Pettit Ice Cream Company produces various ice cream products for which demand is highly seasonal. The company sells more ice cream in warmer months and less in colder ones. Last year, the high point in production activity occurred in August when Pettit produced 50,000 gallons of ice cream at a total cost of $82,000. The low point in production activity occurred in February when the company produced 20,000 gallons of ice cream at a total cost of $46,000.
Required:
a. Use the high-low method to estimate the amount of fixed cost per month incurred by Pettit Ice Cream Company
b. Determine the total estimated monthly cost when 40,000 gallons of ice cream are produced.
c. What factors could cause the estimate determined in Requirement b to be inaccurate?
d. Explain how regression analysis could be used to improve accuracy. Your explanation should in- clude a discussion of the R2 statistic as well as the potential impact of multiple regression analysis.

Answer:

a) Fixed costs = $22,000

b) $70,000

c) The high low cost method is generally inaccurate because it only considers the extremes, the highest and lowest costs and activity levels. Generally costs are not linear, but they might follow a certain tendency. The advantages of the high low cost method is that it is fairly accurate when costs are stable, plus it is much simpler to calculate.

d) Assuming that costs follow a certain tendency, regression analysis is much more exact since it analyses the relationship between different data and different variables. When you analyze only 2 variables, a linear regression analysis will serve you. but if you need to analyse more than two variables, then you must use a multiple regression analysis.

The R² statistic basically measures how one variable's variance is affected by other variables. E.g. if R² is 0.75, then 75% of the variance of A will be explained by the variance of B.

Explanation:

variable cost using high low cost method = (highest activity cost - lowest activity cost) / (highest activity level - lowest activity level) = ($82,000 - $46,000) / (50,000 - 20,000) = $36,000 / 30,000 gallons of ice cream = $1.20 per gallon of ice cream

fixed costs = $82,000 - (50,000 x $1.20) = $22,000

40,000 gallons

$22,000 + (40,000 x $1.20) = $70,000

how regression analysis improves accuracy of high low cost method

Equity Method Investment with Basis Differences Several Years LaterSaxton Corporation purchased 25 percent of Taylor Company's voting stock on January 1, 2013, for $3 million in cash. At the date of acquisition, Taylor reported its total assets at $60 million and its total liabilities at $56 million. Investigation revealed that Taylor's plant and equipment (15-year life) was overvalued by $1.8 million and it had an unreported customer database (2-year life) valued at $500,000. Taylor declares and pays $100,000 in dividends and reports net income of $250,000 in 2016.RequiredPrepare the necessary journal entries on Saxton's books to report the above information for 2016 assuming Saxton uses the equity method to report its investment.Enter answers in thousands. For example, $1 million is $1,000 and $100,000 is $100.Calculation of 2016 Equity in Taylor's Net Income:Saxton's share of Taylor's reported income $Answer+/- Revaluation adjustments AnswerEquity in net income of Taylor $Answer General JournalDate Description Debit Credit1/1/16 AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer12/31/16 AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer

levon files a suit against manufacturing corporation the defendant believes that even if the plaintiff manufactoring corporation should

Which of the following corectly illustrates how prices serve as signals to consumers

Cortina Company accumulates the following adjustment data at December 31.
Indicate (1) the type of adjustment (prepaid expense, accrued revenue, and so on) and (2) the status of the accounts before adjustment (overstated or understated). (Enter your answers in alphabetical order.)
Item (1)
Type of Adjustment (2)
Accounts Before Adjustment
(a) Supplies of $400 are on hand. Supplies account shows $1,600 balance.
Entry field with correct answer Prepaid ExpensesAccrued RevenuesAccrued ExpensesUnearned Revenues
Entry field with incorrect answer now contains modified data Expenses UnderstatedLiabilities UnderstatedExpenses OverstatedRevenues OverstatedAssets UnderstatedAssets OverstatedRevenues UnderstatedLiabilities Overstated
Entry field with incorrect answer now contains modified data Revenues UnderstatedAssets UnderstatedLiabilities UnderstatedLiabilities OverstatedExpenses UnderstatedExpenses OverstatedAssets OverstatedRevenues Overstated
(b) Services performed but unbilled total $700.
Entry field with correct answer Unearned RevenuesAccrued ExpensesPrepaid ExpensesAccrued Revenues
Entry field with incorrect answer now contains modified data Assets UnderstatedAssets OverstatedLiabilities OverstatedExpenses UnderstatedExpenses OverstatedRevenues UnderstatedRevenues OverstatedLiabilities Understated
Entry field with correct answer Assets OverstatedExpenses OverstatedRevenues UnderstatedLiabilities UnderstatedLiabilities OverstatedAssets UnderstatedExpenses UnderstatedRevenues Overstated
(c) Interest of $300 has accumulated on a note payable.
Entry field with correct answer Prepaid ExpensesAccrued ExpensesAccrued RevenuesUnearned Revenues
Entry field with incorrect answer now contains modified data Assets UnderstatedExpenses UnderstatedRevenues OverstatedExpenses OverstatedLiabilities UnderstatedAssets OverstatedRevenues UnderstatedLiabilities Overstated
Entry field with correct answer Assets UnderstatedAssets OverstatedLiabilities UnderstatedRevenues UnderstatedLiabilities OverstatedRevenues OverstatedExpenses UnderstatedExpenses Overstated
(d) Rent collected in advance totaling $1,100 has been earned.
Entry field with correct answer Unearned RevenuesPrepaid ExpensesAccrued ExpensesAccrued Revenues
Entry field with incorrect answer now contains modified data Liabilities OverstatedAssets UnderstatedRevenues UnderstatedLiabilities UnderstatedRevenues OverstatedExpenses OverstatedExpenses UnderstatedAssets Overstated
Entry field with incorrect answer now contains modified data Expenses UnderstatedRevenues OverstatedLiabilities UnderstatedAssets UnderstatedExpenses OverstatedRevenues UnderstatedLiabilities OverstatedAssets Overstated

A selected list of accounts used by Cline Manufacturing Company follows: Code Code A. Cash F Accounts Payable B. Accounts Receivable G Factory Labor C. Raw Materials Inventory H Manufacturing Overhead D. Work In Process Inventory Cost of Goods Sold E. Finished Goods Inventory JSales Revenue Cline Manufacturing Company uses a job order system and maintains perpetual inventory records. Instructions Place the appropriate code letter in the columns indicating the appropriate account(s) to be debited and credited for the transactions listed below.Account(s) Account(s)Transactions Debited Credited1. Raw materials were purchased on account.2. Issued a check to Dixon Machine Shop for repair work on factory equipment.3. Direct materials were requisitioned for Job 280.4. Factory labor was paid as incurred.5. Recognized direct labor and indirect labor used.6. The production department requisitioned indirect materials for use in the factory.7. Overhead was applied to production based on a predetermined overhead rate of $8 per labor hour.8. Goods that were completed were transferred to finished goods.9. Goods costing $80,000 were sold for $105,000 on account.10. Paid for raw materials purchased previously on account

Bonita Marina has 300 available slips that rent for $900 per season. Payments must be made in full by the start of the boating season, April 1, 2021. The boating season ends October 31, and the marina has a December 31 year-end. Slips for future seasons may be reserved if paid for by December 31, 2021. Under a new policy, if payment for 2022 season slips is made by December 31, 2021, a 5% discount is allowed. If payment for 2023 season slips is made by December 31, 2021, renters get a 20% discount (this promotion hopefully will provide cash flow for major dock repairs).
On December 31, 2017, all 300 slips for the 2018 season were rented at full price. On December 31, 2018, 240 slips were reserved and paid for the 2019 boating season, and 56 slips were reserved and paid for the 2020 boating season.
Prepare the appropriate journal entries for December 31, 2017, and December 31, 2018.

Walker & Co. (Walker) signed a written contract to lease a large neon advertising sign to Herbert Harrison, who is in the dry-cleaning business, for $148.50 a month. The contract stated that Walker, as the lessor of the sign, would "at its expense maintain and service the sign [and would perform] cleaning and repainting of sign in original color scheme as often as deemed necessary by lessor to keep sign in first-class advertising condition and make all necessary repairs to sign and equipment installed by lessor." A few weeks the sign was installed, someone hit the sign with a tomato and "little spider cobwebs" appeared in the sign's corners. Harrison repeatedly asked Walker to fix the sign, but Walker did not do so. As a result, Harrison made no further payments and Walker sued Harrison for remainder of the lease payments pursuant to the contract's terms. Did Walker make a material breach of the contract?

Suppose that, in a competitive market without government regulations, the equilibrium price of donuts is $1.50 each. Complete the following by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding.


a. The government has instituted a legal minimum price of $1.80 each for donuts.
b. Due to new regulations, donut shops that would like to pay better wages in order to hire more workers are prohibited from doing so.
c. The government prohibits donut shops from selling donuts for more than $1.10 each.

Suppose that a firm has both fixed-rate and floating-rate debt outstanding. What effect will a decline in interest rates have on the firm's times-interest-earned ratio

Suppose you’ll have an annual nominal income of $65,000 for each of the next three years, and the inflation rate is 5 percent per year.

Required:
a. Find the real value of your $65,000 salary for each of the next three years.
b. If you have a COLA in your contract, and the inflation rate is 5 percent per year, what is the real value of your salary of 70.000 for each year?

Greater indirect costs are associated with:

a. Specialized engineering drawings
b. Quality specifications and testing
c. Inventoried materials and material control systems
d. All of these answers are correct.

Managerial accounting differs from financial accounting in several areas. Specify whether each of the following characteristics relates to managerial accounting or financial accounting. a. Reports are usually prepared quarterly and annually. ▼ b. Information is verified by external auditors. ▼ Financial accounting Managerial accounting c. Focus is on the past. ▼ Financial accounting Managerial accounting d. Main characteristic of information is that it must be relevant. ▼ Financial accounting Managerial accounting e. Reports tend to be prepared for the parts of the organization rather than the whole organization. ▼ Financial accounting Managerial accounting f. Primary users are internal​ (i.e., company managers​). ▼ Financial accounting Managerial accounting g. It is governed by Generally Accepted Accounting Principles​ (GAAP) or International Financial Reporting Standards​ (IFRS). ▼ Financial accounting Managerial accounting h. The primary characteristics of information are that it must be reliable and objective. ▼ Financial accounting Managerial accounting i. Reports are prepared as needed. ▼ Financial accounting Managerial accounting j. It is not governed by legal requirements. ▼ Financial accounting Managerial accounting k. Primary users are external​ (i.e., creditors,​ investors). ▼ Financial accounting Managerial accounting l. Focus is on the future. ▼ Financial accounting Managerial accounting m. Reporting is based mainly on the company as a whole.

SNC is considering an opportunity to add a large customer, Midwest Miracles, a recently launched weight-loss center that is in a precarious financial situation because its entrepreneurial founder took on a significant debt burden. Acquiring Midwest Miracles would allow SNC to increase sales by 30% in 2019. Some analysts have forecasted a 20% probability that Midwest Miracles will declare bankruptcy, and they estimate a recovery rate for suppliers of 50%. Midwest Miracles would be willing to pay significantly higher prices for SNC's products, which can increase the EBIT margin of the whole company by almost 1%. However, Midwest Miracles is likely to take a longer-than-average time to pay its invoices. Therefore, SNC's DSO is likely to increase significantly. What would you like to do about this opportunity?
2019 2020 2021
Incrementa Income ($ in thousands)
Summary Statement
Change in Sales $8,439 $8,439 $8,439
Change in Cost of Sales $7,523 $7,523 $7,523
Change in EBIT $916 $916 $916
Incremental Balance Sheet
($ in thousands)
Change in Accounts
Receivable $4,309 $4,309 $4,309
Change in Inventories $1,907 $1,907 $1,907
Change in Accounts Payable $817 $817 $817

[The following information applies to the questions displayed below.]Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Direct Labor-Hours per unit Annual Production Rims 0.30 26,000 units Posts 0.50 70,000 units Additional information about the company follows: Rims require $15 in direct materials per unit, and Posts require $11. The direct labor wage rate is $15 per hour. Rims are more complex to manufacture than Posts and they require special equipment. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool Activity Measure Estimated Overhead Cost Rims Posts Total Machine setups Number of setups $ 32,900 60 140 200 Special processing Machine-hours $ 114,800 4,000 0 4,000 General factory Direct labor-hours $ 1,404,000 6,000 72,000 78,000Required:1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

How much would a worker have to be paid per hour in 2016 to keep her real wage the same as in 1980 if she earned $10 per hour in 1980

Manta Ray Company manufactures diving masks with a variable cost of $25. The masks sell for $34. Budgeted fixed manufacturing overhead for the most recent year was $792,000. Actual production was equal to planned production.
Required: Under each of the following conditions, state (a) whether operating income is higher under variable or absorption costing and (b) the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case.
1. Production ............................................... 110,000 units
Sales ........................................................ 108,000 units
2. Production ............................................... 90,000 units
Sales ........................................................ 95,000 units
3. Production ............................................... 79,200 units
Sales ........................................................ 79,200 units

Key figures for the recent two years of both Apple and Google follow. Apple Google $ millions Current Year Prior Year Current Year Prior Year Net income $ 48,351 $ 45,687 $ 12,662 $ 19,478 Net sales 229,234 215,639 110,855 90,272 Current assets 128,645 106,869 124,308 105,408 Current liabilities 100,814 79,006 24,183 16,756 Required: 1. Compute profit margins for (a) Apple and (b) Google for the two years of data reported above. 2. In the current year, which company is more successful on the basis of profit margin? 3. Compute current ratios for (a) Apple and (b) Google for the two years reported above. 4. In the current year, which company has the better ability to pay short-term obligations according to the current ratio?

Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools:_____.
Activity Cost Pool Activity Measure Expected Overhead Cost Expected Activity Labor-related Direct labor-hours $ 269,100 29,900 DLHs Purchase orders Number of orders $ 11,000 220 orders Parts management Number of part types $ 78,440 106 part types Board etching Number of boards $ 85,050 1,890 boards General factory Machine-hours $ 242,400 20,200 MHs
Required:
1. Compute the activity rate for each of the activity cost pools.
2. The expected activity for the year was distributed among the company’s four products as follows:_________.
Expected Activity Activity Cost Pool Product A Product B Product C Product D Labor-related (DLHs) 7,500 13,400 3,800 5,200 Purchase orders (orders) 66 30 32 92 Parts management (part types) 29 19 47 11 Board etching (boards) 580 750 560 0 General factory (MHs) 2,600 7,300 3,700 6,600 Using the ABC data, determine the total amount of overhead cost assigned to each product.

Sparty Corporation has provided the following information for its most recent year of operation: Revenues earned were $84,000, of which $9,000 were uncollected at the end of the year. Operating expenses incurred were $46,000, of which $8,000 were unpaid at the end of the year. Dividends declared were $19,000, of which $3,000 were unpaid at the end of the year. Income tax expense is $13,300.

Required:
How much net income was reported on Sparty's income statement?

Ontario Resources, a natural energy supplier, borrowed $79.0 million cash on November 1, 2021, to fund a geological survey. The loan was made by Quebec Banque under a short-term financing arrangement. Ontario Resources issued a 6-month, 12% promissory note with interest payable at maturity. Ontario Resources' fiscal period is the calendar year. Required: 1. Prepare the journal entry for the issuance of the note by Ontario Resources. 2. Prepare the appropriate adjusting entry for the note by Ontario Resources on December 31, 2021 and journal entry for the payment of the note at maturity.

Yancey Productions is a film studio that uses a job-order costing system. The company’s direct materials consist of items such as costumes and props. Its direct labor includes each film’s actors, directors, and extras. The company’s overhead costs include items such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor-dollars. At the beginning of the year, Yancey made the following estimates:
Direct labor-dollars to support all productions $8,000,000
Fixed overhead cost $4,800,000
Variable overhead cost per direct labor-dollar $0.05
Required:
1. Compute the pre-determined overhead rate.
2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs:
Direct materials $1,259,000
Direct labor cost $2,400,000
Compute the total job cost for this particular film.

Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools:
Activity Cost Pool Estimated Overhead Cost Expected Activity
Labor-related $16,800 2,000 direct labor-hours
Machine-related $16,000 8,000 machine-hours
Machine setups $30,400 800 setups
Production orders $6,600 200 orders
Product testing $12,000 500 tests
Packaging $51,000 3,400 packages
General factory $55,600 2,000 direct labor-hours
1. Compute the activity rate for each activity cost pool.
2. Compute the company's pre-determined overhead rate, assuming that the company uses a single plantwide pre-determined overhead rate based on direct labor-hours.

Zander Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In July the company completed job F21X that consisted of 29,850 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job F21X shows the following costs: Beginning balance $80,595 Direct materials $937,290 Direct labor cost $316,410 Manufacturing overhead cost applied $543,270 During the month, the actual manufacturing overhead cost incurred was $537,300 and 19,900 completed units from job F21X were sold. No other products were sold during the month. The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for July is closest to:_______.

Hart, Attorney at Law, experienced the following transactions in 2016, the first year of operations: 1.Accepted $36,000 on April 1, 2016, as a retainer for services to be performed evenly over the next 12 months. 2. Performed legal services for cash of $54,000. 3. Purchased $2,800 of office supplies on account. 4. Paid $2,400 of the amount due on accounts payable. 5. Paid a cash dividend to the stockholders of $5,000. 6. Paid cash for operating expenses of $31,000. 7. Determined that at the end of the accounting period $200 of office supplies remained on hand. 8. On December 31, 2016, recognized the revenue that had been earned for services performed in accordance with Transaction 1. Required Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate accounts not affected by the event. The first event has been recorded as an example. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign.)

Assume that you are a high-level manager for a shoe manufacturer. You know that your firm could increase its profit margin by producing shoes in Indonesia, where you could hire women for $100 a month to assemble them. You also know that human rights advocates recently accused a competing shoe manufacturer of engaging in exploitative labor practices because the manufacturer sold shoes made by Indonesian women for similarly low wages. You personally do not believe that paying $100 a month to Indonesian women is unethical because you know that in their country, $100 a month is a better-than-average wage rate.

Write 1-2 paragraphs explaining whether you would have the shoes manufactured in Indonesia and make higher profits for the company or avoid the risk of negative publicity and its potential adverse consequences for the firm's reputation. Are there other alternatives? Consider the impact of the route you choose and short-term vs. long-term profits, as well as the ethical decision making criteria.

Life, Inc., experienced the following events in 2018, its first year of operation.
1. Performed counseling services for $22,000 cash.
2. On February 1, 2018, paid $18,000 cash to rent office space for the coming year
3. Adjusted the accounts to reflect the amount of rent used during the year.
Required:
Based on this information alone:
A. Record the events under an accounting equation.
B. Prepare an income statement, balance sheet, and statement of cash flows for the 2016 accounting period.
C. Ignoring all other future events, what is the amount of rent expense that would be recognized in 2017?

Assume that Firm ABC has revenues of $120,000 for both 2017 and 2018. It also has operating expenses of $40,000 for each of these years. In addition, Firm ABC accrues a loss and related liability of $10,000 for financial reporting purposes because of pending litigation. Firm ABC cannot deduct this amount for tax purposes until it pays the liability, expected in 2018. As a result, a deductible amount will occur in 2018 when Firm ABC settles the liability, causing taxable income to be lower than pretax financial information.
2017 2018
Revenues 120,000 120,000
Expenses 40,000 40,000
Litigation Loss 10,000
Pretax Financial Income 70,000 80,000
Income Tax Expense (40%) 28,000 32,000
2017 2018
Revenues 120,000 120,000
Expenses 40,000 40,000
Litigation Loss 10,000
Taxable Income 80,000 70,000
Income Tax Expense (40%) 32,000 28,000
Q1) Journalize the entry at 12/31/2017 to record income tax expense, deferred tax asset, and income taxes payable:
Q2) Journalize the entry at 12/31/2018 to record income tax expense, deferred tax asset, and income taxes payable:

A(n) _____ is the maximum price for a good allowed by law.
Please choose the correct answer from the following choices, and then select the submit answer button.
Answer choices

equilibrium price

price floor

price ceiling

fair price

What is the PV of an ordinary annuity with 7 annual payments of $10,000 each if the appropriate annual interest rate is 5%?

On January 1, Merry Walker and other stockholders established a catering service. Listed below are accounts to use for transactions (a) through (f), each identified by a number. Following this list are the transactions that occurred in Walker’s first month of operations. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.1. Cash2. Accounts Receivable3. Supplies4. Prepaid Insurance5. Equipment6. Truck7. Notes Payable8. Accounts Payable9. Common Stock10.Dividends11.Fees Earned12.Wages Expense13.Rent Expense14.Utilities Expense15.Truck Expense16.Miscellaneous Expense17.Insurance Expense​ TransactionsAccount(s) DebitedAccount(s) Crediteda. Recorded jobs completed on account and sent invoices to customers. b. Received an invoice for truck expenses to be paid in February. c. Paid utilities expense d. Received cash from customers on account. e. Paid employee wages. f. Paid dividends to stockholders. What will be an ideal response?