For Dousmann Company actual sales are $1,200,000 and break-even sales
are $840,000. Compute (a) the margin of safety in dollars and (b) the margin of safety
ratio.
Dousmann Company 840000
Price: $1.99
For Dousmann Company actual sales are $1,200,000 and break-even sales
are $840,000. Compute (a) the margin of safety in dollars and (b) the margin of safety
ratio.
For Dousmann Company actual sales are $1,200,000 and break-even sales
are $840,000. Compute (a) the margin of safety in dollars and (b) the margin of safety
ratio.
Mendocino Corporation 300000
Price: $2.50
Mendocino Corporation produces two grades of wine from grapes that it buys
from California growers. It produces and sells roughly 3,000,000 liters per year of a low cost,
high-volume product called CoolDay. It sells this in 600,000 5-liter jugs. Mendocino
also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product
called LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay
product has not been as profitable as LiteMist. Management is considering dropping
the inexpensive CoolDay line so it can focus more attention on the LiteMist product.
The LiteMist product already demands considerably more attention than the CoolDay
line.
Mendocino Corporation produces two grades of wine from grapes that it buys
from California growers. It produces and sells roughly 3,000,000 liters per year of a low cost,
high-volume product called CoolDay. It sells this in 600,000 5-liter jugs. Mendocino
also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product
called LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay
product has not been as profitable as LiteMist. Management is considering dropping
the inexpensive CoolDay line so it can focus more attention on the LiteMist product.
The LiteMist product already demands considerably more attention than the CoolDay
line.
Skaros Stairs Co. of Moore 89600
Price: $2.50
Skaros Stairs Co. of Moore designs and builds factory-made premium wooden
stairways for homes. The manufactured stairway components (spindles, risers, hangers,
hand rails) permit installation of stairways of varying lengths and widths. All are of white
oak wood. Budgeted manufacturing overhead costs for the year 2011 are as follows.
For the last 4 years, Skaros Stairs Co. has been charging overhead to products on
the basis of machine hours. For the year 2011, 100,000 machine hours are budgeted.
Anthony Morse, owner-manager of Skaros Stairs Co., recently directed his accountant,
Neal Seagren, to implement the activity-based costing system that he has repeatedly
proposed. At Anthony Morse’s request, Neal and the production foreman identify the following
cost drivers and their usage for the previously budgeted overhead cost pools.
David Hannon, sales manager, has received an order for 280 stairways from Community
Builders, Inc., a large housing development contractor. At David’s request, Neal
prepares cost estimates for producing components for 280 stairways so David can submit
a contract price per stairway to Community Builders. He accumulates the following data
for the production of 280 stairways.
Instructions
(a) Compute the predetermined overhead rate using traditional costing with machine
hours as the basis.
(b) What is the manufacturing cost per stairway under traditional costing? (Round to
the nearest cent.)
(c) What is the manufacturing cost per stairway under the proposed activity-based costing?
(Round to the nearest cent. Prepare all of the necessary schedules.)
(d) Which of the two costing systems is preferable in pricing decisions and why?
Skaros Stairs Co. of Moore designs and builds factory-made premium wooden
stairways for homes. The manufactured stairway components (spindles, risers, hangers,
hand rails) permit installation of stairways of varying lengths and widths. All are of white
oak wood. Budgeted manufacturing overhead costs for the year 2011 are as follows.
| Purchasing | 57,000 | |||
| Handling materials | 82,000 | |||
| Production (cutting, milling, finishing) | 210,000 | |||
| Setting up machines | 85,000 | |||
| Inspecting | 90,000 | |||
| Inventory control (raw materials and finished goods) | 126,000 | |||
| Utilities | 180,000 | |||
| Total budgeted overhead costs | $830,000 | |||
For the last 4 years, Skaros Stairs Co. has been charging overhead to products on
the basis of machine hours. For the year 2011, 100,000 machine hours are budgeted.
Anthony Morse, owner-manager of Skaros Stairs Co., recently directed his accountant,
Neal Seagren, to implement the activity-based costing system that he has repeatedly
proposed. At Anthony Morse’s request, Neal and the production foreman identify the following
cost drivers and their usage for the previously budgeted overhead cost pools.
David Hannon, sales manager, has received an order for 280 stairways from Community
Builders, Inc., a large housing development contractor. At David’s request, Neal
prepares cost estimates for producing components for 280 stairways so David can submit
a contract price per stairway to Community Builders. He accumulates the following data
for the production of 280 stairways.
| Direct materials | 103,600 | ||
| Direct labor | 112,000 | ||
| Machine hours | 14,500 | ||
| Direct labor hours | 5,000 | ||
| Number of purchase orders | 60 | ||
| Number of material moves | 800 | ||
| Number of machine setups | 100 | ||
| Number of inspections | 450 | ||
| Number of components | 16,000 | ||
| Number of square feet occupied | 8,000 | ||
Instructions
(a) Compute the predetermined overhead rate using traditional costing with machine
hours as the basis.
(b) What is the manufacturing cost per stairway under traditional costing? (Round to
the nearest cent.)
(c) What is the manufacturing cost per stairway under the proposed activity-based costing?
(Round to the nearest cent. Prepare all of the necessary schedules.)
(d) Which of the two costing systems is preferable in pricing decisions and why?
ACC206 Week 3 Ch 4 and 5
Price: $18.99
Chapter 4 and 5 Problems
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 4 Exercise 3
3. Cost flows and 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.
Chapter 4 and 5 Problems
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 4 Exercise 3
3. Cost flows and 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.
The next dividend payment by ECY
Price: $7.99
Chapter 9
QUESTIONS AND PROBLEMS
2. Stock Values – The next dividend payment by ECY, Inc., will be $3.20 per shares. The dividends are anticipated to maintain a growth rate of 6 percent, forever. If ECY stock currently sells for $63.50 per share, what is the required return?
Chapter 9
QUESTIONS AND PROBLEMS
2. Stock Values – The next dividend payment by ECY, Inc., will be $3.20 per shares. The dividends are anticipated to maintain a growth rate of 6 percent, forever. If ECY stock currently sells for $63.50 per share, what is the required return?
Rhiannon Corporation
Price: $7.99
Chapter 8
QUESTIONS and PROBLEMS
2. Valuing Bonds – Microhard has issued a bond with the following characteristics:
Par: $1,000
Time to Maturity: 15 years
Coupon Rate: 7 percent
Semiannual payments
Calculate the price of this bond if the YTM is:
a. 7 percent
b. 9 percent
c. 5 percent
3. Bond Yields - Walters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rate of 6.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?
4. Coupon Rates – Rhiannon Corporation has bonds on the market with 11.5 years to maturity, a YTM of 7.6 percent, and a current price of $1,060. The bonds make semiannual payments. What must the coupon rate be on these bonds?
8. Inflation and Nominal Returns – Suppose the real rate is 2.4 percent and the inflation rate is 3.1 percent. What rate would you expect to see on a treasury bill?
Chapter 8
QUESTIONS and PROBLEMS
2. Valuing Bonds – Microhard has issued a bond with the following characteristics:
Par: $1,000
Time to Maturity: 15 years
Coupon Rate: 7 percent
Semiannual payments
Calculate the price of this bond if the YTM is:
a. 7 percent
b. 9 percent
c. 5 percent
3. Bond Yields - Walters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rate of 6.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?
4. Coupon Rates – Rhiannon Corporation has bonds on the market with 11.5 years to maturity, a YTM of 7.6 percent, and a current price of $1,060. The bonds make semiannual payments. What must the coupon rate be on these bonds?
8. Inflation and Nominal Returns – Suppose the real rate is 2.4 percent and the inflation rate is 3.1 percent. What rate would you expect to see on a treasury bill?
Ang Electronics, Inc
Price: $4.99
QUESTIONS and PROBLEMS
6. Decision Trees - Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (which the product is brought to market) is $34million. If the DVDR fails, the present value of the payoff is $12 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, Ang can delay the launch by one year and spend $1.3 million to test market the DVDR. Test marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 11 percent. Should the firm conduct test marketing?
7. Decision Trees – The manager for a growing firm is considering the launch of a new product. If the product goes directly to market, there is a 50 percent chance of success. For $175,000 the manager can conduct a focus group that will increase the product’s chance of success to 65 percent. Alternatively, the manager has the option to pay a consulting firm $390,000 to research the market and refine the product. The consulting firm successfully launches new products 80 percent of the time. If the firm successfully launches the product, the payoff will be $1.9 million. If the product is a failure, the NPV is Zero. Which action will result in the highest expected payoff to the firm?
QUESTIONS and PROBLEMS
6. Decision Trees - Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (which the product is brought to market) is $34million. If the DVDR fails, the present value of the payoff is $12 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, Ang can delay the launch by one year and spend $1.3 million to test market the DVDR. Test marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 11 percent. Should the firm conduct test marketing?
7. Decision Trees – The manager for a growing firm is considering the launch of a new product. If the product goes directly to market, there is a 50 percent chance of success. For $175,000 the manager can conduct a focus group that will increase the product’s chance of success to 65 percent. Alternatively, the manager has the option to pay a consulting firm $390,000 to research the market and refine the product. The consulting firm successfully launches new products 80 percent of the time. If the firm successfully launches the product, the payoff will be $1.9 million. If the product is a failure, the NPV is Zero. Which action will result in the highest expected payoff to the firm?
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