Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 120 coolers for the upcoming summer. It is willing to pay $255 per cooler. The brewing company would pick up the coolers upon completion of the order.
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- Flotilla Beam, the owner of the Bay City Boatyard, recently had a brilliant idea. There is a shortage of boat slips in the harbor during the summer. Beam’s idea is to develop a system of “dry slips.” A dry slip is a large storage rack in a warehouse on which a boat is stored. When the boat owner requests, a forklift is used to remove the boat from the dry slip and place the boat in the water. The entire operation requires one hour when a launch reservation is made in advance. The boatyard already has a vacant warehouse, which could be used for this purpose. However, Beam’s idea will require the following capital investment by the boatyard. • Storage racks: cost, $200,000; useful life, 18 years; MACRS class, 10-year property. • Forklift: cost, $120,000; useful life, six years; MACRS class, 5-year property. Bay City Boatyard’s tax rate is 35 percent, and its after-tax hurdle rate is 14 percent. Instructions: For each of the boatyard’s proposed capital investments: 1. Prepare a…Meredith had an excellent management science course as part of her MBA program in college, so she realizes that break-even analysis is needed to help make this decision. With this in mind, she instructs several staff members to investigate this prospective product further, including developing estimates of the related costs and revenues as well as forecasting the potential sales. One month later, the preliminary estimates of the relevant financial figures come back. The cost of designing the grandfather clock and then setting up the production facilities to produce this product would be approximately $250,000. There would be only one production run for this limited-edition grandfather clock. The additional cost for each clock produced would be roughly $2,000. The marketing department estimates that their price for selling the clocks can be successfully set at about $4,500 apiece, but a firm forecast of how many clocks can be sold at this price has not yet been obtained. However, it is…Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet has noticed that a great deal of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase. Required What are Harriet’s ethical responsibilities, if any, with respect to the information she has learned through her duties as an accountant for New World Pharmaceuticals? What are the implications of her planned purchase of New World shares?
- Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle's first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is intent on purchasing the warehouse because he believes that more storage space is needed. Jerrod asks Danielle to come to his office, where the following conversation takes place: Jerrod: Danielle, you're new here, aren't you? Danielle: Yes, I am. Jerrod: Well, Danielle, I'm not at all pleased with the capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don't get it, where am I going to place our output? Danielle: Well, we need to get product into our customers' hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers…Suppose that you have been given a summer job as an intern at Issac Aircams, a company that man- ufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and were given the following list of costs: Depreciation on salespersons’ cars. Rent on equipment used in the factory. Lubricants used for machine maintenance. Salaries of personnel who work in the finished goods warehouse. Soap and paper towels used by factory workers at the end of a shift. Factory supervisors’ salaries. Heat, water, and power consumed in the factory. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) Advertising costs. Workers’ compensation insurance for factory employees. Depreciation on…your employer is a large local softdrink manufacturer that has started looking into importing cans, as local can manufacturers have had major service issues over the last 12 months. put forward a proposal to your board of directors discussing a proposed import process
- Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2025. All watches are sold for $491 each. July 17 Purchased 41 watches for $5,781 ($141 per watch) on account. July 31 Sold 31 watches for $15,221 cash. August 12 Purchased 31 watches for $4,681 ($151 per watch) cash. August 22 Sold 21 watches for $10,311 on account. September 19 Paid for watches purchased on July 17. September 27 Receive cash of $20,400…Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2025. All watches are sold for $491 each. July 17 Purchased 41 watches for $5,781 ($141 per watch) on account. July 31 Sold 31 watches for $15,221 cash. August 12 Purchased 31 watches for $4,681 ($151 per watch) cash. August 22 Sold 21 watches for $10,311 on account. September 19 Paid for watches purchased on July 17. September 27 Receive cash of $20,400…John Patrick has recently been hired as controller of Valdosta Vinyl Company (VVC), a manufacturer of vinyl siding used in residential construction. VVC has been in the vinyl siding business form any year sand is currently investigating ways to modernize its manufacturing process. At the first staff meeting Patrick attended, Jack Kielshesky , chief engineer, presented a proposal for automating the Molding Department. Kielshesky recommended that the company purchase two robots that would have the capability of replacing the eight direct-labor employees in the department. The cost savings outlined in the proposal include the elimination of direct-labor cost in the Molding Department plus a reduction of manufacturing overhead cost in the department to zero, because VVC charges manufacturing overhead on the basis of direct-labor dollars using a plant wide rate. The president of VVC was puzzled by Kielshesky's explanation: “This just doesn't make any sense. How can a department’s overhead…
- Danielle Hastings was recently hired as a cost analyst by CareNet Medical Supplies Inc. One of Danielle’s first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is very intent on purchasing the warehouse because be believes that more storage space is needed. Jerrod asks Danielle into his office and the following conversation takes place: Jerrod: Danielle, you’re new here, aren’t you? Danielle: Yes, I am. Jerrod: Well, Danielle, I’m not at all pleased with capital investment analysis that you performed on this new warehouse. I need that warehouse for my production. If I don’t get it, where am I going to place out output? Danielle: Well, we need to get product into our customer’s hands. Jerrod: I agree, and we need a warehouse to do that. Danielle: My analysis does not support constructing a new warehouse. The numbers don’t lie; the warehouse does not…Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2022. All watches are sold for $500 each.Jul. 17 Purchased 50 watches for $7,500 ($150 per watch) on account.Jul. 31 Sold 40 watches for $20,000 cash.Aug. 12 Purchased 40 watches for $6,400 ($160 per watch) cash.Aug. 22 Sold 30 watches for $15,000 on account.Sep. 19 Paid for watches purchased on July 17.Sep. 27 Receive cash of $9,000 for watches sold on account on…Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2022. All watches are sold for $500 each. Jul. 17 Purchased 50 watches for $7,500 ($150 per watch) on account. Jul. 31 Sold 40 watches for $20,000 cash. Aug. 12 Purchased 40 watches for $6,400 ($160 per watch) cash. Aug. 22 Sold 30 watches for $15,000 on account. Sep. 19 Paid for watches purchased on July 17. Sep. 27 Receive cash…