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Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of the chain wanted some help with budgeting and cost control, so Shirrell decided to analyze the account for the past year. She divided the accounts into four different categories, depending on whether they appear to be primarily fixed or to vary with one of three different drivers. Food and wage costs appeared to vary with the total sales dollars. Delivers costs varied with the number of miles driven (workers were required to use their own cars and were reimbursed for miles driven). A group of other costs, including purchasing, materials handling, and purchases of kitchen equipment, dishes, and pans, appears to vary with the number of different product types (e.g., pizza, salad, lasagna). Shirrell came up with the following monthly averages: Food and wage costs $175,000 Delivery Costs $18,000 Other costs $9,520 Fixed Costs $255,000 Sales revenue $560,000 Delivery mileage in miles $8,000 Number of product types 14 Required: 1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs. 2. Form an equation for total cost based on the fixed costs and your results from requirement 1. 3. The president is considering expanding the restaurant menu and plans to add on new offering to the menu. According to the cost equation, what is the additional monthly cost for the new offering?
Suppose a company uses machine hours as a cost-allocation base for factory overhead. How does the company compute a budgeted overhead application rate? How does it compute the amounts of factory overhead applied to a particular job?
Calculate the overhead allocation rate. Compute the amount of under- or overallocated overhead. Calculate the ending balances in work in process, finished goods and cost of goods sold if under overallocated overhead is:
Haig Aircraft is considering a project that has an up-front cost paid today at t = 0. The project will generate positive cash flows of $60,000 a year at the end of each of the next five years.
Compute the sales level required in both dollars and units to earn $210,000 of after-tax income in 2010 with the machine installed and no change in unit sales price. Assume that the income tax rate is 30%.
Which one of the following distributions is nontaxable?
The books of Conchita Corporation carried the following account balances as of December 31, 2010. Prepare the journal entries required for the dividend declaration and payment assuming that they occur simultaneously.
The partnership does not have a natural business year. What is the required tax year-end for the partnership (if no Sec. 444 election is made)?
The beginning work in process inventory had a balance of $2,000. There were $42,000 of product costs added to work in process during the period. The amount of cost in ending work in process inventory is ??
Keenan Company has had bonds payable of $20,000 outstanding for several years.
Explain how your position changes if the employer reports to the IRS the value of the employees' frequent-flyer mileage.
What factors create needs for changing pension expense every year? If you worked in management at a company, what criteria would you evaluate in making pension decisions every year?
What were the business risks Enron faced, and how did those risks increase the likelihood of material misstatements in Enron's financial statements?
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