Financial data for joel de paris

Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division’s return on investment (ROI), which has exceeded 20% each of the last three years. He has computed the cost and revenue estimates for each product as follows:

Product A

Product B

Initial investment:

Cost of equipment (zero salvage value)

$

260,000

$

470,000

Annual revenues and costs:

Sales revenues

$

310,000

$

410,000

Variable expenses

$

144,000

$

194,000

Depreciation expense

$

52,000

$

94,000

Fixed out-of-pocket operating costs

$

76,000

$

56,000

The company’s discount rate is 18%.

Click here to view Exhibit 8B-1 and Exhibit 8B-2 , to determine the appropriate discount factor using tables.

Required:

1. Calculate the payback period for each product. (Round your answers to 2 decimal places.)

2.

Problem 10-19 Activity and Spending Variances [LO10-1, LO10-2, LO10-3]

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

Cost Formula

Actual Cost in March

Utilities

$16,900 plus $0.12 per machine-hour

$

21,460

Maintenance

$38,700 plus $2.00 per machine-hour

$

78,500

Supplies

$0.50 per machine-hour

$

11,300

Indirect labor

$94,800 plus $1.80 per machine-hour

$

137,100

Depreciation

$68,500

$

70,200

During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March.

Required:

1. Complete the report showing the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

3.

Exercise 11-4 Direct Labor and Variable Manufacturing Overhead Variances [LO11-2, LO11-3]

Erie Company manufactures a small mp3 player called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate mp3 player are as follows:

Standard Hours

Standard Rate per Hour

Standard Cost

24 minutes

$5.60

$2.24

During August, 8,470 hours of direct labor time were needed to make 19,600 units of the Jogging Mate. The direct labor cost totaled $45,738 for the month.

Required:

1. According to the standards, what direct labor cost should have been incurred to make 19,600 units of the Jogging Mate? By how much does this differ from the cost that was incurred? (Round Standard labor time per unit and Standard direct labor rate to 2 decimal places.)

` `

4.

Exercise 12-3 Measures of Internal Business Process Performance [LO12-3]

Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported:

Inspection time

0.4

day

Wait time (from order tostart of production)

16.0

days

Process time

3.3

days

Move time

0.8

day

Queue time

4.1

days

Required:

1.Compute the throughput time. (Round your answer to 1 decimal place.)

5.

Problem 12-15 Return on Investment (ROI) and Residual Income [LO12-1, LO12-2]

Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc. Balance Sheet

Beginning Balance

Ending Balance

Assets

Cash

$

128,000

$

135,000

Accounts receivable

332,000

489,000

Inventory

564,000

481,000

Plant and equipment, net

806,000

765,000

Investment in Buisson, S.A.

404,000

430,000

Land (undeveloped)

247,000

247,000

Total assets

$

2,481,000

$

2,547,000

Liabilities and Stockholders' Equity

Accounts payable

$

378,000

$

337,000

Long-term debt

961,000

961,000

Stockholders' equity

1,142,000

1,249,000

Total liabilities and stockholders' equity

$

2,481,000

$

2,547,000

Joel de Paris, Inc. Income Statement

Sales

$

4,255,000

Operating expenses

3,659,300

Net operating income

595,700

Interest and taxes:

Interest expense

118,000

Tax expense

208,000

326,000

Net income

$

269,700

The company paid dividends of $162,700 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company.

Required:

1. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Round your answers to 1 decimal place.)