On January 1, year 1, Dave received 2,500 shares of restricted stock from his employer, RRK Corporation. On that date, the stock price was $13 per share. On receiving the restricted stock, Dave made the 83(b) election. Dave’s restricted shares will vest at the end of year 2. He intends to hold the shares until the end of year 4, when he intends to sell them to help fund the purchase of a new home. Dave predicts the share price of RRK will be $33 per share when his shares vest and will be $54 per share when he sells them. Assume that Dave’s price predictions are correct and answer the following questions:

What are Dave’s taxes due if his ordinary marginal rate is 32 percent and his long-term capital gains rate is 15 percent?

	Taxes Due
Grant Date
Vesting Date	$0
Sale Date

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Murden Corporation has three divisions: pulp, paper, and fibers. Murden's new controller, Ben Mayer, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following information for each division for 2017: (Click the icon to view the data.) Requirement 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each division's operating margin percentage (division margin minus allocated fixed corporate-overhead costs as a percentage of revenues)? Allocate the fixed corporate-overhead costs, then calculate the division operating margins in dollars and as a percentage of revenue. (Round allocation proportions to one decimal place, X.X%, and dollar amounts to the nearest dollar. Enter operating margin percentages to one decimal, X.X%.) Division margin Allocated fixed corporate-overhead Operating margin Operating margin % Data Table Pulp S 3.000.000 $ Fixed Corporate-Overhead Costs Human resource management Facility Corporate administration Total $ $ % Paper 7,300,000 S Fibers 9,700,000 Print Done Until now, Murden Corporation has allocated fixed corporate-overhead costs to the divisions on the basis of division margins. Mayer asks for a list of costs that comprise fixed corporate overhead and suggests the following new allocation bases: (Click the icon to view the fixed corporate averhead and new allocation bases.) Read the requirements. % Suggested Allocation Bases 2,100,000 Number of employees 3,500,000 Floor space (square feet) 4,200,000 Division administrative costs 9.800,000 Data Table Revenues Direct manufacturing costs Division administrative costs Division margin Number of employees Floor space (square feet) Requirements S S S S Pulp 9,100,000 $ 3.300.000 2,800,000 3,000,000 $ 385 $ 24,000 $ Paper 17,100,000 $ 7,600,000 2.200,000 7.900,000 $ 185 S 18,400 S Fibers 23,500,000 10,800,000 3.000.000 9,700,000 550 67,800 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each division's operating margin percentage (division margin minus allocated fixed corporale-overhead costs as a percentage of revenues)? 2. Allocate 2017 fixed costs using the allocation bases suggested by Mayer. What is each division's operating margin percentage under the new allocation scheme? 3. Compare and discuss the results of requirements 1 and 2. If division performance incentives are based on operating margin percentage, which division would be most receptive to the new allocation scheme? Which division would be the least receptive? Why? 4. Which allocation scheme should Murden Corporation use? Why? How might Mayer overcome any objections that may arise from the divisions? Murden Corporation has three divisions: pulp, paper, and fibers. Murden's new controller, Ben Mayer, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following information for each division for 2017: (Click the icon to view the data.) Requirement 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each division's operating margin percentage (division margin minus allocated fixed corporate-overhead costs as a percentage of revenues)? Allocate the fixed corporate-overhead costs, then calculate the division operating margins in dollars and as a percentage of revenue. (Round allocation proportions to one decimal place, X.X%, and dollar amounts to the nearest dollar. Enter operating margin percentages to one decimal, X.X%.) Division margin Allocated fixed corporate-overhead Operating margin Operating margin % Data Table Pulp S 3.000.000 $ Fixed Corporate-Overhead Costs Human resource management Facility Corporate administration Total $ $ % Paper 7,300,000 S Fibers 9,700,000 Print Done Until now, Murden Corporation has allocated fixed corporate-overhead costs to the divisions on the basis of division margins. Mayer asks for a list of costs that comprise fixed corporate overhead and suggests the following new allocation bases: (Click the icon to view the fixed corporate averhead and new allocation bases.) Read the requirements. % Suggested Allocation Bases 2,100,000 Number of employees 3,500,000 Floor space (square feet) 4,200,000 Division administrative costs 9.800,000 Data Table Revenues Direct manufacturing costs Division administrative costs Division margin Number of employees Floor space (square feet) Requirements S S S S Pulp 9,100,000 $ 3.300.000 2,800,000 3,000,000 $ 385 $ 24,000 $ Paper 17,100,000 $ 7,600,000 2.200,000 7.900,000 $ 185 S 18,400 S Fibers 23,500,000 10,800,000 3.000.000 9,700,000 550 67,800 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each division's operating margin percentage (division margin minus allocated fixed corporale-overhead costs as a percentage of revenues)? 2. Allocate 2017 fixed costs using the allocation bases suggested by Mayer. What is each division's operating margin percentage under the new allocation scheme? 3. Compare and discuss the results of requirements 1 and 2. If division performance incentives are based on operating margin percentage, which division would be most receptive to the new allocation scheme? Which division would be the least receptive? Why? 4. Which allocation scheme should Murden Corporation use? Why? How might Mayer overcome any objections that may arise from the divisions?

Answer rating: 100% (QA)

Solution b Answers are highlighted in yellow In case of NQSO As Dave has made 83b election ... View the full answer