Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of laptop computers. Jay Wilson, president of the company, anticipates a 15 percent increase in the cost per unit of direct labor on January 1 of next year. He expects all other costs and expenses to remain unchanged. Wilson has asked you to assist him in developing the information he needs to formulate a reasonable product strategy for next year.

You are satisfied that volume is the primary factor affecting costs and expenses and have separated the semivariable costs into their fixed and variable segments. Beginning and ending inventories remain at a level of 1,000 units. Current plant capacity is 20,000 units. The following are the current-year data assembled for your analysis.

Sales price per unit $100
Variable costs per unit:
Direct materials $10
Direct labor $20
Manufacturing overhead and selling and administrative expenses 30 60
Contribution margin per unit (40%) $40
Fixed costs $390,000

Required:
a. What increase in the selling price is necessary to cover the 15 percent increase in direct labor cost and still maintain the current contribution margin ratio of 40 percent?
b. How many units must be sold to maintain the current operating income of $350,000 if the sales price remains at $100 and the 15 percent wage increase goes into effect?
c. Wilson believes that an additional $700,000 of machinery (to be depreciated at 20 percent annually) will increase present capacity (20,000 units) by 25 percent. If all units produced can be sold at the present price of $100 per unit and the wage increase goes into effect, how would the estimated operating income before capacity is increased compare with the estimated operating income after capacity is increased? Prepare schedules of estimated operating income at full capacity before and after the expansion.

Answer:

a. What increase in the selling price is necessary to cover the 15 percent increase in direct labor cost and still maintain the current contribution margin ratio of 40 percent?

estimated production costs per unit:

direct materials $10

direct labor $23

overhead $30

total $63

if we want contribution margin to remain at 40%, then selling price = $63 / (1 - 40%) = $105

to verify our answer, contribution margin = $105 - $63 = $42 / $105 = 40%

b. How many units must be sold to maintain the current operating income of $350,000 if the sales price remains at $100 and the 15 percent wage increase goes into effect?

if sales price doesn't change, then contribution margin = $37 (not $40)

units sold to keep profit at $350,000 = ($350,000 + $390,000) / $37 = 20,000 units per year

c. Wilson believes that an additional $700,000 of machinery (to be depreciated at 20 percent annually) will increase present capacity (20,000 units) by 25 percent. If all units produced can be sold at the present price of $100 per unit and the wage increase goes into effect, how would the estimated operating income before capacity is increased compare with the estimated operating income after capacity is increased? Prepare schedules of estimated operating income at full capacity before and after the expansion.

working at full capacity, sales price $100 (unchanged) and direct labor costs increasing by 15%

                                          capacity 20,000          capacity 25,000

sales revenue                     $2,000,000                  $2,500,000

direct labor                          $460,000                      $575,000

direct materials                   $200,000                      $250,000

overhead                             $600,000                      $750,000

fixed costs                           $390,000                      $670,000      

operating revenue              $350,000                      $255,000

The expansion will result in lower operating profits ($95,000 less) so it should be discarded.

On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $13 million. The loss from operations of the segment during 2021 was $4.8 million. Pretax income from continuing operations for the year totaled $7.8 million. The income tax rate is 25%.
Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions.)

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate

At year-end 2018, Marvel Company total assets were $4.5 million, and its accounts payable were $850,000. Sales, which in 2018 were $5.5 million, are expected to increase by 25% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Marvel typically uses no current liabilities other than accounts payable. Common stock amounted to $ 2.25 million in 2018, and retained earnings were $150,000. Marvel has arranged to sell $25,000 of new common stock in 2019 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2019. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 2.5%, and 55% of earnings will be paid out as dividends.

Required:
a. What were Marvel's total long-term debt and total liabilities in 2018?
b. How much new long-term debt financing will be needed in 2019?

"The​ ________ includes all international economic transactions with income or payment flows occurring within the year."

You have a tax basis of ​$ and a useful life of five years and no salvage value. Provide a depreciation schedule ​(dk for k1​5) for ​% declining balance with switchover to straight line. Specify the year to switchover. Determine the depreciation amounts using the ​% declining balance and​ straight-line methods and BV amounts for each year

Darby Company, operating at full capacity, sold 500,000 units at a price of $94 per unit during the current year. Its income statement is as follows:
Sales $47,000,000
Cost of goods sold 25,000,000
Gross profit $22,000,000
Expenses:
Selling expenses $4,000,000
Administrative expenses 3,000,000
Total expenses 7,000,000
Income from operations $15,000,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $3,760,000 in yearly sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the current year.
Total variable costs $_____
Total fixed costs $_____
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost $_____
Unit contribution margin $_____
3. Compute the break-even sales (units) for the current year.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $15,000,000 of income from operations that were earned in the current year.
6. Determine the maximum income from operations possible with the expanded plant.
7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
8. Based on the data given, would you recommend accepting the proposal?
a. In favor of the proposal because of the reduction in break-even point.
b. In favor of the proposal because of the possibility of increasing income from operations.
c. In favor of the proposal because of the increase in break-even point.
d. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Maria Boyd has been hired by Barnum Hotels to manage staffing for the regional hotel chain. Barnum intends to open two new hotels within the next three years and will have many job positions to fill. Historically, employee turnover is high at Barnum as employees remain with the company for one or two years before quitting. Maria realizes that Barnum needs to make significant changes in its personnel strategy in order to meet the company's goals for the future and improve employee retention rates. All of the following questions are relevant to Mari's decision to fill top positions at the new hotels with internal candidates EXCEPT::_______

a. What are the key managerial positions that are available at the new hotels?
b. What percentage of employers in the service industry use succession planning?
c. What skills, education, and training have been provided to potential candidates?
d. What is the designated procedure for assessing and selecting potential candidates?

Sunland Diesel owns the Fredonia Barber Shop. He employs 4 barbers and pays each a base rate of $1,440 per month. One of the barbers serves as the manager and receives an extra $520 per month. In addition to the base rate, each barber also receives a commission of $9.15 per haircut. Other costs are as follows.

Advertising $240 per month
Rent $1,100 per month
Barber supplies $0.35 per haircut
Utilities $185 per month plus $0.10 per haircut
Magazines $35 per month Sunland currently charges $16 per haircut.

Vin currently charges $10 per haircut.
Required:

a. Determine the variable costs per haircut and the total monthly fixed costs.
b. Compute the break-even point in units and dollars.
c. Prepare a CVP graph, assuming a maximum of 1,800 haircuts in a month. Use increments of 300 haircuts on the horizontal axis and $3,000 on the vertical axis.
d. Determine net income, assuming 1,600 haircuts are given in a month.

SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand for each color is 3,487 units. Each shirt requires 0.75 pound of raw cotton that is imported from the Luft-Geshfet-Textile (LGT) Company in Brazil. The purchasing price per pound is $1.55 (paid only when the cotton arrives at SYM's facilities) and transportation cost by sea is $0.70 per pound. The traveling time from LGT’s facility in Brazil to the SYM facility in the United States is two weeks. The cost of placing a cotton order, by SYM, is $186 and the annual interest rate that SYM is facing is 32 percent of total cost per pound.
a. What is the optimal order quantity of cotton? (Round your answer to the nearest whole number.)
Optimal order quantity pounds
b. How frequently should the company order cotton? (Round your answer to 2 decimal places.)
Company orders once every months
c. Assuming that the first order is needed on 1-Jul, when should SYM place the order?
17-Jun
1-Jul
15-Jul
d. How many orders will SYM place during the next year? (Round your answer to 2 decimal places.)
Number of orders times
e. What is the resulting annual holding cost? (Round your answer to the nearest whole number.)
Annual holding cost $ per year
f. What is the resulting annual ordering cost?
Annual ordering cost $
g. If the annual interest cost is only 5 percent, how will it affect the annual number of orders, the optimal batch size, and the average inventory?

What is the situation when a home currency purchases more goods and services at home than abroad when converted to a foreign currency

Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms:
Silver Enterprises
Current assets $ 10,000
Current liabilities $ 7,840
Other assets 3,100
Long-term debt 5,110
Net fixed assets 17,300
Equity 17,450
Total $ 30,400
Total $ 30,400
All Gold Mining
Current assets $ 2,920
Current liabilities $ 2,620
Other assets 1,380
Long-term debt 0
Net fixed assets 6,110
Equity 7,790
Total $ 10,410
Total $ 10,410
Construct the balance sheet for the new corporation if the merger is treated as a purchase for accounting purposes. The market value of All Gold Mining's fixed assets is $7,510; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $14,660 in new long-term dept to finance the acquisition.

Mcmurtry Corporation sells a product for $250 per unit. The product's current sales are 13,600 units and its break-even sales are 10,608 units. The margin of safety as a percentage of sales is closest to:

Crawford Corporation incurred the following transactions:1. Purchased raw materials on account $47,000.2. Raw Materials of $44,200 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $7,300 was classified as indirect materials.3. Factory labor costs incurred were $60,100, of which $51,000 pertained to factory wages payable and $9,100 pertained to employer payroll taxes payable.4. Time tickets indicated that $54,400 was direct labor and $5,700 was indirect labor.5. Manufacturing overhead costs incurred on account were $83,600.6. Depreciation on the company's office building was $8,600.7. Manufacturing overhead was applied at the rate of 160% of direct labor cost.8. Goods costing $94,800 were completed and transferred to finished goods9. Finished goods costing $81,800 to manufacture were sold on account for $110,300.Required:Journalize the above transactions.

A company issues $50 million of bonds at par on January 1, 2018. The bonds pay 10% interest semi-annually on 12/31 and 6/30 and mature in 20 years. The journal entry when the bonds are sold is:

Larkspur Incorporated factored $124,300 of accounts receivable with Cullumber Factors Inc. on a without-recourse basis. Cullumber assesses a 2% finance charge of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable for possible adjustments.

Required:
Prepare the journal entry for Larkspur Incorporated and Cullumber Factors to record the factoring of the accounts receivable to Cullumber.

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows? Declaration and payment of a cash dividend during the period. Net income for the period.

Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $900,000 of total manufacturing overhead for an estimated activity level of 75,000 machine-hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:


Machine-hours 76,000
Manufacturing overhead cost $637,000
Inventories at year-end:
Raw materials $20,000
Work in process (includes overhead applied of $36,480) $115,800
Finished goods (includes overhead applied of $91,200) $289,500
Cost of goods sold (includes overhead applied of $480,320) $1,524,700

Required:

a. Compute the underapplied or overapplied overhead.
b. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
c. Assume that the company allocates any underapplied or over appliedoverhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
d. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?

Two manufacturers, denoted 1 and 2, are competing for 100 identical customers. Each manufacturer chooses both the price and quality of its product, where each variable can take any nonnegtive real number. Let pi and xi denote, respectively, the price and quality of manufacturer i's product. The cost to manufacturer i of producing for one customer is 10+5xi . Note in this expression that the cost is higher when the quality is higher. If manufacturer i sells to qi customers, then its total cost is qi(10+5xi). Each cutomer buys from the manufacturer who offers the greatest value, where the value of buying from manufacturer i is 1000+ xi - pi ; higher quality and lower price means more value. A manufacturer's is qi( pi- 10 - 5xi ). If both manufacturer offers the same value, then 50 customers buy from each manufacturer. If one manufacturer offers higher value, then 100 customers buy from it.
Find all symmetric Nash equilibria.

Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales. Sales for the year are expected to total 1,900,000 units. Quarterly sales are 22%, 27%, 25%, and 26%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020.
Production Management desires to maintain the ending finished goods inventories at 25% of the next quarter's budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $11 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 495,000 pounds me Prepare the sales, production, and direct materials budgets by quarters for 2020

You recommend the following: We should discontinue our policy of reimbursing employees for meals and incidental expenses. In place of this policy, we should provide $100 daily stipends. This recommendation is best classified as what

Daily demand for a certain product is normally distributed with a mean of 138 and a standard deviation of 13. The supplier is reliable and maintains a constant lead time of 7 days. The cost of placing an order is $17 and the cost of holding inventory is $0.40 per unit per year. There are no stock-out costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over 358 days of the year.
Your goal here is to find the order quantity and reorder point to satisfy a 73 percent probability of not stocking out during the lead time.
a. To manage inventory, the company is using
Continuous review system
Periodic review system
b. Find the order quantity. (Round your answer to the nearest whole number.)
Order quantity books
c. Find the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
Reorder point

Blight Financial has an investment in bonds issued by Searing Industries that are classified as trading securities. At December 31, Year 2, the Investment in Searing bonds account had a debit balance of $500,000, and the bonds were purchased at par so the $500,000 equals amortized cost. The Fair Value Adjustment account had a debit balance of $20,000. On December 31, Year 3, the amortized cost of those bonds has not changed, but the fair value of those bonds was $515,000. Which of the following will be included in the related journal entry dated December 31, Year 3?

a. Debit to Fair value adjustment for $5,000.
b. Credit to Fair value adjustment for $5,000.
c. Debit to Fair value adjustment for $25,000.
d. Credit to Fair value adjustment for $25,000.

Definition of economic costs
Darnell lives in Philadelphia and runs a business that sells pianos. In an average year, he receives $842,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $452,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $38,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Darnell does not operate this piano business, he can work as an accountant and receive an annual salary of $48,000 with no additional monetary costs. No other costs are incurred in running this piano business.
Identify each of Darnell's costs in the following table as either an implicit cost or an explicit cost of selling pianos.
Implicit Cost
Explicit Cost
The wholesale cost for the pianos that Darnell pays the manufacturer
The salary Darnell could earn if he worked as an accountant
The wages and utility bills that Darnell pays
The rental income Darnell could receive if he chose to rent out his showroom
Complete the following table by determining Darnell's accounting and economic profit of his piano business.
Profit
(Dollars)
Accounting Profit
Economic Profit
If Darnell's goal is to maximize his economic profit, he( should, should not) stay in the piano business because the economic profit he would earn as an accountant would be $______.

Cari created a list of ways to reduce her spending. Which activity should she omit from her list? Choose the correct answer below. use less expensive places for services such as haircuts wear items of clothing for an extra season buy store brands instead of name brands for food and other items rely on friends to treat me when I am out of money

A check register shows a balance of $152.34. The bank statement shows that a check for $75.00 deposited by the account owner was drawn against insufficient funds and was returned. A charge for $2.00 was also deducted by the bank because of the return. Compute the adjusted cash balance of the check register.

The difference between a firm's future cash flows if it accepts a project and the firm's future cash flows if it does not accept the project is referred to as the project's: Group of answer choices

The following costs and inventory data were taken from the accounts of Simon Company for 2010:
January 1, 2011 December 31, 2011
Inventories:
Raw materials $ 8,000 $ 7,000
Work in process 15,000 13,000
Finished goods 16,000 12,000
Costs incurred at the end of December 31, 2011:-
Raw materials purchases $83,000
Direct labor 42,000
Factory rent 8,000
Factory utilities 10,000
Indirect materials 4,000
Indirect labor 6,000
Operating expenses 17,000
Instructions
a. Prepare a schedule showing the amount of direct materials used in production during the year.
b. Compute the amount of manufacturing overhead incurred during the year.
c. Prepare a schedule of Cost of Goods Manufactured for Simon Company for the year ended December 31, 2011 in good form.
d. Prepare the Cost of Goods Sold section of the Income Statement for Simon Company for the year ended December 31, 2011 in good form.

Freeport-McMoRan Copper & Gold Inc., headquartered in Phoenix, Arizona, is a leading international mining company of copper, gold, and molybdenum. Its revenues were over $16 billion with net income of nearly $2 billion in a recent year.

Assume that in February 2020, Freeport-McMoRan paid $800,000 for a mineral deposit in Indonesia. During March, it spent $70,000 in preparing the deposit for exploitation. It was estimated that 1,000,000 total cubic yards could be extracted economically. During 2020, 60,000 cubic yards were extracted. During January 2021, the company spent another $6,000 for additional developmental work that increased the estimated productive capacity of the mineral deposit.

Required:
a. Compute the acquisition cost of the deposit in 2020.
b. Compute depletion for 2020.
c. Compute the net book value of the deposit after payment of the January 2021 developmental costs.

Every 6 months, Leo Perez takes an inventory of the consumer debts he has outstanding. His latest tally shows that he still owes $4,250 on a home improvement loan (monthly payments of $100); he is making $50 monthly payments on a personal loan with a remaining balance of $825; he has a $1,500, secured single- payment loan that's due late next year; he has a $70,000 home mortgage on which he's making $850 monthly payments; he still owes $12,500 on a new car loan (monthly payments of $550); and he has a $1,200 balance on his Mastercard (minimum payment of $50), a $50 balance on his Shell credit card (balance due in 30 days), and a $500 balance on a personal line of credit ($90 monthly payments).
a. Use Worksheet to prepare an inventory of Leo's consumer debt.
Type of Consumer Debt Creditor Currently Monthly Latest Balance Due
Payment
Auto loans
Personal installment loans
Home improvement loan
Single-payment loans
Credit cards Mastercard
(retail charge cards, bank
cards, T&E Shell cards, etc.)
Personal line of credit $ $
Totals $
b. Find his debt safety ratio, given that his take-home pay is $2,000 per month. Round the answer to 1 decimal place. %
c. Would you consider this ratio to be good or bad?

A common step in the testing for accounts payable is to test subsequent disbursements for improper/proper inclusion/exclusion in year-end accounts payable CONCEPT REVIEW A common way to test accounts payable is to examine the check register after period end and make selections for testing. Items are selected and then examined for detail. A determination is then made to conclude whether the amount should have been a liability as of year-end and, if so, if it was recorded as such
1. When searching for unrecorded liabilities, the auditors consider transactions recorded__________year end.
2. Accounts payable __________can be mailed to vendors from whom substantial purchases have been made.
3. To gain overall assurance as to the reasonableness of accounts payable, the auditor may consider _________.
4. When auditors find unrecorded liabilities, before adjusting they must consider __________.
5 Auditiors need to consider_______ terms for determining ownership and whether a liability should be recorded.