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Pricing to Maximize Profits Using Cost Accounting

The Widger Company sells one product with a variable cost of $5 per unit. The company is unsure what price to charge in order to maximize profits. The price charged will also affect the demand. If fixed costs are $100,000 and the following chart represents the demand at various prices, what price should be charged in order to ma

Contribution Margin for AJ Company

AJ Company is trying to determine the optimal price to charge for its PUNCH model. AJ has fixed costs of $50,000 and the PUNCH has variable costs of $12.00 per unit. AJ has determined that the following relationships exist between price and demand: Price Demand $20 6,875 $19 8,800 $18 10,000 $17 11,000 What is the contribution m

Basis of accounting

Which basis of accounting does most companies use, cash or accrual? Why? Which method is approved by GAAP? Why? What are the positives and negatives of each? Is it legal for an organization to keep two sets of accounting records; one for tax and one for book? Why or why not?

Accounting: taxable income, standard deductions, taxes and more

1. A single taxpayer provided the following information for 2007: Salary $40,000 Interest on local government bonds $4,000 (qualifies as a tax exclusion) Allowable itemized deductions $8,000 What is taxable income? a. $28,600 b. $31,600 c. $32,000 d. $32,600 2. Lewis, who is single, is claimed as a dep

Variable Overhead Variances

Exercise 10-4 Variable Overhead Variances [LO4] Order Up, Inc., provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Order Up, which pulls the item from storage, pack

Important information about Material Variances

Exercise 10-2 Material Variances [LO2] Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 4,000 chopping boards using 11,000 board feet of hardwood. The hardwo

Legal Problems and Unpaid Creditors

Frank Pierce is the sole stockholder and director of Ajax, Inc., a construction company in Anytown, U.S.A. Times are getting tough, and Frank is worried about his finances. He is mostly worried about keeping up the mortgage payments on his relatively new home that he purchased during the housing boom. The house, which is titl

Stock Redemption and Non-Liquidating Distributions

1. Describe the mechanics of a stock redemption. 2. A stock redemption may be viewed either as a distribution or as a sale/exchange. From a tax perspective, which view is more advantageous for the shareholder and why? 3. List the four circumstances when redemption is tax-advantaged. 4. What is a stock dividend? 5. What

Budgeted Cash Collections

On August 31, Blake & Sons had an inventory of 50 units of finished goods, and it had accounts receivable totaling $75,000. Sales, in units, have been budgeted as follows for the next four months: September = 300 October = 400 Novemeber = 450 December = 500 Blake has a policy that 20% of the following month's sales sho

Advanced Federal Taxation

Monroe, a 1/3 partner with a basis in the interest of $60,000 at the beginning of the year, received a guaranteed payment in the current year of $40,000. Partnership income before consideration of the guaranteed payment was $25,000. Monroe must report a $5,000 ordinary loss from partnership operations, and the $40,000 guaranteed

What is Management Accounting?

Costs can be classified into two categories, fixed and variable costs. These costs behave differently based on the level of sales volumes. Suppose we are running a restaurant and have identified certain costs along with the number of annual units sold of 1000. Item: Raw Materials (cost of hamburgers) Total Annual Cost: 650

Accounting Case Study Questions

Any 7 of the following 10 questions may be answered: 1. If a digging dog found some deadly dirt, what government agency would you contact about it? Why would you contact the agency you have named? 2. Michael and Lisa were married in 1980 and immediately moved into a house that was titled in Michael's name only. In 1982, Lisa

Managerial Acct

Tatman Corp. uses an activity-based costing system with the following 3 activity cost pools: Activity Cost Pool Total Activity Fabrication...................10,000 machine-hours Order processing..............800 orders Other.........................Not applicable The Other activity cost pool is used to accumulat

Managerial Accounting (ABC Company)

ABC Company's total overhead costs at various levels of activity are presented below: Machine Hours Total Overhead Costs March 60,000 $216,800 April 50,000 $194,000 May 70,000 $239,600 June 80,000 $262,400 Assume that the overhead costs above consist of utilities, supervisory salaries, an

Fritzell Co. Current Income Taxes and Deferred Tax Asset

Frizell Co. at the end of 2007, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 750,000 Estimated litigation expense 1,000,000 Extra depreciation for taxes (1,500,000) Taxable income $ 250,000 The estimated litigation e

Current Income Tax Payable

Frizell Co. at the end of 2007, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 750,000 Estimated litigation expense 1,000,000 Extra depreciation for taxes (1,500,000) Taxable income $ 250,000 The estimated litigation expens

Schedule of Expected Cash Collections

See attached. Exercise 9-1 Schedule of Expected Cash Collections [LO2] Peak sales for Midwest Products, a wholesale distributor of leaf rakes, occur in August. The company's sales budget for the third quarter showing these peak sales is given below: July August September Total Budgeted sales (all on account) $ 600,000 $

System Implementation

(a) For each of the observed reactions, indicate whether they are functional or dysfunctional behavioral responses. Explain your answer in each case. (b) Assuming that one or more of the preceding were dysfunctional, recommend procedures the company could employ to eliminate the dysfunctional behavior and to prevent its recu

Solving a Systems Problem

How might a project accounting system assign overhead to individual projects? Does the assignment of overhead to individual projects enhance management control?

System Development

Design a system that would collect data on a daily basis at the central office regarding the need for food supplies by the individual stores. Your system should incorporate a database that keeps track of the sales and inventories for food supplies at individual stores. Your answer should be expressed in general terms. It is not

The Production Business Process

(a) What factors have contributed to the problem Yard Company is experiencing in implementing numerically controlled machines in it production operations? (b) Suggest a solution to Yard Company's problem. SEE ATTACHED SCENARIO


The Poster Company intends to redesign its purchasing system from the point in time when an item needs to be ordered until payment is made. The system should be designed to ensure that all the proper controls are incorporated into the system. (a) Identify the internally and externally generated documents that would be require

Calculate Check digits using Modulus 11

This question requires using the check-digit formula presented in this chapter. (a) Calculate check digits for teh following hypothetical account numbers: 4388, 5100, and 9106. (b) Verify the following codes (which include a check digit): 10307, 50008, and 22222. SEE ATTACHED EXPLANATION OF CHECK DIGIT.

The Electrocomp Corporation - Optimal Profit

The Electrocomp Corporation manufactures two electrical products: air conditioners and large fans. The assembly process for each is similar in that both require a certain amount of wiring and drilling. Each air conditioner takes 3 hours of wiring and 2 hours of drilling. Each fan must go through 2 hours of wiring and 1 hour of

EOQ Model: Ken Ramsing

Ken Ramsing has been in the lumber business for most of his life. Ken's biggest competitor is Pacific Woods. Through many years of experience, Ken knows that the ordering cost for an order of plywood is $25 and that the carrying cost is 25% of the unit cost. Both Ken and Pacific Woods receive plywood in loads that cost $100 per

Sample Taxation Questions

1. Which of the following entity types cannot NOT become a 501(c)(3)? a. A Delaware LLC b. A Partnership c. An Illinois Corporation d. A Charitable Trust 2. Which of the following is most likely true about an Unincorporated Association that was a 501(c)(3)? a. It was formed by filing its Charter with the applicable S

Production and Purchases Budget

Part I. Budgeting Use the following problems in answering A. and B below: Durham Electric Corporation manufactures two different types of coils used in electric motors. In the fall of 2008 Jessica Martin, the controller, compiled the following data: Use of raw material: Amount Used per Unit Raw Material Lig

Cash flows spreadsheet (indirect method)

Problem 12-5AA: Cash flows spreadsheet (indirect method) L.O. P1, P2, P3, P4 Golden Corp., a merchandiser, recently completed its 2008 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debit

Discretionary Fiscal Policy and Political Biases

Concerns over the recognition, administrative, and operational lags as well as the concern that discretionary fiscal policy is subject to political biases have caused some economists to believe Congress and the president should do nothing in the face of a recession. Even if they are correct, is it realistic to expect the public