Aulman Inc. has a number of divisions, including a Furniture Division and a Motel Division

Aulman Inc. has a number of divisions, including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $40. The manager of the Furniture Division has approached the manager of the Motel Division about selling dressers to the Motel Division. The full product cost of a dresser is $29. The Furniture Division can sell all of the dressers it makes to outside companies for $40. The Motel Division needs 10,000 dressers per year; the Furniture Division can make up to 50,000 dressers per year.

Refer to the information for Aulman Inc. above.

Required:

1. Which division sets the maximum transfer price? Which division sets the minimum transfer price?

2. Suppose the company policy is that all transfers take place at full cost. What is the transfer price?

3. Conceptual Connection: Do you think that the transfer will occur at the company-mandated transfer price? Why or why not?

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Ida Sidha Karya Company is a family-owned company located in the village of Gianyar

Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The sounding bars are cast from brass and hand-filed to attain just the right sound. The bars are then mounted on an intricately hand-carved wooden base. The gamelans are sold for 850 (thousand) rupiahs. (The currency in Indonesia is the rupiah, which is denoted by Rp.) Selected data for the company’s operations last year follow (all currency values are in thousands of rupiahs):

Units in beginning inventory 0
Units produced 250
Units sold 225
Units in ending inventory 25
Variable costs per unit:
Direct materials Rp100
Direct labor Rp320
Variable manufacturing overhead Rp40
Variable selling and administrative Rp20
Fixed costs:
Fixed manufacturing overhead Rp60,000
Fixed selling and administrative Rp20,000
________________________________________

The absorption costing income statement prepared by the company’s accountant for last year appears below (all currency values are in thousands of rupiahs):

Sales Rp191,250
Cost of goods sold 157,500
Gross margin 33,750
Selling and administrative expenses 24,500
Net operating income Rp9,250
________________________________________

Requirement 1:
Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.

Requirement 2:
Prepare an income statement for the year using the variable costing method. Explain the difference in net operating income between the two costing methods.

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Aracel Engineering completed the following transactions in the month of June

Aracel Engineering completed the following transactions in the month of June.

a. Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company.
b. The company purchased land worth $49,000 for an office by paying $6,300 cash and signing a long-term note payable for $42,700.
c. The company purchased a portable building with $55,000 cash and moved it onto the land acquired in b.
d. The company paid $3,000 cash for the premium on an 18-month insurance policy.
e. The company completed and delivered a set of plans for a client and collected $6,200 cash.
f. The company purchased $20,000 of additional drafting equipment by paying $9,500 cash and signing a long-term note payable for $10,500.
g. The company completed $14,000 of engineering services for a client. This amount is to be received in 30 days.
h. The company purchased $1,150 of additional office equipment on credit.
i. The company completed engineering services for $22,000 on credit.
j. The company received a bill for rent of equipment that was used on a recently completed job. The $1,333 rent cost must be paid within 30 days.
k. The company collected $7,000 cash in partial payment from the client described in transaction g.
l. The company paid $1,200 cash for wages to a drafting assistant.
m. The company paid $1,150 cash to settle the account payable created in transaction h.
n. The company paid $925 cash for minor maintenance of its drafting equipment.
o. Jenna Aracel withdrew $9,480 cash from the company for personal use.
p. The company paid $1,200 cash for wages to a drafting assistant.
q. The company paid $2,500 cash for advertisements on the Web during June.

Required
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
2. Open the following ledger accounts— their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163); Drafting Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); J. Aracel, Capital (301); J. Aracel, Withdrawals (302); Engineering Fees Earned (402); Wages Expense (601); Equipment Rental Expense (602); Advertising Expense (603); and Repairs Expense (604). Post the journal entries from part 1 to the accounts and enter the balance after each posting.
3. Prepare a trial balance as of the end of June.

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For Turgo Company, variable costs are 55% of sales, and fixed costs are $170,900

For Turgo Company, variable costs are 55% of sales, and fixed costs are $170,900. Management’s net income goal is $129,925.

Compute the required sales in dollars needed to achieve management’s target net income of $129,925.

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Holden Graham started The Graham Co., a new business that began operations on May 1

Holden Graham started The Graham Co., a new business that began operations on May 1. The Graham Co. completed the following transactions during its first month of operations.

H. Graham invested $45,000 cash in the company in exchange for its common stock.
The company rented a furnished office and paid $2,300 cash for May’s rent.
The company purchased $1,890 of office equipment on credit.
The company paid $790 cash for this month’s cleaning services.
The company provided consulting services for a client and immediately collected $5,400
The company provided $2,600 of consulting services for a client on credit.
The company paid $750 cash for an assistant’s salary for the first half of this month.
The company received $2,600 cash payment for the services provided on May 12.
The company provided $3,700 of consulting services on credit.
The company received $3,700 cash payment for the services provided on May 22.
The company paid $1,890 cash for the office equipment purchased on May 3.
The company purchased $85 of advertising in this month’s (May) local paper on credit payment is due June 1.
The company paid $750 cash for an assistant’s salary for the second half of this month
The company paid $350 cash for this month’s telephone bill.
The company paid $300 cash icr this month’s utilities.
The company paid $1,500 cash in dividends to the owner (sole shareholder).

Required:
2. Enter the amount of each transaction on individual items of the accounting equation.
3.1 Prepare Holden Graham Company’s income statement for May.
3.2 Prepare Holden Graham company’s statement of Retained Earnings for May.
3.3 Prepare Holden Graham Company’s Balance Sheet for May 31.
3.4 Prepare Holden Graham Company’s statemant of Cash Flows For Month Ended May 31

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BBP, Inc., with sales of $500,000, has the following balance sheet

BBP, Inc., with sales of $500,000, has the following balance sheet:

BBP, Incorporated
Balance Sheet
as of 12/31/X0

Assets Liabilities
Cash $ 25,000 Accounts Payable $ 15,000
Accounts Receivable $ 50,000 Accruals $ 20,000
Inventory $ 75,000 Notes Payable $ 0
Current Assets $150,000 Current Liabilities $ 85,000
Fixed Assets $200,000 Common Stock $100,000
Retained Earnings $165,000
Total Assets $350,000 Total Liabilities/Equity $350,000

The firm earns 15% on sales and distributes 25% of its earnings. Using the percent of sales method, forecast the new balance sheet for sales of $600,000 assuming that cash changes with sales and that the firm is not operating at capacity. Will the firm need external; funds? Would your answer be different if the firm distributed all of its earnings?

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Gundy Company expects to produce 1,223,880 units of Product XX in 2012

Gundy Company expects to produce 1,223,880 units of Product XX in 2012. Monthly production is expected to range from 73,280 to 111,220 units. Budgeted variable manufacturing costs per unit are: direct materials $3, direct labor $6, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $6 and for supervision are $2.

Prepare a flexible manufacturing budget for the relevant range value using 18,970 unit increments. (List variable costs before fixed costs.)

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For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools

For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools: $321,700 budget; $333,100 actual.

Prepare a static budget report for the quarter.

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Montana Company produces basketballs. It incurred the following costs during the year

Montana Company produces basketballs. It incurred the following costs during the year.

Direct materials $14,521
Direct labor $25,017
Fixed manufacturing overhead $9,920
Variable manufacturing overhead $31,765
Selling costs $20,653

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For Kozy Company, actual sales are $1,540,000 and break-even sales are $1,078,000

For Kozy Company, actual sales are $1,540,000 and break-even sales are $1,078,000.

Compute the margin of safety in dollars and the margin of safety ratio.

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