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Wednesday, 18 November 2015

Complete Course ACC543 Complete Course

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ACC 543 EXERCISE 15-6B

Exercise 15-6B Fixed versus variable cost behavior Professional Chairs Corporation produces ergonomically designed chairs favored by architects. The company normally produces and sells from 5,000 to 8,000 chairs per year. The following cost data apply to various production activity levels. Required a. Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. b. Explain why the total cost per chair decreases as the number of chairs increases

ACC 543 EXERCISE 15-12B


Exercise 15-12B Effect of cost structure on projected profits Logan and Martin compete in the same market. The following budgeted income statements illustrate their cost structures. Required a. Assume that Logan can lure all 80 customers away from Martin by lowering its sales price to $75 per customer. Reconstruct Logan’s income statement based on 160 customers. b. Assume that Martin can lure all 80 customers away from Logan by lowering its sales price to $75 per customer. Reconstruct Martin’s income statement based on 160 customers. c. Why does the price-cutting strategy increase Logan’s profits but result in a net loss for Martin?

ACC 543 EXERCISE 15-17A IDENTIFYING COST BEHAVIOR


Exercise 15-17A: Identifying Cost Behavior Identify the following costs as fixed or variable. Costs related to plane trips between San Diego, California, and Orlando, Florida, follow. Pilots are paid on a per trip basis. a. Pilots’ salaries relative to the number of trips flown. b. Depreciation relative to the number of planes in service. c. Cost of refreshments relative to the number of passengers. d. Pilots’ salaries relative to the number of passengers on a particular trip. e. Cost of a maintenance check relative to the number of passengers on a particular trip. f. Fuel costs relative to the number of trips. National Union Bank operates several branch offices in grocery stores. Each branch employs a supervisor and two tellers. g. Tellers’ salaries relative to the number of tellers in a particular district. h. Supplies cost relative to the number of transactions processed in a particular branch. i. Tellers’ salaries relative to the number of customers served at a particular branch. j. Supervisors’ salaries relative to the number of branches operated. k. Supervisors’ salaries relative to the number of customers served in a particular branch. l. Facility rental costs relative to the size of customer deposits. Costs related to operating a fast-food restaurant follow. m. Depreciation of equipment relative to the number of restaurants. n. Building rental cost relative to the number of customers served in a particular restaurant. o. Manager’s salary of a particular restaurant relative to the number of employees. p. Food cost relative to the number of customers. q. Utility cost relative to the number of restaurants in operation. r. Company president’s salary relative to the number of restaurants in operation. s. Land costs relative to the number of hamburgers sold at a particular restaurant. t. Depreciation of equipment relative to the number of customers served at a particular restaurant.

ACC 543 EXERCISE 16-9A


Exercise 16-9A Mimosa Corporation expects to incur indirect overhead costs of $72,000 per month and direct manufacturing costs of $11 per unit. The expected production activity for the first four months of 2007 is as follows. Required a. Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. b. Allocate overhead costs to each month using the overhead rate computed in Requirement a. c. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.

ACC 543 EXERCISE 18-17A


Exercise 18-17A Hamby Company had 250 units of product in its work in process inventory at the beginning of the period and started 2,000 additional units during the period. At the end of the period, 750 units were in work in process inventory. The ending work in process inventory was estimated to be 60 percent complete. The cost of work in process inventory at the beginning of the period was $3,420, and $27,000 of product costs was added during the period

EXERCISE 18-17B: PROCESS COST SYSTEM COST


Exercise 18-17B: Process Cost System Cost of Production Report At the beginning of 2004, Dozier Company had 1,800 units of product in its work in process inventory, and it started 19,200 additional units of product during the year. At the end of the year, 6,000 units of product were in the work in process inventory. The ending work in process inventory was estimated to be 50 percent complete. The cost of work in process inventory at the beginning of the period was $9,000, and $108,000 of product costs was added during the period. Required Prepare a cost of production report showing the following. a. The number of equivalent units of production. b. The product cost per equivalent unit. c. The total cost allocated between the ending Work in Process Inventory and Finished Goods Inventory accounts.

ACC 543 EXERCISE 19-24A ASSESSING SIMULTANEOUS CHANGES IN CVP RELATIONSHIPS


Exercise 19-24A: Assessing Simultaneous Changes in CVP Relationships Green Shades Inc. (GSI) sells hammocks; variable costs are $75 each, and the hammocks are sold for $125 each. GSI incurs $250,000 of fixed operating expenses annually. Required a. Determine the sales volume in units and dollars required to attain a $50,000 profit. Verify your answer by preparing an income statement using the contribution margin format. b. GSI is considering implementing a quality improvement program. The program will require a $10 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $20,000 for advertising. Assuming that the improvement program will increase sales to a level that is 3,000 units above the amount computed in Requirement a, should GSI proceed with plans to improve product quality? Support your answer by preparing a budgeted income statement. c. Determine the new break-even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented.

ACC 543 EXERCISE 22-6A USING A FLEXIBLE BUDGET TO ACCOMMODATE MARKET UNCERTAINTY


Exercise 22-6A Using a flexible budget to accommodate market uncertainty According to its original plan, Katta Consulting Services Company would charge its customers for service at $200 per hour in 2006. The company president expects consulting services provided to customers to reach 40,000 hours at that rate. The marketing manager, however, argues that actual results may range from 35,000 hours to 45,000 hours because of market uncertainty. Katta’s standard variable cost is $90 per hour, and its standard fixed cost is $3,000,000.

ACC 543 EXERCISE 24-3A PRESENT VALUE ANALYSIS


Exercise 24-3A: Present Value Analysis Ginger Smalley expects to receive a $300,000 cash benefit when she retires five years from today. Ms. Smalley’s employer has offered an early retirement incentive by agreeing to pay her $180,000 today if she agrees to retire immediately. Ms. Smalley desires to earn a rate of return of 12 percent. Required a. Assuming that the retirement benefit is the only consideration in making the retirement decision, should Ms. Smalley accept her employer’s offer? b. Identify the factors that cause the present value of the retirement benefit to be less than $300,000.

ACC 543 EXERCISE 24-4A DETERMINING THE PRESENT VALUE OF AN ANNUITY


Exercise 24-4A Determining the present value of an annuity The dean of the School of Social Science is trying to decide whether to purchase a copy machine to place in the lobby of the building. The machine would add to student convenience, but the dean feels compelled to earn an 8 percent return on the investment of funds. Estimates of cash inflows from copy machines that have been placed in other university buildings indicate that the copy machine would probably produce incremental cash inflows of approximately $8,000 per year. The machine is expected to have a three-year useful life with a zero salvage value. Required a. Use Present Value Table 1 in Appendix A to determine the maximum amount of cash the dean should be willing to pay for a copy machine. b. Use Present Value Table 2 in Appendix A to determine the maximum amount of cash the dean should be willing to pay for a copy machine. c. Explain the consistency or lack of consistency in the answers to Requirements a & b.

ACC 543 EXERCISE 24-5A DETERMINING NET PRESENT VALUE


Exercise 24-5A Determining net present value Transit Shuttle Inc. is considering investing in two new vans that are expected to generate combined cash inflows of $20,000 per year. The vans’ combined purchase price is $65,000. The expected life and salvage value of each are four years and $15,000, respectively. Transit Shuttle has an average cost of capital of 14 percent. Required a. Calculate the net present value of the investment opportunity. b. Indicate whether the investment opportunity is expected to earn a return that is above or below the cost of capital and whether it should be accepted.

ACC 543 EXERCISE 24-5B PURCHASE OF POPCORN MACHINE


Exercise 24-5B: Purchase of Popcorn Machine Heidi Kahn, manager of the Grand Music Hall, is considering the opportunity to expand the company’s concession revenues. Specifically, she is considering whether to install a popcorn machine. Based on market research, she believes that the machine could produce incremental cash inflows of $1,600 per year. The purchase price of the machine is $5,000. It is expected to have a useful life of three years and a $1,000 salvage value. Ms. Kahn has established a desired rate of return of 16 percent.

ACC 543 EXERCISE 24-6A DETERMINING NET PRESENT VALUE


Exercise 24-6A: Determining Net Present Value Travis Vintor is seeking part-time employment while he attends school. He is considering purchasing technical equipment that will enable him to start a small training services company that will offer tutorial services over the Internet. Travis expects demand for the service to grow rapidly in the first two years of operation as customers learn about the availability of the Internet assistance. Thereafter, he expects demand to stabilize. The following table presents the expected cash flows. In addition to these cash flows, Mr. Vintor expects to pay $8,400 for the equipment. He also expects to pay $1,440 for a major overhaul and updating of the equipment at the end of the second year of operation. The equipment is expected to have a $600 salvage value and a four-year useful life. Mr. Vintor desires to earn a rate of return of 8 percent. Required (Round computations to the nearest whole penny.) a. Calculate the net present value of the investment opportunity. b. Indicate whether the investment opportunity is expected to earn a return that is above or below the desired rate of return and whether it should be accepted

ACC 543 EXERCISE 24-8A: DETERMINING THE INTERNAL RATE OF RETURN


Exercise 24-8A: Determining the Internal Rate of Return Medina Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company’s cash outflow for operating expenses by $1,280,000 per year. The cost of the equipment is $6,186,530.56. Medina expects it to have a 10-year useful life and a zero salvage value. The company has established an investment opportunity hurdle rate of 15 percent and uses the straight-line method for depreciation. Required a. Calculate the internal rate of return of the investment opportunity. b. Indicate whether the investment opportunity should be accepted.

ACC 543 EXERCISE 24-1 NET PRESENT VALUE/PRESENT VALUE INDEX


Exercise 24-1 Net Present Value/Present Value Index The management team at Savage Corporation is evaluating two alternative capital investment opportunities. The first alternative, modernizing the company’s current machinery, costs $45,000. Management estimates the modernization project will reduce annual net cash outflows by $12,500 per year for the next five years. The second alternative, purchasing a new machine, costs $56,500. The new machine is expected to have a five-year useful life and a $4,000 salvage value. Management estimates the new machine will generate cash inflows of $15,000 per year. Savage’s cost of capital is 10%. Required a. Determine the present value of the cash flow savings expected from the modernization program. b. Determine the net present value of the modernization project. c. Determine the net present value of investing in the new machine. d. Use a present value index to determine which investment alternative will yield the higher rate of return.

ACC 543 ASPECTS OF EMPLOYMENT AND ENVIRONMENT PAPER AND POWERPOINT


Aspects of Employment and Environment Paper and PowerPoint You are an accountant at a small accounting firm. One of your clients is looking to open a small river-rafting business. Your client will run the business operations from a mobile home office on a piece of land on the riverbank. Your client must decide the best location to start this business and has asked you to explain the accounting advantages of choosing the best location. Your client is also wondering if the business should build a permanent structure on the land, or use the mobile home they already own. Additionally, your client wants to know the insurance implications of this decision. How would the insurance implications of the location decision change the company’s risks and how might your client use insurance to better manage those risks? As a team, conduct research on three locations and select a location that your client will use to start this business. The locations should be in states where your at least one of your team members lives Address the following for each location, based on research of the three sites located in three states: Evaluate the legal aspects of acquiring, holding, and disposing of real property. Evaluate the legal aspects of acquiring, holding, and disposing of personal property. Analyze the business use of insurance for various risks. Identify environmental issues and regulations related to the site. Discuss which location you will suggest to your client to run the business from, and why this location is advantageous relative to your discussion of real and personal property and the use of insurance. Submit a paper of no more than 1,400 words with your research results and recommendations for the client. Create a 10- to 15-slide Microsoft® PowerPoint® presentation for the client.

ACC 543 CAPITAL BUDGET RECOMMENDATION


Capital Budget Recommendation Guillermo Furniture, a company that manufactures midgrade and high-end sofas, has just hired you as an accountant. The owner, Guillermo Navallez, has assigned you the tasks of determining which decisions provide the greatest returns. Read the Guillermo Furniture Scenario and review the Guillermo Furniture Data Sheets on your student Web site. Enter your name in cell A3 of the Income Information tab in the Guillermo Furniture Data Sheets. Submit the exact name you entered to your instructor. Obtain the number that is shown as a result for total assets on the Assets, Liabilities, and Equity In tab. Submit the number for total assets to your instructor. Differentiate among the various capital budget evaluation techniques. Explain how these different techniques would help you make your recommendation to Guillermo. Recommend a course of action based on a capital budget evaluation technique and include present value calculations as part of your recommendation. Submit your assignment as an attachment of no more than 1,050 words.

ACC 543 FLEXIBLE BUDGETS TEAM PAPER


Flexible Budgets Team Paper Write a paper of no more than 1,050 words in which you discuss flexible budgets. Explain the relationship between fixed and variable costs used in a flexible budget. Discuss the differences between static and flexible budgets and how a flexible budget lends itself to a cost-volume-profit analysis. Format your paper consistent with APA guidelines
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