ACC 206 Complete Course Material

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ACC 206 Complete Course Material

ACC 206 Week 1 Assignment Chapter One Problems

Why are noncash transactions, such as the exchange of common stock a building, included on astatement of cash flows? How are these noncash transactions disclosed?

Chapter 1 Exercise 1:

1. Classification of activitiesClassify each of the following transactions as arising from an operating !", investing #",financing $", or noncash investing%financing &" activity.

a. '''''''' (eceived )*+,+++ from the sale of land.

b. '''''''' (eceived ),-++ from cash sales.

c. '''''''' aid a )/,+++ dividend.

d. '''''''' urchased )*,*++ of merchandise for cash.

e. '''''''' (eceived )1++,+++ from the issuance of common stock.

f. '''''''' aid )1,-++ of interest on a note payable.

g. '''''''' 0cuired a new laser printer by paying )2/+.

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h. '''''''' 0cuired a )3++,+++ building by signing a )3++,+++ mortgage note.

Chapter 1 Exercise :

3. O!er!ie" o# $irect an$ in$irect metho$s4valuate the comments that follow as being 5rue or $alse. #f the comment is false, brieflyexplain why.

a. 6oth the direct and indirect methods will produce the same cash flow from operatingactivities.

b. 7epreciation expense is added back to net income when the indirect method is used.

c. !ne of the advantages of using the direct method rather than the indirect method is thatlarger cash flows from financing activities will be reported.

d. 5he cash paid to suppliers is normally disclosed on the statement of cash flows when theindirect method of statement preparation is employed.

e. 5he dollar change in the 8erchandise #nventory account appears on the statement of cashflows only when the direct method of statement preparation is used.

Chapter 1 Exercise 6:2. E%uipment transaction an$ cash #lo" reporting

&ew euipment purchased during -+93 totaled )-*+,+++. 5he -+93 income statement disclosedeuipment depreciation expense of )31,+++ and a ):,+++ loss on the sale of euipment.

a. 7etermine the cost and accumulated depreciation of the euipment sold during -+;3.

b. 7etermine the selling price of the euipment sold.

c. <how how the sale of euipment would appear on a statement of cash flows prepared by

using the indirect method.

Chapter 1 Problem &:



. Cash flow information= 7irect and indirect methods5he comparative year>end balance sheets of <ign raphics, #nc., revealed the following activityin the company@s current accounts=

(elated 5utorials

ACC 206 Week 1 '(1 Cash )lo"s *n#ormation

What information does the cash flow statement provide that you cannot see in the other financialstatements income statement, balance sheet, owner@s euity"? What elements of the cash flowstatement do you think are most important for company management to monitor and why? #s thisdifferent for investors?

uided (esponse=

(eview your peers@ postings. (espond to at least two of classmates, letting them know whetheryou agree with the use of the cash flow statement and why. 0dditionally, share elements of thecash flow statement that you see as being the greatest interest to investors as opposed to internalmanagement" and why.

ACC 206 Week 1 '(2 Apple+s Cash )lo"

o to http=%%finance.yahoo.com. 4nter in A00B and click on the Aget uote button, and it will bring up information on 0pple. !n the left hand side you@ll see a section on $inancials. Withinthat section, click on the cash flow. (eview the cash flow statement for 0pple. How would yousummariDe 0pple@s cash flow position and what does this statement tell you about where themoney is coming from and where it@s going? What would you suggest 0pple@s do to improve itscash position and why?

uided (esponse=

0nalyDe several of your peers@ postings. 7o you agree with the posting? Bet at least two of your peers know what you would add.

ACC 206 Week 2 Assignment Chapter ,"o an$ ,hree Problems

http://finance.yahoo.com./

http://finance.yahoo.com./



lease complete the following E exercises below in either 4xcel or a word document but must be single document". Fou must show your work where appropriate leaving the calculationswithin 4xcel cells is acceptable". <ave the document, and submit it in the appropriate week using

the 0ssignment <ubmission button.

Chapter 2 Exercise 1

1- *ssuance o# stock

repare Gournal entries to record the issuance of 1++,+++ shares of common stock at )-+ pershare for each of the following independent cases=

a. ackson Corporation has common stock with a par value of )1 per share.

b. (oyal Corporation has no>par common with a stated value of )/ per share.

c. $rench Corporation has no>par commonI no stated value has been assigned

Chapter 2 Exercise &

&- Anal.sis o# stockhol$ers+ e%uit.

<tar Corporation issued both common and preferred stock during -+;2. 5he stockholders@ euitysections of the company@s balance sheets at the end of -+;2 and -+;/ follow.

20/6 20/

referred stock, )1++ par value, 1+J )/*+,+++ )/++,+++

Common stock, )1+ par value -,/+,+++ 1,E/+,+++

aid>in capital in excess of par value



referred -3,+++ K

Common 3,2-+,+++ ,2++,+++

(etained earnings *,3E+,+++ 2,:-+,+++

5otal stockholders@ euity )12,+33,+++ )1-,EE+,+++

a. Compute the number of preferred shares that were issued during -+;2.

b. Calculate the average issue price of the common stock sold in -+;2.

c. 6y what amount did the company@s paid>in capital increase during -+;2?

d. 7id <tar@s total legal capital increase or decrease during -+;2? 6y what amount?

Chapter 2 Problem 1

1. on$ computations: traight3line amorti4ation

<outhlake Corporation issued ):++,+++ of *J bonds on 8arch 1, -+;1. 5he bonds pay intereston 8arch 1 and <eptember 1 and mature in 1+ years. 0ssume the independent cases that follow.

€€€€€€€•Case A K5he bonds are issued at 1++.



€€€€€€€•Case B K5he bonds are issued at :2.

€€€€€€€•Case C K5he bonds are issued at 1+/.

<outhlake uses the straight>line method of amortiDation.

Instructions:

Complete the following table=

Case 0 Case 6 Case C

1. Cash inflow on the issuance date ''''''' ''''''' '''''''

1 5otal cash outflow through maturity ''''''' ''''''' '''''''

1 5otal borrowing cost over the life of the bond issue ''''''' ''''''' '''''''

1 #nterest expense for the year ended 7ecember 1, -+;1 ''''''' ''''''' '''''''

1 0mortiDation for the year ended 7ecember 1, -+;1 ''''''' ''''''' '''''''

1 LnamortiDed premium as of 7ecember 1, -+;1 ''''''' ''''''' '''''''

1 LnamortiDed discount as of 7ecember 1, -+;1 ''''''' ''''''' '''''''

1 6ond carrying value as of 7ecember 1, -+;1 ''''''' ''''''' '''''''

Chapter & Exercise 1



1. Pro$uct costs an$ perio$ costs

5he costs that follow were extracted from the accounting records of several differentmanufacturers=

1. Weekly wages of an euipment maintenance worker

-. 8arketing costs of a soft drink bottler

. Cost of sheet metal in a Honda automobile

3. Cost of president@s subscription to Fortune magazine

/. 8onthly operating costs of pollution control euipment used in a steel mill

2. Weekly wages of a seamstress employed by a Geans maker

E. Cost of compact discs C7s" for newly recorded releases of (ush, 6illy oel, and 6ryan0dams

a. 7etermine which of these costs are product costs and which are period costs.

b. $or the product costs only, determine those that are easily traced to the finished product andthose that are not.

Chapter & Exercise 2

2- 'e#initions o# manu#acturing concepts

#nterstate 8anufacturing produces brass fasteners and incurred the following costs for the year Gust ended=

8aterials and supplies used

6rass )E/,+++

(epair parts 12,+++

8achine lubricants :,+++

Wages and salaries 8achine operators 1-*,+++

roduction supervisors 23,+++

8aintenance personnel 31,+++



!ther factory overhead Mariable /,+++

$ixed 32,+++

<ales commissions -+,+++

Compute=

a. 5otal direct materials consumed

b. 5otal direct labor

c. 5otal prime cost

d. 5otal conversion cost

Chapter & Exercise

- che$ule o# cost o# goo$s manu#acture$5 income statement

5he following information was taken from the ledger of efferson #ndustries, #nc.=

7irect labor )*/,+++0dministrative expenses )/:,+++

<elling expenses 3,+++Work in. process

<ales ++,+++an. 1 -:,+++

$inished goods 7ec. 1 -1,+++

an. 1 11/,+++7irect material purchases **,+++

7ec. 1 11,+++7epreciation= factory 1*,+++



(aw direct" materials on hand #ndirect materials used 1+,+++

an. 1 1,+++#ndirect labor -3,+++

7ec. 1 3+,+++$actory taxes *,+++

$actory utilities 11,+++

repare the following=

a. 0 schedule of cost of goods manufactured for the year ended 7ecember 1.

b. 0n income statement for the year ended 7ecember 1.

Chapter & Problem &

&- Manu#acturing statements an$ cost beha!ior

5ampa $oundry began operations during the current year, manufacturing various products forindustrial use. !ne such product is light>gauge aluminum, which the company sells for )2 perroll. Cost information for the year Gust ended follows.

roduction and sales totaled -+,+++ rollsand 1E,+++ rolls, respectively 5here is

Per nit 7ariable Cost )ixe$ Cost

7irect materials )3./+ ) K

7irect labor 2./ K

$actory overhead : /+,+++

<elling K E+,+++

0dministrative K 1/,+++



no work in process. 5ampa carries its finished goods inventory at the average unit cost of production.

Instructions:

a. 7etermine the cost of the finished goods inventory of light>gauge aluminum.

b. repare an income statement for the current year ended 7ecember 1

c. !n the basis of the information presented=

1. 7oes it appear that the company pays commissions to its sales staff? 4xplain.

-. What is the likely effect on the )3./+ unit cost of direct materials if next year@s productionincreases? Why?

ACC 206 Week 2 '(1 tock )eatures

1. What is callable preferred stock ? Why do corporations issue such stock? iven the different

features that are associated with stock callable, cumulative, preferred, etc.", what type of stockwould you want to buy personally and why?

uided (esponse =

(eview your peers@ posts. (espond to at least two of your classmates, letting them know if youagree with their type of desired stock and whether your answer would change and why" basedon=

a. 7ifferent economic conditions b. <tate of the company if the company is in a growth phase versus a mature state".

ACC 206 Week 2 '(2 8ole o# Management Accounting



(eview the roles of management accounting within a company. What is the most important roleof management accounting? How is that different than financial accounting?

uided (esponse=

(eview your peer@s responses. (espond to at least two of your peers, adding at least twoadditional areas that management accountants focus on that the author didn@t include

ACC 206 Week 2 9ournal *nstitute o# Management Accounting

While there are many instances of overlap between financial accounting and managementaccounting, each group@s primary focus is different. (eview the #nstitute of 8anagement

0ccounting@s #80" website, specifically the A0bout #80 and the A(esources andublications sections of the website. 0re you surprised by the topics that managementaccountants are focusing on? Why or why not? What interests you more, financial accounting ormanagement accounting?

Carefully review the rading (ubric for the criteria that will be used to evaluate your Gournalentry.

ACC 206 Week & Assignment Chapter )our an$ )i!e Problems

lease complete the following E exercises below in either 4xcel or a word document but must be single document". Fou must show your work where appropriate leaving the calculationswithin 4xcel cells is acceptable". <ave the document, and submit it in the appropriate week usingthe 0ssignment <ubmission button.

Chapter Exercise &

. Cost #lo"s an$ o!erhea$ application

Cleveland 8etals uses a Gob cost system and applies factory overhead to production at a

predetermined rate of 1*+J of direct labor cost. 7ata pertaining to recent operations follow.

ob no. 22 was the only Gob in process on anuary 1 of the €€€€€€€• current year. 5he

Work in rocess account contained a )-3,2++ balance on this date.

obs no. 2E, 2*, and 2: were started during anuary. €€€€€€€•

http://vizedhtmlcontent.next.ecollege.com/pub/content/0f86dbeb-4d8e-47a7-98bb-36866ec95494/Journal_Rubric_One_Point.pdf

http://vizedhtmlcontent.next.ecollege.com/pub/content/0f86dbeb-4d8e-47a7-98bb-36866ec95494/Journal_Rubric_One_Point.pdf



5otal direct material reuisitions and directlabor incurred €€€€€€€• during anuary

amounted to )*:,-++ and )113,/++, respectively.

5he only Gob that remained in process on anuary 1 was Gob €€€€€€€• no. 2*, with costs

of )1/,+++ for direct materials and )-+,+++ for direct labor.

a. Compute the total cost of the work in process inventory on anuary 1.

b. Compute the cost of Gobs completed during anuary, and present the proper Gournal entry toreflect Gob completion.

Chapter Exercise

E. O!erhea$ application: Working back"ar$

5he 5owson 8anufacturing Corporation applies overhead on the basis of machine hours. 5he

following divisional information is presented for your review=

7ivision 07ivision 6

0ctual machine hours --,/++?

4stimated machine hours -+,+++?

!verhead application rate )3./+ )/.++

0ctual overhead )11+,+++?

4stimated overhead ? ):+,+++

0pplied overhead ? )*2,+++

!ver> under>" appliedoverhead ? )2,/++

)in$ the unkno"ns #or each o# the $i!isions-



Chapter Problem 2

-. Computations using a ;ob or$er s.stem

eneral Corporation employs a Gob order cost system. !n 8ay 1 the following balances wereextracted from the general ledgerI

Work in process ) /,-++

$inished goods *2,:++

Cost of goods sold 1-*,E++

Work in rocess consisted of two Gobs, no. 1+1 )-+,3++" and no. 1+ )13,*++". 7uring 8ay,

direct materials reuisitioned from the storeroom amounted to ):2,/++, and direct labor incurredtotaled )113,/++. 5hese figures are subdivided as follows=

Direct Materials Direct Labor

9ob <o- Amount 9ob <o- Amount

1+1 )/,+++ 1+1 )E,*++

11/ 1:,/++ 1+ -+,*++

112 2,-++ 11/ 3-,+++

!ther /,*++ 112 1*,+++

):2,/++ !ther -/,:++

)113,/++



ob no. 11/ was the only Gob in process at the end of the month. ob no. 1+1 and three Aother Gobs were sold during 8ay at a profit of -+J of cost. 5he Aother Gobs contained material andlabor charges of )-1,+++ and )1E,3++, respectively.

eneral applies overhead daily at the rate of 1/+J of direct labor cost as labor summaries are posted to Gob orders. 5he firm@s fiscal year ends on 8ay 1.

Instructions:

a. Compute the total overhead applied to production during 8ay.

b. Compute the cost of the ending work in process inventory.

c. Compute the cost of Gobs completed during 8ay.

d. Compute the cost of goods sold for the year ended 8ay 1.

Chapter Exercise 1

1- =igh3lo" metho$

5he following cost data pertain to -+;2 operations of Heritage roducts=

(uarter 1 (uarter 2 (uarter & (uarter

<hipping costs )/*,-++ )/*,2-+ )2+,1-/ )/:,3++

!rders shipped 1-+ 13+ 1E/ 1/+



5he company uses the high>low method to analyDe costs.

a. 7etermine the variable cost per order shipped.

b. 7etermine the fixed shipping costs per uarter.

c. #f present cost behavior patterns continue, determine total shipping costs for -+;E ifactivity amounts to /E+ orders.

Chapter Exercise 2

5he treasurer anticipates the following costs for the event, which will be held at the (egency

Hotel=

(oom rental )++7inner cost per person" -/Chartered buses /++$avors and souvenirs per person" /6and :++4ach person would pay )3+ to attendI -++ attendees are expected.

a. Will the event be profitable for the sorority? <how computations.

b. How many people must attend for the sorority to break even?

c. <uppose the sorority encouraged its members to drive to the hotel and did not charter the buses. $urther, a planned menu change will reduce the cost per meal by )-. #f each member willstill be charged )3+, compute the contribution margin per person.

Chapter Exercise &

. reak3e!en an$ other C7P relationships

Cedars Hospital has average revenue of )1*+ per patient day. Mariable costs are )3/ per patient

dayI fixed costs total )3,-+,+++ per year.

a. How many patient days does the hospital need to break even?

b. What level of revenue is needed to earn a target income of )/3+,+++?

c. #f variable costs drop to )2 per patient day, what increase in fixed costs can be toleratedwithout changing the break>even point as determined in part a"?



Chapter Problem 6

6- 'irect an$ absorption costing

5he information that follows pertains to Consumer roducts for the year ended 7ecember 1,

-+;2.

#nventory, 1%1%;2 -3,+++ unitsLnits manufactured *+,+++Lnits sold *-,+++#nventory, 1-%1%;2 ? units8anufacturing costs=7irect materials ) per unit7irect labor )/ per unitMariable factory overhead ): per unit$ixed factory overhead )-*+,+++

<elling N administrative expenses=Mariable )- per unit$ixed )12,+++

5he unit selling price is )-2. 0ssume that costs have been stable in recent years.

Instructions:

a. Compute the number of units in the ending inventory.

b. Calculate the cost of a unit assuming use of=

1. 7irect costing.

-. 0bsorption costing.

c. repare an income statement for the year ended 7ecember 1, -+;2, by using directcosting.

d. repare an income statement for the year ended 7ecember 1, -+;2, by using absorptioncosting.

ACC 206 Week & '(1 *ssues in Costing



ACC 206 Week & '(2 C7P an$ the Airline *n$ustr.

ACC 206 Week & 9ournal =ershe. Compan.

ACC 206 Week Assignment Chapter ix an$ e!en Problems

lease complete the following * exercises below in either 4xcel or a word document but must be single document". Fou must show your work where appropriate leaving the calculations

within 4xcel cells is acceptable". <ave the document, and submit it in the appropriate week usingthe 0ssignment <ubmission button.

Chapter 6 Exercise 2

2- che$ule o# cash collections

<ugarland Company sells a single product and anticipates opening a new facility in Charlotte on8ay 1 of the current year. 4xpected sales during the first three months of activity are= 8ay,)2+,+++I une, )*+,+++I and uly, )*/,+++. 5hirty percent of all sales are for cashI the remaining

E+J are on account. Credit sales have the following collection pattern=

Chapter 2 4xercise 3

- Pro$uction an$ cash3outla. computations

((, #nc., anticipates that 1-+,+++ units of product O will be sold during 8ay. 4ach unit of product O reuires four units of raw material 0. 0ctual inventories as of 8ay 1 and budgetedinventories as of 8ay 1 follow.

Chapter 2 4xercise /

- Abbre!iate$ cash bu$get> #inancing emphasis



0n abbreviated cash budget for 6ig Chuck 4nterprises follows.Chapter 2 roblem

&- Comprehensi!e bu$geting

5he balance sheet of Watson Company as of 7ecember 1, -+;1, follows.

Chapter Exercise &

&- 7ariances #or $irect materials an$ $irect labor

6anner Company manufactures flags of various countries. 4ach flag has a standard of eightsuare feet of fabric and three hours of direct labor time. #nformation about recent productionactivity follows.

Chapter Exercise

/. O!erhea$ !ariances

&ova 8anufacturing applies factory overhead to products on the basis of direct labor hours. 0tthe beginning of the current year, the company@s accountant made the following estimates for theforthcoming period=

P 4stimated variable overhead= )/++,+++

P 4stimated fixed overhead= )3++,+++

P 4stimated direct labor hours= 3+,+++

#t is now 1- months later. 0ctual total overhead incurred in the manufacture of E,:++ unitsamounted to )*:/,1++. 0ctual labor hours totaled :,*++. 0ssuming a direct labor standard offive hours per finished unit, calculate the following=

a. Mariable overhead efficiency variance

b. $ixed overhead volume variance

c. !verhead spending variance

Chapter Problem 1

1. P263A1 asic #lexible bu$geting ?@-O- 2

Centron, #nc., has the following budgeted production costs=



7irect materials )+.3+ per unit7irect labor 1.*+ per unitMariable factory overhead -.-+ per unit$ixed factory overhead<upervision )-3,+++

8aintenance 1*,+++!ther 1-,+++

5he company normally manufactures between -+,+++ and -/,+++ units each uarter. <houldoutput exceed -/,+++ units, maintenance and other fixed costs are expected to increase by )2,+++and )3,/++, respectively.

7uring the recent uarter ended 8arch 1, Centron produced -/,/++ units and incurred thefollowing costs=

Instructions:

a. repare a flexible budget for -+,+++,

--,/++, and -/,+++ units of activity.

b. Was Centron@s experience in theuarter cited better or worse than

anticipated? repare an appropriate performance report and explain your answer.

c. 4xplain the benefit of using flexible budgets as opposed to static budgets" in themeasurement of performance.

7irect 8aterials )1+,E1+

7irect Babor 3E,1E/

Mariable factory overhead /1,:3+

$ixed factory overhead

<upervision -3,/++

8aintenance -,E++

!ther 12,*++

5otal production costs )1E3,*-/



Chapter Problem

/. P263& traight#or"ar$ !ariance anal.sis ?@-O-

0rrow 4nterprises uses a standard costing system. 5he standard cost sheet for product no. /3:follows.

ACC 206 Week '(1 *ssues in tan$ar$ Costs an$ u$geting

ACC 206 Week '(2 )lexible u$gets

ACC 206 Week Assignment Chapter Eight Problems

lease complete the following / exercises below in either 4xcel or a word document but must be single document". Fou must show your work where appropriate leaving the calculations

within 4xcel cells is acceptable". <ave the document, and submit it in the appropriate week usingthe 0ssignment <ubmission button.

Chapter B Exercise 1:

1. asic present !alue calculations

Calculate the present value of the following cash flows, rounding to the nearest dollar=

a. 0 single cash inflow of )1-,+++ in five years, discounted at a 1-J rate of return.

b. 0n annual receipt of )12,+++ over the next 1- years, discounted at a 1-J rate of return.

c. 0 single receipt of )1/,+++ at the end of Fear 1 followed by a single receipt of )1+,+++ atthe end of Fear . 5he company has a 1+J rate of return.



d. 0n annual receipt of )*,+++ for three years followed by a single receipt of )1+,+++ at theend of Fear 3. 5he company has a 1-J rate of return.

Chapter B Exercise :

3. Cash #lo" calculationsan$ net present !alue

!n anuary -, -+;1, 6ruce reene invested )1+,+++ in the stock market and purchased /++shares of Heartland 7evelopment, #nc. Heartland paid cash dividends of )-.2+ per share in -+;1and -+;-I the dividend was raised to ).1+ per share in -+;. !n 7ecember 1, -+;, reenesold his holdings and generated proceeds of )1,+++. reene uses the net>present> value methodand desires a 12J return on investments.

a. repare a chronological list of the investment@s cash flows. Note: reene is entitled to the

-+; dividend.

b. Compute the investment@s net present value, rounding calculations to the nearest dollar.

c. iven the results of part b", should reene have acuired the Heartland stock? 6rieflyexplain.

Chapter B exercise :

/. traight#or"ar$net present !alue an$ internal rate o# return

5he City of 6edford is studying a 2++>acre site on (oute /2 for a new landfill. 5he startup costhas been calculated as follows=

urchase cost= )3/+ per acre

<ite preparation= )1E/,+++

5he site can be used for -+ years before it reaches capacity. 6edford, which shares a facility in6ath 5ownship with other municipalities, estimates that the new location will save )3+,+++ inannual operating costs.

a. <hould the landfill be acuired if 6edford desires an *J return on its investment? Lse thenet>present>value method to determine your answer.



Chapter B Problem 1:

1. traight#or"ar$ net3present3!alue an$ pa.back computations

<5B 4ntertainment is considering the acuisition of a sight>seeing boat for summer tours along

the 8ississippi (iver. 5he following information is available=

Cost of boat )/++,+++<ervice life 1+ summer seasons7isposal value at the end of 1+ seasons )1++,+++Capacity per trip ++ passengers$ixed operating costs per season including straight>line depreciation" )12+,+++Mariable operating costs per trip )1,+++5icket price )/ per passenger

0ll operating costs, except depreciation, reuire cash outlays. !n the basis of similar operationsin other parts of the country, management anticipates that each trip will be sold out and that1-+,+++ passengers will be carried each season. #gnore income taxes.

Instructions:

6y using the net>present>value method, determine whether <5B 4ntertainment should acuire the boat. 0ssume a 13J desired return on all investments,> round calculations to the nearest dollar.

Chapter B Problem :

3. E%uipment replacement $ecision

Columbia 4nterprises is studying the replacement of some euipment that originally cost)E3,+++. 5he euipment is expected to provide six more years of service if )*,E++ of maGorrepairs are performed in two years. 0nnual cash operating costs total )-E,-++. Columbia can sellthe euipment now for )2,+++I the estimated residual value in six years is )/,+++.

&ew euipment is available that will reduce annual cash operating costs to )-1,+++. 5heeuipment costs )1+,+++, has a service life of six years, and has an estimated residual value of)1,+++. Company sales will total )3+,+++ per year with either the existing or the neweuipment. Columbia has a minimum desired return of 1-J and depreciates all euipment by thestraight>line method.



Instructions:

a. 6y using the net>present>value method, determine whether Columbia should keep its present euipment or acuire the new euipment. (ound all calculations to the nearest dollar, andignore income taxes.

b. Columbia@s management feels that the time value of money should be considered in alllong>term decisions. 6riefly discuss the rationale that underlies management@s belief.

0CC -+2 Week / 7Q1 Bong>term 7ecision 8aking

ACC 206 Week '(2 8esponsibilities in Management Accounting

ACC 206 Week )inal paper

)ocus o# the )inal Paper

Fou@ve Gust been hired onto 06C Company as the corporate controller. 06C Company is amanufacturing firm that specialiDes in making cedar roofing and siding shingles. 5he companycurrently has annual sales of around )1.- million, a -/J increase from the previous year. 5hecompany has an aggressive growth target of reaching ) million annual sales within the next

years. 5he C4! has been trying to find additional products that can leverage the current 06Cemployee skillset as well as the manufacturing facilities.

0s the controller of 06C Company, the C4! has come to you with a new opportunity that he@s been working on. 5he C4! would like to use the some of the shingle scrap materials to buildcedar dollhouses. While this new product line would add additional raw materials and be moretime>intensive to manufacture than the cedar shingles, this new product line will be able toleverage 06C@s existing manufacturing facilities as well as the current staff. 0lthough this product line will reuire added expenses, it will provide additional revenue and gross profit tohelp reach the growth targets. 5he C4! is relying on you to help decide how this proGect can beafforded rovide details about the estimated product costs, what is needed to break even on the

proGect, and what level of return this product is expected to provide.

#n order to help out the C4!, you need to prepare a six> to eight>page report that will contain thefollowing information including exhibits, but excluding your references and title page". (efer tothe accompanying 4xcel spreadsheet available through your online course" for some specificcost and profit information to complete the calculations.

$inal aper <preadsheet

http://vizedhtmlcontent.next.ecollege.com/pub/content/abc3ad4f-f6b4-4a8e-a8e9-3a5cc85354fa/Final_Paper_Spreadsheet._Student_Copy.xlsx

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#. 0n overall risk profile of the company based on current economic and industry issues that itmay be facing.

##. Current company cash flow

a. Fou need to complete a cash flow statement for the company using the direct method. b. !nce you@ve completed the cash flow statement, answer the following uestions=

i. What does this statement of cash flow tell you about the sources and uses of the company?ii. #s there anything 06C Company can do to improve the cash flow?iii. Can this proGect be financed with current cash flow from the company? Why or why not?iv. #f the company needs additional financing beyond what 06C Company can provide internallyeither now or sometime throughout the life of the proGect", how would you suggest the companyobtain the additional financing, euity or corporate debt, and why?

###. roduct cost= 06C Company believes that it has an additional /,+++ machine hours available

in the current facility before it would need to expand. 06C Company uses machine hours toallocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. 06CCompany expects that it will take twice as long to produce the expansion product as it currentlytakes to produce its existing product.

a. What is the product cost for the expansion product? b. 6y adding this new expansion product, it helps to absorb the fixed factory and sales expenses.How much cheaper does this expansion make the existing product?c. 0ssuming 06C Company wants a 3+J gross margin for the new product, what selling priceshould it set for the expansion product?d. 0ssuming the same sales mix of these two products, what are the contribution margins and

break>even points by product?

#M. otential investments to accelerate profit= 06C company has the option to purchaseadditional euipment that will cost about )3-,+++, and this new euipment will produce thefollowing savings in factory overhead costs over the next five years=

Fear 1, )1/,+++Fear -, )1,+++Fear , )1+,+++Fear 3, )1+,+++Fear /, )2,+++

06C Company uses the net>present>value method to analyDe investments and desires a minimumrate of return of 1-J on the euipment.

a. What is the net present value of the proposed investment ignore income taxes anddepreciation? b. 0ssuming a />year straight>line depreciation, how will this impact the factory@s fixed costs foreach of the / years and the implied product costs"? What about cash flow?



c. Considering the cash flow impact of the euipment as well as the time>value of money, wouldyou recommend that 06C Company purchases the euipment? Why or why not?

M. Conclusion=

a. What are the maGor risk factors that you see in this proGect? b. 0s the controller and a management accountant, what is your responsibility to this proGect?c. What do you recommend the C4! do?

Writing the Final Paper

1. 8ust be six to eight double>spaced pages in length, and formatted according to 00 style asoutlined in the 0shford Writing Center.-. 8ust include a title page with the following=

a. 5itle of paper b. <tudent@s namec. Course name and number d. #nstructor@s namee. 7ate submitted

. 8ust begin with an introductory paragraph that has a succinct thesis statement.3. 8ust address the topic of the paper with critical thought./. 8ust end with a conclusion that reaffirms your thesis.2. 8ust document all sources in 00 style, as outlined in the 0shford Writing Center.

E. 8ust include a separate reference page, formatted according to 00 style as outlined in the0shford Writing Center.

Carefully review the rading (ubric for the criteria that will be used to evaluate yourassignment.

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