Professional Documents
Culture Documents
b.
c.
d.
e.
________ Received $100,000 from the issuance of common
stock.
f.
g.
Chapter 1 Exercise 6:
6. Equipment transaction and cash flow reporting
New equipment purchased during 20x4 totaled $280,000. The 20x4
income statement disclosed equipment depreciation expense of
$41,000 and a $9,000 loss on the sale of equipment.
a.
Determine the cost and accumulated depreciation of the
equipment sold during 20X4.
b.
c.
Show how the sale of equipment would appear on a statement of
cash flows prepared by using the indirect method.
Chapter 1 Problem 3:
3. Cash flow information: Direct and indirect methods
The comparative year-end balance sheets of Sign Graphics, Inc.,
revealed the following activity in the company's current accounts:
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ACC 206 Week 2 Assignment Chapter Two and Three Problems (Ash)
Chapter 2 Exercise 3
3. Analysis of stockholders' equity
Star Corporation issued both common and preferred stock during
20X6. The stockholders' equity sections of the company's balance
sheets at the end of 20X6 and 20X5 follow.
20X6
20X5
Preferred stock, $100 par value, 10%
$580,000
$500,000
Common stock, $10 par value
2,350,000
1,750,000
Paid-in capital in excess of par value
Preferred
24,000
Common
4,620,000
3,600,000
Retained earnings
8,470,000
6,920,000
Total stockholders' equity
$16,044,000
$12,770,000
a.
Compute the number of preferred shares that were issued during
20X6.
b.
Calculate the average issue price of the common stock sold in
20X6.
c.
By what amount did the company's paid-in capital increase
during 20X6?
d.
Did Star's total legal capital increase or decrease during 20X6?
By what amount?
Chapter 2 Problem 1
1. Bond computations: Straight-line amortization
Southlake Corporation issued $900,000 of 8% bonds on March 1,
20X1. The bonds pay interest on March 1 and September 1 and
mature in 10 years. Assume the independent cases that follow.
Case AThe bonds are issued at 100.
Case BThe bonds are issued at 96.
Case CThe bonds are issued at 105.
Southlake uses the straight-line method of amortization.
Instructions:
Complete the following table:
Case A
Case B
Case C
Cash inflow on the issuance date
_______
_______
_______
Total cash outflow through maturity
_______
_______
_______
Total borrowing cost over the life of the bond issue
_______
_______
_______
Interest expense for the year ended December 31, 20X1
_______
_______
_______
Chapter 3 Exercise 1
1. Product costs and period costs
The costs that follow were extracted from the accounting records of
several different manufacturers:
1.
2.
3.
4.
5.
Monthly operating costs of pollution control equipment used in
a steel mill
6.
7.
Cost of compact discs (CDs) for newly recorded releases of
Rush, Billy Joel, and Bryan Adams
a.
Determine which of these costs are product costs and which are
period costs.
b.
For the product costs only, determine those that are easily traced
to the finished product and those that are not.
Chapter 3 Exercise 2
2. Definitions of manufacturing concepts
Interstate Manufacturing produces brass fasteners and incurred the
following costs for the year just ended:
Materials and supplies used
Brass
$75,000
Repair parts
16,000
Machine lubricants
9,000
128,000
Production supervisors
64,000
Maintenance personnel
41,000
35,000
Fixed
46,000
Sales commissions
20,000
Compute:
a.
b.
c.
d.
Chapter 3 Exercise 5
5. Schedule of cost of goods manufactured, income statement
The following information was taken from the ledger of Jefferson
Industries, Inc.:
Direct labor
$85,000
Administrative expenses
$59,000
Selling expenses
34,000
Work in. process
Sales
300,000
Jan. 1
29,000
Finished goods
Dec. 31
21,000
Jan. 1
115,000
Direct material purchases
88,000
Dec. 31
131,000
Depreciation: factory
18,000
Raw (direct) materials on hand
Indirect materials used
10,000
Jan. 1
31,000
Indirect labor
24,000
Dec. 31
40,000
Factory taxes
8,000
Factory utilities
11,000
Prepare the following:
a. A schedule of cost of goods manufactured for the year ended
December 31.
b.
Chapter 3 Problem 3
3. Manufacturing statements and cost behavior
Tampa Foundry began operations during the current year,
manufacturing various products for industrial use. One such product
is light-gauge aluminum, which the company sells for $36 per roll.
Cost information for the year just ended follows.
Per Unit
Variable Cost
Fixed Cost
Direct materials
$4.50
$
Direct labor
6.5
Factory overhead
9
50,000
Selling
70,000
Administrative
135,000
1.
Does it appear that the company pays commissions to its sales
staff? Explain.
2. What is the likely effect on the $4.50 unit cost of direct
materials if next year's production increases? Why?
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Stock Features
1. What is callable preferred stock? Why do corporations issue such
stock? Given the different features that are associated with stock
(callable, cumulative, preferred, etc.), what type of stock would you
want to buy personally and why?
Guided Response :
Review your peers posts. Respond to at least two of your classmates,
letting them know if you agree with their type of desired stock and
whether your answer would change (and why) based on:
a. Different economic conditions
b. State of the company (if the company is in a growth phase versus a
mature state).
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Carefully review the Grading Rubric for the criteria that will be used
to evaluate your journal entry.
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ACC 206 Week 3 Assignment Chapter Four and Five Problems (Ash)
a.
Compute the total cost of the work in process inventory on
January 31.
b.
Compute the cost of jobs completed during January, and present
the proper journal entry to reflect job completion.
Chapter 4 Exercise 7
7. Overhead application: Working backward
The Towson Manufacturing Corporation applies overhead on the basis
of machine hours. The following divisional information is presented
for your review:
Division A
Division B
Actual machine hours
22,500
?
Estimated machine hours
20,000
?
Overhead application rate
$4.50
$5.00
Actual overhead
$110,000
?
Estimated overhead
?
$90,000
Applied overhead
?
$86,000
Over- (under-) applied overhead
?
$6,500
Find the unknowns for each of the divisions.
Chapter 4 Problem 2
2. Computations using a job order system
$ 35,200
86,900
128,700
Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103
($14,800). During May, direct materials requisitioned from the
storeroom amounted to $96,500, and direct labor incurred totaled
$114,500. These figures are subdivided as follows:
Direct Materials
Direct Labor
Job No.
Amount
Job No.
Amount
101
$5,000
101
$7,800
115
19,500
103
20,800
116
36,200
115
42,000
Other
35,800
116
18,000
$96,500
Other
25,900
$114,500
Job no. 115 was the only job in process at the end of the month. Job
no. 101 and three "other" jobs were sold during May at a profit of
20% of cost. The "other" jobs contained material and labor charges of
$21,000 and $17,400, respectively.
General applies overhead daily at the rate of 150% of direct labor cost
as labor summaries are posted to job orders. The firm's fiscal year
ends on May 31.
Instructions:
a.
b.
c.
d.
Compute the cost of goods sold for the year ended May 31.
Chapter 5 Exercise 1
1. High-low method
The following cost data pertain to 20X6 operations of Heritage
Products:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Shipping costs
$58,200
$58,620
$60,125
$59,400
Orders shipped
120
140
175
150
The company uses the high-low method to analyze costs.
a.
b.
c.
If present cost behavior patterns continue, determine total
shipping costs for 20X7 if activity amounts to 570 orders.
Chapter 5 Exercise 2
The treasurer anticipates the following costs for the event, which will
be held at the Regency Hotel:
Room rental
$300
25
Chartered buses
500
Band
900
Each person would pay $40 to attend; 200 attendees are expected.
a. Will the event be profitable for the sorority? Show
computations.
b.
How many people must attend for the sorority to break even?
c.
Suppose the sorority encouraged its members to drive to the
hotel and did not charter the buses. Further, a planned menu change
will reduce the cost per meal by $2. If each member will still be
charged $40, compute the contribution margin per person.
Chapter 5 Exercise 3
3. Break-even and other CVP relationships
Cedars Hospital has average revenue of $180 per patient day. Variable
costs are $45 per patient day; fixed costs total $4,320,000 per year.
a.
How many patient days does the hospital need to break even?
$136,000
The unit selling price is $26. Assume that costs have been stable in
recent years.
Instructions:
a.
b.
1.
Direct costing.
2.
Absorption costing.
c.
Prepare an income statement for the year ended December 31,
20X6, by using direct costing.
d.
Prepare an income statement for the year ended December 31,
20X6, by using absorption costing.
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Issues in Costing
Hershey Company
Go the Hershey website to learn how to make Hershey chocolate.
Review the process and take a look at some of the videos. Pay
particular attention to the process steps of milling and pressing,
mixing the ingredients, and refining.
In at least one paragraph, describe the costing system that you would
recommend Hershey use to account for its cost of goods sold and
why. Include a few product costs you think would be traceable, which
costs should be allocated, and how Hershey should account and apply
the manufacturing overhead costs.
Carefully review the Grading Rubric for the criteria that will be used
to evaluate your journal entry.
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ACC 206 Week 4 Assignment Chapter Six and Seven Problems (Ash)
Chapter 6 Problem 3
3. Comprehensive budgeting
The balance sheet of Watson Company as of December 31, 20X1,
follows.
Chapter 7 Exercise 3
3. Variances for direct materials and direct labor
Banner Company manufactures flags of various countries. Each flag
has a standard of eight square feet of fabric and three hours of direct
labor time. Information about recent production activity follows.
Chapter 7 Exercise 5
5. Overhead variances
Nova Manufacturing applies factory overhead to products on the basis
of direct labor hours. At the beginning of the current year, the
company's accountant made the following estimates for the
forthcoming period:
b.
c.
Chapter 7 Problem 1
1. P26-A1 Basic flexible budgeting (L.O. 2)
Centron, Inc., has the following budgeted production costs:
Direct materials
$0.40 per unit
Direct labor
1.80 per unit
Variable factory overhead
2.20 per unit
Fixed factory overhead
Supervision
$24,000
Maintenance
18,000
Other
12,000
The company normally manufactures between 20,000 and 25,000
units each quarter. Should output exceed 25,000 units, maintenance
and other fixed costs are expected to increase by $6,000 and $4,500,
respectively.
During the recent quarter ended March 31, Centron produced 25,500
units and incurred the following costs:
Direct Materials
$10,710
Direct Labor
47,175
Variable factory overhead
51,940
Fixed factory overhead
Supervision
24,500
Maintenance
23,700
Other
16,800
Total production costs
$174,825
Instructions:
a.
Prepare a flexible budget for 20,000, 22,500, and 25,000 units of
activity.
Guided Response:
Review your peers posts and respond to at least two of your
classmates. Describe how job order costing, process costing, or
activity based costing could resolve or exacerbate the issues your
classmates discussed in their initial posts.
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Chapter 8 Problem 1:
1. Straightforward net-present-value and payback computations
STL Entertainment is considering the acquisition of a sight-seeing
boat for summer tours along the Mississippi River. The following
information is available:
Cost of boat
$500,000
Service life
10 summer seasons
Disposal value at the end of 10 seasons
$100,000
Capacity per trip
300 passengers
Fixed operating costs per season (including straight-line depreciation)
$160,000
Variable operating costs per trip
$1,000
Ticket price
$5 per passenger
Final Paper
As the controller of ABC Company, the CEO has come to you with a
new opportunity that hes been working on. The CEO would like to
use the some of the shingle scrap materials to build cedar dollhouses.
While this new product line would add additional raw materials and
be more time-intensive to manufacture than the cedar shingles, this
new product line will be able to leverage ABCs existing
manufacturing facilities as well as the current staff. Although this
product line will require added expenses, it will provide additional
revenue and gross profit to help reach the growth targets. The CEO is
relying on you to help decide how this project can be afforded
Provide details about the estimated product costs, what is needed to
break even on the project, and what level of return this product is
expected to provide.
In order to help out the CEO, you need to prepare a six- to eight-page
report that will contain the following information (including exhibits,
but excluding your references and title page). Refer to the
accompanying Excel spreadsheet (available through your online
course) for some specific cost and profit information to complete the
calculations.
a. You need to complete a cash flow statement for the company using
the direct method.
b. Once youve completed the cash flow statement, answer the
following questions:
i. What does this statement of cash flow tell you about the sources and
uses of the company?
ii. Is there anything ABC Company can do to improve the cash flow?
iii. Can this project be financed with current cash flow from the
company? Why or why not?
iv. If the company needs additional financing beyond what ABC
Company can provide internally (either now or sometime throughout
the life of the project), how would you suggest the company obtain
the additional financing, equity or corporate debt, and why?
d. Assuming the same sales mix of these two products, what are the
contribution margins and break-even points by product?
IV. Potential investments to accelerate profit: ABC company has the
option to purchase additional equipment that will cost about $42,000,
and this new equipment will produce the following savings in factory
overhead costs over the next five years:
Year 1, $15,000
Year 2, $13,000
Year 3, $10,000
Year 4, $10,000
Year 5, $6,000
a. Title of paper
b.
Students name
c.
d.
Instructors name
e.
Date submitted
5.
Carefully review the Grading Rubric for the criteria that will be used
to evaluate your assignment.c
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Guided Response:
Review your peers posts. Respond to at least two of your peers
describing how these issues can be overcome by the tools discussed in
this chapter and why (i.e., looking at IRR, NPV, cash flow).
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Guided Response:
Review your peers posts. Respond to at least two of your peers
outlining the responsibilities that you feel are the most important to
management accountants.
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