Questions and Answers of Accounting and Finance

Identify the main phases of the total life cycle of a product or service and identify the particular phase(s) for which target costing and kaizen costing are particularly appropriate.
What are the four main areas on which the standard balanced scorecard is based?
The use of activity-based costing in helping to deduce full costs has been criticised. What has tended to be the basis of this criticism?
How does activity-based costing differ from the traditional approach? What is the underlying difference in philosophy between them?
Bookdon plc manufactures three products, X, Y and Z, in two product cost centres: a machine shop and a fitting section; it also has two service cost centres: a canteen and a machine maintenance
Many businesses charge overheads to jobs on a cost centre basis.Required:(a) What is the advantage that is claimed for charging overheads to jobs on a cost centre basis and why is it claimed?(b) What
Promptprint Ltd, a printing business, has received an enquiry from a potential customer for the quotation of a price for a job. The pricing policy of the business is based on the plans for the next
Consider this statement:‘In a job costing system, it is necessary to divide up the business into departments. Fixed costs (or overheads) will be collected for each department. Where a particular
It is sometimes claimed that the full cost of a product or service reflects the break-even selling price. Why is this said and what does it mean?
Are direct cost and variable cost the same thing? Explain your answer.
What is the point of distinguishing direct cost from indirect cost? Why is this not necessary in process costing environments?
What problem does the existence of work in progress cause in process costing?
Darmor Ltd has three products, which require the same production facilities. Information about the production cost for one unit of its products is as follows: All labour and materials are variable
A business makes three products, A, B and C. All three products require the use of two types of machine: cutting machines and assembling machines. Estimates for next year include the
Gandhi Ltd renders a promotional service to small retailing businesses. There are three levels of service: the ?Basic?, the ?Standard? and the ?Comprehensive?. The business plans next year to work at
Motormusic Ltd makes a standard model of car radio, which it sells to car manufacturers for £60 each. Next year the business plans to make and sell 20,000 radios. The business’s costs are as
If there is a scarce resource that is restricting sales, how will the business maximise its profit? Explain the logic of the approach that you have identified for maximising profit.
When we say that some business activity has high operating gearing, what do we mean? What are the implications for the business of high operating gearing?
What is meant by the BEP for an activity? How is the BEP calculated? Why is it useful to know the BEP?
Define the terms fixed cost and variable cost. Explain how an understanding of the distinction between fixed cost and variable cost can be useful to managers.
Rob Otics Ltd, a small business that specialises in manufacturing electronic-control equipment, has just received an inquiry from a potential customer for eight identical robotic units. These would
A local education authority is faced with a predicted decline in the demand for school places in its area. It is believed that some schools will have to close in order to remove up to 800 places from
Andrews and Co. Ltd has been invited to tender for a contract. It is to produce 10,000 metres of an electrical cable in which the business specialises. The estimating department of the business has
Lombard Ltd has been offered a contract for which there is available production capacity. The contract is for 20,000 identical items, manufactured by an intricate assembly operation, to be produced
Following a sensitivity analysis, it appears that the success of Project X depends on the actual cost of raw materials not exceeding 10 per cent of their projected cost. It also depends on the actual
What is meant by the expression ‘committed cost’? How do committed costs arise?
Distinguish between a sunk cost and an opportunity cost.
To be relevant to a particular decision, a cost must have three attributes. What are they?
The financial statements for Harridges Ltd are given below for the two years ended 30 June 2014 and 2015. Harridges Limited operates a department store in the centre of a small town. Dividends
Genesis Ltd was incorporated three years ago and has grown rapidly since then. The rapid rate of growth has created problems for the business, which the directors have found difficult to deal with.
Simplified financial statements for York plc are:Income statement for the year ended 30 September 2015 Statement of financial position as at 30 September Notes:1 Operating expenses include
The following financial statements for Blackstone plc are a slightly simplified set of published accounts. Blackstone plc is an engineering business that developed a new range of products in 2011.
Torrent plc?s income statement for the year ended 31 December 2014 and the statements of financial position as at 31 December 2013 and 2014 are as follows: Income statement for the year ended 31
Segmental information relating to Turner plc for the year to 30 April 2015 is: Required:Analyse the performance of each of the three main business segments for the year and comment on your results.
(a) ‘The UK system of corporate governance for Stock Exchange listed companies adopts a “comply or explain” approach.’ What does this mean? Set out one advantage and one disadvantage of this
Manet plc had the following share capital and reserves as at 1 June 2014:......................................................................................£mShare capital (£0.25 ordinary
The following information was extracted from the financial statements of I. Ching (Booksellers) plc for the year to 31 May
Searching for an agreed conceptual framework for accounting rules is likely to be a journey without an ending.’ Discuss.
The following is a draft set of simplified financial statements for Pear Limited for the year ended 30 September 2015.Income statement for the year ended 30 September 2015 Statement of financial
Iqbal Ltd started trading on 1 July 2010. During the first five years of trading, the following occurred: Required:Assume that the company paid the maximum legal dividend each year. Under normal
The following is the income statement for Nikov and Co. for the year ended 31 December 2014, along with information relating to the preceding year. Income statement for the year ended 31
Check the unemployment compensation law of your state and determine the answers to the following questions: a. How do nonprofit organizations, subject to coverage, make payments to the
Investigate your state’s income tax withholding law (or that of some other state assigned by your instructor), and find the answers to the following questions:a. Who must withhold the tax? b.
Antonio plc makes Product X, the standard costs of which are:......................................................£Sales revenue ...........................31Direct labour (1 hour)
O’Neill has decided to give all current employees (excluding himself) a bonus payment during January equal to 5% of their total gross pay for last year. Determine the total of this bonus payment
The total payroll tax expense incurred by the employer on the total earnings of Joseph T. O’Neill during the fourth quarter was .................$..............................................
The total payroll tax expense incurred by the employer on salaries and wages paid during the quarter ended December 31 was.....................$..........................
Also, prepare the adjusting entry as of December 31 to record the accrued vacation pay as of the end of the year. Record the expense in a vacation ben- efits expense account, and credit the
The form on page 6-69 shows the amounts that appear in the Earnings to Date column of the employees€™ earnings records for 10 full-time and part-time workers in Ranger Company. These
In Oregon, employers who are covered by the state workers€™ compensation law withhold employee contributions from the wages of covered employees for the workers€™ benefit fund at
On December 31, 20--, Sanchez Company needed to record its accrued wages for year-end. If December 31 is a Wednesday, then Sanchez Company must account for three days of wages.The company operates on
On December 29, 2017, Santucci Company has a balance of $619.24 in the FUTA taxes payable account. This repre- sents the employer€™s liability for the fourth quarter taxes. Journalize the
Carmen Santos is owner and sole employee of CS Corporation. He pays himself a salary of $2,400 this week.Record the payroll entry and payroll tax entry for the pay of the week ended June 2 (his
Garrett Hudson earned $895 this week. The deductions from his pay were as follows:Hudson€™s employer just received a garnishment order (credit card debt of $2,140) against his pay. Compute
In the Illustrative Case in this chapter, payroll transactions for Brookins Company were analyzed, journalized, and posted for the third quarter of the fiscal year. In this problem, you are to record
The form on page 6-45 shows the amounts that appear in the Earnings to Date column of the employees€™ earnings records for 10 full-time and part-time workers in Unger Company. These amounts
At the end of April, Hernandez Company had a balance of $37,910 in the vacation benefits payable account. During May, employees earned an additional $2,790 in vacation benefits, but some employees
In Oregon, employers who are covered by the state workers€™ compensation law withhold employee contributions from the wages of covered employees for the workers€™ benefit fund at
On December 31, 20--, Karmansky Company needed to record its accrued wages for year-end. If December 31 is a Tuesday, then Karmansky Company must account for two days of wages.The company operates on
On December 29, 2017, Reuter Company has a balance of $98.75 in the FUTA taxes payable account. This represents the employer€™s liability for the fourth quarter taxes. Journalize the entry
What payroll-related expenses does an employer incur because of its employees?
How is the information that is usually on a paper paystub given to an employee if the employer is using electronic paystubs?
Under the Consumer Credit Protection Act, what is the maximum percentage that can be deducted from an employee’s pay to satisfy a student loan garnishment?
Charlie Carlson is a full-time student at Wenonah College and works part time in the school’s maintenance department. Must the college pay a FUTA tax on Carlson’s earnings?
As of June 30, 2016 (the computation date for the 2017 tax rate), Amanda Company had a negative balance of $1,015 in its unemployment reserve account in State A. The company’s average payroll over
Over the past two years, Kermit Stone, the controller of Hilton Company, has been concerned that the company has been paying a large amount of money for state unem- ployment taxes. On reviewing the
During 2017, Shoupe Company was subject to the New Jersey state unemployment tax of 5.1%. The company’s tax- able wages for FUTA were $93,400 and for SUTA, $194,300. Compute:a. SUTA tax that Shoupe
During 2017, Jake Gore worked for two different employers. Until May, he worked for Wonderman Construction Company in Kansas City, Kansas, and earned $21,500. The state unemployment rate for
In September 2017, Manson Paint Corporation began operations in a state that requires new employers of one or more individuals to pay a state unemployment tax of 3.5% of the first $7,000 of wages
In September 2017, Painter Wax Corporation began operations in a state that requires new employers of one or more individuals to pay a state unemployment tax of 4.1% of the first $7,000 of wages paid
As of June 30, 2016 (the computation date for the 2017 tax rate), Sanchez Company had a negative balance of $1,190 in its unemployment reserve account in State A. The company’s average payroll over
During 2017, Jordan Company was subject to the Alaska state unemployment tax of 4.2%. The company’s taxable wages for FUTA were $86,700 and for SUTA, $171,000. Compute:a. SUTA tax that Jordan
During 2017, Jeff Smallwood worked for two different employers. Until May, he worked for Rowland Construction Company in Ames, Iowa, and earned $22,000. The state unemployment rate for Rowland is
Due to its experience rating, Ianelli, Inc., is required to pay unemployment taxes on its payroll as follows:a. Under SUTA for Massachusetts on taxable payroll of $18,000, the contribution rate is
Garrison Shops had a SUTA tax rate of 3.7%. The state’s taxable limit was $8,000 of each employee’s earnings. For the year, Garrison Shops had FUTA taxable wages of $67,900 and SUTA taxable wages
How often do employers file wage and contribution reports with their states?
How are pretax contributions by employees into cafeteria plans presented on Form 940?
In 2016:a. Which states had the widest range of SUTA tax rates for employers?b. Which state paid the highest weekly maximum benefit (excluding dependency allowances) to qualified unemployed
Which of the following types of payments are taxable under FUTA? a. Commissions as compensation for covered employment. b. Christmas gifts of nominal value.c. Courtesy discounts to
During the first full week of 2018, the Payroll Department of Omni Corporation is preparing the Forms W-2 for dis- tribution to its employees along with their payroll checks on January 5. In this
Use the percentage method to word the federal income taxes to withhold from the wages or salaries of each employee. No. of Withholding Gross Wage or Employee No. Marital Amount to Be Withheld
The names of the employees of Hogan Thrift Shop are listed on the following payroll register. Employees are paid weekly. The marital status and the number of allowances claimed are shown on the
Ernesto Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees. Find the amount to withhold from the wages paid each employee. Payroll Period W=Weekly
During the first full week of 2018, the Payroll Department of Quigley Corporation is preparing the Forms W-2 for distribution to its employees along with their payroll checks on January 5. In this
During the fourth quarter of 2017, there were seven biweekly paydays on Friday (October 6, 20; November 3, 17; December 1, 15, 29) for Quality Repairs. Using the forms supplied on pages 4-44 to 4-47,
The names of the employees of Hogan Thrift Shop are listed on the following payroll register. Employees are paid weekly. The marital status and the number of allowances claimed are shown on the
Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees. Find the amount to withhold from the wages paid each employee. Payroll Period W=Weekly No.
Sean Matthews is a waiter at the Duluxe Lounge. In his first weekly pay in March, he earned $300.00 for the 40 hours he worked. In addition, he reports his tips for February to his employer
Use the percentage method to word the federal income taxes to withhold from the wages or salaries of each employee. No. of Withholding Amount to Be Withheld Employee No. Employee Marital Status
Sean Matthews is a waiter at the Duluxe Lounge. In his first weekly pay in March, he earned $300.00 for the 40 hours he worked. In addition, he reports his tips for February to his employer
Besides the name and address of the payer, what other information should be listed in the address box of the payer on the recipient’s copy of Form 1099-MISC?
Under what conditions must employers submit cop- ies of Form W-4 to the IRS?
What is the penalty for filing W-2s with mismatched names and social security numbers?
What is Form 944?
Rhonda Gramm is single, and her wages are paid weekly. Under the percentage method, what is the amount of Gramm’s one weekly withholding allowance? Howard Heinz, married, claims two withholding
Commencing in June, Alan Oldt is eligible to receive monthly payments from a pension fund. What procedure should Oldt follow if he does not wish to have federal income taxes withheld from his
Are employer contributions into employees’ health savings accounts taxed as earnings of the employees?
Orrin D’Amato, single, participates in his firm’s pension retirement plan. This year, his modified adjusted gross income will be about $75,000. How much of his compensation may D’Amato
What is a personal allowance? What was the amount of a personal allowance for 2016?
What is the maximum contribution that an employer can make to an employee’s SIMPLE account?

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