Question 1
Which of the following statements pertain to both variable costing and absorption costing? The income statement discloses the amount of gross margin generated during the reporting period.?? Fixed selling and administrative expenses are treated in the same manner as fixed manufacturing overhead.?? Both variable and absorption costing can be used for external financial reporting.?? Variable selling costs are written-off as expenses of the accounting period.?? Fixed manufacturing overhead is attached to each unit produced.?? Lone Star has computed the following unit costs for the year just ended:?Direct material used $12?Direct labor $18?Variable manufacturing overhead $25?Fixed manufacturing overhead $29?Variable selling and administrative cost $10?Fixed selling and administrative cost $17?Under variable costing, each unit of the company's inventory would be carried at: $35.?? $55.?? $65.?? $84.?? some other amount. Lone Star has computed the following unit costs for the year just ended:?Direct material used $12?Direct labor $18?Variable manufacturing overhead $25?Fixed manufacturing overhead $29?Variable selling and administrative cost $10?Fixed selling and administrative cost $17?Under absorption costing, each unit of the company's inventory would be carried at: $55.?? $65.?? some other amount.?? $84.?? $35. When allocating joint costs, Weinberg calculates the final sales value of the various products manufactured and subtracts appropriate separable costs. The company is using the: gross margin at split-off method.?? reciprocal-accounting method.?? relative-sales-value method.?? physical-units method.?? net-realizable-value method.?? Which of the following methods recognizes some (but not all) of the services that occur between service departments? Direct method.?? Step-down method.?? Indirect method.?? Reciprocal method.?? Dual-cost allocation method. he underlying difference between absorption costing and variable costing lies in the treatment of: direct labor.?? variable manufacturing overhead.?? fixed manufacturing overhead.?? variable selling and administrative expenses.?? fixed selling and administrative expenses. The process of allocating fixed and variable costs separately is called: reciprocal-cost allocation.?? the separate allocation procedure (SAP).?? dual-cost allocation.?? common-cost allocation.?? diverse allocation. Indiana Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:?Direct material used $280,000?Direct labor $120,000?Variable manufacturing overhead $160,000?Fixed manufacturing overhead $100,000?Variable selling and administrative costs $60,000?Fixed selling and administrative costs $90,000?Indiana's per-unit inventoriable cost under variable costing is: $9.50.?? $25.00.?? $28.00.?? $33.00.?? $40.50. Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and believes that Building Maintenance provides more service than Human Resources. The square footage occupied by each department follows.?Human Resources 6,000?Building Maintenance 13,000?Machining 18,000?Assembly 26,000?Assuming use of the step-down method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread)? 19,000.?? 44,000.?? 50,000.?? 63,000.?? More information is needed to judge. Under variable costing, fixed manufacturing overhead is: applied directly to Finished-Goods Inventory.?? expensed immediately when incurred.?? applied directly to Work-in-Process Inventory.?? treated in the same manner as variable manufacturing overhead.?? never expensed. Which of the following situations would cause variable-costing income to be lower than absorption-costing income? Selling expenses increased by 10% during the accounting period.?? Units sold equaled 39,000 and units produced equaled 42,000.?? Sales prices decreased by $7 per unit during the accounting period.?? Units sold equaled 55,000 and units produced equaled 49,000.?? Units sold and units produced were both 42,000. Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $80,000 in the production of 20,000 gallons of P and 60,000 gallons of Q. Garage can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively. Alternatively, both products can be processed beyond the split-off point, as follows:? P Q?Separable processing costs $15,000 $35,000?Sales price (per gallon) if processed beyond split-off $3 $4?The joint cost allocated to Q under the relative-sales-value method would be: $40,000.?? $62,400.?? $64,000.?? $65,600.?? some other amount. The point in a joint production process where each individual product becomes separately identifiable is commonly called the: decision point.?? separation point.?? individual product point.?? split-off point.?? joint product point.?? Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as follows:? ?If the joint production costs are allocated based on the physical-units method, the amount of joint cost assigned to product X would be: Minimized View $20,000.?? $24,000.?? $30,000.?? $36,000.?? $40,000. Martina, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and believes that Building Maintenance provides more service than Human Resources. The square footage occupied by each department follows.?Human Resources 6,000?Building Maintenance 13,000?Machining 18,000?Assembly 26,000?Assuming use of the direct method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread)? 19,000.?? 44,000.?? 50,000.?? 63,000. Herbster manufactures A, B, and C, all of which are joint products, and D, which is classified as a by-product. If joint manufacturing costs amount to $450,000 and the company is using a popular accounting method, the firm will: allocate $450,000 among A, B, and C.?? allocate $450,000 among A, B, C, and D.?? increase $450,000 by the net realizable value of D and then allocate the total among A, B, and C.?? decrease $450,000 by the net realizable value of D and then allocate the total among A, B, and C. Indiana Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:?Direct material used $280,000?Direct labor $120,000?Variable manufacturing overhead $160,000?Fixed manufacturing overhead $100,000?Variable selling and administrative costs $60,000?Fixed selling and administrative costs $90,000?If Indiana uses variable costing, the total inventoriable costs for the year would be: $400,000.?? $460,000.?? $560,000.?? $620,000.?? $660,000.?? Consider the following comments about absorption- and variable-costing income statements:?I. A variable-costing income statement discloses a firm's contribution margin.?II. Cost of goods sold on an absorption-costing income statement includes fixed costs.?III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements.?Which of the above statements is (are) true? I only.?? II only.?? I and II.?? II and III.?? I, II, and III. Which of the following product-costing systems is/are required for tax purposes? Absorption costing.?? Variable costing.?? Throughput costing.?? Either absorption or variable costing.?? Either absorption, variable costing, or throughput costing. The joint-cost allocation method that recognizes the revenues at split-off but does not consider any further processing costs is the: relative-sales-value method.?? net-realizable-value method.?? physical-units method.?? reciprocal-accounting method.?? gross margin at split-off method.??
Question 2
"Lynn purchases a house for 52000 she converts the property to rental property when the fair market value is 115000 after deducting depreciation cost recovery expense of 1130 she sells the house for 120000. what is her gain or loss? a.0 b.6130 c.37630 d.69130 Maude exchanges a business machine for a new business machine. The adjusted basis of the old machine is 62000 and the fair market value of the new machine is 70000. the recognized gain or loss and the basis of the new machine is a. 0 and 0 b. 0 and 62000 c. 0 and 70000 d. 8000 and 70000" Roy exchanges a productive use machine adjusted basis of 9000 for a new machine worth 6000 in addition he receives cash of 5000 what is the recognized gain or loss and the basis of the new machine? a. 0 and 9000 b. 0 and 4000 c. 2000 and 6000 d. 2000 and 9000 MAbel an unmarried taxpayer sells her residence in december 2009 which of the following statements is correct a. to qualify for the section 1221 exclusion, the residence must be mabels principal residence at the date of the sale b the maximum section 121 exclusion available to mabel is 25000 c. if mabel sells her principal residence at a loss, her basis for a replacement residence is the cost plus the disallowed loss on the sale. d. only a and b e. a, b, and c The fixed assets of a business are. a. generally capital assets throughout their holding period b. generally not capital assets c. generally are held for investment d. generally are held for personal use Which of the following is a capital asset? a. the bicycle of a 10 year old child. the child purchased the bicycle with money inherited from an aunt. b. the tools used by a self employed carpenter c. the lots owned by a company that is in the business of buying and reselling residential building lots. d. a mint set of 1985 coinds owned by a coin dealer and that is for sale on his website. a worthless security had a holding period of 11 months when it became worthless on november 10 2009. the investor who had owned the security had a basis of 10000 for it. which of the following is correct? a. the investor has a long term capital loss of 10000 b. the investor has a short term capital loss of 1000 c. the investor has a nondeductible loss of 10000 d. the investor has a long term capital gain of 10000 Which of the following comparisions is correct? a. corporations may carryback capital losses, individuals may not b. both corporations and individual long term capital losses carryover as short term capital losses c. corporations may carryforward capital losses indefinetly, individuals may only carryforward capital losses for five years. d. both corporations and individuals may use an alternative tax rte on net capital gains White company acquires a new machine for 35000 and uses it in whites manufacturing operations. a few months after white places the machine in service, it discovers that the machine is not suitable for whites business. white had fully expensed the machine in the year or acquisition using section 179. white sells the machine for 5000 in the tax year after it was acquired, but held the machine only for a total of 10 months. what was the tax status of the machine when it was disposed of and the amount of the gain or loss? a. a capital asset and 5000 gain b. an ordinary asset and 5000 gain c. a section 1231 asset and 5000 gain d. a section 1231 asset and 5000 loss. Which of the following would be includd in the netting of section 1231 gains and losses? a. nonpersonal use property net casualty gain b. section 1231 loss c. section 1231 gain. d. all of the above e. b and c Vertigo inc has a 2009 net section 1231 loss of 24000 and had a 22000 net section 1231 gain in 2008. for 2009 vertigos net section 1231 loss is treated as: a. ordinary loss b. ordinary gain c. capital loss d. capital gain Which of the following creates potential section 1245 depreciation recapture and potential section 1231 gain? a. depreciable equiptment held more than one year and sold for more than its original cost b. amortizable goodwill held more than on year and disposed of for less than its adjusted basis. c. land held more than one year and sold for more then was paid for it. d. inventory held more than one year and sold for more than was paid for it.
Question 3
1.Francisco?s mass-produces folding chairs in Mexico. All direct materials are added al the beginning of production, and conversion costs are incurred evenly throughout production. The following production information is for the month of May. Physical Units Beginning WIP (40% complete) 9,000 Started in May 50,000 Completed in May 47,000 Ending WIP (30% complete) 12,000 a) Calculate the equivalent units used to calculate cost per unit under the weighted average method. b) Calculate the equivalent units used to calculate cost per unit under the FIFO method. 2.Fine Fans mass-produces small electric fans in Taiwan for home use. All direct materials are added at the beginning of production, and conversion costs are incurred evenly throughout production. The following production information is for the month of October. Physical Units Started in October 100,000 Completed in October 94,000 Ending WIP (60% complete) 15,000 Beginning WIP (20% complete) 9,000 COSTS Beginning work in process costs: Direct material 18,000 Conversion Cost 36,000 Cost added this period: Direct material 100,000 Conversion cost 200,000 a) Calculate the equivalent cost per unit using the weighted average method. b) Calculate the equivalent cost per unit using the FIFO method. 3. Rejected castings in a foundry are treated as spoilage. During the current period, 80 castings (costing $200 each to produce) were spoiled and sold at a net realizable value of $25 each. a) Prepare the journal entry, assuming that the spoilage was abnormal. 4. A department started 10,000 units last month, and the total cost per equivalent unit was $5.00. The department completed and transferred 8,000 units to finished goods inventory. There were no beginning or ending WIP inventories. a) Calculate the number and cost os spoiled units. b) Prepare journal entries for the spoilage if it is all considered normal. c) Prepare journal entries for the spoilage if it is all considered abnormal 5. Kim Mills produces yardage for knitwear. The knit cloth is sold by the bolt. November data for its milling process follow. Beginning WIP was 20,000 units. Good units completed and transferred out during current period totaled 90,000. Ending WIP was 17,000 units. Inspection occurs at the 100% stage of completion regarding conversion costs, which are incurred evenly throughout the process. Total spoilage is 7,000 units. Normal spoilage is 3,000 units. Direct material are added at the beginning of the process. a) Compute abnormal spoilage in units. b) Assume that the manufacturing cost of a spoiled unit is $1,000. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. 6.Use the information for Kim Mills from problem 5. Now assume that inspection occurs when units are 40% complete. a) Calculate total spoilage for conversion cost calculations. b) If normal spoilage is 1,800 units instead of 3,000, what is abnormal spoilage this period for conversion cost? 7. Process costing under weighted average and FIFO, choice of method Red Dog Products manufactures toys for dogs and cats. The most popular toy is a small ball that dispenses tiny treats and is placed within a larger ball. To get the treats, dogs must roll the balls around until the treats fall out. These balls are mass-produced from plastic. Direct materials are introduced at the beginning of the process, and conversion costs are incurred evenly throughout the manufacturing process. Once each unit is completed, it is transferred to finished goods. Data for the month of March are as follows. Beginning WIP (30% complete): Direct material $25,000 Conversion costs 3,000 Total $28,000 Units started during March 80,000 units Units completed and transferred out during March 88,000 units Ending WIP inventory (50% complete) 12,000 units Direct material cost added during March $220,000 Conversion costs added during March $74,000 a. Prepare a process cost report using the weighted average method. b. Prepare a process cost report using the FIFO method. c. What factors might affect the cost accountant's choice of process costing method?,ok,hi for the exercise number 7 were the answers to these questions a. Prepare a cost report process using the weighted average method. b. Prepare a cost report process using the FIFO method. c. What Factors Might Affect the cost accountant's choice of process costing method?,"hi for the exercise number 7 were the answers to these questions a. Prepare a cost report process using the weighted average method. b. Prepare a cost report process using the FIFO method. c. What Factors Might Affect the cost accountan"t's choice of process costing method?,I have until 9:30 pm to submit the assignment will thank you in what can help me
Question 4
Buster Company. Sells radios for $30 each. Fixed expenses total $15,000. Variable expenses are $20 per unit. What total dollar amount must Buster company sell to break even? a $20,000 b. $37,500 c. $45,000 d $60,000 JoJo Company is considering a new product, Pear. JoJo fixed costs are $200,000. Pear's contribution margin is $200 per unit. JoJo has a marginal tax rate of 25%. How many units of Pear would JoJo Company have to sell to have after-tax net income of $1,000,000 a. 2,250 units b. 4,750 units c. 5,000 units d. 7,667 units During May, KIA Co. produced and sold 10,000 units of a product. Manufacturing and selling costs incurred during May were as follows: Direct materials and direct labor $200,000 Variable manufacturing overhead $45,000 Fixed manufacturing overhead $10,000 Variable selling costs $5,000 The product's unit cost under direct (variable) costing was a. $24.50 b. $25.00 c. $25.50 d. $26.00 Which of the following is a problem with the ROI calculation? A. Increased profits cause ROI to decrease. B. Investment in assets is measured using current value costs. C. An undue emphasis on ROI may lead managers to delay the purchase of modern equipment needed to stay competitive. D. It does not hold managers responsible for assets. LaLa Company currently has 100,000 shares of common stock outstanding and a price-earnings ratio of seven. Net income for the recently ended year is $375,000.LaLa board of directors declared a 15-for-2 stock split. Sunshine owned 100 shares of LaLa company before the split. What is the approximate value of Sunshine's investment in LaLa immediately after the split a. $ 26 b. $ 350 c. $2,625 d. $5,250 Lela Company purchases all of the outstanding shares of another company. The acquiring company incurs the following costs to make this purchase: $300,000 to outside accountants and attorneys as direct consolidation costs, $200,000 as a reasonable allocation of internal costs attributed to this purchase, $120,000 in stock issuance costs in connection with shares issued by the acquiring company to the owners of the acquired company. What amount of these costs should be expensed immediately as incurred? Zero $200,000 $500,000 $620,000 On November 1, Year One, the Haynie Company signs a contract to receive one million Japanese yen on February 1, Year Two, for $10,000 based on the three-month forward exchange rate at that time of $1 for 100 Japanese yen (1,000,000 x 1/100 or $10,000). This contract is a derivative because its value is derived from the future value of the Japanese yen in relation to the US dollar. On December 31, Year One, the Haynie Company is producing financial statements. How is this forward exchange contract reported? It is shown as an asset or a liability at its fair value. It is shown only as an asset at its fair value. It is shown only as a liability at its fair value. It is only disclosed in the notes to the financial statements because it is a future transaction. B Company buys 80 percent of the outstanding shares of Little Company on January 1, Year One. Big paid an amount that was in excess of the underlying fair value of the subsidiary's assets and liabilities so that this was not viewed as a bargain purchase. On that date, Little held equipment worth $300,000 but with a net book value of $200,000. This equipment had a ten-year remaining life with no expected residual value. One year later, when Little still held this equipment as well as other, newly-bought pieces, Big reported a net account of $900,000 and Little reported a net account of $500,000. Assume no asset impairments have taken place. What is the consolidated balance to be reported for equipment? $1,472,000 $1,480,000 $1,490,000 $1,500,000 On November 1, Year One, the ABC Company signs a forward exchange contract to receive one million Japanese yen on February 1, Year Two, for $10,000 based on the three-month forward exchange rate at that time of $1 for 100 Japanese yen (1,000,000 x 1/100 or $10,000). On that same day, ABC company agrees to acquire inventory for one million yen when it is delivered on February 1, Year Two. The forward exchange receivable is designated as a hedge for this commitment. On November 1, the spot (current) exchange rate is $1 for 94 Japanese yen but that rate change, by December 31, to $1 for 96 Japanese yen. As of December 31, Year One, the forward exchange rate to be paid one month in the future is $1 for 103 Japanese yen. What is the overall impact to be recognized on NET INCOME at the end of Year On 0 $71 loss $221 gain $292 loss one is left i will post last one in few min Big Company buys 80 percent of the outstanding shares of Little Company on January 1, Year One. Big paid an amount that was in excess of the underlying fair value of the subsidiary's assets and liabilities so that this was not viewed as a bargain purchase. On that date, Little had land worth $500,000 but with a book value of $300,000. Several years later, when Little still held this land as well as other parcels of land, Big reported a Land account of $1.1 million and Little reported a Land account of $700,000. Assume no asset impairments have taken place. What is the consolidated balance to be reported for land? $1.66 million $1.82 million $1.96 million $2.00 million On January 1, Year One, Big Company acquires 100 percent of the outstanding shares of Small Company by issuing its own stock worth $12 million. The shares of Small had been worth only $11 million in the period leading up to the acquisition but Big had to pay a premium in order to obtain all of the stock. Big paid an additional $200,000 in cash to attorneys as direct consolidation costs and another $150,000 in stock issuance costs. According to US GAAP, what should be the basis for reporting the assets and liabilities of Small within consolidated financial statements created on the date of acquisition $11,350,000 $12,000,000 $12,200,000 $12,350,000 On December 1, Year One, a company acquires two three-month financial instruments that qualify as derivatives. Financial instrument A was bought to serve as a fair value hedge. Financial instrument B was bought to serve as a cash flow hedge. By the end of Year One, both of these financial instruments have increased in value by $1,000. How should these gains in value be reported by the company on the Year One financial statements? Both gains are reported within net income. Both gains are reported within accumulated other comprehensive income. The gain on the fair value hedge is reported within net income whereas the gain on the cash flow hedge is reported within accumulated other comprehensive income. The gain on the fair value hedge is reported within accumulated other comprehensive income whereas the gain on the cash flow hedge is reported within net income.
Question 5
Ratio analysis?comprehensive problem, 2006 data This problem is based on the 2006 annual report of Intel Corporation in the appendix. Required: a. Compute the following pro?tability measures for the year ended December 30, 2006: 1. Return on investment, based on net income (perform a DuPont analysis). 2. Return on equity, based on net income. 3. Price/earnings ratio. Use $20.25 as the year-end market price. 4. Dividend yield. 5. Dividend payout ratio. b. Compute the following liquidity measures at December 30, 2006: 1. Working capital. 2. Current ratio. 3. Acid-test ratio. c. Compute the following activity measures for the year ended December 30, 2006: 1. Number of days? sales in accounts receivable, based on a 365-day year. 2. Number of days? sales in inventory, based on a 365-day year. 3. Accounts receivable turnover. 4. Inventory turnover. 5. Turnover of net property, plant, and equipment. d. Compute the following ?nancial leverage measures at December 30, 2006: 1. Debt ratio. 2. Debt/equity ratio. 3. Times interest earned. e. Compute the following physical measures of Intel?s pro?tability at December 30, 2006: 1. Net revenues per employee. 2. Operating income per employee. (Hint: The number of employees at year-end is disclosed on page 681 of the Intel annual report in the appendix. )
