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Chapter 4 Post-Class Homework
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CHAPTER 4 - Cost-Volume-Profit Analysis
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Banner Food Processing prepares ready-to-eat meals. At Banner, the cost of prepared meals has a fixed component and a
variable component related to the number of meals prepared. The cost and number of meals prepared at the kitchen for
the past seven months are provided below.
Month
Number of Prepared Meals Cost of Meals
June
501
$2,098
July
594
$2,450
August
228
$1,063
September
761
$3,083
October
664
$2,716
November
722
$2,935
December
1,085
$4,312
Do not enter dollar signs or commas in the input boxes.
Round all answers to 2 decimal places.
Using the high-low method, What would be the expected cost of meals prepared for a month in which 540 meals are
prepared?
Variable Cost per Unit: $
Fixed Cost: $
Total Cost Incurred: $
Explanation
a) Find the month with the highest number of units and month with the lowest number of units. Divide the difference in
costs by the difference in units.
Variable Cost per Unit = ($4,312 - $1,063) / (1,085 - 228) = $3.79
b) Fixed Cost = $4,312 - ($3.79 x 1,085) = $199.85
c) Total Cost Incurred = $3.79 x 540 + $199.85 = $2,246.45
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Concord Industries has equivalent units of 7100 for materials and for conversion costs. Total manufacturing costs are $124370. Total
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O $17.52.
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Entries for notes payable
Bennett Enterprises issues a $660,000, 45-day, 9%, note to Spectrum Industries for merchandise inventory.
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Lower-of-Cost-or-Market Method
On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10.
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Salma wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $27 that pays 3.7% interest, compounded
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Capital and Revenue Expenditures
On August 5, GTS Co. paid $3,280 to repair the transmission on one of its delivery vans. In addition, GTS paid $57 to install a GPS system in its van.
Journalize the entries for the transmission. If an amount box does not require an entry, leave it blank.
August 5
Journalize the entry for GPS system expenditures. If an amount box does not require an entry, leave it blank.
August 5
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Suppose you found a CD that pays 4.9% interest compounded monthly for 6 years.
If you deposit $10,000 now, how much will you have in the account in 6 years? (Round to the nearest cent.)
What was the interest earned? (Round to the nearest cent.)
Now suppose that you would like to have $20,000 in the account in 6 years. How much would you need to
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Estimating Allowance for Doubtful Accounts
Evers Industries has a past history of uncollectible accounts, as follows.
Age Class
Percent Uncollectible
Not past due
1 %
1-30 days past due
31-60 days past due
12
61-90 days past due
30
Over 90 days past due
75
Estimate the allowance for doubtful accounts, based on the aging of receivables information provided in the chart below.
Evers Industries
Estimate of Allowance for Doubtful Accounts
Not Past Days Past Days Past Days Past
Days Past
Due 1-30 Due 31-60 Due 61-90 Due Over 90
Balance
Due
Total receivables
1,124,500 607,400 233,000
121,600
96,500
66,000
1%
3%
12%
30%
75%
Percentage uncollectible
Allowance for doubtful accounts
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A Company uses a job order costing system and allocates its manufacturing overhead costs based on
direct labor costs. The Company's production costs for the year were: direct labor, $80,000; direct
:materials, $40,000; and factory overhead applied $20,000. The predetermined overhead rate was
4%
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Proceeds from Notes Payable
On January 26, Bella Co. borrowed cash from Conrad Bank by issuing a 30-day note with a face amount of $48,000. Assume a 360-day year.
a. Determine the proceeds of the note, assuming the note carries an interest rate of 6%.
b. Determine the proceeds of the note, assuming the note is discounted at 6%.
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Required information
[The following information applies to the questions displayed below.]
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a
useful life of five years and no salvage value. The company's discount rate
income in each of five years as follows:
$ 2,735,000
1,000,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-
of-pocket costs
Depreciation
Total fixed expenses
1,735,000
$ 735,000
595,000
1,330,000
Net operating income
$ 405,000
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table.
14. Assume a postaudit showed that all estimates including total sales) were exactly correct except for the variable expense ratio,
which actually turned out to be 45%. What was the project's actual payback period? (Round your answer to 2 decimal places.)
Payback period
years
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ESTIMATED PROFIT AND LOSS ACCOUNT (INCOME STATEMENT) FOR KARACHI
TRADERS LTD
$
Revenue (5000 units @ $3.00)
15000
Cost of goods sold (@ $1.00 per unit)
Gross profit
5000
10000
Overhead expenses
4000
Operating profit (profit before tax and interest)
6000
Finance costs (interest)
2000
Profit before tax
4000
Corporation tax @ 20%
Profit for the year
800
3200
Dividends paid
1200
Retained profit
2000
Profit and loss account for Karachi Traders Ltd for the year ending 31 December 2014
20 marks, 40 minutes
1. By amending this profit and loss account (income statement), calculate the new
level of retained profits if the following changes actually occurred:
• each unit was sold…
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Exercise 17-42 (Algo) Taguchi Quality Loss Function (QLF) Analysis [LO 17-4]
Flextronchip, an OEM manufacturer, has a fifth-generation chip for cell phones, with chip specification of 0.2 ± 0.0002 mm for the
distance between two adjacent pins. The loss due to a defective chip has been estimated as $20.
Required:
1. Compute the value of k, the cost coefficient in the Taguchi quality loss function (QLF), L(x) = (x-7)².
2. Assume that the quality control manager takes a sample of 100 chips from the production process. The results are as follows:
Measurement
Frequency
3
0.1996
0.1997
5
0.1998
15
0.1999
14
0.2000
35
0.2001
14
0.2002
6
0.2003
5
0.2004
3
a. & b. Use the appropriate Taguchi quality loss function, L(x), to calculate the estimated quality loss for each of the observed
measurements.…
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Ehapter 22 Mini Case
When math is required, to receive full credit- SHOW YOUR MATH, otherwise you will not receive
credit (even if the answer is correct). You must submit your answer on a word document or
spreadsheet. Hand written responses are not acceptable and will not receive credit. Submit on
Blackboard, if submitted via email or another source you will not receive credit. If submitted late
(after the due date and time) you will not receive credit.
Sweet Suites, Inc. operates a hotel property that has 300 rooms. On average, 80% of Sweet Suites, Inc.,
rooms are occupied on weekday, and 40% are occupied during the weekend. The managerhas asked
you to developa budget forthe housekeeping and restaurant staff forweekdays and weekends. You
have determined that the housekeeping staff requires 30 minutes…
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Payroll tax entrles
Chart of AccountsStarting Question Journal
Instructions
Instructions
According to a summary of the payroll of Guthrie Co., $720,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $60,000 was subject to state and
federal unemployment taxes.
Required:
A. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4 %, federal unemployment, 0.6%.
B. On December 31, journalize the entry to record the accrual of payroll taxes. Refer to the Chart of Accounts for exact wording of account tides.
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Chapters 10 and 11 HOMEWORK X
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Bennett Enterprises issues a $396,000, 30-day, 9%, note to Spectrum Industries for merchandise inventory.
Assume a 360-day year. If required, round your answers to the nearest dollar.If an amount box does not require an entry, leave it blank.
a. Journalize Bennett Enterprises' entries to record:
1. the issuance of the note.
2. the payment of the note at maturity.
1.
2.
>
b. Journalize Spectrum Industries' entries to record:
1. the receipt of the note.
2. the receipt of the payment of the note at maturity.
1.
2.
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Suppose you are paid $3,000 per month and your employer's 401(k) matches your contributions by 10% up to a
maximum of 15% of your pay. Assuming you max-out your retirement savings and you work for 25 years, how
much will the 401(k) be worth when you retire (if you can get an APR of 8% during your work years)? If you are
taxed at a rate of 27%, then how much will you have when you retire?
Round all answers to 2 decimal places.
Before taxes retirement amount $
Number
After taxes retirement amount $
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