Is Tandy's plan ethical?
Q: Williams Incorporated produces a single product, a part used in the manufacture of automobile…
A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: ark is a public accounting firm that offers two primary services, auditing, and tax-return…
A: In traditional costing, a single basis is used to allocate the entire overhead cost but in ABC, cost…
Q: SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los…
A: Activity-based Costing which is more popularly known as the ABC method is an accounting method in…
Q: Lola Metals has two decentralized divisions, Stamping and Finishing. Finishing always has purchased…
A: Impact on profit Impact on profit = (Purchase price from outside supplier - Variable cost…
Q: 1. Property taxes on the factory building. 2. Production superintendents' salaries. 3. Memory boards…
A: The direct materials are the materials used for production process directly. The direct labor…
Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a…
A: The question is related to Activity Based Costing and Traditional costing system. Under Traditional…
Q: Speed Racer in Victoria makes bicycles for people of all ages. The frames division makes and paints…
A: 3b. Should the frames division accept the order? (Yes)Reasoning:Incremental Cost: The cost to…
Q: T-Comm makes a variety of products. It is organized in two divisions, North and South. The managers…
A: Transactions that take place between multiple departments of a same organisation are referred to as…
Q: Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online…
A: Under activity based costing method, the cost is allocated to each activity based on its…
Q: Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President…
A: According to the question, we are required to compute the current cost per unit or workbenches. As…
Q: Race Cars, Inc., produces model cars made from aluminum. It operates two production departments,…
A: The objective of this question is to allocate the costs of the service departments to the production…
Q: Speed Racer in Victoria makes bicycles for people of all ages. The frames division makes and paints…
A: Yes, your analysis is on the right track, but there's a minor error in calculating the "Loss due to…
Q: a)How should the transaction price of $960,000 be allocated among the service obligations? (Do not…
A: The answer with workings are as follows:
Q: Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several…
A: Under traditional costing, overhead costs are allocated based on a single volume-based cost driver.…
Q: Lewis and Stark is a public accounting firm that offers two primary services, auditing and…
A: TRADITIONAL COSTING SYSTEMTraditional System cost analysis is Done by Product.Under Traditional…
Q: Scottsdale Manufacturing is organized into two divisions: Fabrication and Assembly. Components…
A: Transfer pricing indicates to the prices of goods and services that are interchange between…
Q: The law firm END, LLP provides legal services to a wide range of clients in the KC area. The firm…
A:
Q: Silver Company manufactures a product that is available in both a complex model and a regular model.…
A: Model Complex Regular Total Estimated production 5000 40000 (*) Direct labor hours per…
Q: Quality Industries manufactures large workbenches for industrial use. Yewell Hartnet, the Vice…
A: Unit cost for 14,100=8,299,75014,100=588.63 or 589 Thus, the unit cost for 14,100 tables is 589.
Q: Carrie Construction (CC) is a company specializing in building airport runways and major highways.…
A: Cost means different expenses incurred by the manufacturing concern to make a product available for…
Q: ABD Corporation operates sales, administrative, and printing activities from a facility in the…
A: Definitions: i) Variable Cost are the Costs that changes with change in the production and selling…
Q: Textile Crafts Company (TCC) sells craft kits and supplies to retail outlets and through online…
A: Selling cost - The expenditure incurred by the business enterprise in relation to the sales of a…
Q: Clonal Inc., a biotechnology company, developed and patented a diagnostic product called Trouver.…
A: Research and Development (R&D) expenses refer to the costs incurred by a company in conducting…
Q: How should the transaction price of $1,040,000 be allocated among the service obligations? (
A: The Standalone Selling Price is the price at which the entity would sell a good or service…
Q: D Corporation is one of the major producers of prefabricated houses in the home building industry.…
A: a) In this solution the value of the annual report presented for the Bell Division is to be…
Q: Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the…
A: 1. Receiving costs are to be considered as the value-added activities because both these are the…
Q: For each of the scenario/statement (i) to (v) above, STATE your agreement OR disagreement and…
A: Statement 1 Statement- All future costs are irrelevant for decision making Opinion- Disagree…
Q: Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement,…
A: Under profitability analysis, sometimes decision needs to be taken for dropping or adding one or…
Q: Assuming production is at full capacity, determine whether Sunland Inc., as a whole, would make a…
A: Proposal that gives a higher contribution margin, overall, is selected for investment. The fixed…
Q: er, Inc., a manufacturer of kayak ranches: Sand and Clay. Each lling costs. performance evaulation…
A: The answer is stated below:
Q: Required A Required B Assume that Fanning has decided to accept one of the two jobs. Fill in the…
A: Job costing It is the method of costing under which costs and revenue for a particular job are…
Q: The Sheridan Company is a multidivisional company. Its managers have full responsibility for profits…
A: The objective of the question is to determine whether Division A should transfer goods to Division B…
Q: Required: a. Current production levels in Manufacturing are 607,000
A: These are the accounting transactions that are having a monetary impact on the financial statement…
Q: Please give me answer
A: Explanation of Traditional Method:The traditional method of overhead allocation assigns overhead…
Q: The Sunland Company is a multidivisional company. Its managers have full responsibility for profits…
A: Transfer price is used for the internal transfer of intermediary products between different…
Q: Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement,…
A: Contribution margin helps management to determine the amount of sales revenue left after considering…
Q: Finch Construction Company is a building contractor specializing in small commercial buildings. The…
A: Using job costing has various advantages: 1. It offers precise costs for each work, which may be…
Q: Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several…
A: Overhead cost are all the indirect manufacturing costs which are not directly traceable to the…
Q: Redwood Company sells craft kits and supplies to retail outlets and through its catalog. Some of the…
A: The objective of the question is to calculate the unit cost per order of a given size (small,…
Q: Model, Inc., produces model automobiles made from metal. It operates two production departments,…
A: Identification, accumulation, and assignment of costs to certain cost objects is the process of cost…
Q: Redwood Company sells craft kits and supplies to retail outlets and through its catalog. Some of the…
A: Unit cost is the cost incurred by the company in the process of production, storage and, sales of…
Q: Simon Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The…
A: Decision making is a process or an act of deciding something suing rational thinking, intuition and…
TAC Industries, Inc. sells heavy equipment to large corporations and federal, state, and local governments. Corporate sales are the result of a competitive bidding process, where TAC competes against other companies based on selling price. Sales to the government are determined on a cost plus basis, where the selling price is determined by adding a fixed markup percentage to the total
Tandy Lane is the cost accountant for the Equipment Division of TAC Industries Inc. The division is under pressure from senior management to improve operating income. As Tandy reviewed the division's job cost sheets, she realized that she could increase the division's operating income by moving a portion of direct labor hours that had been assigned to the job cost sheets of corporate customers onto the job order cost sheets of government customers. She believed that this would create a "win-win" for the division by (1) reducing the cost of corporate jobs, and (2) increasing the cost of government jobs whose profit is based on a percentage of job cost.
Tandy submitted the idea to her division manager, who was impressed by her creative solution for improving the division's profitability.
Is Tandy's plan ethical?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but. on occasion, also sells to the Eastern Division. When it does, corporate policy states that the price must be cost plus 25 percent to ensure a "fair" return to the selling division. Western received an order from Eastern for 1,200 units. Western's planned output for the year had been 4,800 units before Eastern's order. Western's capacity is 6,000 units per year. The costs for producing those 4,800 units follow Materials Direct labor Other costs varying with output Fixed costs (do not vary with output) Totals Total $ 240,000 115,200 76,800 288,000 $ 720,000 Per Unit $ 50 24 16 60 $ 150 Required: a. If you are the manager of the Western Division, what unit cost would you ask the Eastern Division to pay? b. If you are the…Trehan, Inc. is an established manufacturer of equipment used in the railroad industry. All of Trehan’s sales prices include installation and training. The installation process does not involve changes to the features of the equipment and other companies could be hired to do the installation but most customers have Trehan do the installation. Similarly, other companies could be hired to do the training or customers can learn how to operate the equipment on their own but most have Trehan do the training for their employees. Trehan, Inc. has the following information regarding a sale to Metrarail: Metrarail enters into an agreement with Trehan Inc. on November 1, 2021. Metrarail is purchasing equipment item #201, training, and installation from Trehan for a price of $2,000,000. Metrarail selects the options to have Trehan to perform the installation and training. In addition, Metrarail will purchase a 2 year warranty for $60,000 for a total price of $2,060,000. The agreement specifies…The Robo Division, a decentralized division of GMT Industries, has been approached to submit a bid for a potential project for the RSP Company. Robo Division has been informed by RSP that they will not consider bids over $8,000,000. Robo Division purchases its materials from the Cross Division of GMT Industries. There would be no additional fixed costs for either the Robo or Cross Divisions. Information regarding this project is as follows. Cross Robo Division Division Variable Costs $1,500,000 $4,800,000 Transfer Price 3,700,000 If Robo Division submits a bid for $8,000,000, the amount of contribution margin recognized by the Robo Division and GMT Industries, respectively, is: a. $(500,000) and $(2,000,000). Ob. $3,200,000 and $(500,000). Oc. $(500,000) and $1,700,000. Od. $3,200,000 and $1,700.000.
- Gemma Company is a midsize manufacturing company with 120 employees and approximately $45 million in sales. Management has established a set of processes to purchase fixed assets, described in the following paragraphs: When a user department decides to purchase a new fixed asset, the departmental manager prepares an asset request form. When completing the form, the manager must describe the fixed asset, the advantages or efficiencies offered by the asset, and estimates of costs and benefits. The asset request form is forwarded to the director of finance. Personnel in the finance department review estimates of costs and benefits and revise these if necessary. A discounted cash flow analysis is prepared and forwarded to the vice president of operations, who reviews the asset request forms and the discounted cash flow analysis, and then interviews user department managers if he or she feels it is warranted. After this review, she selects assets to purchase until she has exhausted the…The Josh - Lester Corporation, manufacturer of tractors and other heavy farm equipment, is organized along decentralized product lines, with each manufacturing division operating as a separate profit center. Each division manager has been delegated full authority on all decisions involving the sale of that division's output both to outsiders and to other divisions of Josh - Lester. i(Click the icon to view the information on the divisions.) Begin by calculating the contribution margin from selling units to other customers. Then calculate the net benefit (cost) to the company as a whole. (Enter a net cost using parentheses or a minus sign.) Less: The company already completed an analysis to determine if it was in its best interest to have division C purchase 1,300 units from an external supplier for $125 per unit, assuming that there are no alternative uses for internal facilities of division A. (Click the icon to view the results of the analysis.) Now, assume that division A can sell…Lola Metals has two decentralized divisions, Stamping and Finishing. Finishing always has purchased certain units from Stamping at $52 per unit. Stamping plans to raise the price to $64 per unit, the price it receives from outside customers. As a result, Finishing is considering buying these units from outside suppliers for $52 per unit. Corporate policy allows division managers to choose both customers and suppliers regardless of the transfer price. Stamping's costs follow: Variable costs per unit Annual fixed costs Annual production of these units sold to Alpha Required: a. If Finishing buys from an outside supplier, the facilities that Stamping uses to produce these units will remain idle. What will be the impact on corporate profits if Lola Metals enforces a transfer price of $64 per unit between Stamping and Finishing? b. Suppose Lola Metals enforces a transfer price of $52 and insists that Stamping sell to Finishing before selling to outside customers. Stamping currently operates…
- Large, diversified companies often will sell products/components from one division to another division rather than purchase from an outside supplier. Transfer price is the term used to describe the amount one division pays to another division within the same company to purchase a component part. Therefore, if are the Boat Hull Manufacturing Company and we produce boat parts at the manufacturing facility in Virginia. The managerial accountant reported that Boat Hull Manufacturing manufactures parts to repair the container ships that import products from China. The main part that Boat Hull Manufacturing produces is the T24 part. The Port Department produces the T24 part at the Boat Hull Manufacturing facility in Virginia. The managerial accountant reported that the Deport Department could also produce the T24 part because there is excess capacity at the facility. The managerial accountant reported the current market price of the T24 part is $420 and reported the following…having trouble figuring out the Cost of Services? any advice? The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 65% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $270,000 Take Off Airlines 80,000 Sleepy Tired Hotels 210,000 Tastee Beverages 115,000 Total $675,000 During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct…Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive than the home consoles. The company only recently began producing the home model. Since the introduction of the new product, profits have been steadily declining. Management believes that the accounting system is not accurately allocating costs to products, particularly because sales of the new product have been increasing. Management has asked you to investigate the cost allocation problem. You find that manufacturing overhead is currently assigned to products based on their direct labor costs. For your investigation, you have data form last year. Manufacturing overhead was $1,432,000 based on production of 290,000 handheld consoles and 108,000 home consoles. Direct labor and direct materials costs were as follows. Handheld Home Total Direct labor…
- Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department? Multiple Choice Salary of the clock production supervisor. Depreciation on the factory building. Depreciation on clock-making equipment. All of the answers are correct.Corcoran Heavy Industries Company (CHIC) is organized into four divisions, each of which operates in a different industry. The types of customer served and the method used to distribute products differ across all four of these industries. In addition, each division must comply with its own unique set of industry regulations related to issues such as safety and recyclability of materials.Operating profit before depreciation and amortization is the measure of profit regularly used by the chief operating decision maker for evaluating the performance of each of these divisions. In addition, information for each division on capital expenditures and depreciation and amortization is routinely provided by corporate headquarters to the chief operating decision maker. A summary of the information provided to the chief operating decision maker at the end of the current year is as follows:Required I. Prepare a report for CHIC's management evaluating whether the operating segments disclosures…Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales pricea Variable costs b Fixed costs Production 50,600 $ 252 $ 108 $ 30,000,000 a For Production, this is the price to third parties. b For Packaging, this does not include the transfer price paid to Production. Packaging 25,300 $ 792 $ 300 $ 18,000,000 Suppose Production is located in Country A with a tax rate of 30 percent and Distribution in Country B with a tax rate of 10 percent. All other facts remain the same. a. Optimal transfer price b. Transfer price c. Transfer price Required: a. Current output in Production is 25,300 units. Packaging requests an additional 5,960 units to produce a special order. What transfer price would you recommend? b.…
