Question & Answer

Geddes Corporation is a medium-sized manufacturing companywith two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. Geddes Corporation plans to change from the lower of first-in, first-out (FIFO)-cost-or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change also will be made for its annual financial statements. Instructions (a) Describe the establishment of and subsequent pricing procedures for each of the following LIFO inventory methods. (1) LIFO applied to units of product when the periodic inventory system is used. (2) Application of the dollar-value method to LIFO units of product. (b) Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.) (c) Discuss the general advantages and disadvantages claimed for LIFO methods.

What is meant by the term overcut in electric discharge machining?

Is an asset’s initial or cost basis simply its purchase price? Explain.

What are the principal considerations of a board of directors in making decisions involving dividend declarations? Discuss briefly.

Beaver Corporation reported taxable income of $500,000 from operations this year. In addition, Beaver distributed land to its sole shareholder, Eugenia. The land’s fair market value was $20,000 and its income tax and E&P basis to Beaver was $50,000. Eugenia assumed a mortgage on the land of $25,000. Beaver Corporation had accumulated E&P of $1,500,000 at the beginning of the year.

Explain how CUs’ exposure to liquidity risk differs from that of other financial institutions. Explain why CUs are more insulated from interest rate risk than some other financial institutions. (LO7)

If the volume of merchandise exports falls by less than their value what can be infer about what has happened to the prices of merchandise exports’?

The current date in the production calendar is day 14. There are three orders (A, B, and C) to be processed at a particular work center. The orders arrived in the sequence A-B-C at the work center. For order A, the remaining process time = 8 days, and the due date is day 24. For order B, the remaining process time = 14 days, and the due date is day 33. For order C, the remaining process time = 6 days, and the due date is day 26. Determine the sequence of the orders that would be scheduled using (a) first-come-first-serve, (b) earliest due date, (c) shortest processing time, (d) least slack time, and (e) critical ratio.

The trial balance of Blues Traveler Corporation does not balance.   An examination of the ledger shows these errors. 1. Cash received from a customer on account was recorded (both debit and credit) as $1,380 instead of $1,830. 2. The purchase on account of a computer costing $3,200 was recorded as a debit to Office Expense and a credit to Accounts Payable. 3. Services were performed on account for a client, $2,250, for which Accounts Receivable was debited $2,250 and Service Revenue was credited $225. 4. A payment of $95 for telephone charges was entered as a debit to Office Expense and a debit to Cash. 5. The Service Revenue account was totaled at $5,200 instead of $5,280. Instructions From this information prepare a corrected trial balance.

There are 21 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage on the quiz is based on the total number of correct answers. 39.1 Material handling is usually not associated with transportation between facilities that involves rail, truck, air, or waterway delivery of goods: (a) true or (b) false? 39.2 Fixed routing is associated with which of the following types of manufacturing systems (two best answers): (a) automated production lines, (b) automated storage systems, (c) cellular manufacturing systems, (d) flexible manufacturing systems, (e) job shops, and (f) manual assembly lines? 39.3 Which of the following types of material handling equipment are typically used in a process type layout (two best answers): (a) conveyors, (b) cranes and hoists, (c) fork lift trucks, and (d) railguided vehicles? 39.4 Batch model production lines are most suited to which one of the following production situations: (a) job shop, (b) mass production, or (c) medium production? 39.5 Precedence constraints are best described by which one of the following: (a) launching sequence in a mixed model line, (b) limiting value of the sum of element times that can be assigned to a worker or station, (c) order of workstations along the line, or (d) sequence in which the work elements must be done? 39.6 Which of the following phrases are most appropriate to describe the characteristics of tasks that are performed at automated workstations (three best answers): (a) complex, (b) consists of multiplework elements, (c) involves a single work element, (d) involves straight-line motions, (e) requires sensory capability, and (f) simple? 39.7 The transfer line is most closely associated with which one of the following types of production operations: (a) assembly, (b) automotive chassis fabrication, (c) machining, (d) pressworking, or (e) spot welding? 39.8 A dial indexing machine uses which one of the following types of workpart transfer: (a) asynchronous, (b) continuous, (c) parts passed by hand, or (d) synchronous? 39.8 A dial indexing machine uses which one of the following types of workpart transfer: (a) asynchronous, (b) continuous, (c) parts passed by hand, or (d) synchronous? 39.10 Most parts classification and coding systems are based on which of the following types of part attributes (two best answers): (a) annual production rate, (b) date of design, (c) design, (d) manufacturing, and (e) weight? 39.11 What is the dividing line between a manufacturing cell and a flexible manufacturing system: (a) two machines, (b) four machines, or (c) six machines? 39.12 A machine capable of producing different part styles in a batch mode of operation qualifies as a flexible manufacturing system: (a) true or (b) false? 39.13 The physical layout of a flexible manufacturing system is determined principally by which one of the following: (a) computer system, (b) material handling system, (c) part family, (d) processing equipment, or (e) weight of parts processed? 39.14 Industrial robots can, in general, most easily handle which one of the following part types in a flexible machining system: (a) heavy parts, (b) metal parts, (c) nonrotational parts, (d) plastic parts, or (e) rotational parts? 39.15 Flexible manufacturing systems and cells are generally applied in which one of the following areas: (a) high-variety, low-volume production, (b) low variety, (c) low volume, (d) mass production, (e) medium-volume, medium-variety production? 39.16 Which one of the following technologies is most closely associated with flexible machining systems: (a) lasers, (b) machine vision, (c) manual assembly lines, (d) numerical control, or (f) transfer lines?

How do the tax consequences of being an employee differ from those of being self-employed?

Your firm has been engaged to examine the financial statements of Almaden Corporation for the year 2014. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2009. The client provides you with the following information.       The supplementary information below is also provided. 1. On May 1, 2014, the corporation issued at 95.4, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2. The bookkeeper made the following mistakes. (a) In 2012, the ending inventory was overstated by $183,000. The ending inventories for 2013 and 2014 were correctly computed. (b) In 2014, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2014, a gain of $175,000 (net of tax) on the sale of certain plant assets was credited directly to retained earnings. 3. A major competitor has introduced a line of products that will compete directly with Almaden’s primary line, now being produced in a specially designed new plant. Because of manufacturing innovations,the competitor’s line will be of comparable quality but priced 50% below Almaden’s line. The competitor announced its new line on January 14, 2015. Almaden indicates that the companywill meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2015, prior to completion of the audit, of heavy damage because of a recent fire to one of Almaden’s two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Instructions Analyze the above information to prepare a corrected balance sheet for Almaden in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings.

You have been assigned to examine the financial statements of Zarle Company for the year ended December 31, 2014. You discover the following situations. 1. Depreciation of $3,200 for 2014 on delivery vehicles was not recorded. 2. The physical inventory count on December 31, 2013, improperly excluded merchandise costing $19,000 that had been temporarily stored in a public warehouse. Zarle uses a periodic inventory system. 3. A collection of $5,600 on account from a customer received on December 31, 2014, was not recorded until January 2, 2015. 4. In 2014, the company sold for $3,700 fully depreciated equipment that originally cost $25,000. The company credited the proceeds from the sale to the Equipment account. 5. During November 2014, a competitor company filed a patent-infringement suit against Zarle claiming damages of $220,000. The company’s legal counsel has indicated that an unfavorable verdict is probable and a reasonable estimate of the court’s award to the competitor is $125,000. The company has not reflected or disclosed this situation in the financial statements. 6. Zarle has a portfolio of trading securities. No entry has been made to adjust to market. Information on cost and fair value is as follows. Cost Fair Value December 31, 2013 $95,000 $95,000 December 31, 2014 $84,000 $82,000 7. At December 31, 2014, an analysis of payroll information shows accrued salaries of $12,200. The Salaries and Wages Payable account had a balance of $16,000 at December 31, 2014, which was unchanged from its balance at December 31, 2013. 8. A large piece of equipment was purchased on January 3, 2014, for $40,000 and was charged to Maintenance and Repairs Expense. The equipment is estimated to have a service life of 8 years and no residual value. Zarle normally uses the straight-line depreciation method for this type of equipment. 9. A $12,000 insurance premium paid on July 1, 2013, for a policy that expires on June 30, 2016, was charged to insurance expense. 10. A trademark was acquired at the beginning of 2013 for $50,000. No amortization has been recorded since its acquisition. The maximum allowable amortization period is 10 years. Instructions Assume the trial balance has been prepared but the books have not been closed for 2014. Assuming all amounts are material, prepare journal entries showing the adjustments that are required. (Ignore income tax considerations.)

Use the information presented in BE7-11 for Arness Woodcrafters but assume that the recourse liability has a fair value of $4,000, instead of $8,000. Prepare the journal entry and discuss the effects of this change in the value of the recourse liability on Arness’s financial statements

There are 15 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage on the quiz is based on the total number of correct answers. 41.1 Which one of the following terms best describes the overall function of production planning and control: (a) inventory control, (b) manufacturing logistics, (c) manufacturing engineering, (d) mass production, or (e) product design? 41.2 Which of the following are the three categories of items usually listed in the master production schedule: (a) components used to build the final products, (b) firm customer orders, (c) general product lines, (d) orders for maintenance and spare parts, (e) sales forecasts, and (f) spare tires? 41.3 Inventory carrying costs include which of the following (two best answers): (a) equipment downtime, (b) interest, (c) production, (d) setup, (e) spoilage, (f) stock-out, and (g) storage? 41.4 Which of the following are the three terms in the economic order quantity formula: (a) annual demand rate, (b) batch size, (c) cost per piece, (d) holding cost, (e) interest rate, and (f) setup cost? 41.5 Order point inventory systems are intended for which of the following (two best answers): (a) dependent demand items, (b) independent demand items, (c) low production quantities, (d) mass production quantities, and (e) mid-range production quantities? 41.6 With which of the following manufacturing resources is capacity requirements planning primarily concerned (two best answers): (a) component parts, (b) direct labor, (c) inventory storage space, (d) production equipment, and (e) raw materials? 41.7 The word kanban is most closely associated with which one of the following: (a) capacity planning, (b) economic order quantity, (c) just-in-time production, (d) master production schedule, or (e) material requirements planning? 41.8 Machine loading refers most closely to which one of the following: (a) assigning jobs to a work center, (b) floor foundation in the factory, (c) managing work-in-process in the factory, (d) releasing orders to the shop, or (e) sequencing jobs through a machine?

1.    : If managerial work is characterized by variety, fragmentation, and brevity, how do managers perform basic management functions such as planning and strategic management, which would seem to require reflection and analysis?

Mitchell Corporation had income before income taxes of $195,000 in 2014. Mitchell’s current income tax expense is $48,000, and deferred income tax expense is $30,000. Prepare Mitchell’s 2014 income statement, beginning with Income before income taxes.

In a turning operation on cast iron, the nose radius on the tool = 1.5 mm, feed = 0.22 mm/rev, and speed = 1.8 m/s. Compute an estimate of the surface roughness for this cut.

How would financial accelerator effects (see section 19.4) affect the DAD curve?

Explain the difference between roughing and finishing operations in machining.

Identify some of the advantages of surface-mount technology over conventional through-hole technology.

Contingent Costs List some costs that may be considered to be ‘contingent’ sustainability-related costs for the mining industry. (LO4)

What is a sonotrode in ultrasonic welding?

Explain the term sales mix in your own words. How does sales mix affect the contribution margin?

Discuss the reasons why most welding operations are inherently dangerous.