Problem 1. Compare and contrast income statements prepared for managerial use and those prepared for external reporting.
Problem 2. Michael Visual Works, Inc. uses a normal costing system and estimated its overhead costs for the current year to be as follows: fixed, $525,000; variable, $4 per unit. Michael expected to produce 350,000 units during the year. During the year, the company incurred overhead costs of $2,100,000 and produced 400,000 units.Calculate the rate to be used to apply manufacturing overhead costs to products.
Problem 3. Pete's PCs, Inc. budgeted manufacturing overhead costs for the year are: Type of Cost Cost Pools Electric Power $2,500,000 Inspection $1,500,000 Budgeted overhead costs $4,000,000 Under a traditional cost system, the company estimated the budgeted capacity for machine hours to be 40,000 hours. Bill is considering changing to an activity-based cost system. Thus, the following estimates were provided: Type of Cost Activity-based cost drivers Electric power 50,000 kilowatt hours Inspection 10,000 inspections The following information was provided concerning the production of 1,000 units of model #1040: Direct materials cost $50,000 Direct labor costs $75,000 Machine hours 10,000 Direct labor hours 5,000 Electric power - kilowatt hours 20,000 No. of inspections 1,000 REQUIRED: a. What are the manufacturing costs per PC under the traditional cost system that applies manufacturing overhead costs based on machine hours? b. What are the manufacturing costs per PC if the activity-based costing system is implemented?
Problem 4. Explain the costs, benefits, and weaknesses of the various cost estimation methods
Problem 5. What are the incentives for committing financial fraud?
Problem 6. Describe the use of spreadsheets in financial modeling
Problem 7. Latway Company is considering opening a new sales territory. Management expects the initial investment to be $150,000 and subsequent investments of $100,000 and $50,000 at the end of the first and second years. Net cash flow from the sales territory is expected to yield after-tax cash inflow for 5 more years: $75,000 for the first two years and $60,000 for the remaining years. The company's cost of capital is 12 percent. Calculate the net present value of this project.
Problem 8. Ben's Delivery Company reports the following information for 2010: Actual: Output: 6,000 parcels picked up or delivered Fuel required: 500 Gallons Cost per gallon: $2.25 per gallon Standard: Fuel allowed: 0.10 gallon per parcel picked up or delivered Cost per gallon: $2.00 per gallon REQUIRED: What was the actual fuel cost, flexible budget for fuel cost, and the fuel cost variance?
Problem 9. How do you apply activity-based costing to variance analysis?
Problem 10. Compare and discuss the advantages and disadvantages of the following performance measures: ROI and EVA.
Problem 11. The Worldwide Computer Retailing Division had the following data: Year Sales Profit Investment 2008 $1,000,000 $100,000 $ 500,000 2009 2,000,000 160,000 1,000,000 2010 4,000,000 400,000 2,500,000 What is the return on investment (ROI), profit margin percentage, and investment turnover ratio for Years 2008, 2009, and 2010?