Jon Seceda Corp. purchased machinery for $315,000

E11-4 (Depreciation Computations—Five Methods) Jon Seceda Corp. purchased machinery for    $315,000 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of    25,000. During 2015, Seceda Corp. uses the machinery for 2,650     hours, and the machinery produces 25,500 units.

Instructions: 
From the information given, compute the depreciation charge for 2015 under each of the following methods. (Round to the nearest dollar.)

(a) Straight-line (Note – Utilize Excel formula =SLN(Cost,Salvage,Life) to solve the problem.)
Formula

“(b) Units-of-output (Note: Since units-of-production has an “”s”" in it, utilize salvage value in computing
period depreciation.)”

“(c) Working hours (Note: Working hours is a “”units-of-production”" method and since units-of-
production has an “”s”" in it, utilize salvage value in computing period depreciation.)”

“(d) Sum-of-years-digits (Note – Utilize Excel formula =SYD(Cost,Salvage,Life,Period) to solve the
problem.) (Note: Second year covers two depreciation periods.)”

“(e) Declining balance, (10 year life, DDB results in 20% annual rate, use 200% for Factor in Excel).
(Note: Utilize Excel formula =DDB(Cost,Salvage,Life,Period,Factor) to solve the problem.
(Note: Second year covers two depreciation periods.)”

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E11-2 Rembrandt Company acquired a plant asset

E11-2 (Depreciation—Conceptual Understanding) Rembrandt Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using:

(1) the straight-line method,
(2) the sum-of-the-years’-digits method, and
(3) the double-declining-balance method.
Year    Straight-Line    Sum-of-Years’-Digits    Double-Declining-Balance

1    $9,000     $15,000     $20,000
2    9,000     12,000     12,000
3    9,000     9,000     7,200
4    9,000     6,000     4,320
5    9,000     3,000     1,480
Total    $45,000     $45,000     $45,000

Instructions:
Answer the following questions.
(a) What is the cost of the asset being depreciated?
(b) What amount, if any, was used in the depreciation calculations for the salvage value for this asset?
(c) Which method will produce the highest charge to income in Year 1?
(d) Which method will produce the highest charge to income in Year 4?
(e) Which method will produce the highest book value for the asset at the end of Year 3?
(f) If the asset is sold at the end of Year 3, which method would yield the highest gain (or lowest loss) on disposal of the asset?

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Lansbury Company purchases equipment on January 1, Year 1, at a cost of $518,000

E11-1 (Depreciation Computations—SL, SYD, DDB) Lansbury Company purchases equipment on January 1, Year 1, at a cost of    $518,000 . The asset is expected to have a service life of 12 years and a salvage value of $50,000

Instructions: 
“(a) Compute the amount of depreciation for each Years 1 through 3 using the straight-line
depreciation method.”

Straight-line method depreciation for each of Years 1 through 3 is computed as:

“(b) Compute the amount of depreciation for each Years 1 through 3 using the sum-of-years digits
depreciation method.” 

“The sum of 1 through 12 = 1+2+3+4+5+6+7+8+9+10+11+12 =
1+12 + 2+11 + 3+10 + 4+9 + 5+8 + 6+7 =
(1+12) + (2+11) + (3+10) + (4+9) + (5+8) + (6+7) =
(13) + (13) + (13) + (13) + (13) + (13) =
13 X (12/2) =
13 X 6 = 78
the sum of the first year and the last year multiplied by one half of the total number of years.

Hint: Since “”Sum-of-Years-Digits”" title contains an “”S”", use salvage value to compute periodic
depreciation expense.”

(c) Compute the amount of depreciation for each Years 1 through 3 using the double-declining balance method. (In performing your calculations, round constant percentage to the nearest one-hundredth of a point and round answers to the nearest dollar.) 

Hint: Since “”Double-Declining Balance Method”" title does not contain an “”S”", do not use salvage value to compute periodic depreciation expense. However, ensure that book value does not violate salvage value.”

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ACC 349 Week 5 Individual Assignment Ch. 8, 9, and 11 (A+ Guaranteed)

Individual Assignment, Exercises E8-11, Exercises BE9-6 and BE9-8, Questions 2 and 11, Exercise E11-6

Learning Team Problems, Problem P8-2A, Problem P11-4A

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ACC 349 Week 4 Individual Assignment (E5-1, E5-9, E6-7 and E6-10)

Week 4 Individual Assignments – Ch. 5 & 6

Prepare written responses to the following assignments from Managerial Accounting: Tools for Business Decision Making:

· Ch. 5 – Exercises E5-1 and E5-9

· Ch. 6 – Exercises E6-7 and E6-10

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ACC 349 Week 3 Problem Set (E4-10, E4-11, P4-3A)

E4-10 Mallory Luongo, Inc. manufactures five models of kitchen appliances at its Mesa plant. The company is installing activity-based costing and has identified the following activities performed at its Mesa plant.
1. Designing new models.
2. Purchasing raw materials and parts.
3. Storing and managing inventory.
4. Receiving and inspecting raw materials and parts.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance parts.
7. Manually assembling parts into appliances.
8. Training all employees of the company.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Maintaining and repairing machinery and equipment.
12. Painting and packaging finished appliances.
Having analyzed its Mesa plant operations for purposes of installing activity-based costing, Mallory Luongo, Inc. identified its activity cost centers. It now needs to identify relevant activity cost drivers in order to assign overhead costs to its products.

Instructions
Using the activities listed above, identify for each activity one or more cost drivers that might be used to assign overhead to Mallory Luongo’s five products.

E4-11 Sorce Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.

(A) Determine the overhead rate for each activity
(B) Assign the manufacturing overhead costs for April to the two products using activity based costing.
(C) Write a memorandum to the president of Sorce Instrument explaining the benefits of activity-based costing.

P4-3A Skaros Stairs Co. of Moore designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2011 are as follows.

For the last 4 years, Skaros Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2011, 100,000 machine hours are budgeted. Anthony Morse, owner-manager of Skaros Stairs Co., recently directed his accountant, Neal Seagren to implement the activity-based costing system that he has repeatedly proposed. At Anthony Morse’s request, Neal and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.

David Hannon, sales manager, has received an order for 280 stairways from Community Builders, Inc., a large housing development contractor. At David’s request, Neal prepares cost estimates for producing components for 280 stairways so David can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 280 stairways.

(A) Compute the predetermined overhead rate using traditional costing with machine hours as the basis.
(B) What is the manufacturing cost per stairway under traditional costing?
(C) What is the manufacturing cost per stairway under the proposed activity-based costing? (Round to the nearest cent. Prepare all of the necessary schedules.)
(D) Which of the two costing systems is preferable in pricing decisions and why?

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E9-1 (Lower-of-Cost-or-Market) The inventory of 3T Company

E9-1 (Lower-of-Cost-or-Market) The inventory of 3T Company on December 31, 2014, consists of the following items.

Part No.    Quantity    Cost Per Unit    Cost to Replace per Unit
110     600     $90     $100.00
111     1,000     60     $52.00
112     500     80     $76.00
113     200     170     $180.00
120     400     205     $208.00
121     1,600     16     $14.00
122     300     240     $235.00
Part No. 121 is obsolete and has a realizable value of each as scrap:                    $0.20

Part No.    Quantity    “Per Unit
Cost”    Market    Total Cost    “Total
Market”    “Lower of
Cost or
Market”
110     600     $90     $100.00     Formula    Formula    Formula
111     1,000     60     52.00     Formula    Formula    Formula
112     500     80     76.00     Formula    Formula    Formula
113     200     170     180.00     Formula    Formula    Formula
120     400     205     208.00     Formula    Formula    Formula
121     1,600     16     14.00     Formula    Formula    Formula
122     300     240     $235.00     Formula    Formula    Formula
Totals                Formula    Formula    Formula

Instructions:       
Complete the table above by inserting the correct values or formulas into the yellow highlighted cells. From this data, answer the following two questions:

“(a) Determine the inventory as of December 31, 2014, by the lower-of-cost-or-market method, applying
this method directly to each item.”   

The valuation of inventory as of December 31, 2014, by the lower of cost or market method, as applied directly to each item is:                    Value

“(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total
of the inventory.”         

The valuation of inventory as of December 31, 2014, by the lower of cost or market method, as applied to total inventory is:                    Value

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E9-7 (Relative Sales Value Method) Phil Collins Realty Corporation purchased a tract

E9-7 (Relative Sales Value Method) Phil Collins Realty Corporation purchased a tract of unimproved land for  $55,000. This land was improved and subdivided into building lots at an additional cost of $34,460
These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.

Group    No. of Lots    Price per Lot
1     9     $3,000
2     15     $4,000
3     17     $2,400

Operating expenses for the year allocated to this project total    $18,200 Lots unsold at the year-end
as follows:
Group    No. of Lots
1     5
2     7
3     2

Instructions:      
At the end of the fiscal year Phil Collins Realty Corporation instructs you to arrive at the net income realized on this operation to date.

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P9-2 (Lower-of-Cost-or-Market) Garcia Home Improvement Company installs

P9-2 (Lower-of-Cost-or-Market) Garcia Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes in northern New Jersey and southern New York. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2014, and Jim Alcide, controller for Garcia, has gathered the following data concerning inventory.

At May 31, 2014, the balance in Garcia’s Raw Material Inventory account was $408,000
and the Allowance to Reduce Inventory to Market had a credit balance of    $27,500 Alcide summarized the relevant inventory cost and market data at May 31, 2014, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Garcia’s May 31, 2014, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. Devereaux expressed concern over departing from the cost principle.

Cost    “Replacement
Cost”    Sales Price    “Net Realizable
Value”    Normal Profit
Aluminum siding        $70,000     $62,500     $64,000     $56,000     $5,100
Cedar shake siding        86,000     79,400     94,000     84,800     7,400
Louvered glass doors        112,000     124,000     186,400     168,300     18,500
Thermal windows        140,000     126,000     154,800     140,000     15,400
Total        $408,000     $391,900     $499,200     $449,100     $46,400

Instructions:       
(a) (1) Determine the proper balance in the Allowance to Reduce Inventory to Market at May 31, 2014. 

Calculations of Proper Balance on the Allowance to Reduce Inventory to Market At May 31, 2014.
(a) (2) For the fiscal year ended May 31, 2014, determine the amount of the gain or loss that would be recorded due to the change in the Allowance to Reduce Inventory to Market.

(b) Explain the rationale for the use of the lower of cost or market rule as it applies to inventories.

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P9-6 (Retail Inventory Method) The records for the Clothing Department of Sharapova’s Discount

P9-6 (Retail Inventory Method) The records for the Clothing Department of Sharapova’s Discount Store are summarized below for the month of January.

Inventory, January 1,            at retail:    $25,000     at cost:    $17,000
Purchases in January,            at retail:    137,000     at cost:    82,500
Freight-in,                7,000
Purchases returns,            at retail:    3,000     at cost:    2,300
Transfers in from suburban branch,            at retail:    13,000     at cost:    9,200
Net markups:                8,000
Net markdowns:                4,000
Inventory losses due to normal breakage, etc, at retail:            at retail:    400
Sales            at retail:    95,000
Sales returns:                2,400

Instructions:       
(a) Compute the inventory for this department as of January 31, at Retail
(b) Compute the inventory using lower of average cost or market.
Note: Due to significant digits of worksheets and calculators, small differences may occur.

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