What would you include in a recommendation to the CEO for a better method for evaluating the performance of the divisions?a.The method used to evaluate the performance of the divisions should be reevaluated.

b.A better divisional performance measure would be the rate of return on investment

c.A better divisional performance measure would be the residual income.

d.None of these choices would be included.

e.All of these choices (a, b & c) would be included.

Answers

Answer 1

Answer:

Answer:

Option D

Explanation:

In simple words, method of performance division is considered to be effective when it depicts a true picture, not because it gives a sound position of the organisation as waned by the managers.

Thus, reticulation should not be done. Also, Divisional performance should be judged by some other aspects like time taken to perform the job or wastage done by them etc.

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The plant union is negotiating with the Eagle Company, which is on the verge of bankruptcy. Eagle has offered to pay for the employees' hospitaliztion insurance in exchange for a wage reduction. The employees each currently pay premiums of $4,000 a year for their insurance. Which of the following is correct:a. If an employee's wages are reduced by $5,000 and the employee is in the 28% marginal tax bracket, the employee would benefit from the offer.b. If an employee's wages are reduced by $4,000 and the employee is in the 15% marginal tax bracket, the employee would benefit from the offer.c. If an employee's wages are reduced by $6,000 and the employee is in the 35% marginal tax bracket, the employee would benefit from the offer.d. a., b., and c.e. None of these.
Last year, DJ's Soda Fountains, Inc. reported an ROE = 27 percent. The firm's debt ratio was 50 percent, sales were $9 million, and the capital intensity ratio was 1.5 times. What is the net income for DJ's last year? Multiple Choice a. $1.22m b. $1.82m c. $2.43m d. $2.84m
A stock currently sells for $65. The dividend yield is 3.5 percent and the dividend growth rate is 4.8 percent. What is the amount of the dividend to be paid in one year
Shown below are selected data from the financial statements of the Supreme Company. (Dollar amounts are in millions, except for the per share data). Income statement data: $'000 Net sales $1,230 Cost of goods sold $520 Operating expenses $440 Net income $390 Balance sheet data: $'000 Average total equity $2,400 Average total assets $4,000 Supreme reported earnings per share for the year of $4 and paid cash dividends of $1 per share. At year-end, the Wall Street Journal listed Supreme's capital stock as trading at $88 per share. Required: Compute the following: a). Gross profit rate b). Supreme's operating income (in millions) c). Return on assets d). Return on equity e). Price-earning ratio
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The Museum of America is preparing for its annual appreciation dinner for contributing members. Lastâ year, 525 members attended the dinner. Tickets for the dinner were $ 24 per attendee. The profit report for lastâ year's dinner follows. Ticket sales $12,600

Cost of dinner 15,300

Gross Margin 2,700

Invitations and paperwork 2,500

Profit (loss) $ 5,200

This year the dinner committee does not want to lose money on the dinner. To help achieve itsâ goal, the committee analyzed lastâ year's costs. Of the â$15,300 cost of theâ dinner, â$9,000 were fixed costs and â$6,300 were variable costs. Of the â$2,500 cost of invitations andâ paperwork, â$1,975 were fixed and â$525 were variable.

Requirement:

1. Prepare last year's profit report using the contribution margin format.

Answers

Answer:

Contribution Margin $ 5775

Net Loss ( $ 5,200 )

Explanation:

Ticket sales $12,600

Less

Variable Costs

Cost of dinner

Variable Costs ( 15,300- 9000) $ 6,300

Invitations and paperwork (variable costs) $ 525

Less Fixed Expenses

Cost of dinner (fixed costs) $ 9000

Invitations and paperwork (fixed costs) $ 1975

Net Loss ( $ 5,200 )

Contribution Margin is obtained by deducting variable costs from sales and then the profit or loss is obtained by deducting fixed costs from the contribution margin.

Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is:

Answers

Answer:

Payroll = $95,000,

Indirect labor = $25000

Direct labor paid = $95000 - $25000 = $70000

∵ predetermined overhead application rate is 170 % of direct labor cost

Overhead applied to work in process = 70000 × 170 %

= $119,000

Journal entry:

Debit ⇒ Work in process = $1190000

Credit ⇒ Factory Overheads = $119000

Final answer:

To record the application of factory overhead to production, you first calculate the direct labor cost, then multiply by the predetermined overhead rate. The journal entry is a debit to Work in Process and a credit to Factory Overhead for this calculated amount.

Explanation:

The Portside Watercraft company is using a job order costing system and a predetermined overhead rate based on direct labor cost. In this case, to record the application of factory overhead to production, you would first calculate the factory overhead applied by multiplying the direct labor cost (total labor cost minus indirect labor cost) by the predetermined rate.

The direct labor cost would be calculated by subtraction: $95,000 (total factory payroll) - $25,000 (indirect labor) = $70,000. Then multiply $70,000 by 170% (the predetermined overhead rate) to get $119,000. The journal entry would then be a debit to Work in Process for $119,000 and a credit to Factory Overhead for $119,000.

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Susmel Inc. is considering a project that has the following cash flow data. What is the project's payback? Year 0 1 2 3 Cash flows -$500 $150 $200 $300 2.03 years 2.25 years 2.50 years 2.75 years 3.03 years

Answers

Answer:

Payback period = 2.5 years

Explanation:

given data

Year 0 1 2 3

cash -$500 $150 $200 $300

to find out

What is the project's payback

solution

Year Cash flows Cumulative Cash flows

0 500 500

1 150 350

2 200 150

3 300 150

Payback period = Last period with a negative cumulative cash flow +(Absolute value of cumulative cash flows at that period ÷ Cash flow after that period) .........................1

put here value we get

Payback period = $2+ (150)/(300)$

Payback period = 2.5 years

Final answer:

The payback period for the project is approximately 2.75 years.

Explanation:

The payback period is a financial metric used to assess the time it takes for an investment or project to generate enough cash flows to recover the initial investment cost. It's a simple tool for evaluating the risk and return of an investment, with shorter payback periods generally indicating lower risk. The payback period is the amount of time it takes to recover the initial investment in a project.

To calculate the payback period, we sum the cash flows until we reach or surpass the initial investment.

In this case, the initial investment is $500, and the cash flows are: $150, $200, and $300 in years 1, 2, and 3 respectively.

By adding the cash flows together, we find that the project's payback is 2 years and 25% of year 3, which is approximately 2.75 years.

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Mountain High Ice Cream Company transferred $76,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $6,600). Mountain High anticipates a $4,600 recourse obligation. The bank charges a 2% fee (2% of $76,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sales criteria under IFRS have been met.

Answers

Answer:

Cash 66,880 debit

Due from factor 7,600 debit

Loss on factoring 6,120 debit

Accounts Receivables 76,000 credit

Recourse Liability 4,600 credit

Explanation:

Accounts receivable factored: 76,000

Cash received 90% of 76,000 = 68,400

less bank charge fee: 76,000 x 2% = 1,520

total: 66,880

Due from factoring = 76,000 x 10% 7,600

Recourse liability: 4600

The loss is calcualte bu difference:

The bank receives 76,000 dollars of Accounts receivables

It pays 66,880 It makes us assuma liability for 4,600

and potentially can paid up to 7,600

Net: 69,880‬

difference: 76,000 - 66,880 = 6,120

For each of the following independent situations, prepare journal entries to record the initial transaction on December 31 and the adjustment required on January 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)a.
Magnificent Magazines received $16,800 on December 31, 2015, for subscription services related to magazines that will be published and distributed in January through December 2016.

b.
Walker Window Washing paid $1,680 cash for supplies on December 31, 2015. As of January 31, 2016, $280 of these supplies had been used up.

c.
Indoor Raceway received $4,200 on December 31, 2015, from race participants for providing services for three races. One race is held in January 31, 2016, and the other two will be held in March 2016.

1. Record the receipt of $16,800 on December 31, 2015, for subscription services related to magazines that will be published and distributed from January through December 2016.

2. Record the January 31, 2016 adjusting entry for the December 31, 2015 receipt of $16,800 for magazine subscriptions to be published January through December 2016.

3. Record the payment of $1,680 cash for supplies by Walker Window Washing on December 31, 2015. As of January 31, 2016, $280 of these supplies had been used up.

4. Record the January 31, 2016 adjusting entry for the December 31, 2015 cash payment of $1,680 for supplies. As of January 31, 2016, $280 of these supplies had been used up.

5. Record the receipt by Indoor Raceway of $4,200 on December 31, 2015, from race participants for providing services for three races. One race is held on January 31, 2016, and the other two will be held in March 2016.

6. Record the January 31, 2016 adjusting entry for the December 31, 2015 receipt of $4,200 from race participants for providing services for three races. One race is held on January 31, 2016 and the other two will be held in March 2016.

Answers

Answer:

Journal Entries

a1) Magnificent Magazines

Date Details Dr Cr

$ $

December 31, 2015 Cash 16,800

Deferred Revenue-subscription 16,800

Being recognition of prepaid subscription service for the year 2016

a2) Magnificent Magazines

Date Details Dr Cr

$ $

January 31, 2016 Deferred Revenue-subscription 1,400

Revenue 1,400

Being revenue for the month of January 2016

b1) Walker Window Washing

Date Details Dr Cr

$ $

December 31, 2015 Prepaid expense-Supplies 1680

Cash 1680

Being recognition of advance payment for supplies

b2) Walker Window Washing

Date Details Dr Cr

$ $

January 31, 2016 Expense - supplies 280

Prepaid expense-Supplies 280

Being supply expense for the month of January

c1) Indoor Raceway

Date Details Dr Cr

$ $

December 31, 2015 Cash 4,200

Deferred Revenue 4,200

Being recognition of race income paid in advance

c2) Indoor Raceway

Date Details Dr Cr

$ $

January 31, 2016 Deferred Revenue 1,400

Revenue 1,400

Being revenue for the month of January 2016

Explanation:

a) For Magnificent Magazines, the total amount paid $16800 is given as an advance for services not yet rendered. This amount which is for 12 months is then recognized as revenue when the services as provided on a monthly basis = 16800/12 = 1400

b) Walker windows paid in advance for supplies amounting to $1680, this is an asset to the company (prepayment) and as at January 2016, only $280 had been utilized. The utilized $280 is therefore expensed to the income statement

c) For Indoor Raceway, the $4200 is a liability as the services have not been provided yet, hence deferred revenue and the revenue is recognized after the service has been rendered in the income statement. For January, being 4200/3 = 1400

On December 31, 2016, the manager of Jordan Creek Apartments noticed that four tenants had not paid their December rent amounting to $500 each. The manager spoke to each tenant individually and was promised by all 4 that the rent would be paid by January 15, 2017. Assuming the tenants follow through and make their payments by January 15, 2017, Jordan Creek should make the following entry as of December 31, 2016:______. Cash (dr) $2,000
Rental Receivable (cr) $2,000
A. True
B. False

Answers

Answer:

B. False

The business should not make this entry on 31 December.

Explanation:

The accounting principle of prudence states that profits should not be overstated and losses should not be understated. This means that any profit should not be recorded until it is realized while any losses should be recorded as soon as they are anticipated. As the business has not received cash from tenants on 31 December 2016, it should not make any entry debiting cash and crediting the rent receivable.

The business should let the rent receivable balance intact until the rent is received on 15 January and till then record no entry to such as the above.

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Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B Selling price per unit $120 $160 Variable costs per unit 40 90 Contribution margin per unit $80 $70 Machine hours to produce 1 unit 0.4 hours 1.0 hours Maximum unit sales per month 600 units 200 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $15,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)Required:a. Determine the contribution margin per machine hour that each product generates. b. How many units of Product G and Product B should the company produce if it continues to operate with only one shift" How much total contribution margin does this mix produce each month? c. If the company adds another shift, how many units of Product G and Product B should it produce? How much total contribution margin would this mix produce each month? d.Suppose that the company determines that it can increase Product GIs maximum sales to 700 units per month by spending S 12,000 per month in marketing efforts. Should the company pursue this strategy and the double shift?