Category Archives: ACC 206 (ASH)

ACC 206 Week 5 DQ 2 Responsibilities In Management Accounting

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ACC 206 Week 5 DQ 2 Responsibilities In Management Accounting

Review the rights and responsibilities of Certified Management Accountants:

http://www.imanet.org/PDFs/Public/CMA/RIghts_Responsibility_CMA.pdf

What are some of the ethical responsibilities and obligations that management accountants have within an organization? Provide some examples. Are these responsibilities different than the obligations for financial accountants? 

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ACC 206 Week 5 DQ 1 Long-Term Decision Making

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ACC 206 Week 5 DQ 1 Long-Term Decision Making

List a few of the issues and considerations businesses should have when it comes to the selection of long-term investments and how those issues impact the various financial statements. 

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ACC 206 Week 5 Assignment Final Paper

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ACC 206 Week 5 Assignment Final Paper

 

Focus of the Final Paper

You’ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities.    

 

As the controller of ABC Company, the CEO has come to you with a new opportunity that he’s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC’s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded  Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide.

 

In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information (including exhibits, but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some specific cost and profit information to complete the calculations.

 

Final Paper Spreadsheet

 

I. An overall risk profile of the company based on current economic and industry issues that it may be facing. 

 

II. Current company cash flow

a. You need to complete a cash flow statement for the company using the direct method.

b. Once you’ve completed the cash flow statement, answer the following questions:

i. What does this statement of cash flow tell you about the sources and uses of the company?

ii. Is there anything ABC Company can do to improve the cash flow?

iii. Can this project be financed with current cash flow from the company? Why or why not?

iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why?

III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.

a. What is the product cost for the expansion product?

b. By 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. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product? 

d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?

IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years: 

 

Year 1, $15,000

Year 2, $13,000

Year 3, $10,000

Year 4, $10,000

Year 5, $6,000

 

ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment.

a. What is the net present value of the proposed investment ignore income taxes and depreciation?

b. Assuming a 5-year straight-line depreciation, how will this impact the factory’s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow?

c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? 

V. Conclusion:

a. What are the major risk factors that you see in this project?

b. As the controller and a management accountant, what is your responsibility to this project?

c. What do you recommend the CEO do?

 

Writing the Final Paper

1.    Must be six to eight double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.

2.    Must include a title page with the following:

a.    Title of paper

b.    Student’s name

c.    Course name and number

d.    Instructor’s name

e.    Date submitted

3.    Must begin with an introductory paragraph that has a succinct thesis statement.

4.    Must address the topic of the paper with critical thought.

5.    Must end with a conclusion that reaffirms your thesis.

6.    Must document all sources in APA style, as outlined in the Ashford Writing Center.

7.    Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.

 

Carefully review the  Grading Rubric  for the criteria that will be used to evaluate your assignment.

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ACC 206 Week 5 Assignment Chapter Eight Problems

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ACC 206 Week 5 Assignment Chapter Eight Problems

Chapter Eight Problems

 Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

 Chapter 8 Exercise 1:

Basic present value calculations 

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

a.      A single cash inflow of $12,000 in five years, discounted at a 12% rate of return. 

b.      An annual receipt of $16,000 over the next 12 years, discounted at a 12% rate of return.

c.      A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return. 

d.      An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 12% rate of return.

 

Chapter 8 Exercise 4:

Cash flow calculationsand net present value 

On January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; the dividend was raised to $3.10 per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments.

a.      Prepare a chronological list of the investment’s cash flows. Note: Greene is entitled to the 20X3 dividend. 

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

c.      Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain.

 

Chapter 8 exercise 5:

Straightforwardnet present value and internal rate of return 

The City of Bedford is studying a 600-acre site on Route 356 for a new landfill. The startup cost has been calculated as follows: 

Purchase cost: $450 per acre 

Site preparation: $175,000 

 

The site can be used for 20 years before it reaches capacity. Bedford, which shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs. 

a.      Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the net-present-value method to determine your answer. 

 

Chapter 8 Problem 1:

Straightforward net-present-value and payback computations

STL Entertainment is considering the acquisition of a sight-seeing boat for summer tours along the Mississippi River. The following information is available:

Cost of boat  $500,000 

Service life  10 summer seasons 

Disposal value at the end of 10 seasons  $100,000 

Capacity per trip  300 passengers 

Fixed operating costs per season (including straight-line depreciation)  $160,000 

Variable operating costs per trip  $1,000 

Ticket price $5 per passenger

 

All operating costs, except depreciation, require cash outlays. On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes.

 

Instructions: 

By using the net-present-value method, determine whether STL Entertainment should acquire the boat. Assume a 14% desired return on all investments,- round calculations to the nearest dollar.

 

Chapter 8 Problem 4:

Equipment replacement decision 

Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000. 

New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method. 

 

Instructions: 

a.      By using the net-present-value method, determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar, and ignore income taxes. 

b.      Columbia’s management feels that the time value of money should be considered in all long-term decisions. Briefly discuss the rationale that underlies management’s belief.

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ACC 206 Week 4 DQ 2 Flexible Budgets

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ACC 206 Week 4 DQ 2 Flexible Budgets

Flexible budgets provide different information than static budgets. Discuss some of these differences. Is a flexible budget always better? Are there times when you’d recommend using a static budget over a flexible budget?

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ACC 206 Week 4 DQ 1 Issues In Standard Costs And Budgeting

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ACC 206 Week 4 DQ 1 Issues In Standard Costs And Budgeting

Review the Standard costs: wake up and smell the coffee.article. When evaluating performance, many organizations compare current results with the actual results of previous accounting periods. Is an organization that follows this approach likely to encounter any problems? Explain.

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ACC 206 Week 4 Assignment Chapter Six and Seven Problems

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ACC 206 Week 4 Assignment Chapter Six and Seven Problems

Chapter 6 and 7 Problems

Please complete the following 8 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

 

Chapter 6 Exercise 2

Schedule of cash collections

Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account. Credit sales have the following collection pattern:

 

Chapter 6 Exercise 4

Production and cash-outlay computations

RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.

 

Chapter 6 Exercise 5

Abbreviated cash budget; financing emphasis

An abbreviated cash budget for Big Chuck Enterprises follows.

 

Chapter 6 Problem 3

Comprehensive budgeting

The balance sheet of Watson Company as of December 31, 20X1, follows.

 

Chapter 7 Exercise 3

Variances for direct materials and direct labor

Banner Company manufactures flags of various countries. Each flag has a standard of eight square feet of fabric and three hours of direct labor time. Information about recent production activity follows.

Chapter 7 Exercise 5

Overhead variances 

Nova Manufacturing applies factory overhead to products on the basis of direct labor hours. At the beginning of the current year, the company’s accountant made the following estimates for the forthcoming period: 

•        Estimated variable overhead: $500,000 

•        Estimated fixed overhead: $400,000 

•        Estimated direct labor hours: 40,000

 

It is now 12 months later. Actual total overhead incurred in the manufacture of 7,900 units amounted to $895,100. Actual labor hours totaled 39,800. Assuming a direct labor standard of five hours per finished unit, calculate the following: 

a.      Variable overhead efficiency variance 

b.      Fixed overhead volume variance 

c.      Overhead spending variance 

 

Chapter 7 Problem 1

1. P26-A1 Basic flexible budgeting (L.O. 2)

Centron, Inc., has the following budgeted production costs:

Direct materials  $0.40 per unit 

Direct labor 1.80 per unit 

Variable factory overhead  2.20 per unit 

Fixed factory overhead 

Supervision  $24,000 

Maintenance  18,000

Other  12,000

 

The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively.

During the recent quarter ended March 31, Centron produced 25,500 units and incurred the following costs:

 

Direct Materials $10,710 

Direct Labor 47,175

Variable factory overhead 51,940

Fixed factory overhead

     Supervision 24,500

     Maintenance 23,700

     Other 16,800

Total production costs $174,825 

 

Instructions:

a.      Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity. 

b.      Was Centron’s experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer. 

c.      Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of performance. 

 

Chapter 7 Problem 5

5. P26-B3 Straightforward variance analysis (L.O. 5) 

Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.

 

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ACC 206 Week 3 Journal Hershey Company

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ACC 206 Week 3 Journal Hershey Company

Go the Hershey website  to learn how to make Hershey chocolate. Review the process and take a look at some of the videos. Pay particular attention to the process steps of milling and pressing, mixing the ingredients, and refining.

In at least one paragraph, describe the costing system that you would recommend Hershey use  to account for its cost of goods sold and why. Include a few product costs you think would be traceable, which costs should be allocated, and how Hershey should account and apply the manufacturing overhead costs.

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ACC 206 Week 3 DQ 2 CVP and The Airline Industry

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ACC 206 Week 3 DQ 2 CVP and The Airline Industry

We have all experienced (or heard about) the challenges that the airlines have been facing. Read the Zacks Investment Research article, “Airline Industry Stock Outlook – August 2012” Identify three factors that are affecting airline company’s ability to break even. For each of your factors, discuss how these have an impact on the breakeven (contribution margin, fixed costs, variable costs, a combination, etc.), and what happens if these factors increase or decrease.

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ACC 206 Week 3 DQ 1 Issues In Costing

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ACC 206 Week 3 DQ 1 Issues In Costing

Describe three issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the cost of goods sold. For each of your issues, provide an example of a company or industry where these issues could be present.

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