Crispy, Inc. is a producer of potato chips. A single production process at Crispy, Inc., yields potato chips as the main product, as well as a byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs. For September 2020, the cost of operations is $520,000. Production and sales data are as follows: (Click the icon to view the production and sales data.) Data table Potato Chips Byproduct Production (in pounds) Sales (in pounds) 46,000 34,960 $ 8,200 5,000 $ Deduct value of byproduct production Print Done Selling Price per pound G 26 5 X There were no beginning inventories on September 1, 2020. Read the requirements. Requirements 1. What is the gross margin for Crispy, Inc., under the production method and the sales method of byproduct accounting? 2. What are the inventory costs reported in the balance sheet on September 30, 2020, for the main product and byproduct under the two methods of byproduct accounting in requirement 1? 3. Prepare the journal entries to record the byproduct activities under (a) the production method and (b) the sales method. Briefly discuss the effects on the financial statements. Print Done - X
Q: Lockheed Company for the month of May. Lockheed uses a perpetual inventory system: May 1 00 units…
A: Perpetual inventory system is a method of tracking inventory levels on a continuous basis. In this…
Q: The Balance Sheet XYZ Corporation as of Dec. 31, 2022 has the following information: P4,500 Cash…
A: Merchandise inventory represents the amount of goods that an entity has, for the purpose of selling…
Q: Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment…
A: The expenditure associated with paying income taxes is arrived at by multiplying the taxable income…
Q: 1. What is the gross margin for Holy Cow under the production method and the sales method of…
A: Gross margin measures how much profit a company is making on its products or services before…
Q: Yarra Fabrication estimates that its manufacturing overhead will be $2,310,400 in year 1. It further…
A: Overheads means all type of indirect costs ans expenses being incurred in business for production or…
Q: Futura Company purchases the 62,000 starters that it installs in its standard line of farm tractors…
A: A make-or-buy decision is a useful business decision-making process for an organization, which is…
Q: Beagle Corporation has 18,000 shares of $10 par common stock outstanding and 15,500 shares of $100…
A: Dividend: The part of the profit that a company paid to its shareholders is called dividend. It is…
Q: Lelak Company was formed on January 1, year 2. Its machinery is being depreciated using the MACRS…
A: Answer:- Depreciation meaning:- An asset loses value over the time as a result of use, damage etc.…
Q: Prepare the journal entries to record the above transactions. Assume the company uses the perpetual…
A: The method of the inventory is the perpetual inventory system and as per that the inventories are…
Q: A coal mine expected to contain 6.5 million tons of coal was purchased at a cost of $30 million.…
A: Depletion is always applicable to natural resources such as coal, oil, gas, or minerals. It is an…
Q: Ellicott City received a $5,000,000 capital grant to be equally distributed among its three…
A: Agency Fund is an account that holds the money of the government as an agent of an individual,…
Q: On January 1, 2018, Movie acquired 3,500 of its own $2 par value comm Nonaffiliated Corporation for…
A: Subsidiary Company- A company that is partially or fully controlled and owned by another company,…
Q: 1. How valid and reliable do you think HIT investment decisions are currently? Why?
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: ired information following information applies to the questions displayed below.] stockholders'…
A: Balance sheet is one of financial statements, it is prepared at the end of accounting period.…
Q: 2. Peloton has the following stock outstanding. ■ Common Stock-$50,000 ($1 par, 150,000 shares…
A: When dividend is distributed, it is first paid to arrears of cumulative preference share and then…
Q: Puget Sound Divers is a company that provides diving services such as underwater ship repairs to…
A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…
Q: Punta Cana Company set the following standards for direct materials for 2022: 16 pounds per unit at…
A: Material price variance = AQ x (AP - SP) Material quantity variance = SP x (AQ - SQ)
Q: I have completed the first 3 questions. I would like help with the final question 4- preparing a…
A: A cash flow statement is one of the financial statements which helps in depicting the financial…
Q: On Oct. 1, 2022, the board of directors of Purple Inc. declared a $3.00 per share cash dividend on…
A: Company means a form of business where the share holder invest money in business in form of shares…
Q: a. Prepare a contribution margin by route report for East Coast Railroad Company for the month of…
A: Activity-Based Costing (ABC) is used to,, -assign costs -identify -describe to, and report on agency…
Q: Please do not give solution in image format thanku
A: A balance sheet is a type of financial statement that shows the financial situation of a business at…
Q: 1. Determine free cash flows for General Mills in each of the three years reported. After-tax…
A: Free Cash Flow is defined as the cash balance left with an entity after the payments have been made…
Q: Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the…
A: A budget is a forecast of revenue and expenses for a certain future period of time that is generally…
Q: Q13 By how much the change in Dividends has generated or (used) cash? A) B) C) D) E) $ $ $ $ none of…
A: The cash flow statement is prepared to record the cash flow from various activities during the…
Q: Which of the following statements related to loss carryback is NOT correct? O The company may carry…
A: Carry back is the term used to apply the net operating loss to the taxable income of previous year…
Q: 31) Beta has three products, A, B, and C. The following information is available: C $24,000 9,000…
A: The term "operating income" refers to the money that remains after all operational expenditures and…
Q: Which of the following is true of internal control?
A: Internal control is a process designed to provide reasonable assurance regarding the achievement of…
Q: Beta is approached by a customer to fulfill a one-time-only special order. Beta has excess capacity.…
A: Contribution margin per unit=Selling price per unit-Total variable cost per unit
Q: (a) Prepare journal entries on 1/1/25 to recognize the loan for Shetland Company (b) Prepare the…
A: Disclaimer: "Since you have asked multiple questions, i will solve the first three questions for…
Q: Prepare a production budget for 2022 under each plan. BONITA INDUSTRIES Production Budget Plan A…
A: Budget: A budget can be defined as a financial plan or an estimation of revenues, expenditure,…
Q: On January 1, 2024, the Allegheny Corporation purchased equipment for $283,000. The estimated…
A: DEPRECIATION EXPENSE Depreciation means gradual decrease in the value of an asset due to normal wear…
Q: (Algo) Clothing Emporium was organized Basu Emporium was organized on January 1, 2024. The firm was…
A: Total paid in capital includes par value and the additional paid in capital i.e. Total Issue price…
Q: Required: a. What amount of gain or loss does Ramon realize on the transfer of the property to his…
A: A partnership is a contract between two or more persons to form a business and share profits and…
Q: Florentino Allers is the production manager of Electronics Manufacturer. Due to limited capacity,…
A: Decision Making - It is process of making choice out of different available option after gathering…
Q: Campers Ltd was established in 2010 and have had impressive returns for the years preceding…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: Which of the following BEST (select one) describes why the audit universe should be aligned with…
A: An entity's financial records, statements, and other financial information are examined as part of…
Q: A company reports cost of goods sold of $600,000. During that period, inventory fell by $50,000…
A: Cost of goods sold (COGS) : Cost of goods sold budget shows the expenses incurred for producing a…
Q: The controller of Trenshaw Company wants to improve the company's control system by preparing a…
A: Cash budget records the cash inflows and cash outflows transaction during the period. Cash inflows…
Q: Rasheed works for Company A, earning $299,000 in salary during 2022. Assuming he is single and has…
A: Payroll taxes are the taxes that are paid by both the company and the employee to support the…
Q: crane company management wants to maintain a minimum monthly cash balance of $26,500. At the…
A: The cash budget is an estimate of cash receipts and their payment during a future period of time.
Q: Olive Company makes silver belt buckles. The company's master budget appears in the first column of…
A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…
Q: hich of the following statements are true? a. Recording purchase transactions in a general journal…
A: As per Bartleby's guidelines, I am bound to solve one question at a time. As there is 2 questions…
Q: Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In…
A: Direct Material efficiency variance : Direct Material efficiency variance is the difference between…
Q: Trez Company began operations this year. During this year, the company produced 100,000 units and…
A: ABSORPTION COSTING Absorption Costing is a Cost managerial Accounting method in which All Cost…
Q: Independence permits internal auditors to render impartial and unbiased judgments. The BEST way…
A: An internal auditor is a professional who works within an organization to evaluate the internal…
Q: Rayburn Corporation has a building that it bought during year 0 for $850,000. It sold the building…
A: Business organizations are required to charge the depreciation expense in the books of accounts so…
Q: Solar Systems purchased two assets during the current year. On August 10, Solar Systems placed in…
A: Depreciation is an expense incurred for the usage of tangible fixed properties on a day-to-day basis…
Q: on Dec 31 Liverpyncorp issued 4000 common shares for land with a fair market value of 198000…
A: Answer:- Journal entry meaning:- In the company's books a journal entry serves as a record of a…
Q: At the beginning of the year, Albers, Inc., has total stockholders' equity of $840,000 and 40,000…
A: Stockholders' equity, sometimes known as shareholders' equity, is the remaining stake in a company's…
Q: In the month of April, a department had 500 units in the beginning work in process inventory that…
A: Equivalent units means where the some goods remain incomplete at the end of process and we need to…
Step by step
Solved in 5 steps
- Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling cereal at a price of $22,000 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. Should Almond Treats make or buy the almond cereal?NoFat manufactures one product, olestra, and sells it to large potato chip manufacturers as the key ingredient in nonfat snack foods, including Ruffles, Lays, Doritos, and Tostitos brand products. For each of the past 3 years, sales of olestra have been far less than the expected annual volume of 125,000 pounds. Therefore, the company has ended each year with significant unused capacity. Due to a short shelf life, NoFat must sell every pound of olestra that it produces each year. As a result, NoFats controller, Allyson Ashley, has decided to seek out potential special sales offers from other companies. One company, Patterson Union (PU)a toxic waste cleanup companyoffered to buy 10,000 pounds of olestra from NoFat during December for a price of 2.20 per pound. PU discovered through its research that olestra has proven to be very effective in cleaning up toxic waste locations designated as Superfund Sites by the U.S. Environmental Protection Agency. Allyson was excited, noting that This is another way to use our expensive olestra plant! The annual costs incurred by NoFat to produce and sell 100,000 pounds of olestra are as follows: In addition, Allyson met with several of NoFats key production managers and discovered the following information: The special order could be produced without incurring any additional marketing or customer service costs. NoFat owns the aging plant facility that it uses to manufacture olestra. NoFat incurs costs to set up and clean its machines for each production run, or batch, of olestra that it produces. The total setup costs shown in the previous table represent the production of 20 batches during the year. NoFat leases its plant machinery. The lease agreement is negotiated and signed on the first day of each year. NoFat currently leases enough machinery to produce 125,000 pounds of olestra. PU requires that an independent quality team inspects any facility from which it makes purchases. The terms of the special sales offer would require NoFat to bear the 1,000 cost of the inspection team. Based solely on financial factors, explain why NoFat should accept or reject PUs special sales offer.NoFat manufactures one product, olestra, and sells it to large potato chip manufacturers as the key ingredient in nonfat snack foods, including Ruffles, Lays, Doritos, and Tostitos brand products. For each of the past 3 years, sales of olestra have been far less than the expected annual volume of 125,000 pounds. Therefore, the company has ended each year with significant unused capacity. Due to a short shelf life, NoFat must sell every pound of olestra that it produces each year. As a result, NoFats controller, Allyson Ashley, has decided to seek out potential special sales offers from other companies. One company, Patterson Union (PU)a toxic waste cleanup companyoffered to buy 10,000 pounds of olestra from NoFat during December for a price of 2.20 per pound. PU discovered through its research that olestra has proven to be very effective in cleaning up toxic waste locations designated as Superfund Sites by the U.S. Environmental Protection Agency. Allyson was excited, noting that This is another way to use our expensive olestra plant! The annual costs incurred by NoFat to produce and sell 100,000 pounds of olestra are as follows: In addition, Allyson met with several of NoFats key production managers and discovered the following information: The special order could be produced without incurring any additional marketing or customer service costs. NoFat owns the aging plant facility that it uses to manufacture olestra. NoFat incurs costs to set up and clean its machines for each production run, or batch, of olestra that it produces. The total setup costs shown in the previous table represent the production of 20 batches during the year. NoFat leases its plant machinery. The lease agreement is negotiated and signed on the first day of each year. NoFat currently leases enough machinery to produce 125,000 pounds of olestra. PU requires that an independent quality team inspects any facility from which it makes purchases. The terms of the special sales offer would require NoFat to bear the 1,000 cost of the inspection team. Assume for this question that NoFat rejected PUs special sales offer because the 2.20 price suggested by PU was too low. In response to the rejection, PU asked NoFat to determine the price at which it would be willing to accept the special sales offer. For its regular sales, NoFat sets prices by marking up variable costs by 10%. If Allyson decides to use NoFats 10% markup pricing method to set the price for PUs special sales offer, a. Calculate the price that NoFat would charge PU for each pound of olestra. b. Calculate the relevant profit that NoFat would earn if it set the special sales price by using its markup pricing method. (Hint: Use the estimate of relevant costs that you calculated in response to Requirement 1b.) c. Explain why NoFat should accept or reject the special sales offer if it uses its markup pricing method to set the special sales price.
- NoFat manufactures one product, olestra, and sells it to large potato chip manufacturers as the key ingredient in nonfat snack foods, including Ruffles, Lays, Doritos, and Tostitos brand products. For each of the past 3 years, sales of olestra have been far less than the expected annual volume of 125,000 pounds. Therefore, the company has ended each year with significant unused capacity. Due to a short shelf life, NoFat must sell every pound of olestra that it produces each year. As a result, NoFats controller, Allyson Ashley, has decided to seek out potential special sales offers from other companies. One company, Patterson Union (PU)a toxic waste cleanup companyoffered to buy 10,000 pounds of olestra from NoFat during December for a price of 2.20 per pound. PU discovered through its research that olestra has proven to be very effective in cleaning up toxic waste locations designated as Superfund Sites by the U.S. Environmental Protection Agency. Allyson was excited, noting that This is another way to use our expensive olestra plant! The annual costs incurred by NoFat to produce and sell 100,000 pounds of olestra are as follows: In addition, Allyson met with several of NoFats key production managers and discovered the following information: The special order could be produced without incurring any additional marketing or customer service costs. NoFat owns the aging plant facility that it uses to manufacture olestra. NoFat incurs costs to set up and clean its machines for each production run, or batch, of olestra that it produces. The total setup costs shown in the previous table represent the production of 20 batches during the year. NoFat leases its plant machinery. The lease agreement is negotiated and signed on the first day of each year. NoFat currently leases enough machinery to produce 125,000 pounds of olestra. PU requires that an independent quality team inspects any facility from which it makes purchases. The terms of the special sales offer would require NoFat to bear the 1,000 cost of the inspection team. Assume for this question that Allysons relevant analysis reveals that NoFat would earn a positive relevant profit of 10,000 from the special sale (i.e., the special sales alternative). However, after conducting this traditional, short-term relevant analysis, Allyson wonders whether it might be more profitable over the long term to downsize the company by reducing its manufacturing capacity (i.e., its plant machinery and plant facility). She is aware that downsizing requires a multiyear time horizon because companies usually cannot increase or decrease fixed plant assets every year. Therefore, Allyson has decided to use a 5-year time horizon in her long-term decision analysis. She has identified the following information regarding capacity downsizing (i.e., the downsizing alternative): The plant facility consists of several buildings. If it chooses to downsize its capacity, NoFat can immediately sell one of the buildings to an adjacent business for 30,000. If it chooses to downsize its capacity, NoFats annual lease cost for plant machinery will decrease to 9,000. Therefore, Allyson must choose between these two alternatives: Accept the special sales offer each year and earn a 10,000 relevant profit for each of the next 5 years or reject the special sales offer and downsize as described above. Assume that NoFat pays for all costs with cash. Also, assume a 10% discount rate, a 5-year time horizon, and all cash flows occur at the end of the year. Using an NPV approach to discount future cash flows to present value, a. Calculate the NPV of accepting the special sale with the assumed positive relevant profit of 10,000 per year (i.e., the special sales alternative). b. Calculate the NPV of downsizing capacity as previously described (i.e., the downsizing alternative). c. Based on the NPV of Requirements 5a and 5b, identify and explain which of these two alternatives is best for NoFat to pursue in the long term.Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
- Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas City, and the other in Tulsa. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for 1,620. Sales volume averages 20,000 units per year in each plant. Recently, the Kansas City plant reduced the price of the tilt model to 1,440. Discussion with the Kansas City manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called non-value-added costs. The Kansas City manufacturing and selling costs for the tilt model were 1,260 per unit. The Kansas City manager offered to loan the Tulsa plant his cost accounting manager to help it achieve similar results. The Tulsa plant manager readily agreed, knowing that his plant must keep pacenot only with the Kansas City plant but also with competitors. A local competitor had also reduced its price on a similar model, and Tulsas marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to 1,404 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the 1,260 per-unit cost of the Kansas City plant and if the plant can achieve the cost reduction using the approach of the Kansas City plant. The plant controller and the Kansas City cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. Required: 1. Calculate the target cost for expanding the Tulsa plants market share by 20 percent, assuming that the per-unit profitability is maintained as requested by the plant manager. 2. Calculate the non-value-added cost per unit. Assuming that non-value-added costs can be reduced to zero, can the Tulsa plant match the Kansas City per-unit cost? Can the target cost for expanding market share be achieved? What actions would you take if you were the plant manager? 3. Describe the role that benchmarking played in the effort of the Tulsa plant to protect and improve its competitive position.Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?Taylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio and Maslimpio. Pocolimpio uses two quarts of the chemical for every unit produced, and Maslimpio uses five quarts. Currently, Taylor has 6,000 quarts of the material in inventory. All of the material is imported. For the coming year, Taylor plans to import 6,000 quarts to produce 1,000 units of Pocolimpio and 2,000 units of Maslimpio. The detail of each products unit contribution margin is as follows: Taylor Company has received word that the source of the material has been shut down by embargo. Consequently, the company will not be able to import the 6,000 quarts it planned to use in the coming years production. There is no other source of the material. Required: 1. Compute the total contribution margin that the company would earn if it could import the 6,000 quarts of the material. 2. Determine the optimal usage of the companys inventory of 6,000 quarts of the material. Compute the total contribution margin for the product mix that you recommend. 3. Assume that Pocolimpio uses three direct labor hours for every unit produced and that Maslimpio uses two hours. A total of 6,000 direct labor hours is available for the coming year. a. Formulate the linear programming problem faced by Taylor Company. To do so, you must derive mathematical expressions for the objective function and for the materials and labor constraints. b. Solve the linear programming problem using the graphical approach. c. Compute the total contribution margin produced by the optimal mix.
- Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in the prior year was: At the start of the current year, Cinnamon Depot received a special order for 18,000 rolls to be sold for $1.50 per roll. The company estimates it will incur an additional $1,000 in total fixed costs in order to lease a special machine that forms the rolls in the shape of a heart per the customers request. This order will not affect any of its other operations. Should the company accept the special order? (Show your work.)Yum, Inc. is a producer of potato chips. A single production process at Yum, Inc., yields potato chips as the main product, as well as a byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs. For September 2020, the cost of operations is $485,000. Production and sales data are as follows: Note: There were no beginning inventories on September 1, 2020. Requirements Dialog content starts 1. What is the gross margin forbYum,Inc., under the production method and the sales method of byproduct accounting? 2. What are the inventory costs reported in the balance sheet on September 30, 2020, for the main product and byproduct under the two methods of byproduct accounting in requirement 1? 3. Prepare the journal entries to record the byproduct activities under (a) the production method and (b) the sales method. Briefly discuss the effects on the financial statements.Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 18,000 units of the product at $32 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.$