1. Brodrick Company expects to produce 20,000 units for the year ending December 31. A flexible budget for 20,000 units of production reflects sales of $400,000; variable costs of $80,000; and fixed costs of $150,000. If the company instead expects to produce and sell 26,000 units for the year, calculate the expected level of income from operations.
2. Refer to information QS 1. Assume that actual sales for the year are $480,000, actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000 Prepare a flexible budget performance report for the year.

Answer:

Brodrick Company

1. The expected level of income from operations is:

= $266,000.

2. Flexible Budget Performance Report for the year

                                          Flexible        Actual         Variance

                                          Budget        Budget

Sales revenue               $480,000     $480,000       $0

Variable costs                   96,000         112,000      $16,000 U

Fixed costs                      150,000        145,000          5,000 F

Net operating income $234,000     $223,000       $11,000 U

Explanation:

a) Data and Calculations:

Expected production units = $20,000

Expected sales based on 20,000 units = $400,000 at $20 per unit

Variable costs = $80,000 at $4 per unit

Fixed costs = $150,000

Expected sales based on 26,000 units

Expected level of income from operations:

Sales revenue = $520,000 ($20 * 26,000)

Variable cost =      104,000 ($4 * 26,000)

Fixed cost =          150,000

Net income =    $266,000

Actual sales revenue for the year = $480,000 (24,000 * $20)

Actual variable costs =                          112,000 (24,000 * $4.67)

Actual fixed costs =                              145,000

Net operating income =                    $223,000

Analyzing the Impact of Selected Transactions on the Current Ratio [LO 13-4, LO 13-5]
In its most recent annual report, Sunrise Enterprises reported current assets of $1,090,000 and current liabilities of $602,000.
Required:
Determine for each of the following transactions whether the current ratio, and each of its two components, for Sunrise will increase, decrease, or have no change: (1) sold long-term assets for cash, (2) accrued severance pay for terminated employees, (3) wrote down the carrying value of certain inventory items that were deemed to be obsolete, and (4) acquired new inventory by signing an 18-month promissory note (the supplier was not willing to provide normal credit terms).

1000 par value 5 year bond with 8% semiannual coupons was boughtto yield 7.5% convertible semiannually. Determine the amount of premiumamortized in the six

Suppose that a bank has ​$80 in checkable​ deposits, reserves of ​$15 ​, and a reserve requirement of​ 10%. Also assume that the the bank suffers a ​$6 deposit outflow. If the bank chooses to borrow from the Fed to meet its reserve​ requirement, then the bank would need to borrow ​$nothing . ​(Round your response to the nearest two decimal​ place.)

Jane is a very intelligent graduate of FIN 3601. As such, she knows she should will start contributing into her company's retirement plan. She decides to allocate $250 at the end of each month into her 401(k). However, her company offers a fairly generous matching program. For every dollar that Jane saves in her 401(k), her firm will add $0.50 to her account. If she is employed by this firm for 30 years and earns an average of 10.50% on her retirement savings per year, how much will Jane have in her retirement account 30 years from now? Report your answer rounded to two decimal places.

2. What is dy/dx if y=6x'/12+0.4x
​

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $15 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
If the required return on this stock is 15 percent, what is the current share price?

Julio is in the 32% tax bracket. He acquired 9,000 shares of stock in Gray Corporation seven years ago at a cost of $20 per share. In the current year, Julio received a payment of $135,000 from Gray Corporation in exchange for 4,500 of his shares in Gray. Gray has E & P of $1,000,000. What income tax liabil-ity would Julio incur on the $150,000 payment in each of the following situations? Assume that Julio has no capital losses.

a. The stock redemption qualifies for sale or exchange treatment.
b. The stock redemption does not qualify for sale or exchange treatment.
c. How would your answer to parts (a) and (b) of Problem 49 differ if Julio were a corporate shareholder rather than an individual shareholder and the stock ownership in Gray Corporation represented a 25% interest?

At Bargain Electronics, it costs $29 per unit ($16 variable and $13 fixed) to make an MP3 player that normally sells for $50. A foreign wholesaler offers to buy 3,480 units at $27 each. Bargain Electronics will incur special shipping costs of $1 per unit. Assuming that Bargain Electronics has excess operating capacity.

Required:
Indicate the net income (loss) Bargain Electronics would realize by accepting the special order.

The following information is available for Trinkle Company for the month of June:

a. The unadjusted balance per the bank statement on June 30 was $56,193.
b. Deposits in transit on June 30 were $2,350.
c. A debit memo was included with the bank statement for a service charge of $8.
d. A $4,862 check written in June had not been paid by the bank.
e. The bank statement included a $600 credit memo for the collection of a note.
f. The principal of the note was $545, and the interest collected amounted to $55.

Required:
Determine the true cash balance as of June 30.

The provision of accounting information for internal users is known as

As a manager, Alejandro views his organization primarily as people and believes strongly in treating team members well to help them succeed. Which of the following orientations best describes Alejandro's leader orientation?

a. Symbolic orientation.
b. Human Resource orientation.
c. Structural orientation
d. Political orientation.

Case :
"Dear Mr. President—Please Cancel our Project!": The Honolulu Elevated Rail Project

This case is a great current example of a very expensive project that was kicked off because of an assumed need—to relieve congestion in downtown Honolulu through an elevated urban rail system. Critics argue that in addition to having a ballooning cost, the actual planning was poorly conceived, leaving Honolulu with an intrusive and ugly rail system through the downtown area, ruining panoramic views, and impeding traffic. Additionally, advocates underestimated the power needs for the rail system, requiring the transport authority to renegotiate electricity fees for the system. Finally, the original costs that were assumed for the project were calculated during an economic downturn and with the economy booming again, the costs of the project have gone up dramatically. All of these elements points to a state Governor who is anxious to be rid of the project and hoping that President Trump will deny additional federal funding, in which case the project will likely be cancelled.

Required:
a. Why are public works projects like the Honolulu Rail project nearly impossible to stop once they have been approved, even if later cost estimates skyrocket?
b. Project Management researchers have charged that many large infrastructure projects, like this one, suffer from "delusion" and "deception" on the parts of their advocates. Explain how "delusion" might be a cause of ballooning budgets in this project. How does "deception" affect the final project budget overruns?

Lumberton Home Maintenance Company (LHMC) earned operating income of $6,000,000 on operating assets of $62,500,000 during Year 2. The Tree Cutting Division earned $1,000,000 on operating assets of $10,000,000. LHMC has offered the Tree Cutting Division $1,250,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $112,500. LHMC has a desired return on investment (ROI) of 8 percent.

Required
a. Calculate the return on investment for LHMC, the Tree Cutting Division, and the additional investment opportunity.
b. Calculate the residual income for LHMC, the Tree Cutting Division, and the additional investment opportunity

Analysts estimate that a bond has a 40 percent probability of being priced at $950 and a 60 percent probability of being priced at $1,050 one year from today. The bond is also callable at any time at $1,010. What is the expected value of this bond in one year?
A) $1,000
B) $980
C) $1,010
D) $995
E) $986

Show the effect of each transaction on the three basic accounting elements by indicating the dollar amount of the increase or decrease under the proper element heading. Compute the resulting accounting equation.

a. Owner invested $16,500 cash in the business.
b. Paid premium for two-year insurance policy, $1,500.
c. Purchased a van valued at $35,000 with $5,000 down payment; the balance to be paid over three years.
d. Paid the rent for the month, $900.
e. Purchased $470 of supplies for cash.
f. Cash sales for the month, $8,750.
g. Billed credit customers $14,200 for monthly services.

Assume that Parker Company will receive SF100,000 in 360 days. Assume the following interest rates: U.S. Switzerland 360-day borrowing rate 7% 5% 360-day deposit rate 6% 4% Assume the forward rate of the Swiss franc is $1.0455 and the spot rate of the Swiss franc is $1.0037. If Parker Company uses a Money Market Hedge, it will receive _____in 360 days.

Bob the accountant needs to record indirect labor utilized of $6,000 in a journal entry. Bob should:_____.
a. debit Manufacturing Overhead, $6,000; credit Wages Payable, $6.000.
b. debit Accounts Payable, $6,000; credit Manufacturing Overhead, $6,000.
c. debit Manufacturing Overhead, $6,000; credit Accounts Payable, $6,000.
d. debit Wages Payable, $6,000; credit Manufacturing Overhead, $6,000.

The following selected transactions apply to Topeca Supply for November and December Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month.

a. Cash sales for November Year 1 were $65,500 plus sales tax of 9 percent.
b. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1.
c. Cash sales for December Year 1 were $79,500 plus sales tax of 9 percent.

Required:
Record the effect of the given transactions in a horizontal statements model.

Politicalization of Accounting Standards
Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Think about the term more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles (FASB) are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).
Required:
a. The Committee on Accounting Procedure of the AICPA was established in the mid to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed, and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicalization (as the term is used in the broad sense) of accounting standard setting? Explain.
b. What arguments can be raised to support the politicalization of accounting standard setting?
c. What arguments can be raised against the politicalization of accounting standard setting?

Logan owns a horse ranch. Logan dislikes horses, but he opened the ranch because he heard it was a lucrative business and he wanted to make money. Logan’s horse ranch has lost money every year for the past 5 years (including this year), but Logan has made some changes to business operations, including hiring a consultant and increasing his prices. Logan anticipates that as a result of these changes, his horse ranch will generate a profit in the next year or two. This year, Logan hired his brother, Luke, to work at the horse ranch. Logan pays Luke $500/hr to clean the horse stalls. Logan also hired his best friend, Lucy, to do Logan’s grocery shopping and other personal errands. He pays Lucy $15/hr. Which of the following is most accurate?

a. Logan cannot deduct any of the costs associated with the horse ranch because the horse ranch would be classified as a hobby, not a business
b. Logan can deduct the full salary paid to Luke because Luke works in Logan’s horse ranch business
c. Logan can deduct the full salary paid to Lucy because the amount of the expense is reasonable
d. Logan can deduct the full salary paid to Lucy because grocery shopping is ordinary and necessary
e. None of the above are correct

If interest rates on the euro are consistently below U.S. dollar interest rates, then for the International Fisher Equation (IFE) to hold between the US and the Eurozone:_________
a) The nominal exchange rate for the euro will remain constant.
b) The euro will depreciate against the dollar The euro will appreciate against the dollar.
c) Purchasing power parity must hold between the dollar and the euro.
d) The euro will remain constant with respect to the dollar.

BBB Leasing purchased a machine for $280,000 and leased it to Jack Tupp Auto Repair on January 1, 2021. Lease description: Quarterly rental payments $16,427 at beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of machine 5 years Implicit interest rate 7% Fair value of asset $280,000 What is the balance in the lease payable account after the April 1, 2021, lease payment

Big Corporation receives management consulting services from its 95 percent owned subsidiary, Small Inc. For the year 20X8, Small billed Big $140,000. Small's labor cost and other associated costs for the employees providing services to Big totaled $121,000 in 20X8. Big reported $2,567,000 of income from its own separate operations for 20X8, and Small reported net income of $695,000.
Based on the preceding information, what amount of consolidated net income should be reported in 20X8?
a. $3,262,000
b. $4,050,000
c. $3,254,100
d. $3,122,000

Permabilt Corp. was incorporated on January 1, 2019, and issued the following stock for cash: 2,000,000 shares of no-par common stock were authorized; 750,000 shares were issued on January 1, 2019, at $35 per share. 800,000 shares of $100 par value, 7.5% cumulative, preferred stock were authorized; 540,000 shares were issued on January 1, 2019, at $105 per share. No dividends were declared or paid during 2019 or 2020. However, on December 22, 2021, the board of directors of Permabilt Corp. declared dividends of $15,000,000, payable on February 12, 2022, to holders of record as of January 8, 2022.

Required:
a. Use the horizontal model for the issuance of common stock and preferred stock on January 1, 2019. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)
b. Use the horizontal model for the declaration of dividends on December 22, 2021. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)
c. Use the horizontal model for the payment of dividends on February 12, 2022. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)

Boston Consulting Group (BCG) is a management consulting, technology services and outsourcing organization. Which of the following actions should managers take when there is evidence that a fixed-rate contract is over budget and will generate a loss for the firm?
a. Use the percentage of completion method and pro rate the loss over the entire term of the engagement
b. Restate the financial statements and recognize the loss in the earliest period of the engagement
c. Use the percentage of completion method to recognize the loss over the remaining term of the engagement.
d. Recognize the loss in the current period rather than over the remaining term of the engagement
e. None of the above

The case explains that newly-hired CEO Ron Johnson quickly ordered the alteration of all stores to remove discount racks and add premium items. According to the case, that change and others signaled the move from a _________ strategy to a ________ strategy.

8. It is 1985 and suppose the 90 day forward quotes on the DM and the French franc are $.4002 10 and $.1180 90, respectively

During its 2019 fiscal year, a city receives a grant from the state to use on a worthy city project as determined by the city council. No other eligibility requirements exist, but the state requires that the grant proceeds not be spent before the city's 2020 fiscal year. The city council decides to hire a police officer who is to educate young people about the dangers of using illegal drugs. The grant is for $75,000. The state pays the city $75,000 for the grant during its 2019 fiscal year. How should the city report the receipt of the grant proceeds from the state in its Special Revenue Fund?

The following transactions were completed by the company.

a. The owner invested $17,200 cash in the company in exchange for its common stock.
b. The company purchased supplies for $1,050 cash.
c. The owner invested $11,100 of equipment in the company in exchange for more common stock.
d. The company purchased $310 of additional supplies on credit.
e. The company purchased land for $10,100 cash.

Required:
Write the impact of each transaction on individual items of the accounting equation.

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 5.8 percent, how much will you pay for the policy