Question 1
ROWE POTTERY WORKS, INC. At the end of 1996, Rowe Pottery Works, Inc. (RPW) had been losing money for over two and a half years. This case challenges students to identify and evaluate alternatives that lead to Rowe's return to profitability. RPW's pottery operation is the main source of the losses. The pottery operation provides a majority of the company's revenue leading the company to depend heavily upon its success. Attempts to control costs have reduced but not eliminated the continued losses. The losses perplex the company's president as he believes there is a strong market for RPW's products. Management recently hired a new controller but is skeptical whether or not an accountant can help turn the company around. The previous controller told the president on numerous occasions: "I just report the results." Nonetheless, the president hopes the new controller can help find a way to return the company to profitability. COMPANY HISTORY Jim and Tina Rowe purchased a historic blacksmith shop in 1975. They turned it into an antique shop and soon discovered there was quite a demand for 19th-century salt-glazed pottery. Jim studied art in college and was familiar with the salt-glazed technique. He and Tina began producing handmade salt-glazed pottery and selling it in their store. As demand grew, the Rowe?s began selling their pottery to gift shops across the country. Today RPW sells more salt-glazed pottery than any other producer in the country. RPW also operates a retail store and a wholesale decorative ironworks business. The focus of this case is on RPW?s salt-glazed pottery business. Information about the store and iron works has been removed from the financial data presented. THE ACCOUNTING SYSTEM RPW relies on a fairly sophisticated accounting system. RPW assigns each product a standard cost based upon estimated material, labor and overhead costs. Material costs account for about 10% of the total standard cost. The remaining 90% represents labor and overhead. The kiln represents a significant fixed cost to the company. Management also considers a significant portion of its labor costs (80%) to be fixed. Potters and decorators take a long time to train and management is very careful not to lay off these important employees more than once a year. By limiting the number of layoffs management reduces the risk that these skilled employees will leave the company. As a result, labor costs act more like fixed costs. The pottery contains relatively few variable costs. Variable costs include the costs of all materials (i.e. , clay and glaze) and approximately 20% of overhead costs. The remainder of overhead costs do not vary with production levels. RPW values pottery inventory at standard cost. It tracks variances and charges them to cost of goods sold throughout the year. Table 1 lists the costs of goods sold for each of the last five semi-annual periods broken down into standard costs and total variances. The company has been actively cutting costs. Evidence of this reduction can be seen in the reduced variances and production costs over the five periods. A NEW KILN RPW is considering purchasing a new kiln. It currently operates two kilns, each of which can process $10,000 worth of pottery per firing. The company received a quote of $500,000 for the materials to build a new kiln and the space to house it. Costs to erect the kiln, build the necessary additional space, and prepare it for production are projected at an additional $250,000. A new kiln will take one year to prepare for production. RPW will have to finance the kiln with debt. The company?s current interest rate is 10% (2% over prime). RPW?s bank is reluctant to make such a large loan given RPW?s current financial position. However, the bank believes it may be able to put together a group of area banks to finance the kiln with a 13% fixed rate loan requiring annual payments over five years. RPW estimates its required rate of return at 15% for this project. The expected life of a kiln is seven years after which a major overhaul will be necessary. The kiln and additional space will be essentially worthless without the major overhaul. Assuming the kiln is fired twice a week, 50 weeks a year, with an average firing producing $10,000 worth of product (in sales dollars), the kiln would increase sales capacity $1,000,000. The company expects it could sell half of this increase in the first year with additional increases of $100,000 per year afterward. RPW estimates the cost to produce goods with a new kiln excluding depreciation at 45% of sales. Current marketing related costs average 20% of sales. RPW expects marketing expense to remain 20% on the additional sales because variable selling expenses will increase, but fixed marketing expense will be spread over more sales. Administrative and general expenses should be unaffected by adding a new kiln. 1. Evaluate the purchase of a new kiln. Use the correct format. 2. Should the company purchase a new kiln? - ? page explanation. P.S The attach document is simply for reference, in case you need it . The actual question is above.
Question 2
1. A key internal control in the sales and collection cycle is the separation of duties between cash handling and record keeping. The objective most directly associated with this control is to verify that a)Cash receipts recorded in the cash receipts journal are reasonable b)Cash receipts are properly classified c)Recorded cash receipts result from legitimate transactions d)Existing cash receipts are recorded 2. An auditor tests a company?s policy of obtaining credit approval before shipping goods to customers in support of management?s financial statement assertion of a)Valuation or allocation b)Completeness c)Existence or occurrence d)Rights and obligations 3. Which of the following internal controls would most likely reduce write-offs of un-collectible accounts receivable? a)Employees responsible for authorizing sales and charge-offs of uncollectible accounts receivable are denied access to cash. b)Shipping documents and sales invoices are matched by an employee who does not have the authority to charge off uncollectible accounts receivable. c)Employees involved in the credit-granting function are separated from the sales function d)Accounts receivable master file records are reconciled to the control account by an employee who is not involved in the credit-granting function 4. A manufacturing company received a substantial sales return in the last month of the year, but the credit memorandum for the return was not prepared until after the auditors had completed the field work. The returned merchandise was included in the physical inventory. What control should have prevented the misstatement? a)Aged trial balance of accounts receivable is prepared. b)Credit memoranda are pre-numbered and all numbers are accounted for. c)A reconciliation of the trial balance of customer?s accounts with the general ledger control is prepared periodically. d)Receiving reports are prepared for all materials received and such reports are accounted for on a regular basis. 5. The sales manger credited a salesman, Jack Smith, with sales that were actually ?house account? sales. Later Smith divided his excess sales commissions with the sales manager. What control should have prevented the misstatement? a)The summary sales entries are checked periodically by persons independent of sales functions. b)Sales orders are reviewed and approved by persons independent of the sales department. c)The internal auditor compares the sales commission statements with the cash disbursements records. d)Sales orders are pre-numbered, and all are accounted for.
Question 3
E4-5 Shady Lady sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year. Commercial: Revenues=$300,000, Direct material costs=$30,000, Direct labor costs=100,000, Overhead costs=50,000 =180,000, Operating income(loss)=$120,000. Residential: Revenues=$480,000, Direct material costs= $50,000, Direct labor costs=300,000, Overhead costs=150,000 =500,000, Operating income(loss)=($20,000). The controller, Kelly Swenson, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex to install for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Here are the three activity cost pools and related information she developed: Activity Cost Pools, Estimated Overhead, Cost Drivers. Scheduling ans travel=$90,000 =Hours of travel. Setup time = 70,000 = Numbers of setups. Supervision = 40,000 = Direct labor cost. Expected Use of Cost Drivers per Product. Commercial: Scheduling and travel = 1,000, Setup time =450. Residential: Scheduling and travel =500, Setup time = 250. Instructions: A- Compute the activity-based overhead rates for each of the three cost pools, and determine the overhead cost assigned to each product line. B- Compute the operating income for the each product line, using the activity-based overhead rates. C- What do you believe Kelly Swenson should do?
Question 4
AC305 Intermediate Accounting II Financial Analysis Project Description The Financial Analysis Project will be a thorough examination of British Airways 2008/09 Annual Report and Accounts that is included with the required text. You will be required to analyze British Airways? financial statements and notes, as well as research the company and a major competitor for comparison. Objective The objective of this project will be to apply financial and analytical knowledge in evaluating an existing company, exercise research skills in acquiring and assessing pertinent information, and demonstrate written communications skills in the preparation of a professionally executed final report. Instructions ? Review British Airways 2008/09 Annual Report and Accounts (included with the required text) ? Research British Airways? via the Internet and provide an analysis of their: o History o Product Lines o Competitors ? Research and provide a summary of recent news related to British Airways ? Provide a detailed review of accounting methods used (depreciation, inventory valuation, etc.) ? Perform a high-level analysis of changes between 2008 (restated) and 2009 for the following: o Sales, Net Income o Total Assets, Total Liabilities, Total Equity o Cash from Operating, Cash from Investing, Cash from Financing ? Perform a detailed financial analysis of British Airways and a comparison to a major competitor of your choice. o A minimum of two (2) ratios should be chosen from four (4) different categories ? The text contains the following categories of financial ratios for you to consider: ? Liquidity (Chapter 3) ? Profitability (Chapter 5) ? Activity (Chapter 5) ? Performance (Chapter 21) ? Sufficiency (Chapter 21) ? Formulate recommendations to improve future financial performance ? Include charts/tables to support your narratives ? Format your report using APA style including a cover page and work cited page ? Refer to Financial Analysis Project Grading Rubric for point distribution
Question 5
The body of the paragraph should be three pages long with references. The product that I choose was a car Once you have developed your product/service, you then need to determine how to make it available to the end user. Using your textbook and the articles from the databases in the AIU library, develop a distribution system for the product/service you chose in Week 1. Click here for the research requirements and guide for this assignment. Include the following: 1. An overview of distribution channels (see chapter 10). * Channel Levels - direct versus indirect distribution * Channel Organizations - conventional, vertical, horizontal, and multichannel marketing systems 2. Analyze your target market's needs. Explain what you know about your target market and what they want from a channel of distribution. 3. Determine which channel members you will use and explain why. * Indirect - retailer, wholesaler, dealer, manufacturer's rep, etc. * Direct - catalog, telephone, sales force, etc. 4. Discuss how many channel members you will use and explain why (intensive distribution, exclusive distribution or selective distribution). 5. Recommend a channel organization and explain why (conventional, vertical, horizontal or multichannel marketing system). Your paper MUST include a reference list. All research should be cited in the body of the paper. In-text citations and corresponding references should be included in your paper. For more information on APA, please visit the APA Lab. The paper should be written in third person; this means pronouns like "I", "we", and "you" are not appropriate. The use of direct quotes is strongly discouraged. Your assignment should contain a cover page, an abstract page, and a reference page in addition to the body. The body of the paper should be 3 pages in length starting with a brief one paragraph introduction and ending with a short conclusion. The entire submission will be 6 pages in length.,thanks a lot. Let me know in advance if you can not help. Please
