Module 1: Chapter 2: Cost Flow
(To be posted as a group assignment in your group discussion area)
The following information for Transcontinental Inc. is provided. Use this information to answer
the succeeding eight questions:
Materials Inventory (Jan. 1)
Merchant Co. expects to sell 10,000 units at $120 each. Each unit is expected to require 2lbs. of
material @ $10/lb. and 3 direct labor hours @ $5/DLH. The overhead rate is estimated to be
$15/DLH. The beginning inventories are: DM 1,000 lbs. an
price level rises-the value of the dollar(its purchasing power) falls.
index number for any measure
=(value in current period/value in base period)*100
index number are meaningful only in a relative sense-we compare. but the actual
value of an inde
Scarborough Corporation, 2010 projected numbers
Projected Sales Units
Sale price per unit
Beginning Inventory Finished Goods, Jan 1
Ending Inventory Finished Goods, Dec. 3
Business Assessment Report
Jenny S Lee
Table of Contents
Financial Performance Evaluation.2
Business Case for IT.
The Risk Assessment an
Production (in units) required for the year:
Sales for the year.
Add: Desired ending finished-goods inventory on
Deduct: Beginning finished-goods inventory on
Required production during the year.
Chapter 6 - Problem 2
Joe Bauer Inc. specializes in the painting of older homes and employs several painters. It is essential for Joe Bauer to have accurate cost estimates so he can estimate painting costs before he accepts a job.
Joe has been using the h
Answers to Chapter 7 Problems
1. Determine the revenues needed to obtain the target net income:
First, determine the # of sales checks to obtain the target NI = (Fixed Cost + Target Net
Income) / (Contribution Margin per Sales Check) = ($450K +
Nokia Inc. has two user departments, Wireless Communications & Digital Communications. The
two support departments are Technical Support (TS) & Research & Development (R&D). The
costs incurred in each of these departments are as follows:
Quiz 3 Answers
Question 1 (1 point)
Xenon Company manufactures 10,000 special gears for use in its annual production
activities. The following costs are reported:
Direct materials, $3/gear
Direct labor, $4/gear
Variable Factory Overhead, $4.5/gear
EQUITY METHOD ENTRIES - 3 POINTS EACH
CONSOLIDATION ENTRIES - 4 POINTS EACH
ACCOUNT BALANCES - 2 POINTS EACH
EQUITY METHOD ENTRIES:
1/1 Investment in Homer Company
1/1 Professional Expenses
Acc 400 1:00-2:50
What is the total consideration transferred by Allfoods in the acquisition of Baked
Paragraph 805-10-25-1 requires an entity to determine whether a transaction
or event is a bu
The University of Texas at Arlington - Department of Accounting
COURSE TITLE: Research in Accounting Issues
COURSE#: ACCT 5321.001
COURSE TIMES: W 7:00-9:50 p.m.
COURSE ROOM: Pickard Hall 107
Valuation using market multiples!
P/E, P/B (M/B)!
Intuitively dene the ratios!
Compare multiples across select rms!
Apply comparables to Starbucks!
VALUATION USING MARKET
To determine "reasonable" share price (i.e. in line w
The cost model does not help reflect any changes in fair value for the investment properties. Instead, they
simply appear to lose value over time because of the depreciation charges that are included each year over
the useful life of the buildi
RATIO ANALYSIS PART 1!
Common-size Analysis (Vertical)"
Cross-sectional analysis comparing two companies"
Used to understand, identify, & compare rms"
Percentage Change Analysis (Horizontal)"
Time-series analysis at rm-level"
Earnings Per Share!
Basic Return on Assets (ROA) & Decomposition!
Measures how efciently management uses assets to
Basic & Penman Return on Common Equity (ROCE) &
of debt capital!
Used for payoffs to debtholders!
Cost of equity capital!
Used for payoffs to equity holders!
Weighted average cost of capital!
Used for payoffs to the entire rm!
WEIGHTED AVERAGE COST
[ ][ ]
Delivery has occurred or services rendered: EARNED!
Cash collection is reasonably assured: REALIZED!
Price is known!
Arrangement in place!
REVENUES RECOGNIZED AT
TIME OF SALE!
Merchandise (e.g., Gap
Most expenses are immediately charged to the income
statement in the period incurred!
1. Controls the asset!
2. Arises out of past transaction or exchange!
3. Future bene
Mean: 18.8 out of 22 (or, 86%)!
Median: 19.5 out of 22 (or, 89%)!
Inventories are merchandise available for
Inventory costs either are reported on the
balance sheet or they are transferred to the
income statement as an exp
Companies maintain two sets of accounting
Financial statements for external constituents!
Reporting to tax authorities!
Two sets of accounting records are necessary
because the U.S. tax code is different from
RATIO ANALYSIS !
is to quantify potential credit losses so
lending decisions are made with full information!
Most a lender can earn is the stated interest rate
on the loan!
Expected credit loss consists of two
RECEIVABLES FRAUD, CONT.!
Banamex lent $585 million to OSA, a Mexican oil services company, with the
loans secured by accounts receivable (from Pemex)!
A signicant portion of the accounts receivables were fraudulent and
1. First the reflection of more effective nature of the Corporations transactions with
Second, the foreign subsidiaries are included on the basis of the fiscal years to
September 31, which used to be ended at July 31.