Question & Answer

Job costing; overhead rates The Eastern Seaboard Company uses an estimated rate for allocating factory overhead to job orders based on machine hours for the machining department and on a direct labour cost basis for the finishing department. The company budgeted the following for last year:       During December, the cost record for job 602 shows the following:   Required (a)     What is the estimated overhead allocation rate that should be used in the machining department? In the finishing department? (b)     What is the total overhead allocated to job 602? (c)      Assuming that job 602 consisted of 200 units of product, what is the unit cost for this job? (d)     What factors affect the volume of production in a period? Can we know all of the factors before the period begins? Why? (e)      Explain why the company would use two different overhead allocation bases.

Why have large banks’ noninterest income levels typically been higher than those of smaller banks? (LO2)

In a surface grinding operation performed on hardened plain carbon steel, the grinding wheel has a diameter = 200 mm and width = 25 mm. The wheel rotates at 2400 rev/min, with a depth of cut (infeed) = 0.05 mm/pass and a crossfeed = 3.50 mm. The reciprocating speed of the work is 6 m/min, and the operation is performed dry. Determine (a) length of contact between the wheel and the work and (b) volume rate of metal removed. (c) If there are 64 active grits/cm2 of wheel surface, estimate the number of chips formed per unit time. (d) What is the average volume per chip? (e) If the tangential cutting force on the work = 25 N, compute the specific energy in this operation?

Pechstein Corporation issued 2,000 shares of $10 par value common stock upon conversion of 1,000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The common stock is trading at $26 per share at the time of conversion. Record the conversion of the preferred

Baker Corporation owned a building located in Kansas. Baker used the building for its business operations. Last year, a tornado hit the property and completely destroyed it. This year, Baker received an insurance settlement. Baker had originally purchased the building for $350,000 and had claimed a total of $100,000 of depreciation deductions against the property. What are Baker’s realized and recognized gain or (loss) on this transaction and what is its basis in the new building in the following alternative scenarios? a. Baker received $450,000 in insurance proceeds and spent $450,000 rebuilding the building during the current year. b. Baker received $450,000 in insurance proceeds and spent $500,000 rebuilding the building during the current year. c. Baker received $450,000 in insurance proceeds and spent $400,000 rebuilding the building during the current year. d. Baker received $450,000 in insurance proceeds and spent $450,000 rebuilding the building during the next three years.

A metal removal rate of 0.01 in3/min is achieved in a certain EDM operation on a pure iron workpart. What metal removal rate would be achieved on nickel in this EDM operation, if the same discharge current were used? The melting temperatures of iron and nickel are 2802°F and 2651°F, respectively.

Alexander Enterprises leases property to Hamilton, Inc. Because Hamilton, Inc. is experiencing financial difficulty, Alexander agrees to receive five rents of $20,000 at the end of each year, with the rents deferred 3 years. What is the present value of the five rents discounted at 12%?

Balanced scorecard at individual level; strategy map; boundary systems Required (a) Reflect on the management accounting case and the balanced scorecards used by Qantas and Virgin Australia as part of their incentive plans. How might they use a strategy map in the process of developing their scorecards? (b) With reference to the management accounting case, explain how the airlines might be able to use the balanced scorecard as a form of boundary system.

Is it possible for shareholders to defer or avoid the second level of tax on corporate income altogether? Briefly explain.

What is meant by consumption smoothing and of what significance might it be for the relationship between spending and income?

Hughie, Dewey, and Louie are equal shareholders in HDL, an S corporation. HDL’s S election terminates under each of the following alternative scenarios. When is the earliest it can again operate as an S corporation?

Types of manager decisions Suppose that the following are activities conducted by Microsoft Corporation. A. Comparing the timeliness of development steps of a new release of Windows with the timeline that was laid out to guide development. B. Developing a timeline for the release of new Windows and Microsoft Office products over the next year. C. Debugging the next version of Windows. D. Providing technical support to customers who are having problems with Microsoft Office. E. Estimating cash expenditures for the next year. F. Comparing budgeted costs to actual costs and discussing major differences with department managers. G. Deciding whether to construct a new building on the Microsoft site.   Required Identify whether each activity is most likely part of: (a)          organisational strategies (b)          operating plans (c)           actual operations (d)          measuring, monitoring, and motivating. For each item, explain why. (LO1)

The following information was described in a note of Canon Packing Co. “During August, Holland Products Corporation purchased 311,003 shares of the Company’s common stock which constitutes approximately 35% of the stock outstanding. Holland has since obtained representation on the Board of Directors.” “An affiliate of Holland Products Corporation acts as a food broker for Canon Packing in the greater New York City marketing area. The commissions for such services after August amounted to approximately $20,000.” Why is this information disclosed?

Sherry, who is 52 years of age, opened a Roth IRA three years ago. She has contributed a total of $12,000 to a Roth IRA ($4,000 a year). The current value of the Roth IRA is $16,300. In the current year, Sherry withdraws $14,000 of the account balance to purchase a car. Assuming Sherry’s marginal tax rate is 24 percent, how much of the $14,000 withdrawal will she retain after taxes to fund her car purchase?

What is the common approach used in all of the material addition technologies to prepare the control instructions for the RP system?

For the preceding problem, use the inverse lever rule to determine the proportions of liquid and solid phases present in the alloy.

What book-tax differences in year 1 and year 2 associated with its capital gains and losses would ABD Inc. report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary.

A 5-mm-diameter bolt is to be tightened to produce a preload = 250 N. If the torque coefficient = 0.23, determine the torque that should be applied.

(1)   {Planning} Laurie is thinking about investing in one or several of the following investment options: Corporate bonds (ordinary interest paid annually) Dividend-paying stock (qualified dividends) Life insurance (tax-exempt) Savings account Growth stock   a. Assuming all of the options earn similar returns before taxes, rank Laurie’s investment options from highest to lowest according to their after-tax returns.   b. Which of the investments employ the deferral and/or conversion tax planning strategies?   c. How does the time period of the investment affect the returns from these alternatives?   d. How do these alternative investments differ in terms of their nontax characteristics?

Assume Congress increases individual tax rates on ordinary income while leaving all other tax rates unchanged. How would this change affect the overall tax rate on corporate taxable income? How would this change affect overall tax rates for owners of flow-through business entities?

Assume that your friend Will Morris, who is a music major, asks you to define and discuss the nature of a liability. Assist him by preparing a definition of a liability and by explaining to him what you believe are the elements or factors inherent in the concept of a liability.

What role does the ASX Corporate Governance Council’s Corporate    government principles and recommendations, and the    Corporations Act have in executive remuneration?             (LO5)

The following independent situations relate to inventory accounting. 1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of these goods? 2. Keillor Company’s inventory of $1,100,000 at December 31, 2014, was based on a physical count of goods priced at cost and before any year-end adjustments relating to the following items. (a) Goods shipped from a vendor f.o.b. shipping point on December 24, 2014, at an invoice cost of $69,000 to Keillor Company were received on January 4, 2015. (b) The physical count included $29,000 of goods billed to Sakic Corp. f.o.b. shipping point on December 31, 2014. The carrier picked up these goods on January 3, 2015. What amount should Keillor report as inventory on its balance sheet? 3. Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2014, costing $21 each. Purchases of part M.O. during May were as follows. Units Unit Cost May 9 2,000 $22.00 17 3,500 23.00 26 1,000 24.00 4 5 8A physical count on May 31, 2014, shows 2,000 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2014? Using the LIFO method, what is the inventory cost? Using the average-cost method, what is the inventory cost? 4. Ashbrook Company adopted the dollar-value LIFO method on January 1, 2014 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO. At Base- At Current- Inventory Year Cost Year Cost 1/1/14 $200,000 $200,000 12/31/14 240,000 264,000 12/31/15 256,000 286,720 Computing an internal price index and using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2015? 5. Donovan Inc., a retail store chain, had the following information in its general ledger for the year 2015. Merchandise purchased for resale $909,400 Interest on notes payable to vendors 8,700 Purchase returns 16,500 Freight-in 22,000 Freight-out (delivery expense) 17,100 Cash discounts on purchases 6,800 What is Donovan’s inventoriable cost for 2015? Instructions Answer each of the preceding questions about inventories, and explain your answers.ROBLEMS

Suppose you asked your favorite AI learning tool “What basis does a shareholder take in property received in a liquidating distribution?” and the AI tool provided the following response:

Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below).  WidgetPurchase DateDirect CostOther CostsTotal Cost #1August 15$ 2,100$ 100$ 2,200 #2October 30$ 2,200$ 150$ 2,350 #3November 10$ 2,300$ 100$ 2,400 In late December, David sold one widget, and next year David expects to purchase three more widgets at the following estimated prices: WidgetPurchase DateEstimated Cost #4Early spring$ 2,600 #5Summer$ 2,260 #6Fall$ 2,400 a) What cost of goods sold and ending inventory would David record if he elects to use the LIFO method this year?  b) If David sells two more widgets next year, what will be his cost of goods sold and ending inventory next year under the LIFO method? c) How would you answer (a) and (b) if David had initially selected the first-in, first-out (FIFO) method instead of LIFO? d) Suppose that David initially adopted the LIFO method but wants to apply for a change to FIFO next year. What would be his §481 adjustment for this change, and in what year(s) would he make the adjustment?