ACC 206 Entire Course (New)
For more course tutorials visit www.ashacc206.com ACC 206 Week 1 Assignment Chapter One Problems ACC 206 Week 1 DQ1 Cash Flows Information ACC 206 Week 1 DQ2 Apple's Cash Flow ACC 206 Week 2 Assignment Chapter Two and Three Problems ACC 206 Week 2 DQ1 Stock Features ACC 206 Week 2 DQ2 Role of Management Accounting ACC 206 Week 2 Journal Institute of Management Accounting ACC 206 Week 3 Assignment Chapter Four and Five Problems ACC 206 Week 3 DQ1 Issues in Costing ACC 206 Week 3 DQ2 CVP and the Airline Industry ACC 206 Week 3 Journal Hershey Company ACC 206 Week 4 Assignment Chapter Six and Seven Problems ACC 206 Week 4 DQ1 Issues in Standard Costs and Budgeting ACC 206 Week 4 DQ2 Flexible Budgets ACC 206 Week 5 Assignment Chapter Eight Problems ACC 206 Week 5 Assignment Final Paper ACC 206 Week 5 DQ1 Long-term Decision Making
ACC 206 Week 5 DQ2 Responsibilities in Management Accounting ---------------------------------------------------------------
ACC 206 Week 1 Assignment Chapter One Problems (New)
For more course tutorials visit www.ashacc206.com Answer the following questions: Why are noncash transactions, such as the exchange of common stock a building, included on a statement of cash flows? How are these noncash transactions disclosed Chapter 1 Exercise 1: 1. Classification of activities Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity. a.
________ Received $80,000 from the sale of land.
b.
________ Received $3,200 from cash sales.
c.
________ Paid a $5,000 dividend.
d.
________ Purchased $8,800 of merchandise for cash.
e. ________ Received $100,000 from the issuance of common stock. f.
________ Paid $1,200 of interest on a note payable.
g.
________ Acquired a new laser printer by paying $650.
h. ________ Acquired a $400,000 building by signing a $400,000 mortgage note.
Chapter 1 Exercise 4: 4. Overview of direct and indirect methods Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why. a. Both the direct and indirect methods will produce the same cash flow from operating activities. b. Depreciation expense is added back to net income when the indirect method is used. c. One of the advantages of using the direct method rather than the indirect method is that larger cash flows from financing activities will be reported. d. The cash paid to suppliers is normally disclosed on the statement of cash flows when the indirect method of statement preparation is employed. e. The dollar change in the Merchandise Inventory account appears on the statement of cash flows only when the direct method of statement preparation is use
Chapter 1 Exercise 6: 6. Equipment transaction and cash flow reporting New equipment purchased during 20x4 totaled $280,000. The 20x4 income statement disclosed equipment depreciation expense of $41,000 and a $9,000 loss on the sale of equipment. a. Determine the cost and accumulated depreciation of the equipment sold during 20X4. b.
Determine the selling price of the equipment sold.
c. Show how the sale of equipment would appear on a statement of cash flows prepared by using the indirect method.
Chapter 1 Problem 3: 3. Cash flow information: Direct and indirect methods The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company's current accounts: ---------------------------------------------------------------
ACC 206 Week 1 DQ 2 Apple's Cash Flow (New)
For more course tutorials visit www.ashacc206.com
Go to http://finance.yahoo.com. Enter in “AAPL” and click on the “get quote” button, and it will bring up information on Apple. On the left hand side you’ll see a section on Financials. Within that section, click on the cash flow. Review the cash flow statement for Apple. How would you summarize Apple’s cash flow position and what does this statement tell you about where the money is coming from and where it’s going? What would you suggest Apple’s do to improve its cash position and why? Guided Response: Analyze several of your peers’ postings. Do you agree with the posting? Let at least two of your peers know what you would add. ---------------------------------------------------------------
ACC 206 Week 1 DQ1 Cash Flows Information (New)
For more course tutorials visit www.ashacc206.com What information does the cash flow statement provide that you cannot see in the other financial statements (income statement, balance sheet, owner’s equity)? What elements of the cash flow statement do you think are most important for company management to monitor and why? Is this different for investors? Guided Response: Review your peers’ postings. Respond to at least two of classmates, letting them know whether you agree with the use of the cash flow statement and why. Additionally, share elements of the cash flow
statement that you see as being the greatest interest to investors (as opposed to internal management) and why. ---------------------------------------------------------------
ACC 206 Week 2 Assignment Chapter Two and Three Problems (New)
For more course tutorials visit www.ashacc206.com Please complete the following 7 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 2 Exercise 1 1. Issuance of stock Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases: a. Jackson Corporation has common stock with a par value of $1 per share. b. Royal Corporation has no-par common with a stated value of $5 per share.
c. French Corporation has no-par common; no stated value has been assigned
Chapter 2 Exercise 3 3. Analysis of stockholders' equity Star Corporation issued both common and preferred stock during 20X6. The stockholders' equity sections of the company's balance sheets at the end of 20X6 and 20X5 follow.
20X6 Preferred stock, $100 par $580,000 value, 10% Common value
stock, $10 par
20X5 $500,000
2,350,000 1,750,000
Paid-in capital in excess of par value Preferred
24,000
—
Common
4,620,000 3,600,000
Retained earnings
8,470,000 6,920,000
Total stockholders' equity
$16,044,0 $12,770,0 00 00
a. Compute the number of preferred shares that were issued during 20X6. b. Calculate the average issue price of the common stock sold in 20X6. c. By what amount did the company's paid-in capital increase during 20X6? d. Did Star's total legal capital increase or decrease during 20X6? By what amount?
Chapter 2 Problem 1 1. Bond computations: Straight-line amortization Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow.
Case A—The bonds are issued at 100. Case B—The bonds are issued at 96. Case C—The bonds are issued at 105.
Southlake uses the straight-line method of amortization.
Instructions: Complete the following table: Case A
Cash inflow on the issuance date
Total maturity
cash
outflow
through
Case B
Case C
_____ _____ _____ __ __ __ _____ _____ _____ __ __ __
Total borrowing cost over the life _____ _____ _____ of the bond issue __ __ __
Interest expense for the year ended _____ _____ _____ December 31, 20X1 __ __ __
Amortization for the year ended _____ _____ _____
December 31, 20X1
__
Unamortized premium December 31, 20X1
as
of
Unamortized discount December 31, 20X1
as
of
Bond carrying value December 31, 20X1
as
of
__
__
_____ _____ _____ __ __ __
_____ _____ _____ __ __ __
_____ _____ _____ __ __ __
Chapter 3 Exercise 1 1. Product costs and period costs The costs that follow were extracted from the accounting records of several different manufacturers: 1.
Weekly wages of an equipment maintenance worker
2.
Marketing costs of a soft drink bottler
3.
Cost of sheet metal in a Honda automobile
4.
Cost of president's subscription to Fortune magazine
5. Monthly operating costs of pollution control equipment used in a steel mill 6. Weekly wages of a seamstress employed by a jeans maker 7. Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams a. Determine which of these costs are product costs and which are period costs. b. For the product costs only, determine those that are easily traced to the finished product and those that are not.
Chapter 3 Exercise 2 2. Definitions of manufacturing concepts Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: Materials and supplies used Brass
$75,000
Repair parts
16,000
Machine lubricants
9,000
Wages and salaries Machine operators
128,000
Production supervisors
64,000
Maintenance personnel
41,000
Other factory overhead Variable
35,000
Fixed
46,000
Sales commissions
20,000
Compute: a.
Total direct materials consumed
b.
Total direct labor
c.
Total prime cost
d.
Total conversion cost
Chapter 3 Exercise 5 5. Schedule of cost of goods manufactured, income statement The following information was taken from the ledger of Jefferson Industries, Inc.: Direct labor
$85,000
Administrative expenses
Selling expenses
34,000
Work in. process
Sales
300,000
Jan. 1
29,00 0
Dec. 31
21,00 0
Finished goods
$59,0 00
Jan. 1
115,000
Direct material 88,00 purchases 0
Dec. 31
131,000
Depreciation: factory
18,00 0
Raw (direct) materials on hand
Indirect materials used
10,00 0
Jan. 1
31,000
Indirect labor
24,00 0
Dec. 31
40,000
Factory taxes
8,000
Factory utilities
11,00 0
Prepare the following: a. A schedule of cost of goods manufactured for the year ended December 31. b. 31.
An income statement for the year ended December
Chapter 3 Problem 3. Manufacturing statements and cost behavior
3
Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-gauge aluminum, which the company sells for $36 per roll. Cost information for the year just ended follows. Per Unit
Variable
Fixed
Cost
Cost
Direct materials $4.50
$—
Direct labor
6.5
—
Factory overhead
9
50,000
Selling
—
70,000
Administrative
—
135,000
Production and sales totaled 20,000 rolls and 17,000 rolls, respectively There is no work in process. Tampa carries its finished goods inventory at the average unit cost of production.
Instructions: a. Determine the cost of the finished goods inventory of light-gauge aluminum. b. Prepare an income statement for the current year ended December 31 c.
On the basis of the information presented:
1. Does it appear that the company pays commissions to its sales staff? Explain.
2. What is the likely effect on the $4.50 unit cost of direct materials if next year's production increases? Why? ---------------------------------------------------------------
ACC 206 Week 2 DQ1 Stock Features (New)
For more course tutorials visit www.ashacc206.com 1. What is callable preferred stock? Why do corporations issue such stock? Given the different features that are associated with stock (callable, cumulative, preferred, etc.), what type of stock would you want to buy personally and why? Guided Response : Review your peers’ posts. Respond to at least two of your classmates, letting them know if you agree with their type of desired stock and whether your answer would change (and why) based on: a. Different economic conditions b. State of the company (if the company is in a growth phase versus a mature state). ---------------------------------------------------------------
ACC 206 Week 2 DQ2 Role of Management Accounting (New)
For more course tutorials visit www.ashacc206.com
Review the roles of management accounting within a company. What is the most important role of management accounting? How is that different than financial accounting? Guided
Response:
Review your peer's responses. Respond to at least two of your peers, adding at least two additional areas that management accountants focus on that the author didn't include ---------------------------------------------------------------
ACC 206 Week 2 Journal Institute of Management Accounting (New)
For more course tutorials visit www.ashacc206.com While there are many instances of overlap between financial accounting and management accounting, each group’s primary focus is different. Review the Institute of Management Accounting’s (IMA) website, specifically the “About IMA” and the “Resources and Publications” sections of the website. Are you surprised by the topics that management accountants are focusing on? Why or why not? What interests you more, financial accounting or management accounting? Carefully review the Grading Rubric for the criteria that will be used to evaluate your journal entry. ---------------------------------------------------------------
ACC 206 Week 3 Assignment Chapter Four and Five Problems (New)
For more course tutorials visit www.ashacc206.com Please complete the following 7 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button. Chapter 3.
4 Cost
flows
and
Exercise
3
overhead
application
Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of 180% of direct labor cost. Data pertaining to recent operations follow. Job no. 636 was the only job in process on January 1 of the current year. The Work in Process account contained a $24,600 balance on this date. Jobs no. 637, 638, and 639 were started during January. Total direct material requisitions and direct labor incurred during January amounted to $89,200 and $114,500, respectively.
The only job that remained in process on January 31 was job no. 638, with costs of $15,000 for direct materials and $20,000 for direct labor.
a. Compute the total cost of the work in process inventory on January 31. b. Compute the cost of jobs completed during January, and present the proper journal entry to reflect job completion.
Chapter 7.
Overhead
4
Exercise
application:
Working
7 backward
The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following divisional information is presented for your review: Divisi Divisi on A on B Actual hours
machine 22,50 0
?
Estimated machine 20,00 hours 0
?
Overhead
$4.50
$5.00
application rate Actual overhead
$110, 000
?
Estimated overhead ?
$90,0 00
Applied overhead
?
$86,0 00
Over(under-) ? applied overhead
$6,50 0
Find the unknowns for each of the divisions.
Chapter 2.
Computations
4
Problem using
a
job
2 order
system
General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger;
Work in process Finished goods Cost of goods sold
$ 35,200 86,900 128,700
Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $114,500. These figures are subdivided as follows:
Direct Materials
Direct Labor
Job No.
Amount
Job No.
Amount
101
$5,000
101
$7,800
115
19,500
103
20,800
116
36,200
115
42,000
Other
35,800
116
18,000
$96,500
Other
25,900 $114,500
no. 115 was the only job in process at the end of the month. Job no. 101 and three "other" jobs were sold during May at a profit of 20% of cost. The "other" jobs contained material and labor charges of $21,000 and $17,400, respectively.
General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to job orders. The firm's fiscal year ends on May 31. Instructions: a. Compute the total overhead applied to production during May. b. Compute the cost of the ending work in process inventory. c.
Compute the cost of jobs completed during May.
d. 31.
Compute the cost of goods sold for the year ended May
Chapter
5
Exercise
1
1. High-low method The following cost data pertain to 20X6 operations of Heritage Products:
Shipping costs
Quarter 1
Quarter 2
Quarter 3
Quarter 4
$58,200
$58,620
$60,125
$59,400
Orders shipped
120
140
175
150
The company uses the high-low method to analyze costs. a.
Determine the variable cost per order shipped.
b.
Determine the fixed shipping costs per quarter.
c. If present cost behavior patterns continue, determine total shipping costs for 20X7 if activity amounts to 570 orders.
Chapter 5 Exercise 2 The treasurer anticipates the following costs for the event, which will be held at the Regency Hotel: Room rental Dinner cost (per person) Chartered buses Favors and souvenirs Band
(per
person) 900
$300 25 500 5
Each person would pay $40 to attend; 200 attendees are expected. a. Will the event be profitable for the sorority? Show computations. b. How many people must attend for the sorority to break even?
c. Suppose the sorority encouraged its members to drive to the hotel and did not charter the buses. Further, a planned menu change will reduce the cost per meal by $2. If each member will still be charged $40, compute the contribution margin per person.
Chapter 3.
5
Break-even
Exercise
and
other
CVP
3 relationships
Cedars Hospital has average revenue of $180 per patient day. Variable costs are $45 per patient day; fixed costs total $4,320,000 per year. a. How many patient days does the hospital need to break even? b. What level of revenue is needed to earn a target income of $540,000? c. If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)?
Chapter 6.
5 Direct
Problem and
absorption
6 costing
The information that follows pertains to Consumer Products for the year ended December 31, 20X6. Inventory, 1/1/X6
24,000 units
Units manufactured
80,000
Units sold
82,000
Inventory, 12/31/X6
? units
Manufacturing costs: Direct materials
$3 per unit
Direct labor
$5 per unit
Variable overhead
factory
Fixed factory overhead
$9 per unit $280,000
Selling & administrative expenses: Variable
$2 per unit
Fixed
$136,000
The unit selling price is $26. Assume that costs have been stable in recent years.
Instructions: a.
Compute the number of units in the ending inventory.
b.
Calculate the cost of a unit assuming use of:
1.
Direct costing.
2.
Absorption costing.
c. Prepare an income statement for the year ended December 31, 20X6, by using direct costing. d. Prepare an income statement for the year ended December 31, 20X6, by using absorption costing. ---------------------------------------------------------------
ACC 206 Week 3 DQ 2 CVP and the Airline Industry (New)
For more course tutorials visit www.ashacc206.com We’ve all experienced (or heard about) the challenges that the airlines have been facing. Read the Zacks Investment Research article, “Airline Industry Stock Outlook – August 2012” Identify three factors that are affecting airline company’s ability to break even. For each of your factors, discuss how these have an impact on the breakeven (contribution margin, fixed costs, variable costs, a combination, etc.), and what happens if these factors increase or decrease. Guided Response: Review your peers’ posts and respond to at least two of your peers. In each response, add two factors that your classmate hasn’t included and explain how your additional factors influence the break-even point. ---------------------------------------------------------------
ACC 206 Week 3 DQ1 Issues in Costing (New)
For more course tutorials visit www.ashacc206.com Describe three issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the cost of goods sold. For each of your issues, provide an example of a company or industry where these issues could be present. Guided Response: Review your peers’ posts and respond to at least two of your classmates. Describe how job order costing or activity-based costing could resolve the issues your classmates mentioned in their posts. ---------------------------------------------------------------
ACC 206 Week 3 Journal Hershey Company (New)
For more course tutorials visit www.ashacc206.com Go the Hershey website to learn how to make Hershey chocolate. Review the process and take a look at some of the videos. Pay particular attention to the process steps of milling and pressing, mixing the ingredients, and refinin In at least one paragraph, describe the costing system that you would recommend Hershey use to account for its cost of goods sold and why. Include a few product costs you think would be traceable, which costs
should be allocated, and how Hershey should account and apply the manufacturing overhead costs. Carefully review the Grading Rubric for the criteria that will be used to evaluate your journal entry. ---------------------------------------------------------------
ACC 206 Week 4 Assignment Chapter Six and Seven Problems (New)
For more course tutorials visit www.ashacc206.com Please complete the following 8 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 6 Exercise 2 2. Schedule of cash collections Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account. Credit sales have the following collection pattern:
Chapter 6 Exercise 4 4. Production and cash-outlay computations RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.
Chapter 6 Exercise 5 5. Abbreviated cash budget; financing emphasis An abbreviated cash budget for Big Chuck Enterprises follows.
Chapter 6 Problem 3 3. Comprehensive budgeting The balance sheet of Watson Company as of December 31, 20X1, follows. Chapter 7 Exercise 3 3. Variances for direct materials and direct labor Banner Company manufactures flags of various countries. Each flag has a standard of eight square feet of fabric and three hours of direct labor time. Information about recent production activity follows. Chapter 7 Exercise 5 5. Overhead variances
Nova Manufacturing applies factory overhead to products on the basis of direct labor hours. At the beginning of the current year, the company's accountant made the following estimates for the forthcoming period: ·
Estimated variable overhead: $500,000
·
Estimated fixed overhead: $400,000
·
Estimated direct labor hours: 40,000
It is now 12 months later. Actual total overhead incurred in the manufacture of 7,900 units amounted to $895,100. Actual labor hours totaled 39,800. Assuming a direct labor standard of five hours per finished unit, calculate the following: a.
Variable overhead efficiency variance
b.
Fixed overhead volume variance
c.
Overhead
spending
variance
Chapter 7 Problem 1 1. P26-A1 Basic flexible budgeting (L.O. Centron, Inc., has the following budgeted production costs: Direct materials
$0.40 per unit
Direct labor
1.80 per unit
Variable factory overhead
2.20 per unit
Fixed factory overhead
2)
Supervision
$24,000
Maintenance
18,000
Other
12,000
The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively. During the recent quarter ended March 31, Centron produced 25,500 units and incurred the following costs:
Direct Materials
$10,7 10
Direct Labor
47,17 5
Variable overhead
factory 51,94 0
Fixed factory overhead Supervision
Maintenance Other
24,50 0 23,70 0 16,80 0
Total production costs
$174, 825
: a. Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity. b. Was Centron's experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer. c. Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of performance.
Chapter 7 Problem 5 5. P26-B3 Straightforward variance analysis (L.O. 5) Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows. ---------------------------------------------------------------
ACC 206 Week 4 DQ 2 Flexible Budgets (New)
For more course tutorials visit www.ashacc206.com Flexible budgets provide different information than static budgets. Discuss some of these differences. Is a flexible budget always better?
Are there times when you’d recommend using a static budget over a flexible budget? Guided Response: Review your peers’ posts and respond to at least two of your classmates. Discuss whether you agree or disagree with the uses of a flexible budget and why. ---------------------------------------------------------------
ACC 206 Week 4 DQ1 Issues in Standard Costs and Budgeting (New)
For more course tutorials visit www.ashacc206.com Review the Standard costs: wake up and smell the coffee.article. When evaluating performance, many organizations compare current results with the actual results of previous accounting periods. Is an organization that follows this approach likely to encounter any problems? Explain. Guided Response: Review your peers’ posts and respond to at least two of your classmates. Describe how job order costing, process costing, or activity based costing could resolve or exacerbate the issues your classmates discussed in their initial posts. ---------------------------------------------------------------
ACC 206 Week 5 Assignment Chapter Eight Problems (New)
For more course tutorials visit www.ashacc206.com Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 8 Exercise 1: 1. Basic present value calculations Calculate the present value of the following cash flows, rounding to the nearest dollar: a. A single cash inflow of $12,000 in five years, discounted at a 12% rate of return. b. An annual receipt of $16,000 over the next 12 years, discounted at a 12% rate of return. c. A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return. d. An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 12% rate of return.
Chapter 8 Exercise 4:
4. Cash flow calculationsand net present value On January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; the dividend was raised to $3.10 per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments. a. Prepare a chronological list of the investment's cash flows. Note: Greene is entitled to the 20X3 dividend. b. Compute the investment's net present value, rounding calculations to the nearest dollar. c. Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain.
Chapter 8 exercise 5: 5. Straightforwardnet present value and internal rate of return The City of Bedford is studying a 600-acre site on Route 356 for a new landfill. The startup cost has been calculated as follows: Purchase cost: $450 per acre Site preparation: $175,000
The site can be used for 20 years before it reaches capacity. Bedford, which shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs.
a. Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the net-present-value method to determine your answer.
Chapter 8 Problem 1: 1. Straightforward net-present-value and payback computations STL Entertainment is considering the acquisition of a sight-seeing boat for summer tours along the Mississippi River. The following information is available:
Cost of boat
$500,000
Service life
10 summer seasons
Disposal value at the end of 10 seasons
$100,000
Capacity per trip
300 passengers
Fixed operating costs per season $160,000 (including straight-line depreciation) Variable operating costs per trip
$1,000
Ticket price
$5 per passenger
All operating costs, except depreciation, require cash outlays. On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes.
Instructions: By using the net-present-value method, determine whether STL Entertainment should acquire the boat. Assume a 14% desired return on all investments,- round calculations to the nearest dollar.
Chapter 8 Problem 4: 4. Equipment replacement decision Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000. New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method. Instructions: a. By using the net-present-value method, determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar, and ignore income taxes.
b. Columbia's management feels that the time value of money should be considered in all long-term decisions. Briefly discuss the rationale that underlies management's belief. ---------------------------------------------------------------
ACC 206 Week 5 Assignment Final Paper (New)
For more course tutorials visit www.ashacc206.com Focus
of
the
Final
Paper
You’ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities. As the controller of ABC Company, the CEO has come to you with a new opportunity that he’s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC’s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help
reach the growth targets. The CEO is relying on you to help decide how this project can be afforded Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide. In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information (including exhibits, but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some specific cost and profit information to complete the calculations. Final
Paper
Spreadsheet
I. An overall risk profile of the company based on current economic and industry issues that it may be facing. II. Current company cash flow a. You need to complete a cash flow statement for the company using the direct method. b. Once you’ve completed the cash flow statement, answer the following questions: i. What does this statement of cash flow tell you about the sources and uses of the company? ii. Is there anything ABC Company can do to improve the cash flow? iii. Can this project be financed with current cash flow from the company? Why or why not? iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the
life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why? III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product. a. What is the product cost for the expansion product? b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product? c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product? d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product? IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years: Year Year Year Year Year
1, 2, 3, 4, 5,
$15,000 $13,000 $10,000 $10,000 $6,000
ABC Company uses the net-present-value method to analyze
investments and desires a minimum rate of return of 12% on the equipment. a. What is the net present value of the proposed investment ignore income taxes and depreciation? b. Assuming a 5-year straight-line depreciation, how will this impact the factory’s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow? c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? V. Conclusion: a. What are the major risk factors that you see in this project? b. As the controller and a management accountant, what is your responsibility to this project? c. What do you recommend the CEO do? Writing
the
Final
Paper
1. Must be six to eight double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center. 2. Must include a title page with the following: a. b. c. d. e. Date submitted
Title Course
of Student’s name and Instructor’s
paper name number name
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought. 5. Must end with a conclusion that reaffirms your thesis. 6. Must document all sources in APA style, as outlined in the Ashford Writing Center. 7. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center. Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment. ---------------------------------------------------------------
ACC 206 Week 5 DQ 1 Long-term Decision Making (New)
For more course tutorials visit www.ashacc206.com List a few of the issues and considerations businesses should have when it comes to the selection of long-term investments and how those issues impact the various financial statements. Guided Response: Review your peer’s posts. Respond to at least two of your peers describing how these issues can be overcome by the tools discussed in this chapter and why (i.e., looking at IRR, NPV, cash flow). ---------------------------------------------------------------
ACC 206 Week 5 DQ 2 Responsibilities in Management Accounting (New)
For more course tutorials visit www.ashacc206.com Review the rights and responsibilities of Certified Management Accountants: http://www.imanet.org/PDFs/Public/CMA/RIghts_Responsibility_CMA. pdf What are some of the ethical responsibilities and obligations that management accountants have within an organization? Provide some examples. Are these responsibilities different than the obligations for financial accountants? Guided Response: Review your peer’s posts. Respond to at least two of your peers outlining the responsibilities that you feel are the most important to management accountants. ---------------------------------------------------------------