Clauss Company transfers out 14,000 units and has 2,000 units

Clauss Company transfers out 14,000 units and has 2,000 units of ending work in process that are 25% complete. Materials are entered at the beginning of the process and there is no beginning work in process. Assuming unit materials costs of $3 and unit conversion costs of $5, what are the costs to be assigned to units transferred out and in ending work in process?

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Fuque Inc. uses the retail inventory method to estimate

Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2013.

Inventory, October 1, 2013
At cost………………………….. $ 52000
At retail…………………………. 78000
Purchases
At cost………………………….. 272000
At retail…………………………. 423000
Freight in……………………….. 16600
Purchase Returns
At cost………………………….. 5600
At retail………………………… 8000
Markups…………………………. 9000
MArkup Cancellation……………. 2000
Markdowns……………………… 3600
Normal Spoilage and breakage… 10000
Sales…………………………….. 390000

(A) Using the conventional retail method, prepare a schedule computing estimated lower of cost or market inventory for October 31, 2013.

(B) A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60000. An accurate physical count reveals only $47000 of inventory at lower of cost or market. List the factors that may have caused the difference between the computed inventory and the physical count.

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Huron Company produces a commercial cleaning compound known as Zoom

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Standard Quantity or Hours Standard Price
or Rate
Standard
Cost
  Direct materials 6.00 pounds $ 2.30 per pounds $ 13.80
  Direct labor 0.50 hours $ 10.00 per hour $ 5.00

During the most recent month, the following activity was recorded:

a. 11,000 pounds of material were purchased at a cost of $2.10 per pound.

b. All of the material purchased was used to produce 1,500 units of Zoom.

c. 500 hours of direct labor time were recorded at a total labor cost of $6,500.

Required:

1. Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).)

2. Compute the labor rate and efficiency variances for the month. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).)

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Mr. Carter is the manager of Simmons Farm and Seed Company

Mr. Carter is the manager of Simmons Farm and Seed Company, a wholesaler of fertilizer, seed, and other farm supplies. The company has been successful in recent years primarily because of great customer service—flexible credit terms, customized orders (quantities, seed mix, etc), and on-time delivery, among others. Budgeted net income for the coming year will be $120,000, based on the following data:

Sales $1,500,000

Variable costs other than shipping 1,095,000

Shipping costs 135,000

Fixed Costs 150,000

After the determination of the budget, Carter received notice from Simmons’ principal shipping agent that it was about to increase its rates by 10%. This carrier handles 90% of Simmons’ total shipping volume. Paying the increased rate will result in failure to meet the budgeted income level. Mr. Carter is considering two alternatives.

First, it is possible to use another carrier whose rates are 5% less than the old carrier’s original rate. The old carrier, however, is a subsidiary of a major customer; shifting to a new carrier will almost certainly result in loss of that customer and sales amounting to $70,000. Assume that prior to the recent rate increase, the shipping costs of the principal carrier and the other carriers were the same, and that costs of the other carriers are not expected to change.

As a second alternative, Simmons can purchase its own trucks thereby reducing its shipping costs to 85% of the original rate. The new trucks would have an expected life of 10 years, no salvage value and would be depreciated on a straight line basis. Additional fixed costs (excluding depreciation) would be $2,000.

REQUIRED:

1. Using cost-volume-profit analysis and the data provided, determine the maximum amount that Mr. Carter can pay for the trucks and still expect to attain budgeted net income.

2. At what price for the truck would Mr. Carter be indifferent between purchasing the new trucks and using a new carrier?

3. Mr. Carter has decided to use a new carrier, but now is worried its apparent lack of reliability may adversely affect sales volume. Determine the dollar amount of sales that Simmons can lose because of lack of reliability before any benefit from switching carriers is lost completely.

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The Painting Department of the Garner Manufacturing Company has the following production

The Painting Department of the Garner Manufacturing Company has the following production and manufacturing cost data for September.

Production: Beginning inventory 4,000 units; units started into production 16,000; ending inventory of 5,000 units 20% complete as to conversion costs.

Manufacturing Costs: Beginning work in process inventory of $80,000, comprised of $49,000 of materials and $31,000 of conversion costs. Materials added during the month, $231,000; labor and overhead applied during the month, $94,400 and $50,600, respectively.

Instructions

(a) Compute the equivalent units of production for materials and conversion costs for the month of September.

(b) Compute the unit costs for materials and conversion costs.

(c) Determine the costs to be assigned to the units transferred out and ending work in process.

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PM Auto Company sells car parts to customers. The company’s fiscal year-end is december 31

PM Auto Company sells car parts to customers. The company’s fiscal year-end is December 31. The December 31,2015, unadjusted trial balance appears below.

Cash—–22,000

Accounts Receivable—–35,000

supplies—27,000

prepaid insurance— 24,000

equipment—–95,000

accumulated depreciation— 37,000

accounts payable—-12,000

salaries payable—–0

utilities payable—-0

interest payable—–0

income taxes payable—-5,000

notes payable—-35,000

common stock –35,000

retained earnings —10,000

dividends—–3,000

parts revenue—–247,000

cost of goods sold—–50,000

salaries expense—-108,000

depreciation expense—-0

insurance exoense—–0

supplies expense——-0

utilities expense—–12,000

interest expense——0

income taxes expense——5,000

Additional information necessary to prepare the year-end adjusting entries appears below. The Adjusting entries is where i need the most help.

a. Depreciation on the machines for the year is 10,000

b. employee salaries are paid every two weeks. The last pay period ended on December 23. Salaries earned from December 24 through December 31,2015 are 4000.

c. On September 1, 2015, Pm Auto borrows 35,000 from a local bank and signs a note. The note requires interest to be paid annually on august 31 at 9%. The principal is due in five years,

d. On march 1, 2015, the company purchases insurance for 24,000 for a one-year policy to cover possible injury to mechanics. The entire 24,000 was debited to prepaid insurance at the time of the purchase.

e.5,000 of supplies remains on hand at December 31,2015

f. on December 30, PM auto receives a utility bill of 2,200 for the month. The bill will not be paid until early January 2016, and no entry was recorded when the bill was received

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Avantronics is a manufacturer of electronic components and accessories

Avantronics is a manufacturer of electronic components and accessories that has total assets of $ 20,000,000. Selected financial ratios for Avantronics and the industry averages for firms of similar size are as follows:   Avantronics Industry

Year 1 Year 2 Year 3 Average

Current ratio 2.09 2.27 2.51 2.24

Quick ratio 1.15 1.12 1.19 1.22

Inventory turnover 2.40 2.18 2.02 3.50

Profit margin 0.14 0.15 0.17 0.11

Debt- to- equity ratio 0.24 0.37 0.44 0.35

Avantronics is being reviewed by several entities whose interests vary, and the company’s financial ratios are a part of the data being considered. Each of the following parties must recommend an action based on its evaluation of Avantronics’s financial position: MidCoastal Bank. The bank is processing ­Avantronics’s application for a new five- year term note. MidCoastal has been the banker for Avantronics for several years but must reevaluate the company’s financial position for each major transaction. Ozawa Company. Ozawa is a new supplier to Avantronics and must decide on the appropriate credit terms to extend to the company. Drucker & Denon. A brokerage firm special-izing in the stock of electronics firms that are sold over the counter, Drucker & Denon must decide whether it will include Avantronics in a new fund being ­established for sale to Drucker & Denon’s clients. Working Capital Management Committee. This is a committee of Avantronics’s management personnel chaired by the chief operating officer. The committee is responsible for periodically reviewing the company’s working- capital position, comparing actual data against budgets, and recommending changes in strategy as needed.

A. Describe the analytical use of each of the five ratios presented in the chart. For this question consider/discuss the following: Current Ratio, Quick Ratio, Inventory turnover, Profit margin, and Debt to equity.

B. For each of the four entities described, identify the financial ratios, from those ratios presented, that would be most valuable as a basis for its decision regarding Avantronics. For this question consider/discuss the following: MidCoastal BankU, Ozawa Company, Drucker & Denon, and Working Capital Management Committee

C. Discuss what the financial ratios presented in the question reveal about Avantronics. Support your answer by citing specific ratio levels and trends, as well as the interrelationships among these ratios. For this question consider/discuss the following: Current and Quick ratios, Inventory turnover, Profit margin, and Debt to equity.

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The Macrohard Corporation projects an increase in sales from $18 million to $25 million

The Macrohard Corporation projects an increase in sales from $18 million to $25 million, but it needs an additional $500,000 of current assets to support this expansion. Macrohard purchases under terms of 2/10, net 45 and currently pays on the 10th day, taking discounts. The CFO is considering using trade credit to finance the additional working capital required. Alternatively, Macrohard can finance its expansion with a one-year loan from its bank. The bank has quoted the following alternative loan terms:

a) 10 percent rate on a simple interest loan, with monthly interest payments.
b) 9 percent annual rate on a discount interest basis with no compensating balance.
c) 8 percent annual rate on a discount interest basis, with a 10 percent compensating balance.
d) 7 percent add-on interest, with monthly payments.

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The Pension Trust Fund maintained by the City of Linden had the following transactions

The Pension Trust Fund maintained by the City of Linden had the following transactions during 2012. Record each transaction in the Pension Trust Fund. Ignore any other funds that may be involved in a transaction.

1. Contributions of $600,000 were received from General Fund employees, and the General Fund contributed its share of $100,000.

2. The fund paid $500 for investment management fees.

3. Investments held by the fund increased in value by $3,500.

4. Depreciation on fund capital assets totaled $800.

5. Retirement benefits of $7,700 were paid to retirees.

6. Interest of $2,500 and dividends of $1,400 were received from investments.

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Finsdale Farms, Inc. produces and sells corn dogs

Finsdale Farms, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $215,000. In addition, Austin estimates that the new machine will increase the company’s annual net cash inflows by $33,000. The machine will have a 12-year useful life and no salvage value.

Instructions

(a)   Calculate the cash payback period.

(b)   Calculate the machine’s internal rate of return.

(c)   Calculate the machine’s net present value using a discount rate of 10%.

(d)   Assuming Finsdale Farms, Inc.’s cost of capital is 10%, is the investment acceptable? Why or why not?

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