Question 1
St. James, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.? ?The overhead cost allocated to Zeta by using traditional costing procedures would be: Minimized View A B C $240,000.?? D E F $356,000.?? G H I $444,000.?? J K L $560,000.?? M N some other amount. Cartwright Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100-sheet packages at a cost of $100 per package. Management estimates that the cost of placing and receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1.50. Cartwright uses 2,600 packages each year. Production is constant, and the lead time to receive an order is 1 week. The economic order quantity is approximately: A B C 203 packages.?? D E F 225 packages.?? G H I 228 packages.?? J K L 565 packages.?? M N 631 packages. During a recent accounting period, Marty's shipping department processed 26 orders. Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies. If shipping labor is paid $14 per hour, the company's non-value-added cost would be: A B C $0.? D E F $56.? G H I $364.? J K L $1,456.? M N $1,820.? St. James, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.? ?The overhead cost allocated to Zeta by using activity-based costing procedures would be: Minimized View A B C $240,000.?? D E F $356,000.?? G H I $444,000.?? J K L $560,000.?? M N some other amount. Burgoon uses an economic order quantity model and has determined an optimal order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and holding costs are $4 per unit. The company's annual ordering and holding costs total: A B C $2,000.?? D E F $3,000.?? G H I $21,000.?? J K L $41,000.?? M N some other amount. The following tasks are associated with an activity-based costing system:?1? Assignment of cost to products?2? Calculation of pool rates?3? Identification of cost drivers?4? Identification of cost pools?Which of the following choices correctly expresses the proper order of the preceding tasks?? A B C 1, 2, 3, 4.?? D E F 2, 4, 1, 3.?? G H I 3, 4, 2, 1.?? J K L 4, 2, 1, 3.?? M N 4, 3, 2, 1.?? St. James, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.? ?The overhead cost allocated to Beta by using traditional costing procedures would be: Minimized View A B C $240,000.?? D E F $356,000.?? G H I $444,000.?? J K L $560,000.?? M N some other amount. St. James, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.? ?The overhead cost allocated to Beta by using activity-based costing procedures would be: Minimized View A B C $240,000.?? D E F $356,000.?? G H I $444,000?? J K L $560,000.?? M N some other amount. In an activity-based costing system, direct materials used would typically be classified as a: A B C unit-level cost.? D E F batch-level cost.? G H I product-sustaining cost.? J K L facility-level cost.? M N matrix-level cost.? Cartwright Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100-sheet packages at a cost of $100 per package. Management estimates that the cost of placing and receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1.50. Cartwright uses 2,600 packages each year. Production is constant, and the lead time to receive an order is 1 week. The reorder point is: A B C 25 packages.?? D E F 50 packages.?? G H I 100 packages.?? J K L 203 packages.?? M N 225 packages. At the economic order quantity: A B C total annual inventory costs, holding costs, and ordering costs are all minimized.? D E F total annual inventory costs and holding costs are minimized.? G H I total annual inventory costs are minimized, and holding costs equal ordering costs.? J K L total annual inventory costs are minimized, and holding costs exceed ordering costs.? M N total annual inventory costs are minimized, and ordering costs exceed holding costs. Alaina's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company's wholesale operation; the remainder were for the retail division. Costs allocated to the wholesale operation are: A B C $0.? D E F $31,200.? G H I $118,560.? J K L $193,440.? M N $203,000. Consider the following statements:?I. Product diversity creates costing problems because diverse products tend to utilize manufacturing activities in different ways.?II. Overhead costs that are not incurred at the unit level create costing problems because such costs do not vary with traditional application bases such as direct labor hours or machine hours.?III. Product diversity typically exists when a single product (e.g., a ballpoint pen) is made in different colors.?Which of the above statements is (are) true? A B C I only.?? D E F II only.?? G H I I and II.?? J K L I and III.?? M N II and III. Which of the following is classified as an inventory shortage cost? A B C Purchase order preparation.? D E F Production disruption.? G H I Lost sales and lost customers.? J K L Spoilage.? M N Production disruption, lost sales, and lost customers.? Consider the following statements regarding traditional costing systems:?I. Overhead costs are applied to products on the basis of volume-related measures.?II. All manufacturing costs are easily traceable to the goods produced.?III. Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements.?Which of the above statements is (are) true? A B C I only.?? D E F II only.?? G H I III only.?? J K L I and III.?? M N II and III Alamo's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to: A B C $0.? D E F $29.? G H I $85,260.? J K L $117,740.? M N $203,000. Activity-based costing systems: A B C use a single, volume-based cost driver.? D E F assign overhead to products based on the products' relative usage of direct labor.? G H I often reveal products that were under- or over-costed by traditional costing systems.? J K L typically use fewer cost drivers than more traditional costing systems.? M N have a tendency to distort product costs. Which of the following does not minimize ordering costs when using JIT purchasing? A B C Reducing the number of vendors.? D E F Negotiating long-term supply agreements.? G H I Making less frequent payments.? J K L Maintaining a safety stock.? M N Eliminating inspections.? Inventory holding costs typically include: A B C clerical costs of purchase-order preparation.? D E F costs of deterioration, theft, or spoilage.? G H I costs associated with lost sales to customers.? J K L forgone interest on money tied up in inventory.? M N costs of deterioration, theft, or spoilage and forgone interest on money tied up in inventory.? Feinstein, Inc., an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a: A B unit-level activity.? C D batch-level activity.? E product-sustaining activity.? F facility-level activity.? competitive-level activity.?
Question 2
Q1) Michael received land as a gift from his father in 2008. At the time of the gift, the land had a FMV of $185,000 and an adjusted basis of $210,000 to Michael?s father. There was no gift tax due with respect to this transfer. A year and a day later, Michael sold the land for $180,000. What was his realized gain or loss on this transaction? Q2 Maria and Tia form a corporation in a transaction governed by Code Section 351. Tia transfers real estate to the corporation. The real estate has an adjusted basis to Tia of $150,000 and a FMV of $200,000 on the date of the transfer. Tia also transfers cash of $40,000. In exchange for the transfer of the real estate and cash, Tia receives one-half of the stock of the corporation. The property is subject to an $180,000 mortgage, which the corporation assumes. The corporation?s adjusted basis in the real estate immediately after the contribution is a. $200,000. b. $180,000. c. $150,000. d. $130,000. e. $190,000. Q3 During 2009, Henry reported the following income and loss: Activity X??????????????..$50,000 loss Activity Y??????????????..$20,000 income Both Activity X and Activity Y are passive activities as to Henry. Henry purchased Activity X in 1988 and Activity Y in 1994. How much, if any, passive activity loss will be carried over to 2010? a. $50,000. b. $30,000. c. $20,000. d. 0. e. none of the above.
Question 4
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable costs are $8 per unit, and fi xed costs total $180,000 per year. Required: Answer the following independent questions: 1. What is the product?s CM ratio? 2. Use the CM ratio to determine the break-even point in sales dollars. 3. Due to an increase in demand, the company estimates that sales will increase by $75,000 during the next year. By how much should net operating income increase (or net loss decrease) assuming that fi xed costs do not change? 4. Assume that the operating results for last year were: Problems Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000 Variable expenses . . . . . . . . . . . . . . . . . . . 160,000 Contribution margin . . . . . . . . . . . . . . . . . . 240,000 Fixed expenses . . . . . . . . . . . . . . . . . . . . . 180,000 Net operating income . . . . . . . . . . . . . . . . $ 60,000 a. Compute the degree of operating leverage at the current level of sales. b. The president expects sales to increase by 20% next year. By what percentage should net operating income increase? 5. Refer to the original data. Assume that the company sold 18,000 units last year. The sales manager is convinced that a 10% reduction in the selling price, combined with a $30,000 increase in advertising, would cause annual sales in units to increase by one-third. Prepare two contribution format income statements, one showing the results of last year?s operations and one showing the results of operations if these changes are made. Would you recommend that the company do as the sales manager suggests? 6. Refer to the original data. Assume again that the company sold 18,000 units last year. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $1 per unit. He thinks that this move, combined with some increase in advertising, would increase annual sales by 25%. By how much could advertising be increased with profi ts remaining unchanged? Do not prepare an income statement; use the incremental analysis approach. please respond to let me know if you can assist with this problem in accounting.,I have agreed to pay $30 for your answer, I didn't find out from you if this is sufficient.
Question 5
1.Find the payback period for a project that requires investment of $34 and returns $12 every years for 7 years. 2. Calculate the project's IRR. Do not write the '%' sign in your answer. If the answer is 12.45%, you will enter 12.45 Year 0 1 2 3 4 Cash flows ?$1,050 $400 $400 $400 $400 3. Calculate the payback period for a project that requires investment of $5,400 and will provide the cashflows of $1,200, $400, $700, $3,000 and $500 in years 1 thru 5 respectively. 4. Given the following cashflows calculate NPV. WACC: 10.00% Year 0 1 2 3 Cash flows ?$1,050 $450 $460 $470 5. RR has the following drawbacks. Check all that apply. No credit if you miss or wrongly check any option. There may be several IRRs if the cashflows are unconventional For a project with conventional cashflows you may decide to take a project based on IRR when NPV would have led you to reject the project. IRR assumes that intermediate cashflows from a project are invested at IRR IRR may lead you to a wrong decision if you are deciding between mutually exclusive projects. You may get a negative IRR 6. Calculate the NPV of a project that requires investment of 567 and provides the cashflows of 487, 272, 253, 372 in the next 4 years. The relevant discount rate is 10%. (All numbers are in dollars) 7. Given the following cashflows calculate payback period. WACC: 10.00% Year 0 1 2 3 Cash flows ?$1,050 $450 $460 $470 8. A project has the following cashflow. Calculate NPV. WACC: 9.00% Year 0 1 2 3 Cash flows ?$1,000 $500 $500 $500 9. A project has the following cash flow. What is the project's NPV? Discount rate: 11.00% Year 0 1 2 3 4 Cash flows ?$1,000 $350 $350 $350 $350 10. A project has following cashflow. Calculate NPV WACC: 10.25% Year 0 1 2 3 4 5 Cash flows ?$1,000 $300 $300 $300 $300 $300
