The following information was obtained from the accounting records of Macquarie Ltd.

	Machine A	Machine B
Acquisition date	1 April 2022	1 May 2022
Cost	$38,000 fully paid in cash	$28,800, 50% paid by cash, 50% to be paid in December 2022
Residual value	$2,000	$2,800
Useful life	6 years	4 years
Depreciation method	Straight-line	Diminishing-balance

Requirements:

a) Prepare journal entries at the acquisition date for both Machine A and Machine B. Narrations are not required.
b) Prepare general entries on 30 June 2022 to recognise the depreciation expense, assuming the business recognises depreciation every quarter. Prepare a separate journal entry for each machine. Round depreciation rate and journal entries where appropriate to 2 decimal places.
c) Prepare an extract Balance Sheet to present the carrying amount of Machine A as at 30 June 2022.
d) Calculate the carrying value of Machine B as at 31 December 2022.

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1. Prepare a report showing the revenue and spending and activity variances for each cost, including total and net income amounts. (Remember, you will need to prepare a flexible budget for the actual level of activity in order to complete this report.) 2. Based on your report, answer the following: a. Look at the Revenue Variance in conjunction with the Selling Expense variances. What is a possible explanation for these variances? b. Are the Activity Variances mostly favorable or unfavorable? Is this a good thing? What do activity variances tell us about the company's performance? c. What do you notice about the FIXED activity variances? Why is this the case? What do the Direct and Indirect Materials spending variances indicate about the company's use of materials? d. e. What do the Direct and Indirect Labor spending variances indicate about the company's laborers? f. Overall, how well did the company perform in the first month with regard to sales of the Whack-O? The CEO of Baxter Company is particularly concerned about the Direct Materials and Direct Labor spending variances and asks the Production Manager to further investigate what caused them. Upon further review, it was determined that the company purchased 40,000 pounds of raw materials in the first month at a cost of $.38 a pound. All of the materials purchased were used to make the 12,900 units produced that month. The standard materials quantity and cost for each unit is 3 pounds per unit at a cost of $.50 per pound. Additionally, it was discovered that the direct laborers spent, on average, 30 minutes on each product and were paid a rate of $9.00 per DL hour. The standard activity is 20 minutes per product at a rate of $12.00 per DL hour. Total (variable plus fixed) manufacturing overhead was applied at a rate of $20.85 per direct labor hour. The Production Manager thought that he had done a good job of containing the material and labor costs for the month and was surprised that the CEO was concerned about the production costs. 1. Prepare a report showing the revenue and spending and activity variances for each cost, including total and net income amounts. (Remember, you will need to prepare a flexible budget for the actual level of activity in order to complete this report.) 2. Based on your report, answer the following: a. Look at the Revenue Variance in conjunction with the Selling Expense variances. What is a possible explanation for these variances? b. Are the Activity Variances mostly favorable or unfavorable? Is this a good thing? What do activity variances tell us about the company's performance? c. What do you notice about the FIXED activity variances? Why is this the case? What do the Direct and Indirect Materials spending variances indicate about the company's use of materials? d. e. What do the Direct and Indirect Labor spending variances indicate about the company's laborers? f. Overall, how well did the company perform in the first month with regard to sales of the Whack-O? The CEO of Baxter Company is particularly concerned about the Direct Materials and Direct Labor spending variances and asks the Production Manager to further investigate what caused them. Upon further review, it was determined that the company purchased 40,000 pounds of raw materials in the first month at a cost of $.38 a pound. All of the materials purchased were used to make the 12,900 units produced that month. The standard materials quantity and cost for each unit is 3 pounds per unit at a cost of $.50 per pound. Additionally, it was discovered that the direct laborers spent, on average, 30 minutes on each product and were paid a rate of $9.00 per DL hour. The standard activity is 20 minutes per product at a rate of $12.00 per DL hour. Total (variable plus fixed) manufacturing overhead was applied at a rate of $20.85 per direct labor hour. The Production Manager thought that he had done a good job of containing the material and labor costs for the month and was surprised that the CEO was concerned about the production costs.

Answer rating: 100% (QA)

a Macquarie Ltd Journal Date Description Debit Credit 1 April Machine A 380... View the full answer