Master Business with Fun Quizzes & Brain Teasers!
Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit:Materials $ 36.00 Labor 14.00 Variable overhead 4.00 Fixed overhead ($1,800,000 per year; 100,000 units per year) 18.00 Total $ 72.00 Simpson Company has approached Andreasen with an offer to buy 7,500 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 7,500 additional units without affecting its current production of 100,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one-time rental of packaging equipment for $20,000.Required:a. Prepare a schedule to show the impact of filling the Simpson order on Andreasens profits for the year. (Enter your answers in thousands (i.e., 5,400,000 should be entered as 5,400). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status quo 100,000 units Alternative 107,500 units Difference Higher or lowerSales Revenue ? ? ? ?Less: variable cost ? ? ? ?Materials ? ? ? ?Labor ? ? ? ?Variable Overhead ? ? ? ?Total variable cost ? ? ? ?Contribution margin ? ? ? ?Less; fixed costs ? ? ? ?Operating profit or loss ? ? ? ?b. Do you agree with the decision to accept the special order. Yes or no?c. Considering only profit, determine the minimum quantity of thermostats in the special order that would make it profitable, assuming capacity is available.... Quanitity of Themostats #___?____ units
Beasley Industries' sales are expected to increase from $5 million in 2019 to $6 million in 2020, or by 20%. Its assets totaled $3 million at the end of 2019. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $740,000, consisting of $160,000 of accounts payable, $450,000 of notes payable, and $130,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 50%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Round your answer to the nearest dollar.$ The AFN equation assumes that ratios remain constant. However, firms are not always operating at full capacity so adjustments need to be made to the existing asset forecast. Excess capacity adjustments are changes made to the existing asset forecast because the firm is not operating at full capacity. For example, a firm may not be at full capacity with respect to its fixed assets. First, the firm's management must find out the firm's full capacity sales as follows:Next, management would calculate the firm's target fixed assets ratio as follows:Finally, management would use the target fixed assets ratio with the projected sales to calculate the firm's required level of fixed assets as follows:Required level of fixed assets = (Target fixed assets/Sales) Projected salesQuantitative Problem 2: Mitchell Manufacturing Company has $1,600,000,000 in sales and $310,000,000 in fixed assets. Currently, the company's fixed assets are operating at 70% of capacity.A. What level of sales could Mitchell have obtained if it had been operating at full capacity? Do not round intermediate calculations. Round your answer to the nearest dollar.$ B. What is Mitchell's Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to two decimal places.%C. If Mitchell's sales increase by 60%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to the nearest dollar.$
Money, Inc., has no debt outstanding and a total market value of $200,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12% higher. If there is a recession, then EBIT will be 25% lower. Money is considering a $65,000 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 10,000 shares outstanding. Ignore taxes for this problem.a-1. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows (the amounts are rounded to thousands of dollars to simplify):Account Titles Debit CreditCash $ 6Accounts Receivable 2Supplies 2Equipment 10Accumulated Depreciation $3Software 8Accumulated Amortization 3Accounts Payable 6Notes Payable (short-term) 0Salaries and Wages Payable 0Interest Payable 0Income Taxes Payable 0Deferred Revenue 0Common Stock 13Retained Earnings 3Service Revenue 0Depreciation Expense 0Amortization Expense 0Salaries and Wages Expense 0Supplies Expense 0Interest Expense 0Income Tax Expense 0Totals $28 $28Transactions during 2018 (summarized in thousands of dollars) follow:Borrowed $13 cash on July 1, 2018, signing a six-month note payable.Purchased equipment for $16 cash on July 2, 2018.Issued additional shares of common stock for $6 on July 3.Purchased software on July 4, $2 cash.Purchased supplies on July 5 on account for future use, $8.Recorded revenues on December 6 of $47, including $9 on credit and $38 received in cash.Recognized salaries and wages expense on December 7 of $21; paid in cash.Collected accounts receivable on December 8, $8.Paid accounts payable on December 9, $9.Received a $2 cash deposit on December 10 from a hospital for a contract to start January 5, 2019. Data for adjusting journal entries on December 31:Amortization for 2018, $3.Supplies of $2 were counted on December 31, 2018.Depreciation for 2018, $3.Accrued interest of $1 on notes payable.Salaries and wages incurred but not yet paid or recorded, $4.Income tax expense for 2018 was $3 and will be paid in 2019.Record journal entries for transactions (a) through (j).Cash 13Notes-payable (short term) 13Equipment 16 Cash 16Cash 6Common Stock 6Software 2Cash 2Supplies 8Accounts Payable 8Accounts Receivable 9Cash 38Service Revenue 47Salaries and Wages Expense 21Cash 21Cash 8Accounts Receivable 8Accounts Payable 9Cash 9Cash 2Deferred Revenue 2Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry.Prepare an unadjusted trial balance and a trial balance.
Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $12,000. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:Gasoline $2 per gallonDiesel 1 per gallonKerosene 3 per gallonUsing the market value at split-off method, allocate the $12,000 joint cost of production to each product.Joint Product AllocationGasoline $Diesel Kerosene Totals $
On September 1 of the current year,Scots Company experienced a flood that destroyed the company's entire inventory.Because the company had not completed its month end reporting for August,it must estimate the amount of inventory lost using the gross profit method.At the beginning of August,the company reported beginning inventory of $215,450.Inventory purchased during August was $192,530.Sales for the month of August were $542,500.Assuming the company's typical gross profit ratio is 40%,estimate the amount of inventory destroyed in the flood.A) $87,480B) $134,520C) $109,980D) $82,480E) $81,480
Presented below is information related to Cheyenne Corp. for the year 2017.Net sales $1,307,700 Write-off of inventory due to obsolescence $84,810Cost of goods sold 783,400 Depreciation expense omitted by accident in 2016 44,900Selling expenses 70,400 Casualty loss 46,800Administrative expenses 57,500 Cash dividends declared 41,910Dividend revenue 24,700 Retained earnings at December 31, 2016 1,018,730Interest revenue 7,450 Effective tax rate of 34% on all itemsPrepare a separate retained earnings statement for 2017. (List items that increase adjusted retained earnings first.) CHEYENNE CORP. Retained Earnings Statement For the Year Ended December 31, 2017 Retained Earnings, January 1, as reported Correction for Overstatement of Net Income in Prior Period Retained Earnings, January 1, as adjusted Add:Net Income/(Loss) Less . Dividends Declared Retained Earnings, December 31
Journalize the following transactions by Bramble Printing Company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select ""No Entry"" for the account titles and enter 0 for the amounts.) 1. Stockholders invest $87,000 cash to start the business. 2. Purchased three digital copy machines for $445,000, paying $108,000 cash and signing a 5-year, 6% note for the remainder. 3. Purchased $4,000 paper supplies on credit. 4. Cash received for photocopy services amounted to $7,300. 5. Paid $400 cash for radio advertising. 6. Paid $950 on account for paper supplies purchased in transaction 3. 7. Dividends of $1,400 were paid to stockholders. 8. Paid $2,100 cash for rent for the current month. 9. Received $2,200 cash advance from a customer for future copying. 10. Billed a customer for $350 for photocopy services completed.(The Titles that are used on this chart are No. Account Titles and Explanation, Debit, Credit)*LIST OF ACCOUNTS*Accounts Payable, Accounts Receivable, Advertising Expense, Bonds Payable, Buildings, Cash, Common Stock, Dividends, Equipment, Gasoline Expense, Income Tax Expense, Income Taxes Payable, Insurance Expense, Land, Maintenance and Repairs expense, Mortgage Payable, No Entry, Notes Payable, Notes Receivable, Prepaid Insurance, Prepaid Rent, Rent expense, Rent revenue, repair services, retained earning, sales and wages expense, salaries and wages payable, sales revenue, service revenue, supplies, supplies expense, unearned service revenue, utilities expense, website
The following information to perform the calculations below (using the indirect method). Net income $401,000 Beginning accounts payable $119,000 Depreciation expense 97,000 Ending accounts payable 146,000 Beginning accounts receivable 420,000 Purchase of long-term assets 612,000 Ending accounts receivable 439,000 Issuance of long-term debt 220,000 Beginning inventory 516,000 Issuance of stock for cash 180,000 Ending inventory 550,000 Issuance of stock for long-term assets 110,000 Beginning prepaid insurance 42,000 Purchase of treasury stock 64,000 Ending prepaid insurance 48,000 Sale of long-term investment at cost 56,000 Calculate the amount of cash used by investing activities. Only enter the number. No brackets or negative signs required
Blaster Corporation manufactures hiking boots. For the coming year, the company has budgeted the following costs for the production and sale of 30,000 pairs of boots. Budgeted Costs Budgeted Costs per Pair Percentage of Costs Considered Variable Direct materials $ 630,000 $ 21 100 % Direct labor 300,000 10 100 Manufacturing overhead (fixed and variable) 720,000 24 25 Selling and administrative expenses 600,000 20 20 Totals $ 2,250,000 $ 75 Required: a. Compute the sales price per unit that would result in a budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs. (Hint: First compute the budgeted sales revenue needed to produce this operating income.) Assume that the company decides to sell the boots at a unit price of $121 per pair. b-1. Compute the total fixed costs budgeted for the year. b-2. Compute the variable cost per unit. b-3. Compute the contribution margin per pair of boots. b-4. Compute the number of pairs that must be produced and sold annually to break even at a sales price of $121 per pair.
On December 31, 2012, Mass Construction Inc. signs a contract with the state of Massachusetts Department of Transportation to manufacture a bridge over the Merrimack. Mass Construction anticipates the construction will take three years. The company's accountants provide the following contract details relating to the project:Contract price $520 millionEstimated construction costs $300 millionEstimated total profit $220 millionDuring the three-year construction period, Tri-State incurred costs as follows:2013 $ 30 million2014 $180 million2015 $ 90 millionTri-State uses the percentage of completion method to recognize revenue. Which of the following represent the revenue recognized in 2013, 2014, and 2015?A. $52 million, $312 million, $156 millionB. $12 million, $72 million, $36 millionC. $140 million, $140 million, $140 millionD. $30 million, $180 million, $90 millionE. None of the above
The following is a condensed version of the comparative balance sheets for Tamarisk Corporation for the last two years at December 31. 2020 2019 Cash $ 354,000 $ 156,000 Accounts receivable 360,000 370,000 Investments 104,000 148,000 Equipment 596,000 480,000 Accumulated Depreciation-Equipment (212,000 ) (178,000 ) Current liabilities 268,000 302,000 Common stock 320,000 320,000 Retained earnings 614,000 354,000 Additional information: Investments were sold at a loss of $20,000; no equipment was sold; cash dividends paid were $60,000; and net income was $320,000.Prepare a statement of cash flows for 2020 for Swifty Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)