“We believe that it is important for director’s reward to be performance -related. Moreover, we expect excellent performance in both short and the long term. So we calculate bonuses on the annual profits then we have a parallel 3-year scheme which rewards directors if EPS grows by 30% over that period” Comment on above phrase. What is the challenge faced by a company in determining directors’ remuneration.
Q: What was the annual rate of simple interest offered on a savings of $7106 if the amount of interest…
A: What was the annual rate of simple interest:- Given information:- Savings(P)…
Q: Steam Room Inc. (SRI) has 15,000 shares issued in total. Assume that on January 1, 2021, Omega…
A: When one company is holding shares in another company from 20% to 50% , then it is called as…
Q: Use the following information to calculate the cost of goods manufactured during July. Work in…
A: The cost of goods manufactured is the direct cost incurred to manufacture the product. It includes…
Q: A debt of $6361 borrowed today will be due in 4 years and 6 months. Determine the accumulated value…
A: Formula for Compound Interest: Accumulated value=Initial principal balance×1+RateNumber of times…
Q: Ziek Corp. acquired a 30% interest in ZKI Corporation on December 31, 2020 for $2,159,000. During…
A: Investment refers to the assets which are acquired or invested in building the wealth and also save…
Q: Kross company purchases an equity investment in Penno Company at a purchase price of 5,000,000…
A: Equity Method of Accounting: Companies typically utilise the equity method of accounting to…
Q: 9) Due to the pandemic, a Canadian sports clothing store reported large losses during 2020. The…
A: Lets understand all the options briefly. Going concern assumption is a accounting principle which…
Q: How much will be the total shareholders' equity from the following: 6% Preference shares, P50 par,…
A: The shareholder's equity includes the share capital issued to shareholders and retained earnings…
Q: Debt General Bonds Lease Bonds Revenue Bonds Loans Capital Leases Total Highest Debt Lowest Debt…
A: Debts are the obligations for an entity. These are just like creditors so the payment of the…
Q: Which expenses are associated with the risk of disability?
A: Disability refers to being abnormal from others i.e the person is incapable in a or few aspects from…
Q: On December 29, 2009, Bay Company was registered at the Securities and Exchange Commission with…
A: Shareholders equity is the total amount attributable to the shareholders of the company. It includes…
Q: (2) Diminishing-balance using double the straight-line rate for 2017 through to 2021. 2017 expense…
A: Depreciation :—The monetary value of an asset decreases over time due to use, wear and tear or…
Q: P3-2B. On April 1, 2023, Beth Orth opened Beth's Art Studio. The following transac- tions occurred…
A: Journal Entries - Journal Entries are the recording of transactions of the organization. It is…
Q: Why is independence the main conduct the most important in the GAAS
A: Generally Accepted Auditing Standards (GAAS) are a set of detailed instructions that auditors follow…
Q: Question 17 Use the following scenario for Blanks#1-Blanks #6 Company YYZ is determining whether a…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Why isn't the $900,000 loan taken into account when calculating goodwill/consideration?
A: Goodwill exists in case of the acquisition when there has been acquired by the acquiring company the…
Q: 31, 2021, Tesla's fair value per share is $1,050 and Alphabet's is $145. John has negligible…
A: Investments are assets held by an enterprise for earning income by way of dividends, interest, and…
Q: Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2021 (the end…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: 4. BE.12.03.ALGO 5. BE.12.08.ALGO 6. BE.12.01.ALGO 7. BE.12.07 8. BE.11.07 stock. The following…
A: There are two types of stocks. One is preferred stock and the other is common stock. Preferred…
Q: artz Corporation is a relatively new firm. Quartz has experienced enough losses during its early…
A: Lease gives the right of use of equipment by payment of fixed annual payment of lease and by this…
Q: An invoice dated January 25 with terms 2/10 -20 X. Find the final discount rate and the next payment…
A: The invoice is dated 25th January. The payment terms are 2/10 -20 X. Which are to be read as 2%…
Q: Calculate depreciation for the machine under each of the following methods: (Round expense per unit…
A: Depreciation means a decrease in the value of assets due to wear and tear, usage, or decrease in…
Q: Faith Busby and Jeremy Beatty started the B&B partnership on January 1, Year 1. The business…
A: The partnership comes into existence when two or more persons agree to do the business and further…
Q: PNET Accounts payable Accounts receivable Accumulated depreciation, building Accumulated…
A: The post-closing trial balance seems to be the trial balance created after all types of closing…
Q: A company with a break-even point at $900,000 in sales revenue and had fixed costs of $225,000. When…
A: Margin of safety: It is the sale over and above break even point. Profit is earned on this sale.…
Q: The Kirkland Department of Culver Company began the month of December with work in process inventory…
A: It is assumed that weighted average method is used to calculate equivalent unit production. Under…
Q: On July 1, 2019, Sara Corporation issues $400,000 of 7%, 10-year bonds at 93.20 when the market rate…
A: Bond :— Bond is Liability in Nature. Bonds are units of corporate debt issued by companies and…
Q: part 3 4 Question 6.2…
A: Budgeted costs=Budgeted long-run usage per month×Fixed costs per hour+Budgeted long-run usage per…
Q: What is the threshold for reporting a major customer? 5 percent of revenues. 5 percent of profits.…
A: As per IRFS 8 Operating Segment Segment reporting is the reporting of the operating segments of a…
Q: Determine the number of months (rounded off to the nearest month) required for a deposit of $2968.84…
A: Here aked to calculate time for deposit in months. Interest = principal amount* rate* time
Q: Problem 17-3A Analysis of working capital LO4 Halifax Fisheries Inc. began the month of March with…
A: Current Ratio :— It is the ratio of current assets and current liabilities. Quick ratio :— It is…
Q: What amount of money will accumulate to $8365.5 in 337 days at an interest rate of 8.6% p.a.?
A: Accumulate amount is equal to interest plus principal amount. Here aked to. Calculate principal…
Q: Which of the following statements is false? Explain Why?? a. It is the best practice to verify…
A: Intra company transfer represents the transfer of the inventory from one department to another…
Q: Which of the following is an expense recognition criterion for recording a government transfer…
A: PS 3410 :— Government Transfers This Section establishes standards on how to account for and report…
Q: Three Company produces two products (Product 1 and Product 2) from a common input. Joint costs for…
A: In the context of the given question, we are required to compute the joint cost allocation of the…
Q: Would unearned Revenue be included in post closing trial balance?
A: Unearned Revenue is the amount received from customers without rendering services. It is like an…
Q: Beginning Work in Process: Ending Work in Process: Beginning Finished Goods Inventory: Ending…
A: Cost of goods manufactured: Cost of goods manufactured means total manufacturing costs; including…
Q: An NFP organization receives supplies from a donor. At what amount is the donation reported in…
A: A NPF stands for non profit organisation. It runs for the betterment of society rather than earning…
Q: Golden Corporation contemplates to market a new product. Estimated fixed costs is P1,000,000. The…
A: Introduction: After deducting costs, allowances, and taxes, net revenue is the money earned by an…
Q: Assume the following information (the quantity of materials purchased = the quantity used):…
A: Variances are difference between actual cost and standard cost. If actual cost is higher than…
Q: Beginning inventory, purchases, and sales for Item XJ-56 are as follows: May 1 Beginning…
A: Inventory is one of the important current asset of the business, which includes inventory of raw…
Q: Entries for Cash Dividends The declaration, record, and payment dates in connection with a cash…
A: Cash Dividends :— It is the cash paid to stockholders against the distribution of their return on…
Q: Barrington Bears has developed the following sales forecasts for the next few months. January 500,…
A: Budgeting is a method of forecasting future income and costs. It's like a company roadmap. It guides…
Q: When is Leasing used?
A: Fixed assets are those type of assets which are being held by the business for longer period of…
Q: What is the entry on Kiner's books to record the payment of the invoice within the discount period?
A: In the normal course of business, Business Entities allow credit to their customers on some terms…
Q: The following table includes quarterly working capital levels for your firm for the next year.…
A: Wokriing capital :— Working capital is a financial metric which represents operating liquidity…
Q: Nelter Corporation, which has only one product, has provided the following data concerning its most…
A: Variable Costing - In this costing method, variable costs are considered while preparing the cost of…
Q: What is the company’s total amount of common fixed expenses? 3. Assume that Cane expects to produce…
A: Cost :— The Money you have to pay for something. The amount of money that a company spends on the…
Q: Golden Corporation contemplates to market a new product. Estimated fixed costs is P1,000,000. The…
A: Introduction: A fixed cost is something that does not change with the amount of goods or services…
Q: Mr. Lopez opened a mini grocery store with business name Lopez Fiesta Mart. Operations began on…
A: JOURNAL ENTRY :— journal entry is the process of Recording financial transactions. A journal entry…
(a) “We believe that it is important for director’s reward to be performance -related. Moreover, we expect excellent performance in both short and the long term. So we calculate bonuses on the annual profits then we have a parallel 3-year scheme which rewards directors if EPS grows by 30% over that period” Comment on above phrase. What is the challenge faced by a company in determining directors’ remuneration.
b) Mr. Daniel has been a director for Air Hitam Berhad for 5 years. He has not hold any directorship in any other company. He is now 50 years old. Recently, he was charged with corporate fraud. His case is still in the court hearing and yet to be verdicted. However, due to the case, the substantial shareholders of the company which is Valiguard investment group has passed the resolution to remove him from the board of directors. Is the decision valid? Justify your argument.
Step by step
Solved in 3 steps
- Consider the following thoughts of a manager at the end of the companys third quarter: If I can increase my reported profit by 2 million, the actual earnings per share will exceed analysts expectations, and stock prices will increase. The stock options that I am holding will become more valuable. The extra income will also make me eligible to receive a significant bonus. With a son headed to college, it would be good if I could cash in some of these options to help pay his expenses. However, my vice president of finance indicates that such an increase is unlikely. The projected profit for the fourth quarter will just about meet the expected earnings per share. There may be ways, though, that I can achieve the desired outcome. First, I can instruct all divisional managers that their preventive maintenance budgets are reduced by 25 percent for the fourth quarter. That should reduce maintenance expenses by approximately 1 million. Second, I can increase the estimated life of the existing equipment, producing a reduction of depreciation by another 500,000. Third, I can reduce the salary increases for those being promoted by 50 percent. And that should easily put us over the needed increase of 2 million. Required: Comment on the ethical content of the earnings management being considered by the manager. Is there an ethical dilemma? What is the right choice for the manager to make? Is there any way to redesign the accounting reporting system to discourage the type of behavior the manager is contemplating?The sales manager is deciding between two possible compensation structures for sales staff. Under one plan, salespeople would receive a base compensation of $80,000 per year plus a 1% commission on all sales to their customers. Under the other plan, the base compensation would drop to $40,000 per year, but the commission rate would increase to 5%. What are the advantages and disadvantages, to the company of both plans? As the accounting manager, would you have a preference? Why or why not? (answer in text form please (without image), Note: .Every entry should have narration please)A new CEO takes control of Do-Da Industries to turn it around (to make it profitable). Based on market research she wants to focus on two specific product lines. By the end of the first year the company exceeded budgeted profits by 18%. The company’s controller knows his annual bonus depends on exceeding budgeted profit and that next year’s performance would unlikely be similar to this year’s. Profit must exceed budget by 10% before the controller’s bonus kicks in. The controller realizes he can accrue some of next year’s expenses and defer some of this year’s revenue while still exceeding this year’s budgeted profit by 10%. Required: Why would the controller want to defer revenues but accrue expenses? Is this ethical? Why?
- Employee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year?Employee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year? Quentin will be able to purchase shares per month. (Round to the nearest hundredth as needed.) The net asset value of the fund at…The divisional managers of West plc have requested that the method for calculating bonuses at the year be reviewed. Senior managers at the head office have proposed that a bonus of £40,000 will be paid to the divisional manager who has the best return on investment (ROI) of the 3 divisions and this policy is consistent with previous years. Divisional managers want the senior managers to take into account controllable costs and profits and residual income (RI) when deciding bonuses and also to include non-financial measures of performance. The main reason given by the head office for using ROI is that it is understood by all managers and that it is used by external analysts.Summary of Management Accounts to 31 December 1997 Southern (£) Eastern (£) Western (£) Sales 5,400,000 5,000,000 5,590,000 Controllable costs 3,700,000 3,502,000 3,660,000 Head Office Charges 998,000 1,282,000 1,170,000 Net profit 702,000 716,000 760,000 Capital Employed Southern (£)…
- Ben Johnson is the manager of the jewelry department of a large chain of department stores. Thedepartment store has succeeded on the basis of customer service and quality of merchandise. As amanager, Ben is compensated with a salary of $200,000 and a bonus based on his unit’s income.The bonus pool is 10% of companywide net income. When the unit’s return on invested assetsexceeds the rate of return of the whole company, the unit manager is included in the bonus pool;the bonus pool is divided evenly among the managers that qualify for the bonus. Selected information about the department store and Ben’s performance is as follows. Customer service is measuredon a 6-point scale, with 6 being the highest rating; quality of service is measured on a 10-pointscale, with 10 being the highest rating. In the current period, 25 managers qualified for the bonus,including Ben.JewelryDepartmentWholeCompanyStock price $ 42Net income $ 1,898,000 $ 16,500,000Assets invested $22,500,000…Toselli Animation plans to offer its employees a salary enhancement package that has revenue sharing as its main component. Specifically, the company will set aside 3% of total sales revenue for year-end bonuses. The sales are expected to be $5 million the first year, $5.5 million the second year, and amounts increasing by 10% each year for the next 5 years. At an interest rate of 8% per year, what is the equivalent annual worth in years 1 through 5 of the bonus package? What is the equivalent annual worth of the bonus package?An organization's objective is to increase its production by 20 percent next year. How do you consider the Accounting Department of the company? Line or staff? Justify your answer.
- Each of the following scenarios requires the use of accounting information to carry out one or more of the following managerial activities: (1) planning, (2) control and evaluation, (3) continuous improvement, or (4) decision making. a. MANAGER: At the last board meeting, we established an objective of earning an after-tax profit equal to 20 percent of sales. I need to know the revenue that we need to earn in order to meet this objective, given that we have 250,000 to spend on the promotional campaign. Once I have estimated sales in units, we then need to outline a promotional campaign that conforms to our budget and that will take us where we want to be. However, to compute the targeted sales revenue, I need to know the unit sales price, the unit variable cost, and the associated fixed production and support costs. I also need to know the tax rate. b. MANAGER: We have problems with our procurement process. Our accounts payable department is spending 80 percent of its time resolving discrepancies between the purchase order, receiving order, and suppliers invoice. Incorrect part numbers on the purchase orders, incorrect quantities ordered, and wrong parts sent (or the incorrect quantity) are just a few examples of sources of discrepancies. A complete redesign of the process has been suggested, which will allow us to eliminate virtually all of the errors and, at the same time, significantly reduce the number of clerks needed in purchasing, receiving, and accounts payable. This redesign promises to significantly reduce costs, decrease lead time, and increase customer satisfaction. c. MANAGER: This overhead cost report indicates that we have spent significantly more on inspection, purchasing, and production than was budgeted. An investigation has revealed that the source of the problem is faulty components from suppliers. A supplier evaluation has revealed that by selecting five suppliers with the best quality records (out of 15 currently used), the number of defective components will be dramatically reduced, thus producing significant overhead savings by reducing the demand for inspections, reordering, and rework. d. MANAGER: A large local firm has approached me and has offered to sell us one of the components used in our small enginesa component that we are currently producing internally. I need to know costs that we would avoid if this component is purchased so that I can assess the economic merits of this offer. e. MANAGER: Currently, our deluxe lawn mower is losing money. We need to increase profits. I would like to know how much our profits would be if we reduce our variable costs by 50 per mower while maintaining our current sales volume. Also, marketing claims that if we increase advertising expenditures by 1,000,000 and cut prices by 15 percent, we can increase the number of mowers sold by 25 percent. I would like to know which approach offers the most profit, or if a combination of the approaches may be best. f. MANAGER: We are implementing a major quality improvement program. We will be increasing the investment in prevention and detection activities with the expectation of driving down both internal and external failure costs. I expect to see trend reports for all categories of quality costs. I want to see if improving quality really does reduce costs and improve profitability. g. MANAGER: Our engineering design department has proposed a new design for our product. The new design promises to reduce post-purchase costs and, as a consequence, increase market share. I need to know the cost of producing this new design because it uses some new components and requires some different manufacturing processes. I would then like to have a projected income statement based on the new market share and new production costs. The planned selling price will be the same, or maybe even 10 percent lower. Projections based on the two price scenarios would be needed. h. MANAGER: My engineers have said that by redesigning our two main production processes, we can reduce move time by 90 percent and wait time by 85 percent. This would decrease cycle time and virtually eliminate the need to carry finished goods inventories. On-time deliveries would also increase dramatically. This would produce cost savings of nearly 20,000,000 per year. Market share and revenues would also increase. Required: 1. Describe each of the four managerial responsibilities. 2. Identify the managerial activity or activities applicable for each scenario, and indicate the role of accounting information in the activity.Dana Baird was manager of a new Medical Supplies Division. She had just finished her second year and had been visiting with the companys vice president of operations. In the first year, the operating income for the division had shown a substantial increase over the prior year. Her second year saw an even greater increase. The vice president was extremely pleased and promised Dana a 5,000 bonus if the division showed a similar increase in profits for the upcoming year. Dana was elated. She was completely confident that the goal could be met. Sales contracts were already well ahead of last years performance, and she knew that there would be no increases in costs. At the end of the third year, Dana received the following data regarding operations for the first three years: The predetermined fixed overhead rate is based on expected actual units of production and expected fixed overhead. Expected production each year was 10,000 units. Any under-or overapplied fixed overhead is closed to Cost of Goods Sold. Assumes a LIFO inventory flow. Upon examining the operating data, Dana was pleased. Sales had increased by 20 percent over the previous year, and costs had remained stable. However, when she saw the yearly income statements, she was dismayed and perplexed. Instead of seeing a significant increase in income for the third year, she saw a small decrease. Surely, the Accounting Department had made an error. Required: 1. Explain to Dana why she lost her 5,000 bonus. 2. Prepare variable-costing income statements for each of the three years. Reconcile the differences between the absorption-costing and variable-costing incomes. 3. If you were the vice president of Danas company, which income statement (variable-costing or absorption-costing) would you prefer to use for evaluating Danas performance? Why?A recently hired chief executive officer wants to reduce future production costs to improve the company’s earnings, thereby increasing the value of the company’s stock. The plan is to invest $84,000 now and $62,000 in each of the next 4 years to improve productivity. By how much must annual costs decrease in years 5 through 13 to recover the investment plus a return of 11% per year?