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Accounting

Choosing the correct accounting convention

Under the accounting framework, a company needs to follow the accounting conventions and asset valuation principles in preparing and publishing its financial declarations. According to Atrill and McLaney (2008), a company's financial position is measured and reported based on the following conventions and asset valuation: (i)

Record Treasury Stock Transactions Under the Cost Method

Original sale of the $50 par value common shares of XYZ Company was recorded as follows: Cash 290,000 Common stock 250,000 Paid in capital in excess of par value 40,000 a: Bought 300 shares of common stock as treasury shares at $62 b: Sold 80

Activity Based Costing - Masters level course

Problem/Scenario is attached. The management of Magnet Diversified Corporation is concerned about overhead cost allocations. The corporation has been using the plant-wide rate based on direct labor costs since it began operations. The CEO, Gogo McDermitt, has been hearing a lot about Activity Based Costing and is beginning

The following list identifies several potential cost drivers for a manufacturing company that makes eight products. The company uses a JIT production system so it stores finished product for a very limited time. The 8 products vary substantially in size from small (plastic casings for pens) to large (plastic casings for truck instrument panels). ? Number of setups ? Setup time ? Square feet ? Cubic feet ? Cubic feet weeks For each situation described below (activity and related resource), identify the best cost driver from the list and briefly justify your choice. 1. To produce a product, production mechanics must set up machinery. It takes about the same time to set up for a production run regardless of the product being produced. What is the best cost driver for the setup activity? 2. Instead of the situation described in number 1, what driver should the company use for the setup activity if it takes longer to set up for complex products, such as the instrument panel casings, than for simple products, such as pen casings? 3. What driver should the company use for warehouse occupancy costs (depreciation and insurance)? The company uses the warehouse to store finished product. 4. What driver should the company use for the warehouse occupancy costs if it did not use a JIT system (that is, the company maintains inventories), and upon inspection, one of the products had a thick layer of dust on it? 3-34 Cost Function for Expedia Expedia provides travel services on the Internet. 2002 was an important year for Expedia as it reported positive operating income after three years of operating losses. In the first quarter of 2001, Expedia reported an operating loss of $19 million on sales revenue of $57 million. In the first quarter of 2002, sales revenue had more than doubled to $116 million, and Expedia had operating income of $18 million. Assume that fixed costs were the same in 2002 as in 2001. 1. Compute the operating expenses for Expedia in the first quarter of 2001. In the first quarter of 2002. 2. Determine the cost function for Expedia, that is, the total fixed cost and the variable cost as a percentage of sales revenue. Use the same form as equation (1) on page 100. 3. Explain how Expedia's operating income could increase by $37 million with an increase in sales of $59 million, while it had an operating loss of $19 million on its $57 million of sales in the first quarter of 2001.

2-27, 2-29, 3-33, 3-34 Question 3-38, Mixed Cost, Choosing Cost Drivers, and High-Low and Visual-Fit Methods, on pp. 121 & 122 3-45 Please place solutions in excel format 2-27 Identifying Cost Drivers The following list identifies several potential cost drivers for a manufacturing company that makes eight products.

Over and Underabsorbed Overhead

The Alphonse Company allocates fixed overhead costs by machine hours and variable overhead costs by direct labor hours. At the beginning of the year the company expects fixed overhead costs to be $600,000 and variable costs to be $800,000. The expected machine hours are 6,000 and the expected direct labor hours are 80,000. The

Capacity/Capacity Gaps

Use the attached table in relation to demand. The doctor's office has 3 exam rooms and operates 9 hours per day. The doctor's office seeks to maintain a 10 percent capacity cushion. Calculate the required capacity and identify any capacity gaps. Low Patient Time Medium Patient Time High Patient Time 15 mins per visit 30 m

Critical Thinking Exercise on Topic of Non-Statutory Profit

Financial Accounting You work for the Sydney office of an international firm of public accountants. You have been asked to prepare a report for the partners on the topic of non-statutory (underlying) profit, as reported by many of the firm's corporate clients. The partners are concerned that these profit figures depart from

How does ABC costing differ from traditional allocation methods?

ABC Costing How does ABC costing differ from traditional allocation methods? What can an organization learn from the process of applying ABC costing? Some firms have a lot of fixed costs and few variable costs, while other firms are configured the other way around. What affect do you think the existence of a high propo

Cambridge Construction Company: Business Analyst

1. Cambridge Construction Company follows the percentage-of-completion method for reporting long-term contract revenues. The percentage of completion is based on the cost of materials shipped to the project site as a percentage of total expected materials costs. Cambridge's major debt agreement includes restrictions on net worth

Financial Ratios for Long-Term Creditors

Comparative financial statements for Weller Corporation for the fiscal year ending December 31 appear in the chart attached. The company did not issue any new common or preferred stock during the year. A total of 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rat

Nova Company high low method

Nova Company's total overhead costs at various levels of activity are presented below: Month Machine Hours Total Overhead Costs April 70,000 $198,000 May 60,000 $174,000 June 80,000 $222,000 July 90,000 $246,000 Assume that the total overhead costs above consist of utilities, supervisory salaries, and maintenance. The

Conceptual framework in accounting

Explain the conceptual framework, and discuss why it is important to the accounting profession. In your opinion, do all professional accountants use the conceptual framework in their daily work activities, and if so, how?

debt and credits

Mr. Bryant invested $50,000 cash in a new corporation. The new corporation will record this transaction with a debit to: a. paid in capital and credit to retain earnings b. cash and a credit to retained income c. retained earnings and a credit to cash d. cash and a credit to paid in capital Non operating items of the

Determining Amount of Money in Accounts Receivables

How much money do I have tied up in accounts receivables? I can determine if more people are slow to pay, or haven't been paying, and then maybe tighten my credit restrictions to customers. How much do I owe in liabilities - how big are my notes payable to the bank/credit card companies?

Company Analysis - Poway

Managerial Accounting, 3rd Edition, by Weygandt, Kieso, and Kimmel Solving Managerial Accounting Problems Using Microsoft Excel for Windows Exercise E6-10 Maggie Sharrer, a recent graduate of Rolling's accounting program, evaluated the operating performance of Poway Company's six divisions. Maggie made the foll

Activity-Based Costing; Budgeted Operating Margin

Activity-Based Costing; Budgeted Operating Margin Stanley Cycle Company produces two subassemblies, JY-63 and RX-67, used in manufacturing motorcycles. The company is currently using an absorption costing system that applies overhead based on direct-labour hours. The budget for the current year ending December 31, 20x4 is as

findings, forecasts, and recommendations

The Carlson Department Store suffered heavy damage when a hurricane struck on August 31, 2006. The store was closed for four months (September 2006 through December 2006), and Carlson is now involved in a dispute with its insurance company about the amount of lost sales during the time the store was closed. Two key issues must

Operating Loss

At the end of 2010, Nelson Inc. reports a pretax operating loss of $80,000 for both financial reporting and income tax purposes. Prior to 2010 the company had reported and paid taxes on the following pretax financial income: 2007, $37000; 2008, $50000; 2009, $54000. The company had been subject to tax rates of 20% for 2007, 25

Doggy World - Performance in Dayton

Please open the attached file (P7_18A) to see the problem, also please use the attached file (Solution_CH7) to write your solution. Doggy world operates a chain of pair store in the Midwest. The manager of each store reports to the regional manager, who, in turn, reports to the headquarters in the Milwaukee, Wisconsin. The ac

Flexible Budgets

Explain the relationship between fixed and variable costs used in a flexible budget. Discuss the differences between static and flexible budgets and how a flexible budget lends itself to a cost-volume-profit analysis.

Taxation issues in land exchanges

Melissa owns a residential lot in Spring Creek that has appreciated substantially in value. She holds the lot for investment. She is exchanging the lot with her father for a residential lot in McComb that she also will hold for investment. Please identify any relevant tax issues for Melissa.

Detailed Accounting Assignment Tutorial

5.6A During the current year, Black Corporation incurred the following expenditures which should be recorded either as operating expenses or as intangible assets: A. Expenditures were made for the training of new employees. The average employee remains with the company for five years, but is trained for a new position eve

Tax/S Corp

Sam, Joe, and Lisa are equal shareholders in Friends, inc., and S corporation. in the conditions listed below, how much income should each report from Friends, inc. under both the daily allocation and the interim closing books allocation method. There should be 6 answers. Period

Accounting: Five Tax Questions

1. What is the purpose of Code Sec. 351 in regard to transfers of corporations? 2. What tax years are available to corporations? How do the options differ from other forms of business organizations? 3. What are the differences in the treatment of capital gains and capital losses of corporations and of individuals? 4. Su

Payroll Accounting Analyzing and Journalizing Payroll Transactions

The employees of Donnelly Music Company earned a total wages $4,690 during January. The total amount is taxable under FICA, FUTA, and SUTA. The state contribution rate for the company is 3.6%. The amount withheld for federal income taxes is $685. Journalize the payments of the monthly wages, and record the payroll taxes.