Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Case 1:

Roger Powers, founder and president of WindTech, Inc. was dismayed when presented with the following report. Despite better-than-expected sales the first quarter, the company’s ability to remain a going concern was now in doubt based on the high cost of operations. His company was organized at the beginning of the current year to produce and market a revolutionary new storage battery that captures and stores electricity generated by wind power. In addition, on April 3, the company’s finished goods warehouse was destroyed by a fire and all 8,000 unsold batteries were destroyed. These batteries represented 20% of the first quarter’s production. Although the company’s insurance policy states that the company will be reimbursed for the ‘cost‘of any finished batteries destroyed or stolen, the insurance adjuster is disputing the company’s claim of $226,000. The company’s somewhat inexperienced accountant determined the amount of the claim as follows:

Total Costs for the quarter/Batteries produced during the quarter = $1,130,000/40,000 units = $28.25/unit

$28.25 x 8,000 batteries = $226,000

1814_windtech investment statement.jpg

The following additional information concerning the company’s activities during the quarter is available:

193_company activity.jpg

Eighty percent of the rental cost for facilities and 90% of the utilities cost relate to manufacturing operations. The remaining amounts relate to selling and administrative activities.

a) Describe the conceptual errors, if any, made in preparing the income statement above.
b) Prepare a schedule of cost of goods manufactured for the first quarter.
c) Prepare a corrected income statement for the first quarter. Show how cost of goods sold is computed.
d) Do you agree that the insurance company owes WindTech $226,000? describe your answer.

Case 2: Activity Based Costing (ABC) and Activity Based Management (4- 5 double spaced pages)

Developed in the mid-1980, ABC continues to help companies create value through improved profitability by overcoming distortions inherent in cost accounting systems. Though initially adopted primarily by manufacturers, ABC has moved into many diverse industries, the government, and military. Perform an internet search to answer the following problems related to the current use of ABC:

a) Describe the evolution of ABC over time.  As ABC moves to the maturity phase of its life cycle, what other uses for ABC (besides cost accounting) have been developed? What impact has recent advances in technology had on ABC?

b) There are numerous exs of successful ABC applications that can be found on the internet. Find case studies for two organizations, preferably one business and one nonprofit/government/military organization. (Many software companies with ABC applications will post their client’s success stories on their website in order to attract new clients). Summarize the following information from the two cases:

  • What reasons were given for implementing ABC?
  • What benefits were achieved by each organization?
  • What problems were mentioned, if any?

c) In general, what are some downsides, if any, of adopting ABC?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92018

Have any Question? 


Related Questions in Accounting Basics

Bubbles hot tubsbubbles hot tubs are a business that

Bubbles Hot Tubs Bubbles Hot Tubs are a business that manufactures and sells hot tubs to the UK market. At present the business manufactures three different types of hot tubs: The selling prices for each of the hot tubs ...

Course project a financial statement analysisa comparative

Course Project: A Financial Statement Analysis A Comparative Analysis of Nike, Inc. and Under Armour, Inc. Below is the link for the financial statements for Nike, Inc. for the fiscal year ending 2014. First, select 2014 ...

Landscaping service pricing analysisyou own a landscaping

Landscaping Service Pricing Analysis You own a landscaping company for residential properties. Your average cost for design and implement a standard landscape change per residential property is as follows Bushes @ $130 F ...

Business assignmentthe comany i have choosen is upsresearch

Business Assignment The comany i have choosen is UPS. Research a company that interests you from the Fortune 500. (A list will be provided). Analyze what they do. What business are they in? What industry? How have they b ...

Part 1true false questionsselect the correct answer1 a

Part 1: True / False Questions Select the correct answer 1. A single plant-wide overhead rate generally provides more accurate product costs than multiple departmental overhead rates. True False 2. The use of a predeterm ...

Discussionpart 1 please respond the following question no

Discussion Part 1 please respond the following question no less then 350 words (original work, no plagiarism, 1 reference "learning experience and application of knowledge" please respond to the following: • Assume you h ...

A company is considering to replace an existing machine for

A Company is considering to replace an existing machine for which two suppliers have given quotation. Supplier A has proposed a machine costing Rs. 180 lakh that uses the existing boiler while supplier B has quoted for t ...

Discussion forumthis week we shall look at monopolistic

DISCUSSION Forum This week we shall look at Monopolistic Competition. This is where you, as a consumer, spend most of your time. In Monopolistic Competition, there are many companies selling similar but not identical pro ...

Study guide1 what is the beta of a firm whose equity has an

STUDY GUIDE 1. What is the beta of a firm whose equity has an expected return of 21.30%, the risk-free rate is 7%, and the expected return on the stock market is 18%? 2. Two reasons for the agency problem in modern corpo ...

What is the difference between a significant deficiency and

What is the difference between a significant deficiency and a material weakness as it relates to internal Control? How does the presence of one material deficiency affect the auditor's report on internal controls under t ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen