make or buy decision standard costs and other data for two component parts used by g 768154

Make-or-Buy Decision. Standard costs and other data for two component parts used by Griffon Electronics are presented below:

Direct materials . Direct labor . Factory overhead .

Unit standard cost. .

Units needed per year . Machine hours per unit . Unit cost if purchased .

Part A4

$ .40







Part B5

$ 8.00







In past years, Griffon Electronics has manufactured all of its required components; however, in 19- only 30,000 hours of otherwise idle machine time can be devoted to the production of components. Accordingly, some of the parts must be purchased from outside suppliers. In producing parts, factory

overhead is applied at $1 per standard machine hour. Fixed capacity costs, which will not be affected by any make-or-buy decision, represent 60% of the applied factory overhead.

The 30,000 hours of available machine time are to be scheduled so that

Griffon realizes maximum potential cost savings.

Required: (1) The relevant unit production costs to be considered in the make-or-buy decision to schedule machine time.

(2) The units of A4 and B5 that Griffon should produce if the allocation of machine time is based on potential cost savings per machine hour.

(AICPA adapted)

financial statement classification wayside machine tool company purchased a 600 000 741675

(Financial statement classification) Wayside Machine Tool Company purchased a $600,000 welding machine to use in production of large machine tools and robots. The welding machine was expected to have a life of 10 years and a salvage value at time of disposition of $60,000. The company uses straight-line depreciation. During its first operating year, the machine produced 600 machines of which 480 were sold.

a. What part of the $600,000 machine cost expired?

b. Where would each of the amounts related to this machine appear on the financial statements at the end of the first year of operations?

covered interest arbitrage assume that the interest rates for both the u s and germa 957065

Covered Interest Arbitrage

Assume that the interest rates for both the U.S. and German banks are 2%. You borrow $1M dollars from a U.S. bank for 6 months, convert it to Euros and invest it in a German bank for 6 months. The spot rate is 1.3664 USD per EUR.

The forward rate is currently 1.3749 USD per EUR.

a) If interest rate parity holds, what should the German interest rate be?

b) Do you have an opportunity for covered interest arbitrage? Explain why or why not.

c) What is your profit in USD after 6 months on your $1M if you engage in covered interest arbitrage using a forward contract at the rate stated?

individual tax return problem 2 required use the following information to complete p 1180182

INDIVIDUAL TAX RETURN PROBLEM 2 Required: • Use the following information to complete Paige Turner’s 2010 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps. • You may need the following forms and schedules to complete the project: Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule SE, Form 2106, Form 4562, Form 4684, and Form 8283. The forms, schedules, and instructions can be found at the IRS Web site ( The instructions can be helpful in completing the forms. Facts: 1. Paige Turner is single and has two children from her previous marriage. Ali lives with Paige, and Paige provides more than half of her support. Leif lives with his father, Will (Lief lived with Will for all of 2010). Will provides more than half of Leif’s support. Paige pays “alimony”

use the cch intelliconnect browse to locate topical indexes for answering the follow 773361

Use the CCH IntelliConnect Browse to locate Topical Indexes for answering the following questions:

a. What are the major headings for the letter “Y” in the Internal Revenue Code index?

b. What countries are listed for the letter “K” in the Tax Research Consultant index?

c. What is the listing for the letter “Z” in the Gift Tax Detailed Index (found in Financial and Estate Planning)? Include paragraph numbers.

d. Explain the function of the Topic Navigator that is located in the Practice Tools, Federal Taxes.

question 7 6 points timex inc produces several models of flag poles an outside suppl 1084989

Question 7: 6% points:

Timex Inc. produces several models of flag poles. An outside supplier has offered to produce the flag poles for Timex for $270 each. Timex needs 1,500 flag poles annually. Timex provided the following unit costs for its flag poles:

Direct materials   $100

Direct labor   110

Variable overhead   30

Fixed overhead (70% avoidable)   150

Instructions: Prepare an incremental analysis which shows the effect of the make-or-buy decision.

montclair corporation designs and manufactures wind turbine generating systems and s 939807

Montclair Corporation designs and manufactures wind turbine generating systems and sells them to private energy producers. Many of their sales are structured to allow their customers to pay for equipment on an installment basis. In 2001 Montclair sold 10 units on installment resulting in %1.5 million of gross profit being reported for GAAP purposes. Payment for these sales will be received evenly over a 3 year period starting with the current year. In 2002, Montclair sold 12 units on installment resulting in $1.8 million of gross profit being reported on the income statement. Montclair changed the structure of these sales so that payments would be received evenly over a 2 year period starting with the current periods.

Montclair provides warranties on the units it sells. In 2001, the company estimated that it would incur $780,000 during the 3 year warranty period and accrued this amount for financial purposes. During 2001, Montclair incurred $132,000 to perform warranty related repairs. Expected warranty costs associated with 2001 sales in 2002 and 2003 were $352,000 and $296,000 respectively. Montclair continued to offer warranties on the units it sold in 2002 and estimated the cost associated with the coverage to be $931,000 (this amount was accrued for financial purposes). Costs incurred during the year to provide warranty services totaled $500,000 (for units sold in 2001 and 2002). Remaining total warranty costs of $521,000 and $270,000 and $288,000 were expected for 2003, 2004, and 2005 respectively.

Montclair uses a wide range of capital assets to produce its products, which it depreciates on a straight line basis for financial reporting purposes. The company depreciates the assets on an accelerated basis for tax purposes as follows:

                                Book                      Tax

2001                       $1,400,000           $2,000,600

2002                       $1,400,000           $3,428,600

2003                       $1,400,000           $2,448,600

2004                       $1,400,000           $1,748,600

2005                       $1,400,000           $1,250,200

2006                       $1,400,000           $1,248,800

2007                       $1,400,000           $1,250,200

2008                       $1,400,000           $624,400

2009                       $1,400,000           0

2010                       $1,400,000           0

Montclair rents power generating equipment for which they are paid in advance of the rental period commencing. In 2001, the company received $500,000 for contracts associated with 2 year rental terms that start on January 1, 2001. The company received $600,000 for similar contracts in 2002. Montclair invests idle funds in various types of investments, which include municipal bonds. The company reported interest earned in the bonds of $24,000 and $26,000 in 2001 and 2002 respectively.

Montclair insures the lives of its executives. Premiums associated with the policies were $12,000 per year in 2001 and 2002. Sadly, a senior executive covered by one of the policies lost her life in an automobile accident in 2002. Per the policy terms, Montclair received a death benefit of $5,000,000.

In 2002 Montclair was fined $10,000 for violating highway safety rules when delivering one of its products to a customer. Also in 2002, the company became involved in a lawsuit, which the companyAc€?cs legal counsel felt would likely result in an adverse outcome for Montclair. The resulting loss was estimated to be in a range from $2,000,000 to $8,000,000. The appropriate amount was accrued for financial purposes. The anticipated settlement does not represent a fine or penalty and is expected to be paid in 2004.

Montclair reported income before taxes of $532,400 and $5,831,740 in 2001 and 2002 respectively. On its 2000 balance sheet, it reported a deferred tax asset of $1,307,861 (debit) and a deferred tax liability of $1,231,252 (credit). Two years prior to 2001, Montclair reported income for tax purposes of $245,270 and had a tax rate of 32%. One year prior to 2001 (2000), the company reported income for tax purposes of $325,660 and had a tax rate of 34%. Assume that Montclair carries back NOLs to the extent possible and utilizes NOL carry forwards as early as it can. Tax rates for Montclair are as follows:

2001 Ac€?o 34%

2002 to 2004 Ac€?o 36%

2005 and beyond Ac€?o 38%


Prepare step 1 and step 2 schedules for 2001 and 2002. Prepare the required journal entries to account for MontclairAc€?cs income taxes for 2001 and 2002 (be sure to prepare your entries in conformity with MontclairAc€?cs NOL policy).

direct method of support department cost allocation valron company has two support d 961605

Direct Method of Support Department Cost Allocation

Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.

The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Valron Company uses the direct method of support department cost allocation.


1. Calculate the allocation ratios for the four departments using the direct method. If an amount is zero, enter “0”. Use your solutions to this requirement in requirement 2, if needed.

Proportion of Driver Used by
Human Resources General Factory Fabricating Assembly
Human Resources
General Factory

2. Using the direct method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. If an amount is zero, enter “0”.

Support Departments Producing Departments
Human Resources General Factory Fabricating Assembly
Direct costs $ $ $ $
Human Resources            
General Factory            
Total after allocation $ $ $ $

3. What if the General Factory Department had 40 employees? How would that affect the allocation of Human Resources Department costs to the Fabricating and Assembly departments?

evaluating nonmanufacturing performance nicholson insurance company estimates that i 1235287

  1. Evaluating nonmanufacturing performance. Nicholson Insurance Company estimates that its overhead costs for policy administration should amount to $80 for each new policy obtained and $2 per year for each $1,000 face amount of insurance outstanding. The company set a budget of selling 6,000 new policies during the coming period. In addition, the company estimated that the total face amount of insurance outstanding for the period would equal $12,000,000.

During the period, actual costs related to new policies amounted to $430,000. The firm sold a total of 6,200 new policies.

The cost of maintaining existing policies was $27,000. Policies worth $13,000,000 were outstanding during the period.

Prepare a schedule to show the variances between the master budget and actual costs for this operation.

evaluating an incentive pay plan strategy anne marie fox is the manager of a new and 1226193

    1. Evaluating an Incentive Pay Plan; Strategy Anne-Marie Fox is the manager of a new and used boat dealership. She has decided to reevaluate the compensation plan offered to her sales representatives to determine whether the plan encourages the dealership’s success. The representatives are paid no salary, but they receive 20 percent of the sales price of every boat sold, and they have the authority to negotiate the boats’ prices as far down as their wholesale cost if necessary.

Required Is this plan in the dealership’s strategic best interest? Why or why not?