Watch the video below and write three to four paragraphs summarizing the contents of the chapter and the video. In your discussion don’t forget to discuss major concepts (including the formulas and definitions)
https://www.youtube.com/watch?v=zMb_IniBbDk&ab_channel=MarkTaylor
Role of Activity-Based Costing in Implementing Strategy Laurent Products is a manufacturer of plastic packaging products with plants located throughout Europe and customers worldwide. During the past 10 years, Laurent Products has successfully developed a line of packaging materials and a unique bagging system that present an important opportunity to increase the productivity of checkout counters in grocery stores. The plastic bags manufactured by Laurent are produced in several sizes and different plastic film colors and may have attractive multicolor printed designs on one or both sides to meet the specification of a particular grocery store. The advantages provided by the Laurent bagging system include the lower cost of bags and labor at the checkout counter as well as improved customer service. The system has contributed to significant growth in Laurent’s sales in recent years.
Laurent’s success in the grocery chain market has attracted an increasing number of competitors into the market. While the company has been very successful in bringing out a series of new product types with innovative labor-saving features for the grocery stores, Laurent’s competitors have eventually been able to develop quite similar products. The result has been increased competition with a substantial reduction in Laurent’s prices.
As a result of the increased competition in the grocery chain market, Laurent is planning to begin to focus on the small independent grocery stores that purchase bags from large wholesale distributors. The potential sales for this wholesaler segment is about the same size as the grocery chain market but includes a much larger number of independent store customers.
Investments in manufacturing equipment in recent years have been to support two principal objectives: to
increase capacity and to reduce costs. The cost reduction initiatives principally concerned material costs and
reduced processing times. Over the years, Laurent has chosen to invest in machines that are similar to existing
equipment in order to capitalize on the fact that the process is relatively simple and that products can, with
relatively few exceptions, be processed on any machine in the plant. The only major restriction is the number
of colors that a machine can accommodate on a single pass. Future investment proposals now being
considered are based on this rationale.
Questions
1.) What are the key strategic issues facing Laurent, and how can ABC costing assist in resolving these issues?
Activity Levels and Cost Drivers Shroeder Machine Shop has the following activities:
Machine operation
Machine setup
Production scheduling
Materials receiving
page 170Research and development
Machine maintenance
Product design
Parts administration
Final inspection of a sample of products
Materials handling
Questions
1.) Classify each of the activities as a unit-level, batch-level, product-level, or facility-level activity.
2.) Identify a potential cost driver for each activity in requirement 1.
Activity Levels and Cost Drivers Steve’s Slop Shop, a small hamburger shop, has identified the resources used in
its operations (assume each customer’s order is a batch for this example):
Bread
Hourly workers that cook hamburgers
Store rent
Ground beef
Catsup
Advertising for Triple-Burger special
Salary for the store managers
Utilities
$1-off-coupon for each order
Bag for each order
Questions
1.) Classify its costs as unit-level, batch-level, product-level, or facility-level costs.
2.) Suggest a possible cost driver for each of the above items.
Activity-Based Costing in the Fashion Apparel Industry Fleet Street Inc., a manufacturer of high-fashion clothing
for women, is located in South London in the UK. Its product line consists of trousers (45%), skirts (35%),
dresses (15%), and other (5%). Fleet Street has been using a volume-based rate to assign overhead to each
product; the rate it uses is £2.25 per unit produced. The results for the trousers line, using the volume-based
approach, are as follows:
Number of units produced
10,000
Price (all figures in £)
£ 20.525
Total revenue
205,250
Direct materials
33,750
Direct labor
112,500
Overhead (volume-based)
22,500
Total product cost
168,750
Nonmanufacturing expenses
31,500
Total cost
200,250
Profit margin for trousers
5,000
Recently, Fleet Street conducted a further analysis of the trousers line of product, using ABC. In the study,
eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor
and overhead) for the eight activities, after allocation to the trousers line, is as follows:
Pattern cutting
£22,000
Grading
19,000
Lay planning
18,500
Sewing
21,000
Finishing
14,300
Inspection
6,500
Boxing up
3,500
Storage
7,000
Questions
1.) Determine the profit margin for the trousers line using ABC
2.) Comment on the difference in comparison to the volume-based calculations.
Select an industry of your choice. Explain a product it would produce that could be accounted for using a job-costing system. What are 2 variable costs for the process? What are 2 fixed costs for the process? What cost driver you would select for allocating overhead to each job?
Watch the video below and write a three to four paragraphs summarizing the contents of the chapter and video. In your posts you want to discuss production process and how we account and record Direct Labor, Direct Materials and Overhead in Raw Materials, Work In Process, and Overhead Costs, make sure to discuss Debits and Credits in detail. Also discuss similarities and differences between job order and process costing. Don’t forget to discuss accounting for equivalent units.
Youtube Video you need to watch – https://www.youtube.com/watch?v=GJGklGGbCzw&ab_channel=Farhat%27sAccountingLectures
Watch the video below and write a three to four paragraphs summarizing the contents of the chapter and video. In your posts you might want to discuss how Overhead is applied in traditional systems, What is ABC as used in Overhead cost calculations and applications. Why do companies use ABC instead of Traditional systems. How are over applied and under applied overhead handled. Also, it will be good if you use examples.
Youtube video that you have to watch – https://www.youtube.com/watch?v=M-uGibLcQ-g&ab_channel=MarkTaylor
Respond to one or more question(s) from each of the three categories below.
Category: Revenue and Net Income
1. What was the corporation’s net sales, cost of goods sold, and gross profit?
2. What was the corporate tax rate? [Hint: divide income tax expense by income before income taxes]
3. What was the corporation’s net interest expense?
Category: Comprehensive Income
1. What is the account and amount of the top line item on the Statement (or Consolidated Statement) of Comprehensive Income?
2. What items appear under “Other Comprehensive Income (Loss)”?
3. What is the account and the amount of the bottom line item on the Statement (or Consolidated Statement) of Comprehensive Income?
Category: Analysis
1. Calculate the following ratios for the most recent year, and interpret/comment on what those results of your ratio analysis indicate about the financial aspect measured. Show your calculations.
a. Gross profit margin
b. Net profit margin
c. Times interest earned
SEC 10K Link:
https://www.sec.gov/ix?doc=/Archives/edgar/data/93410/000009341021000009/cvx-20201231.htm
The Journal of Accounting identified key areas of research in accounting:
• The role of transparency in markets and society;
Choose this area and give a summary of some of the current research themes (last 5 years). Finally, identify questions the researchers have identified as needing further exploration in these areas.
Patel, CPA, has completed the audit of the financial statements of Bellamy Corporation as of and for the year ended December 31, 2019. Patel also audited and reported on the Bellamy financial statements for the prior year. Patel drafted the following report for 2019.
We have audited the balance sheet and statements of income and retained earnings of Bellamy Corporation as of December 31, 2019. We conducted our audit in accordance with generally accepted accounting standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of misstatement.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly the financial position of Bellamy Corporation as of December 31, 2019, and the results of its operations for the year then ended in conformity with generally accepted auditing standards, applied on a basis consistent with those of the preceding year.
Patel, CPA
(Signed)
Here are some other pertinent facts about the audit:
Bellamy is a private corporation and is presenting comparative financial statements.
Bellamy does not wish to present a statement of cash flows for either year.
During 2019, Bellamy changed its method of accounting for long-term construction contracts and properly reflected the effect of the change in the current year’s financial statements and restated the prior year’s statements. Patel is satisfied with Bellamy’s justification for making the change. The change is discussed in the footnotes to the financial statements.
Patel was unable to perform normal accounts receivable confirmation procedures, but alternative procedures were used to satisfy Patel as to the existence of the receivables.
Bellamy Corporation is the defendant in a litigation, the outcome of which is highly uncertain. If the case is settled in favor of the plaintiff, Bellamy will be required to pay a substantial amount of cash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in the footnotes to the financial statements.
Bellamy issued bonds on January 31, 2018, in the amount of $10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The bond agreement restricts the payment of future cash dividends to earnings after December 31, 2023. Bellamy declined to disclose this essential data in the footnotes to the financial statements.
Required:
Explain the deficiencies in Patel’s report as drafted. There are at least 15 deficiencies. Each student should identify only one deficiency in their original post and then respond to at least two other students posts sometime during the week. You can agree or disagree with other students but make sure you explain why you agree or disagree.
Your original post is due by 5:00 pm on Saturday and your reply to at least 2 other student’s posts are due by 5:00pm on Monday. You will not be able to view other student’s posts until you create your own original threaded response.
Discussion board topics are worth a total of 100 points for each discussion board assignment. The following points are what is looked for in your original posts to the discussion board and your replies to other students’ postings:
Original Posting (60 points)
Relation of new information to old information learned in the course (or other related business courses) to date.
Relation of information in article or reading to personal experience.
The use of proper grammar, complete sentences, lack of misspelled words.
The response answers all questions asked and is on topic.
The original post was made in time for others to read and respond. Your original post is due by 5:00pm on Saturday and your reply to at least 2 other student’s posts are due by 5:00pm on Monday. The whole point of a discussion board is to have discussion with your classmates throughout the week just as you would have in a face to face class.
Discussion at a critical level, not just recitation of facts from the article.
Note: Discussion at a critical level means discussing things such as your opinion of the point mentioned, why you hold that opinion, what you see wrong with point mentioned, how you see the point consistent/inconsistent with what you have learned so far, implications for the future, consistencies/inconsistencies within the article or reading itself, and so forth. In other words, you should analyze the good and/or bad aspects of each discussion board activity and justifying your analysis. Do not just tell me what the article or reading states … I already know this.
Reply to Two Others’ Postings (40 points total – 20 points for each):
Discuss one point you like/agree with, and one point you dislike/disagree with, and why. (Do not just post “I agree” as this will not count as a valid reply post and will not be graded or awarded points.)
There is a response to at least two other student’s original posts by the due date.
If your original post and/or replies are not posted through Canvas by the due date you will receive a zero on the assignment – absolutely no exceptions. No late postings will be graded.
In the 21st century, taxes are “used to achieve a number of government objectives as well as to raise revenue to fund its public spending and to repay its…borrowing. In modern Britain taxation has become completely embedded in our society. Without taxation, the country would cease to operate. Whilst few people would say they like to pay taxes, their presence provides the foundation for an orderly, well managed country.”
Critically analyse the following in relation to the statement above:
1) How U.K. taxes are “used to achieve government objectives”, giving examples of specific taxes and how they are designed to achieve particular government objectives;
2) How U.K. taxes are used “to raise revenue to fund its public spending”; and
3) Whether taxation in the U.K. “provides the foundation for an orderly, well managed country”.
West Point Supply
It is the second week of January 2018. The Chief Executive Officer (CEO) of West Point Supply, Inc. (WPS), Mr. Donnie Glover, is preparing for a meeting with the company’s bank, Welles Forgo Bank & Trust (Welles Forgo). To prepare for the meeting, Mr. Glover is reviewing the company’s 2017 financial statements. He is working with the knowledge that
2017 was a very good year for WPS both in sales and in profits, and he is hopeful the company’s bank will recognize this achievement. Such an outcome is important because in early 2017 WPS had arranged a term loan, for the first time ever, and its initial repayment installment of $40,000 is due in February 1, 2018. Mr. Glover hopes that the company’s strong results during 2017 will impress Ms. Carrie Lowe, the bank’s loan officer. He is confident that the approaching loan
payment is within WPS’s financial capacity following its best year ever. He expects to send Ms. Lowe the company’s 2017 financial statements soon so that she can review them before the due date of the loan.
The Company
WPS was organized by Mr. Glover in 2001 as a wholesaler of electrical supplies and equipment to building contractors in and around Pittsburgh, PA. After a contraction during the recession of 2007–2009 its sales had grown through the following 10 years. The company has built a reputation for rapid delivery on a wide array of materials required by builders, many of whom are not well–capitalized and cannot finance an extensive inventory themselves. Mr. Glover believes WPS’s competitive advantage depends on this reputation. An implication of this strategy is that WPS must carry substantial inventory. As a result, through time, the company had to rent warehouse space in growing capacity. To stock its inventory WPS purchases supplies from an array of dealers. WPS’s suppliers sell to WPS on credit terms of 2/15, net 30 days. All of WPS’s purchases are on credit. In turn, the company sells to builders on credit terms of net 30 days and all sales are credit sales. During the latter part of 2016, a decision was made to construct a new warehouse adjacent to the company’s main offices and existing storerooms. The new building meant that WPS no longer needed to rent warehouse space – – which represents a saving for the company.
The Loan
When the financial statements for the year 2016 were completed, Mr. Glover had visited Welles Forgo to secure a loan. Historically, WPS maintained operating cash balances with the bank ranging from $20,000 to $60,000.1 Never before, however, had the company sought a loan either for seasonal or longer–term capital requirements. Mr. Glover discussed with Ms. Lowe the possibilities for bank support of WPS’s building expansion. He presented to her the 2016 statements, together with a forecast for 2017 which included the anticipated expenditures for construction, and savings on warehouse rental fees (see Exhibits 1 and 2). 1 The numbers in this case may appear to be “too small” to be realistic or worth worrying about. If so, just add three zeroes to all numbers. The concepts employed will be the same regardless of the dollars involved.
Based on these financial statements, on her conversations with Mr. Glover, and on her general knowledge of the building and building–supply business, Ms. Lowe and the bank agreed to loan $120,000 to WPS to help finance the proposed new facilities and the customary seasonal increase in sales that occurs during the spring and summer of each year. The loan was structured as a three–year loan, with repayments of principal of $40,000 due on February 1 of 2018, 2019, and 2020. The loan carries an interest rate of 12 percent per year. Mr. Glover visited Ms. Lowe periodically throughout 2017 to update the bank on the company’s progress. The new warehouse was completed in May of 2017 and Ms. Lowe participated in the “grand opening” ceremonies. She had been informed in October of 2017 that an especially good sales record was expected for the full year.
Assignment:
a. Use key financial ratios to determine what events occurred during 2017 to affect the company’s financial position. Ratios are presented in the case packet reading “Financial Planning, Financial Ratios and Pro Forma Financial Statements” and in RWJ&J.
Be prepared to address at least the following questions:
• Is the company growing (i.e., calculate the year–to–year growth rate of sales)?
• Are receivables in control? (Calculate days sales outstanding (DSO) through time.)
• Is inventory in control? (Calculate days of inventory through time.)
• Are payables being managed prudently (Note: See footnote a to the income statements)?
• Is the company’s debt usage in control?
• Is cost of goods sold in control?
• Are operating and administrative expenses in control?
• Is the company profitable? Is profitability improving?
In addressing these questions, calculate the ratios for each year’s actual financial statements and for the forecast financial statements. In calculating ratios, use end–of–period balances except for profit ratios. (Use the beginning of year balance sheet data in calculating profit ratios.)
b. What implications do the deviations from plan and the general 2017 operating results have for the company and the bank? What financial strategies seem desirable during 2018? (Be especially aware of the implicit cost of trade credit.)
c. If you were WPS’s banker, what would you do?
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