15th Edition

ISBN: 9780133428834

Author: Horngren

Publisher: PEARSON

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Textbook Question

Chapter 10, Problem 10.29E

Learning curve, incremental unit-time learning model. Assume the same information for Northern Defense as in Exercise 10-33, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours.

(An 85 % learning curve means b = −0.234465.)

1. Calculate the total variable costs of producing 2, 3, and 4 units.

Required

2. If you solved Exercise 10-33, compare your cost predictions in the two exercises for 2 and 4 units. Why are the predictions different? How should Northern Defense decide which model it should use?

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Chapter 10, Problem 10.28E

Chapter 10, Problem 10.30E

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

Chapter 10 Solutions

Cost Accounting

Ch. 10 - What two assumptions are frequently made when...Ch. 10 - Describe three alternative linear cost functions.Ch. 10 - What is the difference between a linear and a...Ch. 10 - High correlation between two variables means that...Ch. 10 - Name four approaches to estimating a cost...Ch. 10 - Describe the conference method for estimating a...Ch. 10 - Describe the account analysis method for...Ch. 10 - List the six steps in estimating a cost function...Ch. 10 - When using the high-low method, should you base...Ch. 10 - Describe three criteria for evaluating cost...

Ch. 10 - Define learning curve. Outline two models that can...Ch. 10 - Discuss four frequently encountered problems when...Ch. 10 - Prob. 10.13Q Ch. 10 - All the independent variables in a cost function...Ch. 10 - Multicollinearity exists when the dependent...Ch. 10 - Prob. 10.16E Ch. 10 - Prob. 10.17E Ch. 10 - Various cost-behavior patterns. (CPA, adapted)....Ch. 10 - Matching graphs with descriptions of cost and...Ch. 10 - Prob. 10.20E Ch. 10 - Prob. 10.21E Ch. 10 - Prob. 10.22E Ch. 10 - Prob. 10.23E Ch. 10 - Prob. 10.24E Ch. 10 - Prob. 10.25E Ch. 10 - Prob. 10.26E Ch. 10 - Prob. 10.27E Ch. 10 - Learning curve, cumulative average-time learning...Ch. 10 - Learning curve, incremental unit-time learning...Ch. 10 - Prob. 10.30E Ch. 10 - Prob. 10.31P Ch. 10 - Prob. 10.32P Ch. 10 - Prob. 10.33P Ch. 10 - Interpreting regression results. Spirit...Ch. 10 - Prob. 10.35P Ch. 10 - Prob. 10.36P Ch. 10 - Regression; choosing among models. Apollo Hospital...Ch. 10 - Multiple regression (continuation of 10-42). After...Ch. 10 - Prob. 10.39P Ch. 10 - Prob. 10.40P Ch. 10 - Interpreting regression results, matching time...Ch. 10 - Prob. 10.42P Ch. 10 - Prob. 10.43P

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Solution Summary: The author explains that variable cost is that cost which varies with increase or decrease in the level of production, but fixed cost per unit changes with change in production.

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Chapter 10 Solutions