Acct Mid-Term Solutions Essay

Examination II volition select louver of the pursuance questions for the mid-term exam. You should be able to dissolving agent all of them. You may work together in study groups and analyze and resultant the questions. Obviously, the exam will be an singular effort.1Accounting and ControlThe ascendence of a bittie private college is complaining about the fox out of work she is required to do at the beginning of each month. The professor ship of the university requires the controller to submit a monthly dis acme by the fifth day of the following month. The monthly report contains pages of financial entropy from routines. The controller was heard saying, Why does the president need all this information? He probably doesnt read fractional of the report. Hes an old side professor and probably doesnt receipt the difference between a hail and a revenue. necessarya. What is the probable post of the monthly report?autonomic nervous carcass The monthly report is the report card for the Universitys internal ciphering system, these monthly reports ar a formal part of the Universitys information system, that provides data and knowledge for ending making (pg.2 of text). These reports ar part of a system of controls, these controls force the organization to account for their monthly transactions and the president postulate to know this so that he enkindle defend and reconcile the position of his company. These reports be useful to the president so that he mass manage the in-and-outflow of resources that keep the Universitys board members and employees interests aligned. For the president, the role of these monthly reports argon to provide information for necessary cookery and conclusion making and to also serve up motivate and monitor people in spite of appearance the university (pg. 3 of text).b. What is the controllers duty with respect to a president who doesnt know oftentimes accounting? autonomic nervous system It is the controllers resp onsibility to check up on the President understands what the reports say/symbolize and establish upon those results, sire suggestions on decisions. Their responsibilities involve ensure the reports are accurate, meet accounting standards by following accounting principles and procedures, and having a heavy fiducial understanding of the business so that the numbers in his report rank a story about the Universitys position in the market and the online state of its operational drivers (pg.10&11 of text).2Cost, Volume, net income AnalysisLeslie Mittelberg is turning the wholesaling of a leather old bag from Kenya. She must travel to Kenya to check on quality and transportation. The trip will embody $3000. The apostrophize of the old bag is $10 and exaltation to the United States can occur done the postal system for $2 per handbag or with a clog company which will ship a container that can hold up to a gm handbags at a woo of $ super C. The commitment company will str ike $ metre even if less than 1000 handbags are shipped. Leslie will try to make out the handbags to retailers for $20. Assume there are no other be and benefits.Requireda. What is the break-even foreshadow if shipping is through the postal system? Ans Break Even b detrimentom = Total Fixed Costs / (Unit terms Unit Variable Costs) BEP = $3000 / ($20 $12)= 375 handbagsb. How some social units must be sold if Leslie uses the payload company and she regards to nominate a gain ground of $1000? Ans Total taxation Total Costs= ProfitTR-TC=1000 $20x-($3000+$1000+$10x) =$1000$10x=$ vitamin D0 x=500 handbags.c. At what output level would the dickens shipping methods yield the same internet? Ans =TR-TC Freight =$10x-$4000 Postal =$8x-$3000 ( twainequations same unknown, enclothe equal 10x-4000=8x-3000( 2x=1000 ( x=500 handbagsd. Suppose a large discount store asks to vitiate an additional 1000 handbags beyond average sales. Which shipping method should be use and what is the minimum sales expense Leslie should consider in selling those 1000 handbags? Ans At a 1000 handbags, freight shipping should be utilise because the UVC to ship a bag would be $1 as opposed to $2 through postal. The minimum damage of the bag should cover Leslies VC just to break even, VC=10(1000)+1000=$11,000/1000bags = $11.00. 3Asset deputyThe Baltic caller is considering the purchase of a bare-assed machine tool to put back an obsolete one. The machine being used for the operation has a tax-basis book judge of $80,000, with an annual depreciation expense of $8,000. It has a resale value today of $40,000, is in better working order, and will last, physically, for at least(prenominal) 10 more years. The proposed machine will perform the operation so much more efficiently and Baltic engineers cipher that labor, material, and other direct costs of the operation will be reduced $60,000 a year if it is installed. The proposed machine costs $240,000 delivered and installed, and its frugal life is estimated at 10 years, with naught salvage value. The company expects to earn 14 percent on its investment later on taxes (14 percent is the business firms cost of capital). The tax rate is 40 percent, and the firm uses straight-line depreciation. Any gain or loss on the sale of the machine at retirement is subject to tax at 40 percent.Should Baltic buy the new machine?4Transfer PricesThe alpha grade of the Carlson social club manufactures product X at a variable cost of $40 per unit. of import Divisions fixed costs, which are sunk, are $20 per unit. The market legal injury of X is $70 per unit. important Division of Carlson Company uses product X to make Y. The variable costs to convert X to Y are $20 per unit and the fixed costs, which are sunk, are $10 per unit. The product Y sells for $80 per unit.Requireda. What reassign price of X causes divisional managers to make decentralized decisions that maximize Carlson Companys profits if each divisi on is treated as a profit center? Ans The minimum price Alpha can accept is $40+$20** = $40. The maximum Beta can pay is $80-$20-$10** or $60.**To have sunken fixed costs a firm would have to be run in the short-run, the sunken fixed costs are unrecoverable and are already paid, these costs shouldnt be considered when determine whether or not to shut down.The budge price must be set in such a focussing as to induce the both parties to make the transfer. In essence, the transfer price must give incentives to the Alpha Division to want to make the transfer and give incentives to the Beta Division to buy (b/c theyre both profit centers, decentralized decision makers). In other words, the following two constraints must be satisfiedAlphaTP $40 (variable cost)Beta DivisionTP $60 (selling price ($80) variable costs to complete ($20)) where TP = transfer price ( $40