Test #4 - Problems Portion
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&) 23 40+ 90307 \A+24.6- NA=$4A10 ©) Managerial Accounting 4B Name\)Q\t\/\Q‘ M&m& Test #4 (Chapters 12-14) Part 2. Problems. There are six problems. Each one is worth the score indicated next to the problem number. Show all work for complete credit. You may attach extra pages if you so desire. Please be NEAT when writing your answers. I cannot grade illegible answers. (50 points possible — which includes 10 bonus points possible) 1. (10 points) Fothergill Company makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials
..........
ccceeeevveieiineeeecneeennee, $23.40 Direct 1abor
......
ooveeeeeeiiiieeeeeee 22.30 Variable manufacturing overhead
..............
1.40 Fixed manufacturing overhead
..................
24.60 Unit product COSt
........
covvevveeeeeeereeeeneeennne. $71.70 An outside supplier has offered to sell the company all of these parts it needs for $59.10 a unit. If the company accepts this offer, the facilitics now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $390,000 per year. If the part were purchased from the outside supplier, all of the direct labor, direct materials and variable manufacturing overhead costs of the part would be avoided. However, $21.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. Required: a. How much of the unit product cost of $71.70 is relevant in the decision of whether to make or buy the part? b. What is the net total dollar advantage or (disadvantage) of purchasing the part rather than making it? (remember that the facility could be used to produce a different product if we purchased the parts from the outside). c. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 40,000 units required cach year? Q) 2BILLNC ¥ 400D SADS QX e mLoos 2588009 46,000 %23 4= o & 0Q 0 2=3%3.000 - D8 T — w,o&: t:z < LROO \ OO0 %\@ - bt ‘QQ Q 10 ‘000") 3= . \1,0\0 PO s\% LS ok \-@p.\ 2,312000 d\sodm“\cwx‘ 2,333 000 - 2L HOC™
2. (10 points) (Ignore income taxes in this problem.) Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo which will require the purchase of new mixing machinery. The machinery will cost $310,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $35,000 at the end of 10 years. The machinery will also need a $25,000 overhaul at the end of year 6. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $80,000 per year for each of the 10 years. Axillar's discount rate is 12%. Required: a. What is the net present value of this investment opportunity? b. Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo? Description Cash Flow | PV/PVA Factor | PV of Cash Flow Purchase Machine (2\0 ,000\ | (30 @OCS\ Working Capital (40,000 l ( 40,0600) Overhaul — yr. 6 (25.003) 0.S0l QoL LS Annual Cash Inflows | $0,0Q0) S.00502 45) O\ Salvage Value 35,000 0.2 220 L, 200 Release of Working Capital 40,000 0-3220 \2.3¢0 Net Present Value W 3,500 ) Axillor Sncdd an oXeod with Moe nees Condiitotng Sromgao. 3. (6 points) (Ignore income taxes in this problem.) Jimmy Chitwood, Inc. is considering a project that is estimated to generate annual cash inflows of $35,000. The equipment required for the project would cost $266,210. The project would last 15 years. What is the project’s internal rate of return (round to the nearest percent.) 20LL,2\6 23,000 = M. LoL > \O/. *\’&d M 0% . & Qfl\\x\\\\ o QQ\'\QI‘
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[The following information applies to the questions displayed below.]
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$2,030
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310
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$2,030
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$2,040
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Depreciation expense
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Allocated costs (uncontrollable)
$2,040
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17,000
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$2,035
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Income Statement
For the Year Ended Dec. 31, 20xx
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189,000
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780
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690
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Other expenses
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Income Statement
For the Year Ended Dec. 31, 20xx
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Pretax income
?
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?
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$2,030
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41,570
Sales
188,000
Research and development (uncontrollable)
310
Depreciation expense
17,000
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?
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Selling expense
1,260
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790
Administrative expense
700
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?
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310
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Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values.
Pretax income
?
Gross profit
?
Allocated costs (uncontrollable)
$2,030
Labor expense
41,590
Sales
189,000
Research and development (uncontrollable)
320
Depreciation expense
18,000
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?
Cost of goods sold
119,070
Selling expense
1,250
Total expenses
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Marketing costs (uncontrollable)
780
Administrative expense
700
Income tax expense (21% of pretax income)
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310
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Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values.
Pretax income
?
Gross profit
?
Allocated costs (uncontrollable)
$2,040
Labor expense
41,580
Sales
188,000
Research and development (uncontrollable)
315
Depreciation expense
16,000
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Cost of goods sold
118,440
Selling expense
1,260
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780
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Other expenses
310
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Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values.
Pretax income
?
Gross profit
?
Allocated costs (uncontrollable)
$2,040
Labor expense
41,580
Sales
189,000
Research and development (uncontrollable)
310
Depreciation expense
16,000
Net income/(loss)
?
Cost of goods sold
119,070
Selling expense
1,250
Total expenses
?
Marketing costs (uncontrollable)
790
Administrative expense
700
Income tax expense (21% of pretax income)
?
Other expenses
330
A. Prepare the income statement using the above information. Round your answers to the nearest dollar.
BDS Enterprises
Income Statement
For the Year Ended Dec. 31, 20xx
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Please answer D,E,F and G
Problem 14-15 (Algo) Comprehensive Ratio Analysis [LO14-2, LO14-3, LO14-4, LO14-5, LO14-6]
Skip to question
[The following information applies to the questions displayed below.]
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the company’s financial statements, including comparing Lydex’s performance to its major competitors. The company’s financial statements for the last two years are as follows:
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This Year
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Assets
Current assets:
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$ 1,100,000
Marketable securities
0
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1,400,000
Inventory
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2,000,000
Prepaid expenses
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4,980,000
Plant and equipment, net
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8,950,000
Total assets
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$ 13,930,000
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- Give typing answer with explanation and conclusion You are given the following information on a Company - ROAop = 10%, tc = 30% and rd = 5% if D/EV = 30%, what is ROE = ? Question 21 options: 8.05% 8.50% 10.00% 15.00% the answer is 8.5% but i dont understand how to get there can someone show me the work and break it downarrow_forwardcan u make like this in excel, and correct this two highlighted digit should have the same result COST AD (annual) F&F = 119,000 12760 M&E = 112,120 13390arrow_forwardPlease answer A,B,C Required information Problem 14-15 (Algo) Comprehensive Ratio Analysis [LO14-2, LO14-3, LO14-4, LO14-5, LO14-6] Skip to question [The following information applies to the questions displayed below.] You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the company’s financial statements, including comparing Lydex’s performance to its major competitors. The company’s financial statements for the last two years are as follows: Lydex CompanyComparative Balance Sheet This Year Last Year Assets Current assets: Cash $ 860,000 $ 1,100,000 Marketable securities 0 300,000 Accounts receivable, net 2,300,000 1,400,000 Inventory 3,500,000 2,000,000 Prepaid expenses 240,000 180,000 Total current assets 6,900,000 4,980,000 Plant and equipment, net 9,320,000 8,950,000 Total assets $ 16,220,000 $ 13,930,000 Liabilities and…arrow_forward
- Social Media, Inc. (SMI) has two services for users. To ot!, which connects tuters with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 13,100 20,100 33,200 Revenues $ 1,800,000 $ 1,760,000 $ 3,560,000 Engineering hours 9,300 7,300 16,600 Engineering cost $ 687,750 $ 806,250 $ 1,494,000 Administrative costs $ 1,195,200 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of users to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?arrow_forwardSocial Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TIX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! Tix Total Users 15,500 22,100 37,600 Revenues $2,000,000 $2,080,000 $4,080,000 Engineering hours 10,4000 8,400 18,800 Engineering cost $ 881,000 $ 999,000 $1,880,000 Administrative costs…arrow_forwardthe answer A)is 34,500,000. please explain how to get this answer without the use of excelarrow_forward
- Work the problem out by hand on a piece of paper so that you know what the answers should be. All dollar amounts (except EPS) should end in ",000" The schedule and statment in your output should compute mathematically from TOP to Bottom, so check and make sure that's the case Math Example: If A - B = C, then A - C = B and A = B + C Prepare an output section that produces the following items: 1) "COGS Schedule", 2) "Income Statement", and 3) "Retained Earning Statement". The reporting period is for the calendar year of 2023. The output items should be placed on a separate 'sheet' (the heading "... OUTPUT SECTION ..." should be centered over all columns to which it relates: [A1..G1]). Naming of the output 'sheet' should be "OUTPUT". No number (dollar amount, shares, or percentage) or company name should be typed (hard coded) directly into any cell in the output section, as this would prevent your output from being correct when the input is changed. Instead, the output section must…arrow_forwardSocial Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 13,700 20,600 34,300 Revenues $ 1,850,000 $ 1,840,000 $ 3,690,000 Engineering hours 9,575 7,575 17,150 Engineering cost $ 734,000 $ 852,375 $ 1,586,375 Administrative costs $ 1,269,100 The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! TiX Total Engineering hours 9,575 7,575 17,150 Users 13,700 20,600 34,300 Engineering-hour related administrative cost $ 171,500 User-related…arrow_forwardneed solving, answer is given 1. [90,000] 2. [7] 3. [72,000] 4. [18,000] 5. [(56,000)] 6. [(42,000)] 7.PRODUCTIONarrow_forward
- PLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULASPLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULASPLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULASPLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULAS 10.-The company El Invierno, S.A., presents the following information for you to calculate its accounting and cash profit: Total Sales................................. $ 1'345,670.20 Cost of Sales.............................. $ 702,875.95 Operating Expenses: Wages and salaries.......... $149,516.40 Rent................................. 69,250.50 Commissions.................... 320,000.00 Depreciation.............. 114,129.32 $ 652,896.22 Sales, purchases and expenses were made in cash. Note:In the image, this is the original exercise, it is in Spanish, but it is easy to understand. Very important Note:It is necessary that you make a solution approach…arrow_forwardPLEASE SHOW YOUR SOLUTIONS PLEASE. THANK YOU! 2. An executive receives an annual salary of P600,000 and his secretary a salary of P180,000. A certain task can be performed by the executive working alone in four hours. If he delegates the task to his secretary it will require him 30 minutes to explain the work and another 45 minutes to check the finished work. Due to the unfamiliarity of the secretary to do the task, it takes her an additional time of 6 hours after being instructed. considering salary cost only, determine the cost of performing the task by each method, if the secretary works P2,400 hours a year and the executive 3,000 hours a year.arrow_forwardGood afternoon, I emailed you yesterday inquiring about missing solution on problem 14-1A in Financial and Managerial accounting book. I purchased the solution version and while working on my homework I realized that the second part on the problem I am working on is missing the solution. I am attaching complete instructions and the part where I am stuck. Would you, please, help me figure it out? Thank youarrow_forward
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