wOW Furniture Sdn Bhd has been in business for the last ten years with sturdy financialperformance. Covid-19 pandemic, nevertheless, has significantly affected WO'sbusiness performance. The owners, however, are positive that the business can sustainby implementing a few strategies including a cut-down on business costs. The followinginformation was taken from the company's accounting records for the year ended 31December 2021.В.ItemsRMDepreciation on factory machinery75,000Purchase of raw materials198,000Direct labour101,000Indirect labour32,000Administrative expenseRent expenseInsurance expenseUtilities expense54,000108,00068,00094,000Indirect overhead43,000Salaries expense72,000 Additional information:1.Beginning and ending inventories are as follow:Ending(RM)62,000Beginning(RM)55,000Raw materialsWork in processFinished goods94,00087,000121,000106,0002.The allocation of expenses between factory and office is as follows:FactoryOffice(%)(%)35%Rent expenseInsurance expenseUtilities expenseSalary expense65%70%30%80%20%55%45%REQUIRED:(a)Prepare the Statement of Cost of Goods Manufactured for the year ended 31December 2021 (show your workings).State and briefly explain ONE (1) type of period cost and product cost that couldbe cut down in order for business entities to sustain during Covid-19 pandemic.(b)

Answer to Question(a): WOW FURNITURE Sdn Bhd…

Prepare the Statement of Cost of Goods Manufactured for the year ended 31 December 2021 (show your workings). State and briefly explain ONE (1) type of period cost and product cost that could be cut down in order for business entities to sustain during Covid-19 pandemic.

Prepare the Statement of Cost of Goods Manufactured for the year ended 31 December 2021 (show your workings). State and briefly explain ONE (1) type of period cost and product cost that could be cut down in order for business entities to sustain during Covid-19 pandemic.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter6: Accounting Quality

Section: Chapter Questions

Problem 10QE: Checkpoint Systems is a leading provider of source tagging, handheld labeling systems, retail...

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Checkpoint Systems is a leading provider of source tagging, handheld labeling systems, retail merchandising systems, and bar-code labeling systems. In a press release, Checkpoint stated the following: GAAP reported net loss for the fourth quarter of 2004 was 29.3 million, or 0.78 per diluted share, compared to net earnings of 4.5 million, or 0.13 per diluted share, for the fourth quarter 2003. Excluding impairment and restructuring charges, net of tax, the Companys net income for the fourth quarter 2004 was 0.30 per diluted share, compared to 0.27 per diluted share in the fourth quarter 2003. Calculate the amount of the impairment and restructuring charges Checkpoint reported in 2004 and 2003. Discuss why the firm reported earnings both including and excluding impairment and restructuring charges.
Consider the following conversation between Leonard Bryner, president and manager of a firm engaged in job manufacturing, and Chuck Davis, certified management accountant, the firms controller. Leonard: Chuck, as you know, our firm has been losing market share over the past 3 years. We have been losing more and more bids, and I dont understand why. At first, I thought that other firms were undercutting simply to gain business, but after examining some of the public financial reports, I believe that they are making a reasonable rate of return. I am beginning to believe that our costs and costing methods are at fault. Chuck: I cant agree with that. We have good control over our costs. Like most firms in our industry, we use a normal job-costing system. I really dont see any significant waste in the plant. Leonard: After talking with some other managers at a recent industrial convention, Im not so sure that waste by itself is the issue. They talked about activity-based management, activity-based costing, and continuous improvement. They mentioned the use of something called activity drivers to assign overhead. They claimed that these new procedures can help to produce more efficiency in manufacturing, better control of overhead, and more accurate product costing. A big deal was made of eliminating activities that added no value. Maybe our bids are too high because these other firms have found ways to decrease their overhead costs and to increase the accuracy of their product costing. Chuck: I doubt it. For one thing, I dont see how we can increase product-costing accuracy. So many of our costs are indirect costs. Furthermore, everyone uses some measure of production activity to assign overhead costs. I imagine that what they are calling activity drivers is just some new buzzword for measures of production volume. Fads in costing come and go. I wouldnt worry about it. Ill bet that our problems with decreasing sales are temporary. You might recall that we experienced a similar problem about 12 years agoit was 2 years before it straightened out. Required: 1. Do you agree or disagree with Chuck Davis and the advice that he gave Leonard Bryner? Explain. 2. Was there anything wrong or unethical in the behavior that Chuck Davis displayed? Explain your reasoning. 3. Do you think that Chuck was well informedthat he was aware of the accounting implications of ABC and that he knew what was meant by cost drivers? Should he have been well informed? Review (in Chapter 1) the first category of the Statement of Ethical Professional Practice for management accountants. Do any of these standards apply in Chucks case?
Grant Company has had a record-breaking year in termsof growth in sales and profitability. However, marketresearch indicates that it will experience operating lossesin two of its major businesses next year. The controllerhas proposed that the company record a provision forthese future losses this year, since it can afford to take thecharge and still show good results. Advise the controlleron the appropriateness of this charge.
One of the major advantages of small businesses is that the investment for running the business is not a major issue this statement is a.Fully false b.Partly false c.Fully true d. Partly true In one of the reputed firm total number of employees were more than 150 and the annual sales in 2019 was around 5 million OMR. In 2020 the company had a huge crisis because of the Corona pandemic which leads them to decrease their number of workers to 55, as a cosuquance their annual sales drop to 723,000 OMR. Based on last year data and according to the Ministry of commerce and industry the business will be categorized under a.None of the given options b.Micro business enterprise c.Small business enterprise d.Medium business enterprise Which of the following Statement(s) is/are Correct? Statement 1: Entrepreneurship is a systematic process of applying creativity and innovation to needs and opportunities in the marketplace Statement2: Entrepreneurship involves using old ideas to create a product…
Penco Ltd’s board of directors are looking into expanding the company’s business operations. Before investing in a new product, the board conducted one focus group, and based on this one bit of feedback, invested $5m of company funds to develop the product. Within two years, the company had lost $8m due to poor sales. Shareholders are furious and wish to hold directors personally liable for this loss. Analyse the likely outcome for directors if shareholders were to accuse the board of breaching CA s 180.
ABC Airlines is a commercial airline that targets business and nonbusiness travelers. In recent months, the airline has been unprofitable. The company has break-even sales volume of 75% of capacity, which is significantly higher than the industry average of 65%. ABC's CEO, Richard Buchanan, is concerned about the recent string of losses and is considering a strategic plan that could reduce the break-even sales volume by increasing ticket prices. He has asked for your help in evaluating this plan. Instruction: As management accountants, write a brief memo to Richard Buchanan evaluating this strategy by discussing the advantages/disadvantages of increasing the ticket prices and its effect on the break even sales volume for ABC Airlines.
Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer (CFO) to Jim Fielding, the company controller, included the following comments:If we don’t do something about the large amount of unsold computers already manufactured, our auditors will require us to record a write-down. The resulting loss for 2021 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales, Inc., in Oklahoma City. I know the company’s president, and he will accept the inventory and acknowledge the shipment as a purchase. We can record the sale in 2021 which will boost our loss to a profit. Then J.B. Sales will simply…
On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc.Product-Line Income StatementFor the Year Ended April 30, 20Y7 Children's Shoes Men's Shoes Women's Shoes Total Sales $165,000 $300,000 $500,000 $965,000 Costs of goods sold: Variable costs $105,000 $150,000 $220,000 $475,000 Fixed costs 32,000 60,000 120,000 212,000 Total cost of goods sold $137,000 $210,000 $340,000 $687,000 Gross profit $28,000 $90,000 $160,000 $278,000 Selling and adminstrative expenses: Variable selling and admin. expenses $21,000 $45,000 $95,000 $161,000 Fixed selling and admin. expenses 17,000 20,000 25,000 62,000 Total selling and admin. expenses $38,000 $65,000 $120,000 $223,000 Income (loss) from…
In one of the reputed firm total number of employees were more than 150 and the annual sales in 2019 was around 5 million OMR. In 2020 the company had a huge crisis because of the Corona pandemic which leads them to decrease their number of workers to 55, as a cosuquance their annual sales drop to 723,000 OMR. Based on last year data and according to the Ministry of commerce and industry the business will be categorized under a.None of the given options b.Micro business enterprise c.Small business enterprise d.Medium business enterprise Which of the following Statement(s) is/are Correct? Statement 1: Entrepreneurship is a systematic process of applying creativity and innovation to needs and opportunities in the marketplace Statement2: Entrepreneurship involves using old ideas to create a product that satisfies customer needs a.Only Statement 1 is Correct b.Both the given Statements are Correct c.Only Statement 2 is Correct d.None of the given Statements are Correct Please answer all…
The following scenario describes the X Company with 25M revenue and approximately 300 employees. X company is a publicly listed company that first became listed 3 years ago. It has been hit hard by the recent pandemic and its sales dropped from 375M to 250M. It is barely profitable and is just meeting some of the most important debt covenants. During the past year, the CEO and owner of 22% shares of the company has taken the following actions to reduce costs: Laid approximately 75 factory workers and streamlined receiving and shipping to be more efficient. Cut hourly wages by P50 per hour. Changed from big 4 audit firm to a regional audit firm, resulting to an additional audit savings of P300,000. This is the first public company audit for the new firm. Put a freeze on hiring despite the accounting’s retirement of its assistant controller. This has required a great deal of overtime for most accounting personnel. Required: For each of the items above, identify whether the…
Horizon Corporation manufactues personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020's income statement reported a loss of $20 million. Just before the end of 2021 fiscal year, a memo from the company's chief financial officer (CFO) to Jim Fielding, the company controller, included the following comments: "If we dont do something about the large amount of unsold computers already manufactured, our auditors will require us to record a write-down. The resulting loss for 2021 will cause a violation of our debt convenants and force the company into bankruptcy. I suggest that you ship half of out inventory to J.B. Sales, Inc., in Oklahoma City. I know the company's presdient, and he will accept the inventory and acknowledge the shipment as a purchase. We can record the sale in 2021 which will boost our loss to a profit. Then J.B. Sales will simply return…
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