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Coyle Company manufactured 6,000 units of a component part that is used in its product and incurred the following costs Answer

1. In the month of September, Nixon Company sold 800 units of product. The average sales price was $30. During the month, fixed costs were $7,200 and variable costs were 60% of sales. (25 points)

(a)Determine the contribution margin in dollars, per unit, and as a ratio.
(b)Using the contribution margin technique, compute the break-even point in dollars and in units.

2. It takes 3 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product. It is the company’s policy to maintain an inventory of direct materials on hand at the end of each month equal to 30% of the next month’s production needs for the Regular product and 20% of the next month’s production needs for the Deluxe product. Direct materials inventory on hand at June 30 were 9,000 pounds for the Regular product and 15,000 pounds for the Deluxe product. The cost per pound of materials is $5 Regular and $7 Deluxe. (25 points)

Instructions
Prepare separate direct materials budgets for each product for the third quarter of 2010.

3. Coyle Company manufactured 6,000 units of a component part that is used in its product and incurred the following costs: (25 points)

Direct materials$35,000
Direct labor15,000
Variable manufacturing overhead10,000
Fixed manufacturing overhead 20,000
$80,000

Another company has offered to sell the same component part to the company for $12 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, Coyle Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $14,000.

Instructions
Prepare an incremental analysis report for Coyle Company which can serve as informational input into this make or buy decision.

4. Mercer has three product lines in its retail stores: books, videos, and music. Results of the fourth quarter are presented below: (25 points)
Books Music Videos Total
Units sold 1,000 2,000 2,000 5,000
Revenue $22,000 $40,000 $23,000 $85,000
Variable Dept costs 17,000 22,000 12,000 51,000
Direct fixed costs 1,000 3,000 2,000 6,000
Allocated fixed costs 7,000 7,000 7,000 21,000
Net income (loss) $ (3,000) $ 8,000 $2,000 $ 7,000

The allocated fixed costs are unavoidable. Demand of individual products are not affected by changes in other product lines.

Instructions
What will happen to profits if Mercer discontinues the Books product line?

5. Martinez Company has money available for investment and is considering two projects each costing $70,000. Each project has a useful life of 3 years and no salvage value. The investment cash flows follow:
Project A Project B
Year 1$ 8,000$28,000
Year 224,00028,000
Year 352,00028,000

Instructions
If 8% is an acceptable earnings rate, which project should be selected? Justify your response. (25 points)

 

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Selected transactions completed by Equinix Products Inc. during the fiscal year ending December 31, 2012, were as follows Answer

Comprehensive Problem 4
Part 1:
Selected transactions completed by Equinix Products Inc. during the fiscal year ending December 31, 2012, were as follows:
1. Journalize the selected transactions.
If no entry is required, select “No Entry Required” from the dropdown and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Issued 12,500 shares of $25 par common stock at $32, receiving cash.
b. Issued 2,000 shares of $100 par preferred 5% stock at $105, receiving cash.
c. Issued $400,000 of 10-year, 6% bonds at 105, with interest payable semiannually.
d. Declared a quarterly dividend of $0.45 per share on common stock and $1.25 per share on preferred stock. On the date of record, 85,000 shares of common stock were outstanding, no treasury shares were held, and 17,000 shares of preferred stock were outstanding.
e. Paid the cash dividends declared in (d).
f. Purchased 5,500 shares of Kress Corp. at $22 per share, plus a $275 brokerage commission. The investment is classified as an available-for-sale investment.
g. Purchased 6,500 shares of treasury common stock at $35 per share.
h. Purchased 36,000 shares of Lifecare Co. stock directly from the founders for $18 per share. Lifecare has 112,500 shares issued and outstanding. Everyday Products Inc. treated the investment as an equity method investment.
i. Declared a 2% stock dividend on common stock and a $1.25 quarterly cash dividend per share on preferred stock. On the date of declaration, the market value of the common stock was $40 per share. On the date of record, 85,000 shares of common stock had been issued, 6,500 shares of treasury common stock were held, and 17,000 shares of preferred stock had been issued.
j. Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders.
k. Received $24,500 dividend from Lifecare Co. investment in (h).

l. Purchased $62,000 of Nordic Wear Inc. 10-year, 6% bonds, directly from the issuing company at par value, plus accrued interest of $550. The bonds are classifed as a held-to-maturity long-term investment.
m. Sold, at $42 per share, 2,600 shares of treasury common stock purchased in (g).
n. Received a dividend of $0.65 per share from the Kress Corp. investment in (f).
o. Sold 500 shares of Kress Corp. at $26.50, including commission.
p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization was determined using the straight-line method.
q. Accrued interest for three months on the Nordic Wear Inc. bonds purchased in (l).
r. Lifecare Co. recorded total earnings of $205,000. Everyday Products recorded equity earnings for its share of Lifecare Co. net income.
s. The fair value for Kress Corp. stock was $18.50 per share on December 31, 2012. The investment is adjusted to fair value using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero.

Comprehensive Problem 4
Part 2:
Note: You must complete part 1 before part 2.
After all of the transactions for the year ended December 31, 2012, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data below were taken from the records of Everyday Products Inc.
On your own paper, in the working papers, or using a spreadsheet, prepare the following:
a. Prepare a multiple-step income statement for the year ended December 31, 2012, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 84,000 and preferred dividends were $85,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.
b. Prepare a retained earnings statement for the year ended December 31, 2012. Save your calculations and enter the requested amounts below.
c. Prepare a balance sheet in report form as of December 31, 2012. Save your calculations and enter the requested amounts below.

If required, only use the minus sign to indicate net loss before income tax, net loss, or a deficit balance in retained earnings.
Gross profit $
Total Selling expenses $
Total Administrative expenses $
Total operating expenses $
Income from operations $
Net Other expenses and income $
Income tax $
Net income $
Earnings per common share (rounded to the nearest cent) $
Retained earnings, January 1, 2012 $
Total current assets $
Investment in Nordic Wear Inc. bonds $
Total property, plant, and equipment $
Total assets $
Total current liabilities $
Net Long-term liabilities $
Total liabilities $
Total Paid-in capital Preferred 5% stock $
Total Paid-in capital Common stock, $25 par $
Total paid-in capital $
Retained earnings, December 31, 2012 $
Total stockholders’ equity $

P.S. Some of the data in the solution/Tutorial may vary from the question listed above. The questions vary all the times. Please treat this as a solution guide only and develop your own solution.

 

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After successfully completing your goals, the organization promotes you to lead a larger team with members of different backgrounds and ability Answer

After successfully completing your goals, the organization promotes you to lead a larger team with members of different backgrounds and ability. Recognizing that this is your first experience with such a team, the organization assigns a veteran as your coach. At your first meeting with the coach, he suggests you learn all about the Path-Goal Leadership Model. Explain this model and how it is relevant to managing a diverse team.

 

Ans: The path-goal leadership model is used to select the leadership style such as directive, supportive, participative, or achievement-oriented appropriate to the situation i.e. subordinate and environment to maximize both performance and job satisfaction. The leader is responsible for increasing followers’ motivation to attain personal and organizational goals. Motivation is increased by clarifying the follower’s path to the rewards that are available, or increasing the rewards that the follower values and desires. Path clarification means that the leader works with followers to help them identify and learn the behaviors that will lead to successful task accomplishment and organizational rewards. The path-goal model is used to determine employee objectives and to clarify how to achieve them using one of four leadership styles. It focuses on how leaders influence employees’ perceptions of their goals and the paths they follow toward goal attainment. The situational factors are used to determine the leadership style that affects goal achievement through performance and satisfaction.

Situational Factors – Subordinate

Subordinate situational characteristics follow:

  1. Authoritarianism is the degree to which employees defer to others, and want to be told what to do and how to do the job.
  2. Locus of control is the extent to which employees believe they control goal achievement or if goal achievement is controlled by others.
  3. Ability is the extent of the employees’ ability to perform tasks to achieve goals.

Environment situational factors follow:

  1. Task structure is the extent of repetitiveness of the job.
  2. Formal authority is the extent of the leader’s position power.
  3. Work group is the extent to which coworkers contribute to job satisfaction or the relationship between followers.

Based on the situational factors in the path-goal model, the leader can select the most appropriate leadership style such as directive, supportive, participative, or achievement-oriented.

Directive – the leader provides high structure. Directive leadership is appropriate when the followers want authority leadership, have external locus of control, and the follower ability is low.

Supportive – The leader provides high consideration. Supportive leadership is appropriate when the followers do not want autocratic leadership, have internal locus of control, and follower ability is high.

Participative – The leader includes employee input into decision making. Participative leadership is appropriate when followers want to be involved, have internal locus of control, and follower ability is high; when the environmental task is complex, authority is either strong or weak, and job satisfaction from coworkers is either high or low.

Achievement-Oriented – Achievement-oriented leadership is appropriate when followers are open to autocratic leadership, have external locus of control, and follower ability is high; when the environmental task is simple, authority is strong, and job satisfaction from coworkers is either high or low.

In this case, I am supposed to lead a larger team with members of different backgrounds and ability. So, this is quite a diverse team wherein I would have team members can have different degrees of need for Authoritarianism, Locus of control and may have different abilities or expertise. Some of them may want to be told what to do on the job whereas some of the employees may take the complete ownership of the task or job. Similarly, some may be experienced whereas others may be just out of college and freshers. Similarly, on the Environmental factors side, the task structure may be repetitive or non-repetitive. Also, the team dynamics may require some position or the personal power to be exercised. So, depending upon each of these cases, leader or manager may have to exercise any of the leadership style such as directive, supportive, participative, or achievement-oriented as explained above. Three Subordinate situational characteristics, three Environment situational factors and four leadership styles actually make multiple combinations and leadership style would be unique for each of the followers in this diverse team. So, it makes a lot of sense to learn all about the Path-Goal Leadership Model especially for a large and diverse team.

References: Lussier, R.N., Achua. C.F. (2010). Leadership, Theory, Application, Skill Development. 4th Edition. Cengage Learning. pp 162-164

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Identify and describe validation tests and techniques used to enhance the validity of data input Answer

Different validation tests and techniques used to enhance the validity of data input are:

Class or composition Test – This validation test is done to ensure that data are of proper type (e.g., all numeric, all alphabetic, alphanumeric).
Combinations Test – This is to see that value combinations of two or more data fields are appropriate or make sense.
Expected values Test – This test is done to see whether data are what is expected e.g., match with existing customer names, payment amount, etc.
Missing data test – This is to test for existence of data items in all fields of a record.
Pictures/templates test – This is done to ensure that data conform to a standard format.
Range test – Range test is done to ensure data are within a proper range of values e.g., is an employee salary between USD 20000 and USD 200,000.
Reasonableness test – This is done to ensure data are reasonable for situation.
Self-checking digits – This technique is used in which extra digits, derived using a standard formula are added to a numeric field before transmission and checked after transmission
Size test – This tests too few or too many characters.
Values Test – This test is done to make sure values come from a set of standard values e.g., two-letter state codes.

References:
Valacich, George and Hoffer. (2011). Essential of Systems Analysis and Design. 5th Edition. Prentice Hall. pp. 253

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What are some of the different types of sampling methods that are available to the auditor Answer

What are some of the different types of sampling methods that are available to the auditor? How does the auditor decide which method to use? How will the different methods affect the audit?

 

When performing audit, the auditor has the choice to go for statistical sampling or non-statistical sampling or both of them. Both sampling methods are efficient in providing the auditor with sufficient appropriate audit evidence about the financial statements and both audit sampling methods require that the auditor practice his judgment in planning and executing his plan and come out with the results. Sampling and non-sampling risks are applicable to both sampling methods. Non-statistical sampling may be as effective as statistical sampling and vice versa (Boynton, 2006).

In statistical sampling, the auditor may choose random sampling techniques, block sampling techniques, or systematic sampling techniques which all of them are a result of the use of the laws of probability that enable the auditor to control sampling risk. On the other hand, the auditor who uses non-statistical sampling must use professional judgment, derived basically from his/her own experience, to evaluate sampling risk (Boynton, 2006).

Statistical and non-statistical sampling methods do not affect audit and the auditor is using the same framework for planning and performing whatever sample used. Also, the choice of statistical or non-statistical sampling method does not affect the evidence achieved or the auditor response to the potential errors found in sample because, at the end, the auditor is practicing his/her professional judgment while either sampling (Boynton, 2006).

 

References

Boynton, W. C., & Johnson, R. N. (2006). Modern auditing: Assurance services and the integrity of financial reporting. (8th ed.). Hoboken, NJ: Wiley. Louwers, T., Ramsay, R., Sinason, D., & Stawser, J. R.. (2007). Auditing and assurance services. New York, NY: McGraw-Hill. Phoenix accountant (2012) retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx

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What are the four main criteria for evaluating the quality of Internet resources? What are the basic concepts for each criterion Answer

What are the four main criteria for evaluating the quality of Internet resources? What are the basic concepts for each criterion?

(Points : 20)

Ans:

Four main criteria for evaluating the quality of Internet resources are as follows:

 

Authority – One should look for if the author or the organization providing the information is identifiable. How credible are the site owners? We should look for their experiences, credentials and publications/press. Whether other credible sites are linking this site?

Accuracy and reliability – The criteria’s here should be whether research sources have been properly documented and cited. Whether there are spelling errors or incorrect uses of grammar. Whether the background information can be verified for accuracy?

Purpose/objectivity – When evaluating the sources, we should also consider the purpose of the study, how the data was collected and analysed, how consistent the data is with other studies, and how old the data is? Is there a clear distinction between the opinion and fact. Who is the intended audience?

Coverage – Does the site cover a specific time period? Does the site cover only one aspect of the topic or it covers the topic in depth. What information is included and what information is omitted. Is the page completed or “under construction”?

References:   Newman, A., Ober, S. (2013). Business Communication: In Person, In Print, Online 8e. South-Western, Cengage Learning. pp. 292

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Read “Building Virtual Global Teams” on pages 314 and 315 in your text. What is a virtual global team? Is it harder or easier for virtual team members Answer

Read “Building Virtual Global Teams” on pages 314 and 315 in your text. What is a virtual global team? Is it harder or easier for virtual team members to work together than teams whose members meet face-to-face? (25 points) (A 1½-page response is required.)

A virtual team is a group of individuals who work across time, space and organizational boundaries with links strengthened by webs of communication technology. In a virtual team environment, work is not limited to the traditional 9-5 work day and product or services can be created in a way that result into faster time to market of products, technology and services. This also enables companies to compete on a global scale by bringing together people with different types of knowledge into ‘online’ meetings from around the globe.

 

The availability of electronic communication such as e-mail, audio conferencing, web-based meetings and video conferencing has made such virtual teams feasible. Working in electronic space and free from the constraints of geographical distance, members of highly distributed teams can do the same things in computer networks as do members of face-to-face groups: share information, make decisions, and complete tasks. The highly distributed team environment makes it possible to:

 

  • Form teams of people from the same company who live in widespread geographic areas,
  • Add special expertise to a global team even though the expert is not in the same geographic area,
  • Incorporate employees who work from home offices,
  • Form teams of people who work different shifts or hours,
  • Include people with mobility limitations or disabilities, and
  • Move forward with projects that would have been ignored due to travel expenses.

It can become harder for virtual team members to work together than teams whose members meet face-to-face if proper management and communication planning is not carried out. It becomes increasingly important in a highly distributed team environment. Additional time may be needed to set clear expectations, facilitate communications, develop protocols for resolving conflict, include people in decision-making, and share credit in successes. Today global managers operate in a global environment and work on projects characterized by cultural diversity. Team members often have diverse industry experience, multiple languages, and sometimes operate in the language that is a different than their native one. The global management team should capitalize on cultural differences, focus on developing and sustaining the global team throughout the global life cycle, and promote working together interdependently in a climate of mutual trust. Developing the global team improves the people skills, technical competencies, and overall team environment and global performance. It requires clear, timely, effective, and efficient communication between team members throughout the life of the project.

 

In addition, discussions and information shared among team members can also be electronically stored for continuous access and historical record keeping. Many of the downsides to highly distributed teams occur for the same reasons they do in other groups. Members of virtual team can have difficulties establishing good working relationships. Relationships and interactions among highly distributed team members are different from those of face-to-face settings. The lack of face-to-face interaction limits the role of emotions and nonverbal cues in the communication process, perhaps depersonalizing relations among team members. Meeting teams quite often is practically not possible. There are times where the major decisions are made remotely. Management plan in a virtual team environment would involve the following:

  • Define and distribute team goals and individual responsibilities across the team
  • Develop a sense of familiarity with the team members — use tools such as video conferences, periodic calls and e-mails to encourage interaction
  • Have a clear cut communication plan with the right point of contact defined at every location
  • To have regular global team meeting and maximize the number of meetings to create awareness on global happenings
  • Adjust according to the time differences
  • Define processes and develop back-ups to handle emergency scenarios
  • Define conventional terminology and ensure it is understood by all the team members.

There are challenges, however, inherent in the virtual team concept. It is difficult to build trust and to manage conflict when team members lack the ability to interact face-to-face. Communication is often more challenging, particularly among global virtual teams, which can also make it more difficult to overcome cultural barriers (http://onlinemba.unc.edu/).

 

References:

http://onlinemba.unc.edu/research-and-insights/developing-real-skills-for-virtual-teams/virtual-team-challenges/

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Describe a retail business with which you are familiar and determine the most suitable means of inventory control Answer

Managing Inventory

 •Describe a retail business with which you are familiar and determine the most suitable means of inventory control. Provide specific examples to support your response.

•For the same business, discuss what innovative steps you could take to deter employee theft and/or shoplifting.

 

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A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pay its bills Answer

A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer’s effective cost of trade credit?

Ans:

Effective cost of trade credit = (1 + 1/99) ^ 8.11 – 1.0

= 0.0849 = 8.492%.