Cole Pro Company managers received the following incomplete performance reports

Cole Pro Company managers received the following incomplete performance reports:

E23-16 preparing a flexible budget performance report

Cole Pro Company managers received the following incomplete performance reports:

Cole Pro Company

Flexible budget performance report

For the year ended July 31, 2016

Actual Flexible Flexible sales static

Results Budget Budget volume Budget

Variance. Variance

----------------------------------------------------------------------------

Units. 39,000. (a) 39000. 8000 F. (g)

-----------------------------------------------------------------------------

Sales

Revenue. $214,000. (b). $214000. $19000. F (h)

Variable

Expenses 86000. (c). 80000. 8000. U. (I)

___________________________________________________________

Contribution

Margin. 128000. (d). 134000. 11000 F. (j)

Fixed

Expenses. 10800. (e). 103000. 0. (k)

-------------------------------------------------------

Operating

Income. $20000. (f). $31000. $11000 F (l)

======================================

Complete the performance report. Identify their employee Group that may deserve praise and the group that may be subject to criticism. Give your reasoning.

TUTORIAL PREVIEW

Req. 1

Cole Pro Company
Income Statement Performance Report
Year Ended July 31, 2016
	Actual Results at Actual Prices	Flexible Budget Variance	Flexible Budget for Actual Number of Output Units	Sales Volume Variance	Static (Master) Budget
Output units	39,000	0	39,000	8,000 F	31,000

File name: E23-16 Cole Pro Company.doc   File type: docx PRICE: $5

Cole Pro Company managers received the following incomplete performance reports:

E23-16 preparing a flexible budget performance report

Cole Pro Company managers received the following incomplete performance reports:

Cole Pro Company

Flexible budget performance report

For the year ended July 31, 2016

Actual Flexible Flexible sales static

Results Budget Budget volume Budget

Variance. Variance

----------------------------------------------------------------------------

Units. 39,000. (a) 39000. 8000 F. (g)

-----------------------------------------------------------------------------

Sales

Revenue. $214,000. (b). $214000. $19000. F (h)

Variable

Expenses 86000. (c). 80000. 8000. U. (I)

___________________________________________________________

Contribution

Margin. 128000. (d). 134000. 11000 F. (j)

Fixed

Expenses. 10800. (e). 103000. 0. (k)

-------------------------------------------------------

Operating

Income. $20000. (f). $31000. $11000 F (l)

======================================

Complete the performance report. Identify their employee Group that may deserve praise and the group that may be subject to criticism. Give your reasoning.

TUTORIAL PREVIEW

Req. 1

Cole Pro Company
Income Statement Performance Report
Year Ended July 31, 2016
	Actual Results at Actual Prices	Flexible Budget Variance	Flexible Budget for Actual Number of Output Units	Sales Volume Variance	Static (Master) Budget
Output units	39,000	0	39,000	8,000 F	31,000

File name: E23-16 Cole Pro Company.doc   File type: docx PRICE: $5

Problem 18-12 Tax shields Digital Organics (DO) has the opportunity

Problem 18-12 Tax shields

Compute the Present Value of interest tax shields generated by these three debt issues.  Consider corporate taxes only.  The marginal tax rate is T_c =0.40.

a.       A $2,000, one-year loan at 6% interest

b.       A five-year loan of $2,000 at 6% interest.  Assume no principal is repaid until maturity.

c.       A $2,000 perpetuity at 5% interest

Digital Organics (DO) has the opportunity to invest $0.96 million now (t = 0) and expects after-tax returns of $560,000 in t = 1 and $660,000 in t = 2. The project will last for two years only. The appropriate cost of capital is 10% with all-equity financing, the borrowing rate is 6%, and DO will borrow $260,000 against the project. This debt must be repaid in two equal installments. Assume debt tax shields have a net value of $0.35 per dollar of interest paid. Calculate the project’s APV. (Do not round intermediate calculations. Round down your answer to the nearest whole dollar.)

File name: Problem 18-12 Tax shields.docx   File type: docx PRICE: $10

Imperial Jewelers is considering a special order for 22 handcrafted gold

Imperial Jewelers is considering a special order for 22 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $410.00 and its unit product cost is $270.00 as shown below:

Direct materials $147

Direct labor 88

Manufacturing overhead 35

Unit product cost $270

Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $8 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing $7 per bracelet and would also require acquisition of a special tool costing $458 that would have no other use once the special order is completed. This order would have no effect on the company’s regular sales and the order could be fulfilled using the company’s existing capacity without affecting any other order.

Required:

What effect would accepting this order have on the company’s net operating income if a special price of $370.00 per bracelet is offered for this order? (Enter all amounts as positive values.) 

TUTORIAL PREVIEW

	Per	Total
	Unit	22 bracelets
Incremental revenue	$370	$8,140
Incremental costs:

File name: Imperial Jewelers.docx   File type: docx  PRICE: $5

The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2016.

The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2016.

E15-15EXCEL(Dividend Entries) The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2016.

Current assets$540,000

Debt investments (trading)624,000

Common stock (par value $10)500,000

Paid-in capital in excess of par150,000

Retained earnings840,000

Prepare the required journal entries for the following unrelated items.

(a) A 5% stock dividend is declared and distributed at a time when the market price per share is $39.

(b)The par value of the common stock is reduced to $2 with a 5-for-1 stock split.

(c)A dividend is declared January 5, 2017, and paid January 25, 2017, in bonds heldas an investment. The bonds have a book value of $100,000 and a fair value of$135,000.

TUTORIAL PREVIEW

Retained Earnings (50,000 x 5.00 x $39.00)	97,500
Common Stock Dividend Distributable		25,000

File name: E15-15 Masefield Corporation on December 31, 2016.xlsx   File type: doc PRICE: $6