PROBLEM SOLVING: This will help you develop your analytical capabinles and exercise judgement. Problem 1 Bulacan Chemicals purchases coconut and processes it into products such as copra, vinegar and alcohol. In July 2020, Bulacan purchased coconut for P40,000. Conversion costs of P60,000 were incurred up to the split-off point, at which time two saleable products were produced: copra and vinegar. Vinegar can be further processed into alcohol. The July 2020 production and sales data are: Sales Price per Ton P50 per ton Production Sales Copra Vinegar Alcohol 1,200 tons 800 tons 1,200 tons 500 tons 500 tons P200 per ton

PROBLEM SOLVING: This will help you develop your analytical capabinles and exercise judgement. Problem 1 Bulacan Chemicals purchases coconut and processes it into products such as copra, vinegar and alcohol. In July 2020, Bulacan purchased coconut for P40,000. Conversion costs of P60,000 were incurred up to the split-off point, at which time two saleable products were produced: copra and vinegar. Vinegar can be further processed into alcohol. The July 2020 production and sales data are: Sales Price per Ton P50 per ton Production Sales Copra Vinegar Alcohol 1,200 tons 800 tons 1,200 tons 500 tons 500 tons P200 per ton

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Blue & Grey Company is a producer of coffee. The entity is considering the valuation of its harvested coffee beans. Industry practice is to value the coffee beans at market value and uses as reference a local publication "Accounting for Successful Farms". On December 31, 2018, the entity has harvested coffee beans costing P3,000,000 and with fair value less cost to sell of P3,500,000 at the point harvest. Because of long aging and maturation process after harvest, the harvested coffee beans were still on hand on December 31,2018. On such date, the fair value less cost to sell is P3,900,000 and the net realizable value is P3,200,000. The coffee beans inventory shall be measured at? A. P3,200,000 B. P3,000,000 C. P3,900,000 D. P3,500,000
Making sell or process further decisions Heavenly Dessert processes cocoa beans into cocoa powder at a processing cost of $9,700 per batch. Heavenly Dessert can sell the cocoa powder as is, or it can process the cocoa powder further into either chocolate syrup or boxed assorted chocolates. Once processed, each batch of cocoa beans would result in the following sales revenue: The cost of transforming the cocoa powder into chocolate syrup would be $72,000. Likewise, the company would incur a cost of $183,000 to transform the cocoa powder into boxed assorted chocolates. The company president has decided to make boxed assorted chocolates due to their high sales value and to the fact that the cocoa be processing cost of $9,700 eats up most of the cocoa powder profits. Has the president made the right or wrong decision? Explain your answer. Be sure to include the correct financial analysis in your response.
Thirsty plc makes a revolutionary type of can called Soak. The can has a resealable top which allows the can to be sealed after opening to prevent gas escaping. In January 2019 the idea for this new product was launched, and a loan of £5 million was obtained from Sunshine Bank in order to finance this project. The associated costs and activities for the year ended 31 May 2020 are as shown below: 01 June 2019 – 31 July 2019: £30,000 per month on market surveys to establish whether or not consumers would want such can. The market surveys suggest that there is a market for the can amongst environmentally aware consumers. 01 August 2019 – 30 September 2019: £100,000 for evaluation of a number of alternative prototypes and designs. End of September 2019: a design is chosen and engineers produce a plan which indicates that is technically possible to produce the Soak can. 01 October 2019 -31 January 2020: £1,300,000 was spent for the design and construction of a pilot manufacturing…
Thirsty plc makes a revolutionary type of can called Soak. The can has a resealable top which allows the can to be sealed after opening to prevent gas escaping. In January 2019 the idea for this new product was launched, and a loan of £5 million was obtained from Sunshine Bank in order to finance this project. The associated costs and activities for the year ended 31 May 2020 are as shown below: 01 June 2019 – 31 July 2019: £30,000 per month on market surveys to establish whether or not consumers would want such can. The market surveys suggest that there is a market for the can amongst environmentally aware consumers. 01 August 2019 – 30 September 2019: £100,000 for evaluation of a number of alternative prototypes and designs. End of September 2019: a design is chosen and engineers produce a plan which indicates that is technically possible to produce the Soak can. 01 October 2019 -31 January 2020: £1,300,000 was spent for the design and construction of a pilot manufacturing plant.…
Thirsty plc makes a revolutionary type of can called Soak. The can has a resealable top which allows the can to be sealed after opening to prevent gas escaping. In January 2019 the idea for this new product was launched, and a loan of £5 million was obtained from Sunshine Bank in order to finance this project. The associated costs and activities for the year ended 31 May 2020 are as shown below: 01 June 2019 – 31 July 2019: £30,000 per month on market surveys to establish whether or not consumers would want such can. The market surveys suggest that there is a market for the can amongst environmentally aware consumers. 01 August 2019 – 30 September 2019: £100,000 for evaluation of a number of alternative prototypes and designs. End of September 2019: a design is chosen and engineers produce a plan which indicates that is technically possible to produce the Soak can. 01 October 2019 -31 January 2020: £1,300,000 was spent for the design and construction of a pilot manufacturing plant.…
Kristin Company sells 300 units of its products for $20 each to Logan Inc. for cash. Kristin allows Logan to return any unused product within 30 days and receive a full refund. The cost of each product is $12. To determine the transaction price, Kristin decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the probability-weighted amount. Using the probability-weighted amount, Kristin estimates that (1) 10 products will be returned and (2) the returned products are expected to be resold at a profit. Indicate the amount of (a) net sales, (b) estimated liability for refunds, and (c) cost of goods sold that Kristen should report in its financial statements (assume that none of the products have been returned at the financial statement date).
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Consider the info provided below as well as the financial statements and answer the questions that follow.Pearson & Litt is a manufacturing company in the Eastern Cape. Their factory manufactures glass wine bottles for the Blue Valley Beer Co. For 2019 and 2020 respectively :Sales price per unit R15 and R19Variable cost per unit R6 and R7Fixed cost (FC) per annum R650 000 and R 855 500Fixed cost per unit R3 and R4Current assets R450 600 and R560 700Current liabilities R510 000 and R780 000Retained profit R21 809 and R17 600Net Sales R2 900 320 and R 3 100 100Cost of sales R390 000 and R475 000 The current ratio reflects the relationship between the value of the current assets and the extent of the current liabilities of a business.Q.1 Calculate the current ratio for Pearson & Litt for 2019. Q.2 Explain the results of the current‐test ratio.HINT: Include the minimum ratio recommended for the ratio in youranswer.
Study the scenario and complete the question that follows:Jojo LtdJojo Ltd manufactures products Abbisha and Babbisha from raw material Zaro. The raw material isimported at a cost of R15 per kilogram from Garwe Limited, a foreign company. As a result of a fire thatdestroyed the warehouse of the supplier, the 2020 import of Zaro will be limited to 80% of the quantityimported in 2019.Following the restrictions on raw material imports, labour hours will, according to estimate, reduce by10 000 hours in comparison to those worked in 2019. The management of the company, however, hasdecided to maintain a minimum wage rate of R6 per hour.The following is an extract from the budget for the 2020 financial year based on 95% of the availablemachine hours. ABISHA BABISHA Sales volume in units 12000 16000 Sales volume in rands R348000 R512000 R R Standards per unit Raw material-Zaro 12.00 7.50 Labour 4.50 3.00 Overheads 3.00 5.00 The budgeted fixed manufacturing…
On March 10, 2020, Wildhorse Company sold to Barr Hardware 230 tool sets at a price of $53 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Wildhorse allows Barr to return any unused tool sets within 60 days of purchase. Wildhorse estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned 6 tool sets and received a credit to its account. (a) Prepare journal entries for Wildhorse to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (3) any adjusting entries required on March 31, 2020 (when Wildhorse prepares financial statements). Wildhorse believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)…
If you were John Glaser, what would you do? Why? How will you measure the risks and rewards? Suppose Compass Box had whisky that they had bought 6 years ago as new fill whisky with inventoriable costs incurred to date (i.e., historic cost) of £300, completion cost of £130, and an expected selling price of £600. Assume that the cost to buy comparable whisky on the spot market (i.e., replacement cost) is more than £300. What journal entries would be required if: The selling price dropped to £500? The selling price remained at £600, but the replacement cost dropped to £100? The selling price dropped to £400 and the replacement cost dropped to £100? The selling price previously dropped to £400, and then recovered to £650?