Question & Answer

A continuous hot rolling mill has eight stands. The dimensions of the starting slab are: thickness = 3.0 in, width = 15.0 in, and length = 10 ft. The final thickness is to be 0.3 in. Roll diameter at each stand = 36 in, and rotational speed at stand number 1 = 30 rev/min. It is observed that the speed of the slab entering stand 1 = 240 ft/min. Assume that no widening of the slab occurs during the rolling sequence. Percent reduction in thickness is to be equal at all stands, and it is assumed that the forward slip will be equal at each stand. Determine (a) percent reduction at each stand, (b) rotational speed of the rolls at stands 2 through 8, and (c) forward slip. (d) What is the draft at stands 1 and 8? (e) What is the length and exit speed of the final strip exiting stand 8?

This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has “written off” the account and would like to claim a deduction for tax purposes.   a) What amount of deduction for bad debt expense can William claim this year if he uses the accrual method? b) What amount of deduction for bad debt expense can William claim this year if he uses the cash method?

Explain the similarities and differences among absorption and variable costing.

Discuss the similarities and the differences between convertible debt and debt issued with stock warrants.

Flexible budget variance analysis Cardinal Products hired a new marketing manager early this year. After an informal consumer survey, the marketing manager decided to lower the firm’s selling price by 10 per cent and increase television advertising. The operating results at year end were disappointing. The marketing manager prepared the following analysis for the president. He assumed that direct materials and direct labour were variable costs and that advertising was a fixed cost.       ‘As you can see’, the marketing manager reported, ‘the major problem is due to inefficiencies in production. My plan would have worked if production had kept its costs in line.’   Required (a) Prepare a flexible budget report. (b) What is the real source of the disappointing results? Explain.

Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023:

If business entities taxed as partnerships and S corporations are both flow-through entities for tax purposes, why might an owner prefer one form over the other for tax purposes? List separately the tax factors supporting the decision to operate a business entity as an entity taxed either as a partnership or as an S corporation.

Rode Inc. incurred a net operating loss of $500,000 in 2014. Combined income for 2012 and 2013 was $350,000. The tax rate for all years is 40%. Rode elects the carryback option. Prepare the journal entries to record the benefits of the loss carryback and the loss carryforward.

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (a) What amounts relative to income taxes does P&G report in its: (1) 2011 income statement? (2) June 30, 2011, balance sheet? (3) 2011 statement of cash flows? (b) P&G’s income taxes in 2009, 2010, and 2011 were computed at what effective tax rates? (See the notes to the financial statements.) (c) How much of P&G’s 2011 total income taxes was current tax expense, and how much was deferred tax expense? (d) What did P&G report as the significant components (the details) of its June 30, 2011, deferred tax assets and liabilities?

Cost function using high-low and regression; quality of cost estimates Following are sales and administrative cost data for Big Jack Burgers for four months:  Administrative cost is a mixed cost, and sales is a potential cost driver.   Required (a)          Using the high-low method, create a cost function for administrative costs. (b)          In your own words, explain why the high-low method might not be a good method for estimating the cost function. (c)           Create a scatter plot and add a trend line. After examining the plot, use your judgement to determine whether the cost is fixed, variable, or mixed. (d)          Perform regression analysis to create a cost function for administrative costs. (e)           Can we know for certain that the cost function from part (d) provides a good estimate for next month’s administrative costs? Why or why not? (f)           Discuss whether sales are an economically plausible driver for administration costs for Big Jack Burgers.(a)     Total revenue (TR) instead of quantity (Q) in the cost function because sales is a potential cost driver. Under the high-low method, the cost function is calculated using the highest and lowest values of the cost driver. First, the variable cost is calculated: ($68 333 – $43 333)/($1 132 100 – $632 100) = $25 000/$500 000 = 0.05  or 5% of sales   The fixed cost is determined by substituting the variable cost into one of the high-low data points: $68 333 = F + 5%×$1 132 100 F = $68 333 – $56 605 = $11 728   Thus, the total cost function is: TC = $11 728 + 5%×Sales   (b)        The high-low method uses the most extreme cost driver values, which could be outliers, that is, not represent the cost most of the time. That means that the cost function might not represent the actual cost, on average. Therefore, this cost function might provide poor estimates of future costs. (c)     Chart of data with trend line added by Excel; trend line extended to Y-axis (dashed line) using Word: It appears that the cost is most likely mixed. There is a general downward slope     (variable cost) that appears to meet the intercept enough above zero to suggest a    fixed cost. The upward slope of the line indicates that there are variable costs.   (d)     Following is the regression output. A t-statistic greater than 2 is often interpreted as meaning that the coefficient is significantly different from zero. Notice that the t-statistic for the intercept coefficient is 2.172, but the p-value is greater than 10% at 0.162. Based on the p-value, there is a 16% probability that the intercept (fixed cost) is not different from zero. Because this regression has few observations, the p-value result for the t-statistic is atypical. Additional judgement is required to decide whether it is appropriate to include a fixed cost in the cost function.             Analysis at the account level can be used to increase the understanding of this cost. If this cost pool includes items such as salaries and other fixed costs (insurance, etc.), the regression intercept can be used as an estimate of the fixed costs. Then, the cost function would be TC = $16 800 + 4.5% × sales. Alternatively, analysis at the account level might indicate that there are few fixed costs. In that case, fixed costs are likely to be zero and would be excluded from the cost function. Then, the cost function would be: TC = 4.5% × sales   (e)     Because of unforeseen changes in cost behaviour, a cost function may not provide a good estimate for the next month’s costs. The past costs used for estimation might not be representative, especially because so few observations were used in the estimation. Sales might not be the activity that drives administrative costs. There might be a change in business operations or in the economy that would cause future costs to be different than in the past. There might be a large discretionary component in administrative costs, causing fluctuations in cost that are unrelated to any cost driver.                     (f)      The cons of the high-low method as an estimation technique were discussed in Part B above. If there are only two or three data points, however, the high-low method may be the best option available. This method can be used in cases where there is not enough data to perform regression, and it can be further improved by adopting more representative data points than the highest and lowest values of the cost driver. If there are more data points, regression analysis incorporates all of the observations into the analysis. Therefore, the results rely on more complete information and provide a better estimate, on average. Both methods assume that the cost function is linear and that all data points come from a single relevant range. If these assumptions do not hold, then both methods may be unsuitable for estimating future costs. In addition, both of these methods assume that the data points are representative of future costs. Unusual cost items are assumed to continue in the future, and possible changes in costs such as those described in Part E are ignored.

Of what significance is inventory turnover to a retail store?

At December 31, 2014, Hillyard Corporation has a deferred tax asset of $200,000. After a careful review of all available evidence, it is determined that it is probable that $60,000 of this deferred tax asset will not be realized. Prepare the necessary journal entry.

1.       : Some critics argue that Six Sigma is a collection of superficial changes that often results in doing a superb job of building the wrong product or offering the wrong service. Do you agree or disagree? Explain.

1.              : Say nothing about the false numbers. Of course, the company will miss the projections and have to come up with a good explanation, but, after all, isn’t that par for the course among fledgling high-tech companies? Chances are the whole thing will blow over without a problem.

Kleckner Company started operations in 2010. Although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2014), Kleckner appears to have turned the corner and reported modest taxable income of $30,000. In addition to a deferred tax asset related to its net operating loss, Kleckner has recorded a deferred tax asset related to product warranties and a deferred tax liability related to accelerated depreciation. Given its past operating results, Kleckner has determined that it is not probable that it will realize any of the deferred tax assets. However, given its improved performance, Kleckner management wonders whether there are any accounting consequences for its deferred tax assets. They would like you to conduct some research on the accounting for recognition of its deferred tax asset. Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you  canuse the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) Briefly explain to Kleckner management the importance of future taxable income as it relates to the recognition of deferred tax assets. (b) What are the sources of income that may be relied upon in assessing realization of a deferred tax asset? (c) What are tax-planning strategies? From the information provided, does it appear that Kleckner could employ a tax-planning strategy in evaluating its deferred tax asset?

Floyd Corporation has the following four items in its ending inventory. Replacement Cost Net Realizable Value (NRV) NRV Less Item Cost Normal Profi t Margin Jokers $2,000 $2,050 $2,100 $1,600 Penguins 5,000 5,100 4,950 4,100 Riddlers 4,400 4,550 4,625 3,700 Scarecrows 3,200 2,990 3,830 3,070 Determine the final lower-of-cost-or-market inventory value for each item.

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/Marksand- Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) What amounts relative to income taxes does M&S report in its: (1) 2012 income statement? (2) 31 March 2012 statement of financial position? (3) 2012 statement of cash flows? (b) M&S’s provision for income taxes in 2011 and 2012 was computed at what effective tax rates? (See the notes to the financial statements.) (c) How much of M&S’s 2012 total provision for income taxes was current tax expense, and how much was deferred tax expense? (d) What did M&S report as the significant components (the details) of its 31 March 2012 deferred tax assets and liabilities?

Instructions Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What are the amounts of Coca-Cola’s and PepsiCo’s provision for income taxes for the year 2011? Of each company’s 2011 provision for income taxes, what portion is current expense and what portion is deferred expense? (b) What amount of cash was paid in 2011 for income taxes by Coca-Cola and by PepsiCo? (c) What was the U.S. federal statutory tax rate in 2011? What was the effective tax rate in 2011 for Coca Cola and PepsiCo? Why might their effective tax rates differ? (d) For year-end 2011, what amounts were reported by Coca-Cola and PepsiCo as (1) gross deferred tax assets and (2) gross deferred tax liabilities? (e) Do either Coca-Cola or PepsiCo disclose any net operating loss carrybacks and/or carryforwards at year-end 2011? What are the amounts, and when do the carryforwards expire?

What is press fit technology in electrical connections?

The drive unit for a positioning table is driven by a leadscrew directly coupled to the output shaft of a stepping motor. The pitch of the leadscrew = 0.18 in. The table must have a linear speed = 35 in/min, and a positioning accuracy = 0.001 in. Mechanical errors in the motor, leadscrew, and table connection are characterized by a normal distribution with standard deviation = 0.0002 in. Determine (a) the minimum number of step angles in the stepping motor to achieve the accuracy, (b) the associated step angle, and (c) the frequency of the pulse train required to drive the table at the desired speed.

What is the starting material in fused-deposition modeling?

Mark received 10 ISOs at the time he started working for Hendricks Corporation five years ago, when Hendricks’s price was $5 per share (each option gives him the right to purchase 10 shares of Hendricks Corporation stock for $5 per share). Now that Hendricks’s share price is $35 per share, Mark intends to exercise all of his options and hold all of his shares for more than one year. Assume that more than a year after exercise, Mark sells the stock for $35 a share. What are Mark’s tax consequences on the grant date, the exercise date, and the date he sells the shares, assuming his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent?

Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $125,000. The appraised fair market value of the warehouse was $75,000, and the appraised value of the land was $100,000.  a. What is Bob’s basis in the warehouse and in the land? b. What would be Bob’s basis in the warehouse and in the land if the appraised value of the warehouse is $50,000 and the appraised value of the land is $125,000? c. Which appraisal would Bob likely prefer?

Can a bank simultaneously maximize return and minimize credit risk? If not, what can it do instead? (LO4)

Define viscosity of a fluid.