1. The first general standard of generally accepted auditing standards which sta

1. The first general standard of generally accepted
auditing standards which states, in part, that the examination is
to be performed by a person or persons having adequate technical
training, requires that an auditor have:
2. The first standard of field work recognizes that
early appointment of the independent auditor has many advantages to
the auditor and the client. Which of the following advantages is
least likely to occur as a result of early appointment of the
auditor?
3. Due professional care requires
4. Auditing standards differ from auditing procedures in
that procedures relate to
5. One element of the personnel management quality
control standard is
professional development. The primary reason why a CPA
firm establishes policies
and procedures for professional development of staff
accountants is to
 
These are just few questions from the exam.  Please
see the attached file for details

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Discussion Board Unit 1 – Unit 4 with References   Unit 1: Introduction to Manag

Discussion Board Unit 1 – Unit 4 with References
 
Unit 1: Introduction to Managerial Accounting
Consider the following scenario:
You are a senior level manager in a large company:
List and explain the types of accounting information that are
important to you and your staff
when making decisions.
Explain how your managerial accountant uses technology to develop
and communicate this
information throughout your large company.
 
Unit 2: Cost Management
Activity-based costing differs from traditional costing systems
in a number of ways. In activity-basedcosting, non-manufacturing as
well as manufacturing costs may be assigned to products. And, some
manufacturing costs may be excluded from product costs.

1. Discuss other differences between activity-based costing and the
traditional costing systems.
2. Discuss the reasons that activity-based costing may be resisted
by top management.
3. Discuss why activity rates are important 3. to management.
4. In your opinion, why activity-based costing approach is probably
unacceptable for external financialreports.

The controller of Chicago Company is in charge of installing a new
costing system that includes the allocation of indirect
manufacturing costs to the producing departments. After studying
the situation, he found there were three cost drivers that could be
used to assign the indirect costs, each with its own merits. After
computing the allocations for the departments on a sample month, he
found that each cost driver favored (that is, assigned less costs
to) a different department. Machine hours favored Department X,
direct manufacturing labor hours favored Department Y, and number
of processing steps performed favored Department Z.
1. What additional factors must the controller consider before
deciding on an allocation base for the indirect manufacturing cost
assignment to the departments?
Unit 3: Activity-Based Costing & Process Costing
Consider the following scenario:
Your CFO, in her initial work, needs to decide whether to set up a
job order costing system or a process type costing system. She has
asked you to make a recommendation based on the following
information. You plan to meet with her in the morning. Write 4–6
paragraphs in response to the following, and provide support for
your recommendation:

1. Compare and contrast job order costing to process costing
methods.
2. What kind of system works best in what kinds of
companies?
3. What kind of system makes sense for your company, given that you
plan to start with only one
version of your product but at some point in the future may offer a
variety of options?
 
Unit 4: Financial Analysis: Planning & Budgeting
Students should review the following statements and write 3–4
paragraphs that provide support for your answers:
1. Managers should base pricing decisions on both cost and
market factors. In addition, they must also consider legal issues.
Describe the influence that the law has on pricing decisions.
2. It is impossible to use Discounted Cash Flow methods for
evaluating investments in research and development. There are no
cost savings to measure, and we don’t even know what products might
come out of our R&D activities.” This is a quote from an
R&D manager who was asked to justify investment in a major
research project based on its expected net present value. How would
you respond to this statement? Do you agree or disagree?
Explain.
 
Unit 5: Responsibility Centers & Financial Controls
Consider the following scenario:
The organization that you work for has been thinking about
implementing one of the following performance measures:
Balanced Scorecard
Economic Value Added
It has asked you to prepare a summary and make a recommendation
as to what performance measure should be used. Use the library, the
Internet, and other resources, to research these topics and provide
support for your recommendation.

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COMPREHENSIVE PROBLEM Modern Weapons, Inc. (Comprehensive time value of money) M

COMPREHENSIVE PROBLEM
Modern Weapons, Inc. (Comprehensive time value of
money) Mr. Rambo, President of Modern Weapons, Inc., was
pleased to hear that he had three offers from major defense
companies for his latest missile firing automatic ejector. He will
use a discount rate of 12 percent to evaluate each offer.
 

Offer I

$500,000 now plus $120,000 from the end of years 6 through 15.
Also if the product goes over $50 million in cumulative sales by
the end of year 15, he will receive an additional $1,500,000. Rambo
thought there was a 75 percent probability this would happen.

Offer II

Twenty-five percent of the buyer’s gross margin for the next
four years. The buyer in this case is Air Defense, Inc. (ADI). Its
gross margin is 65 percent. Sales for year 1 are projected to be $1
million and then grow by 40 percent per year. This amount is paid
today and is not discounted.

Offer III

A trust fund would be set up for the next nine years. At the end
of that period, Rambo would receive the proceeds (and discount them
back to the present at
12 percent). The trust fund called for semiannual payments for the
next nine years of $80,000 (a total of $160,000 per year). The
payments would start immediately. Since the payments are coming at
the beginning of each period instead of the end, this is an annuity
due. To look up the future value of the annuity due in the tables,
add 1 to n (18 + 1) and subtract 1 from the value in the table.
Assume the annual interest rate on this annuity is 12 percent
annually (6 percent semiannually). Determine the present value of
the trust fund’s final value.
Required: Find the present value of each of the three offers and
then indicate which one has the highest present value.

 

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Level versus seasonal production (LO1) Bambino Sporting Goods makes baseball glo

Level versus seasonal production (LO1) Bambino
Sporting Goods makes baseball gloves that are very popular in the
spring and early summer season. Units sold are anticipated as
follows:
 
March 3,000
April 7,000
May 11,000
June 9,000
30,000
 
If seasonal production is used, it is assumed that inventory
will directly match sales for each month and there will be no
inventory buildup.
The production manager thinks the above assumption is too
optimistic and decides to go with level production to avoid being
out of merchandise. He will produce the 30,000 units over 4 months
at a level of 7,500 per month.
 
a. What is the ending
inventory at the end of each month? Compare the unit sales to the
units produced and keep a running total.
b. If the inventory costs $20
per unit and will be financed at the bank at a cost of 6 percent,
what is the monthly financing cost and the total for the four
months? (Use .5% as the monthly rate.)

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Matching asset mix and financing plans (LO3) Winfrey Diet Food Corp. has $4,500,

Matching asset mix and financing plans (LO3)
Winfrey Diet Food Corp. has $4,500,000 in assets.
 
Temporary current assets $1,000,000
Permanent current assets 1,500,000
Fixed assets 2,000,000
Total assets $4,500,000
 
Short-term rates are 8 percent. Long-term rates are 13 percent.
Earnings before interest and taxes are $960,000. The tax rate is 40
percent.
If long-term financing is perfectly matched (synchronized) with
long-term asset needs, and the same is true of short-term
financing, what will earnings after taxes be? For an example of
perfectly matched plans

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COMPREHENSIVE PROBLEM Logan Distributing Company (receivables and inventory poli

COMPREHENSIVE PROBLEM
Logan Distributing Company (receivables and
inventory policy) (LO 04 & 05) Logan
Distributing Company of Atlanta sells fans and heaters to retail
outlets through out the Southeast. Joe Logan, the president of the
company, is thinking about changing the firm’s credit policy to
attract customers away from competitors. The present policy calls
for a 1/10, net 30 cash discount. The new policy would call for a
3/10, net 50 cash discount. Currently, 30 percent of Logan
customers are taking the discount, and it is anticipated that this
number would go up to 50 percent with the new discount policy. It
is further anticipated that annual sales would increase from a
level of $400,000 to $600,000 as a result of the change in the cash
discount policy.
The increased sales would also affect the inventory level.
The average inventory carried by Logan is based on a determination
of an EOQ. Assume sales of fans and heaters increase from 15,000 to
22,500 units. The ordering cost for each order is $200 and the
carrying cost per unit is $1.50 (these values will not change with
the discount). The average inventory is based on EOQ/2. Each unit
in inventory has an average cost of $12.
Cost of goods sold is equal to 65 percent of net sales;
general and administrative expenses are 15 percent of net sales,
and interest payments of 14 percent will only be necessary for the
increase in the accounts receivable and inventory balances. Taxes
will be 40 percent of before-tax income.
a. Compute the accounts receivable balance before and
after the change in the cash discount policy. Use the net sales
(total sales minus cash discounts) to determine the average daily
sales.
b. Determine EOQ before and after the change in the
cash discount policy. Translate this into average inventory (in
units and dollars) before and after the change in the cash discount
policy.
 
c. Complete the following income statement.

 

Before Policy
Change

After Policy Change

Net sales (Sales – Cash discounts)

 

 

Cost of goods sold

 

 

Gross profit

 

 

General and administrative expense

 

 

Operating profit

 

 

Interest on increase in accounts
receivable and inventory (14%)

 

 

Income before taxes

 

 

Taxes

 

 

Income after taxes

 

 

d. Should the new cash discount policy be utilized?
Briefly comment.

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A customer has asked Clougherty Corporation to supply 4,000 units of product M97

A customer has asked Clougherty Corporation to supply 4,000
units of product M97, with some modifications, for $40.10 each. The
normal selling price of this product is $48.00 each. The normal
unit product cost of product M97 is computed as follows.

Direct Materials

$18.50

Direct Labor

$1.20

Variable manufacturing overhead

$8.40

Fixed  manufacturing overhead

$3.90

Unit product cost

$32.00

Direct labor is a variable cost. The special order would have no
effect on the company’s total fixed manufacturing overhead costs.
The customer would like some modifications made to product M97 that
would increase the variable costs by $5.70 per unit and that would
require a one-time investment of $31,000 in special molds that
would have no salvage value. This special order would have no
effect on the company’s other sales. The company has ample spare
capacity for producing the special order.

Required:

Determine the effect on the company’s total net operating income of
accepting the special order. Show your work!

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The following information reflects Cash flow and other activities of Framer Comp

The following information reflects Cash flow and other
activities of Framer Company for six months ending June 30.
Paid for Equipment 45,000
Paid for income taxes 3,000
Paid for insurance 1,000
Paid for interest  900.
Paid for utilities 790.
Paid for advertising  560.
Paid to owners 5,000
Paid to suppliers 28,000
Paid to employees 17,000
Depreciation Expense 13,500
Received from customers 99,000
Received from issuing long-term 40,000
Received from sale of land 18,000
1). what are the net cash flows from the operating activity for
the period?
2). what are the net cash flow from the investing activity for
the period?
3). what are the net cash flow from the financing activity for
the period?
 4). what was the net change in cash flow for the
period?

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Saferoad Corporation has completed its comparative balance sheet and income stat

Saferoad Corporation has completed its comparative balance sheet
and income statement at year-end 2009.
• A payment of $7,500 was made on the loan principal during the
year
• Just before year-end, a dividend was distributed to
stockholders.
• A parcel of land was acquired early in the year.
• New shares of common stock were sold during the year.
 
Year 2009 Year 2008
 
Cash 1,090 4,000
Accounts receivable 2,910 6,150
Inventory 4,800 3,880
Prepaid advertising 700 1,775
Building and furnishings 40,000 40,000
Accumulated depreciation -10,000 -8,000
Land 27,000 15,000
TOTAL ASSETS 66,500 62,805
Rent payable 2,000 4,000
Taxes payable 1,900 1,500
Wages payable 3,300 2,200
Loan payable, long-term 19,600 26,805
Common stocks 31,000 25,000
Retained earnings 8,700 3,300
TOTAL LIABILITIES AND EQUITY 66,500 62,805
Income Statement for 2009
Sales Revenue 350,000
Cost of goods solD 250,600
Gross profit 99,400
Operating expenses:
Advertising 9,500
Depreciation 2,000
Insurance 4,100
Rent payable 28,900
Wages 40,450
Operating income 14,450
Interest expense 1,600
Income before tax 12,850
Taxes 3,850
Net income 9,000
 
Prepare a statement of cash flows using the indirect method
format, please left align all headings

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Diego Company manufactures one product that is sold for $80 per unit in two geog

Diego Company manufactures one product that is sold for $80 per
unit in two geographic regions-the East and West regions. The
following information pertains to the company’s first year of
operations in which it produced 40,000 units and sold 35,000
units.
The company sold 25,000 units in the East region and 10,000
units in the West region. It determined that $250,000 of its fixed
selling and administrative expenses is traceable to the West
region, $150,000 is traceable to the East region, and the remaining
$96,000 is a common fixed cost. The company will continue to incur
the total amount of its fixed manufacturing overhead costs as long
as it continues to produce any amount of its only product.
Required: Answer each question independently based on the
original data unless instructed otherwise. You do not need to
prepare a segmented income statement until question 13.
1. What is the unit product cost under variable costing?
2. What is the unit product cost under absorption costing?
3. What is the company’s total contribution margin under
variable costing?
4. What is the company’s net operating income under variable
costing?
5. What is the company’s total gross margin under absorption
costing?
6. What is the company’s net operating income under absorption
costing?
7. What is the amount of the difference between the variable
costing and absorption costing net operating incomes? What is the
cause of this difference?
8. What is the company’s break even point in unit sales? Is it
above or below the actual sales volume? Compare the break even
sales volume to your answer for question 6 and comment.
9. If sales volumes in the East and West regions had been
reversed, what would be the company’s overall break even point in
unit sales?
10. What would have been the company’s variable costing net
operating income if it had produced and sold 35,000 units? You do
not need to perform any calculations to answer this question.
11. What would have been the company’s absorption costing net
operating income if it had produced and sold 35,000 units? You do
not need to perform any calculations to answer this question.
12. If the company produces 5,000 fewer units than it sells in
its second year of operations, will absorption costing net
operating income be higher or lower than variable costing net
operating income in Year 2? Why? No calculations are necessary.
13. Prepare a contribution format segmented income statement
that includes a Total column and columns for the East and West
regions.
14. Diego is considering eliminating the West region because an
internally generated report suggests the region’s total gross
margin in the first year of operations was $50,000 less than its
traceable fixed selling and administrative expenses. Diego believes
that if it drops the West region, the East region’s sales will grow
by 5% in Year 2. Using the contribution approach for analyzing
segment profitability and assuming all else remains constant in
Year 2, what would be the profit impact of dropping the West region
in Year 2?
15. Assume the West region invests $30,000 in a new advertising
campaign in Year 2 that increases its unit sales by 20%. If all
else remains constant, what would be the profit impact of pursuing
the advertising campaign?

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