500 PCs, next year

H. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market

Exercise 13-35 Target Costing

H. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market. The toaster will have four slots that adjust in thickness to accommodate both slim slices of bread and oversized bagels. The target price is $75. Banks requires that new products be priced such that 20 percent of the price is profit.

Instructions
1. Calculate the amount of desired profit per unit of the new toaster.
2. Calculate the target cost per unit of the new toaster.

Click here for the solution: H. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market

Spencer Electronics has just developed a low-end electronic calendar that it plans to sell via a cable channel marketing program

PROBLEM 8-1. Determining the Profit-Maximizing Price [LO 1] Spencer Electronics has just developed a low-end electronic calendar that it plans to sell via a cable channel marketing program. The cable program's fee for selling the item is 20% of revenue. For this fee, the program will sell the calendar over six 10-minute segments in September.

Spencer's fixed costs of producing the calendar are $150,000 per production run. The company plans to wait for all orders to come in, then it will produce exactly the number of units ordered. Production time will be less than three weeks. Variable production costs are $25.00 per unit. In addition, it will cost approximately $5.00 per unit to ship the calendars to customers.

Marsha Andersen, a product manager at Spencer, is charged with recommending a price for the item. Based on her experience with similar items, focus group responses, and survey information, she has estimated the number of units that can be sold at various prices:

Price: Quantity:
$79.99 15,000
$69.99 20,000
$59.99 30,000
$49.99 45,000
$39.99 65,000

Required:
a) Calculate expected profit for each price.
b) Which price maximizes company profit.

Click here for the solution: Spencer Electronics has just developed a low-end electronic calendar that it plans to sell via a cable channel marketing program