Q 32. C10-78 Ethical dilemmas relating to standards (Learning Objective 3) : PAGE-613
Austin Landers is the accountant for Sun Coast, a manufacturer of outdoor furniture that is sold through specialty stores and internet companies. Annually, Landers is responsible for reviewing the standard costs for the following year. While reviewing the standard costs for the coming year, two ethical issues arise.
Use the IMA’s Statement of Ethical Professional Practice (in Chapter 1) to identify the ethical dilemma in each situation. Identify the relevant factors in each situation and suggest what Landers should recommend to the controller. (250 words)
Issue 1 : Landers has been approached by Kara Willis, a former colleague who worked with Landers when they were both employed by a public accounting firm. Willis recently started her own firm, Willis Benchmarking Associates, which collects and sells data on industry benchmarks. She offers to provide Landers with benchmarks for the outdoor furniture industry free of charge if he will provide her with the last three years of Sun Coast’s standard and actual costs. Willis he will provide her with the last three years of Sun Coast’s standard and actual costs. Willis explains that this is how she obtains most of her firm’s benchmarking data would be very useful.
Issue 2 : Sun Coast’s management is starting a continuous improvement policy that requires a 10% reduction in standard costs each years. Dan Jones, manufacturing supervisor of the Teak furniture line, asks Landers to set loose standard costs this year before the continuous improvement policy is implemented. Jones argues that there is no other way to meet the tightening standards while maintaining the high quality of the Teak line.
Q-33.). E11-32B Complete and analyze a performance report (Learning Objective 4).:PAGE-656
One subunit of Speed Sports Company had following financial results last month:
Speed-Subunit X / Actual / Flexible Budget / Flexible Budget Variance(U or F) / % Variance (U of F)
Direct materials / $12,930 / $12,000
Direct Labor / 13,265 / 14,000
Indirect Labor / 23,380 / 20,000
Utilities / 16,455 / 15,000
Depreciation / 30,250 / 30,250
Repairs and maintenance / 4,205 / 5,000
Total / $100,485 / $96.250
Requirements
- Complete the performance evaluation report for this subunit (round to four decimals)
- Based on the data presented, what type of responsibility center is this subunit?(100 words)
- Which items should be investigated if part of management’s decision criteria is to investigate all variances exceeding or $2,900 or 11%?
- Should only unfavorable variances be investigated? Explain(150n words)
Q-34). C11-45 Collect and analyze division data (Learning Objective 5).:PAGE-665
Colgate-Palmolive operates two product segments. Using the company’s Web site, locate segment information for 2008 in the company’s 2008 annual report. (Hint : Look under investor relations.) Then, look in the financial statement footnotes.
Requirements
- What are the two segments (ignore geographical subsets of the one product segment)? Gather data about each segment’s net sales, operating income, and identifiable assets.
- Calculate ROI for each segment.
- Which segment has the highest ROI? Explain why (150 words)
- If you were on the top management team and could allocate extra funds to only one division, which division would you choose? Why? (150 words)
Q.42). P13-36B Prepare statements of cash flows (indirect and direct method) (Learning Objectives 1, 2 & 3):PAGE-770
Barton Publication Company, Inc., has the following comparative balance sheet as of March 31, 2010.
Barton Publication Company, Inc.Balance Sheet
As of March 31, 2010 and 2009
2010 / 2009 / Increase (Decrease)
Current assets :
Cash / $ 55,600 / $14.700 / $40,900
Accounts receivable / 51,400 / 53,300 / (1,900)
Inventories / 65,400 / 59,700 / 5,700
Prepaid expenses / 3,700 / 5,100 / (1,400)
Long-term investment / 10,000 / 6,800 / 3,200
Equipment, net / 71,700 / 70,200 / 1,500
Land / 35,500 / 97,000 / (61,500)
Total assets / 293,300 / $306,800 / (61,500)
Current liabilities
Note payable, short-term / $43,200 / $48,900 / $(5,700)
Account payable / 4,300 / 3,500 / 800
Income tax payable / 13,700 / 15,500 / (1,800)
Salary payable / 9,200 / 12,400 / (3,200)
Interest payable / 8,200 / 7,400 / 800
Accrued liabilities / 2,900 / 3,400 / (500)
Long-term note payable / 48,900 / 93,100 / (44,200)
Common stock / 69,600 / 61,700 / 7,900
Retained earnings / 93,300 / 60,900 / 32,400
Total liabilities and equity / $293,300 / $306,800 / $(13,500)
Selected transaction data for the year ended March 31, 2010, include the following :
- Net income, $77,000
- Paid long-term note payable with cash, $59,600
- Cash payments to employees, $43,000
- Loss on sale of land, $9,600
- Acquired equipment by issuing long-term note payable, $15,400
- Cash payments to suppliers, $147,100
- Cash paid for interest, $4,100
- Depreciation expense on equipment, $13,900
- Paid short-term note payable by issuing common stock, $5,700
- Paid cash dividends, $44,600
- Received cash for issuance of common stock, $2,200
- Cash received form customer, $299,400
- Cash paid for income taxes, $12,000
- Sold land for cash, $51,900
- Interest received (in cash), $1,000
- Purchased long-term investment for cash, $3,200
Requirements
- Prepare the statement of cash flows for Barton Publication Company, Inc., for the year ended March 31, 2010, using the indirect method for operating cash flows. Include a schedule of noncash investing and financing activities. All of the current accounts except short-term notes payable result from operating transactions.
- Also prepare a supplementary schedule of cash flows from operations using the direct method.
ESSAY QUESTION MOL-8
Q.44). Research and find financial statements for two companies of your choosing. Drawing on information from this module and the course, analyze the statements and write an essay summarizing which of the two is a better investment. Include your reasons, using the course material evidence. Cite the financial statements andincorporate what you have learned in this course.(300 WORDS)