Week 1 - Problems 2-9 Emrich Processing and 2-23 iGen3, Income Statement.

• Using Excel, complete the following problems found in Chapter 2 of the Zimmerman (2016) textbook:
  • Problem 2-9 - Emrich Processing is a small custom stainless steel processor who needs to determine how to bid a job to a client requesting a rush on the order. Given the costs and the other factors in the problem stated in the text, at what amount should Emrich quote the job?
  • Problem 2-23 - Answer the following questions about ColorGraphix?s options for leasing the iGen3, according to the options in the textbook:
    • If ColorGrafix leases the iGen3 and chooses Option A, how many impressions per month will ColorGrafix have to sell and produce to breakeven?
    • If ColorGrafix leases the iGen3 and chooses Option B, how many impressions per month will ColorGrafix have to sell and produce to breakeven?
    • Should ColorGrafix choose Option A or Option B? Explain why.
    • ColorGrafix is a fairly new firm (only three years old) and has a substantial amount of debt that was used to help start the company. ColorGrafix has positive net cash flow after servicing the debt, but the owners of ColorGrafix have not felt it wise to withdraw any cash from the business since its inception, except for their salaries. ColorGrafix expects to sell and produce 520,000 impressions per month. Which lease option would you recommend ColorGrafix choose? Explain why.
• Slides 21-29 in this week?s PowerPoint presentation are concerning cash versus accrual accounting and income statement presentation. On the Excel worksheet titled Glassy Lips Lip Gloss Company, prepare a traditional and a contribution margin income statement.
  • Define what a contribution margin is
  • Explain the differences between the two statements
  • Under what circumstances would a contribution margin statement be used?
  • Propose which statement is more accurate and explain why.

Reference

Zimmerman, J. (2016).Accounting for decision making and control(9th ed.). New York, NY: McGraw-Hill.