Katara Enterprises distributes a single product whose selling price is $30 (A+ Guaranteed)

Katara Enterprises distributes a single product whose selling price is $30 and whose variable expense is $16 per unit. The company’s monthly fixed expense is $18,900.

Required:

1.  Prepare a cost-volume-profit graph for the company up to a sales level of 2,000 units. (Use the line tool to draw three single lines (Total Sales Revenue, Fixed Expenses, Total Expenses). Each line should only contain the two endpoints. For the CVP Graph to grade correctly, you must enter the exact coordinates of each endpoint. To enter the exact coordinates, double click on the point and enter the correct values of x and y.)

2.  Calculate the company’s break-even point in unit sales.

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I-Time, Inc., produces electronic timepieces (A+ Guaranteed)

Direct Materials Variances

I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 470 timepieces during October. However, due to LCD defects, the company actually used 490 LCD displays during October. Each display has a standard cost of $6.50. The company purchased 490 LCD displays for October production at a cost of $2,820.

Determine the price variance, quantity variance, and total direct materials cost variance for October. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to nearest cent, if required.

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Ware Co. produces and sells motorcycle parts (A+ Guaranteed)

Ware Co. produces and sells motorcycle parts. On the first day of the its fiscal year, Ware Co. issued $35,000,000 of five-year, 12% bonds at a market (effective) interest rate of 10% with interest payable semiannually. Compute the following, presenting figures used on your computations.

a.       The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibits 4 & 5. Round to the nearest dollar.

b.       The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar.

c.        The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar.

d.       The amount of the bond interest expense for the first year.

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Jennings Inc. reported the following pretax income (loss) and related tax rates (A+ Guaranteed)

Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2008–2014.

Pretax Income (loss) Tax Rate
2008 $?40,000? 30%
2009 25,000? 30%
2010 50,000? 30%
2011 80,000? 40%
2012 (180,000) 45%
2013 70,000? 40%
2014 100,000? 35%

Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2011–2014 were enacted in 2011.

a. Prepare the journal entries for the years 2012-2014 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume that Jennings elects the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. -

b. Indicate the effect the 2012 entry (ies) has on the December 31, 2012 balance sheet. -

c.  Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2012 -

d. Prepare the portion of the income ststement, starting with “Income before income taxes,” for 2013. -

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Beacon Company is considering two different, mutually exclusive capital (A+ Guaranteed)

Beacon Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $473,200, has an expected useful life of 13 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,500. Project B will cost $299,406, has an expected useful life of 13 years, a salvage value of zero, and is expected to increase net annual cash flows by $46,700. A discount rate of 9% is appropriate for both projects.

Compute the net present value and profitability index of each project

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Kirkland Plumbing Company is a newly formed company specializing (A+ Guaranteed)

Kirkland Plumbing Company is a newly formed company specializing in plumbing services for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Plumbing Services and Business Plumbing Services. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments.

Lenny has asked you to help him create a performance reporting system that will allow him to measure each segment’s performance in terms of its profitability. To that end, the following information has been collected on the Home Plumbing Services segment for the first quarter of 2014.

Prepare a responsibility report for the first quarter of 2014 for the Home Plumbing Services segment.

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Jorge Company bottles and distributes B-Lite, a diet soft drink (A+ Guaranteed)

Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 60 cents per 16-ounce bottle to retailers, who charge customers 77 cents per bottle. For the year 2014, management estimates the following revenues and costs.

1) Calculate variable cost per bottle. (Round variable cost per bottle to 2 decimal places, e.g. 0.25.

2) Compute the break-even point in (1) units and (2) dollars.(Round answers to 0 decimal places, e.g. 1,225.)

3) Compute the contribution margin ratio and the margin of safety ratio. (Round variable cost per bottle to 2 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 25%.)

4) Determine the sales dollars required to earn net income of $240,910. (Round answers to 0 decimal places, e.g. 1,225.)

Sales $1,816,000 Selling expenses—variable $66,600
Direct materials 427,000 Selling expenses—fixed 65,200
Direct labor 353,000 Administrative expenses—variable 55,120
Manufacturing overhead—variable 315,000 Administrative expenses—fixed 62,000
Manufacturing overhead—fixed 292,000

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On January 1, 2012, Gucci Brothers Inc. started the year with a $501,000 (A+ Guaranteed)

On January 1, 2012, Gucci Brothers Inc. started the year with a $501,000 balance in retained earnings and a $600,000 balance in common stock. During 2012, the company earned net income of $96,000, paid a dividend of $15,100, and issued more common stock for $22,000. What is total stockholders’ equity on December 31, 2012?

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Athletic Sports, Inc., produces high-quality sports equipment (A+ Guaranteed)

Athletic Sports, Inc., produces high-quality sports equipment. The company’s Racket Division manufactures two tennis rackets—the Standard and the Deluxe—that are widely used in amateur play. Selected information on the rackets is given below:

Standard                  Deluxe

Selling price per racket                                        $47.70                     $84.00
Variable expenses per racket:
Production                                                           $21.40                      $28.10
Selling                                                                 $ 2.45                      $ 5.50

Sales in units over the past two months have been as follows:

Standard                         Deluxe

April                               5000                               3000

May                                4000                               3500

All sales are made through the company’s own retail outlets. The Racket Division has the following fixed costs:

Per month

Fixed production cost       $ 107,100

Advertising expense         $ 101,000

Administrative salaries     $   50,000

Total                                 $ 258,000

Compute the Racket Division’s break-even point in dollar sales for April.

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Hannon Company makes swimsuits and sells these suits directly to retailers (A+ Guaranteed)

Hannon Company makes swimsuits and sells these suits directly to retailers. Although Hannon has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $104. Given its experience, Hannon believes the All-Body suit would have the following manufacturing costs.

Direct materials $27 Direct labor 30 Manufacturing overhead

44

Total costs

$101

Assume that Hannon uses cost-plus pricing, setting the selling price 15% above its costs. What would be the price charged for the All-Body swimsuit?

Assume that Hannon uses target costing. What is the price that Hannon would charge the retailer for the All-Body swimsuit?

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