Question & Answer

Berstler Construction Company began operations in 2014. Construction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2014, is expected to be completed in 2015. Cash Contract Estimated Total Billings Collections Costs Incurred Additional Contract through through through Costs to Project Price 12/31/14 12/31/14 12/31/14 Complete 1 $ 560,000 $ 360,000 $340,000 $450,000 $130,000 2 670,000 220,000 210,000 126,000 504,000 3 520,000 500,000 440,000 330,000 –0– $1,750,000 $1,080,000 $990,000 $906,000 $634,000 Instructions Prepare a partial income statement and balance sheet to indicate how the above information would be reported for financial statement purposes. Berstler Construction Company uses the completed-contract method.

A 125.0-mm-diameter shaft rotates inside a stationary bushing whose inside diameter = 125.6 mm and length = 50.0 mm. In the clearance between the shaft and the bushing is a lubricating oil whose viscosity = 0.14 Pa-s. The shaft rotates at a velocity of 400 rev/min; this speed and the action of the oil are sufficient to keep the shaft centered inside the bushing. Determine the magnitude of the torque due to viscosity that acts to resist the rotation of the shaft.

Marathon Inc. (a C corporation) reported $1,000,000 of taxable income in the current year. During the year, it distributed $100,000 as dividends to its shareholders as follows: • $5,000 to Guy, a 5 percent individual shareholder. • $15,000 to Little Rock Corp., a 15 percent shareholder (C corporation).  • $80,000 to other shareholders. a. How much of the dividend payment did Marathon deduct in determining its taxable income? b. Assuming Guy’s marginal ordinary tax rate is 37 percent, how much tax will he pay on the $5,000 dividend he received from Marathon Inc. (including the net investment income tax)?  c. What amount of tax will Little Rock Corp. pay on the $15,000 dividend it received from Marathon Inc. (50 percent dividends-received deduction)? d. Complete Form 1120 Schedule C for Little Rock Corp. to reflect its dividends-received deduction (use the most recent Form 1120 Schedule C available). e. On what line on page 1 of Little Rock Corp.’s Form 1120 is the dividend from Marathon Inc. reported, and on what line of Little Rock Corp.’s Form 1120 is its dividends-received deduction reported?

Assume a financial institution has more rate-sensitive liabilities than rate-sensitive assets. Would it be more likely to be adversely affected by an increase or a decrease in interest rates? Should it purchase or sell interest rate futures contracts so as to hedge its exposure? (LO2)

Distinguish among Accounting Research Bulletins, Opinionsof the Accounting Principles Board, and Statementsof the Financial Accounting Standards Board.

Solve Problem 41.9 except that the following is known in addition to the information given: scheduled receipts of M5 are 250 units in period (week) 3 and 50 units in period (week) 4.

Software Galore sells gaming software that is downloaded to the customer’s device on purchase. The owner, Fred, was talking with a friend who sang the praises of flexible budgeting in his manufacturing business. Fred was wondering whether a flexible budget would benefit his business decision making. Comment.

The foreman in the injection molding department says that a polyethylene part produced in one of the operations has greater shrinkage than the calculations indicate it should have. The important dimension of the part is specified as 112.5 ±0.25 mm. However, the actual molded part measures 112.02 mm. (a) As a first step, the corresponding mold cavity dimension should be checked. Compute the correct value of the mold dimension, given that the shrinkage value for polyethylene is 0.025 (from Table 13.1). (b) What adjustments in process parameters could be made to reduce the amount of shrinkage?

As noted in Example 1-2, tolls, parking meter fees, and annual licensing fees are not considered taxes.  Can you identify other fees that are similar?

Assume that inflation is expected to decline in the near future. How could this affect future bond prices? Would you recommend that financial institutions increase or decrease their concentration in long-term bonds based on this expectation? Explain. (LO2)

How is materiality (or immateriality) related to the proper presentation of financial statements? What factors and mea-sures should be considered in assessing the materiality of a misstatement in the presentation of a financial statement?

1.   Call the local environmental advocacy group and get the group to stage a protest of the company.

Using the facts in the previous problem, what are some ways that Bendetta could shift some of the rental income to Jenine? What are the disadvantages associated with these income-shifting strategies?

What are some of the general considerations that product designers must keep in mind when designing components out of plastics?

Refer to the Partridge Insurance Illustration in the chapter. Explain how         the support departments can be classified as both cost objects and cost        pools in the costing system.

An indirect extrusion process starts with an aluminum billet with diameter = 2.0 in and length = 3.0 in. Final cross section after extrusion is a square with 1.0 in on a side. The die angle = 90°. The operation is performed cold and the strength coefficient of the metal K = 26,000 lb/in2 and strainhardening exponent n = 0.20. In the Johnson extrusion strain equation, a = 0.8 and b = 1.2. (a) Compute the extrusion ratio, true strain, and extrusion strain. (b) What is the shape factor of the product? (c) If the butt left in the container at the end of the stroke is 0.5 in thick, what is the length of the extruded section? (d) Determine the ram pressure in the process.

A product is made to stock. Annual demand is 86,000 units. Each unit costs $9.50 and the annual holding cost rate is 22%. Setup cost to produce this product is $800. Determine (a) economic order quantity and (b) total inventory costs for this situation.

A turning operation is to be performed on C1010 steel, which is a ductile grade. It is desired to achieve a surface finish of 64 µ-in, while at the same time maximizing the metal removal rate. It has been decided that the speed should be in the range 200 ft/min to 400 ft/min, and that the depth of cut will be 0.080 in. The tool nose radius = 3/64 in. Determine the speed and feed combination that meets these criteria.

Explain what it means to say that a married couple filing a joint tax return has joint and several liability for the taxes associated with the return?

Briefly describe the provisions of the SarbanesOxley Act. Discuss how this act affects the monitoring performed by shareholders. (LO6)

Bar stock of initial diameter = 90 mm is drawn with a draft = 15 mm. The draw die has an entrance angle = 18°, and the coefficient of friction at the work-die interface = 0.08. The metal behaves as a perfectly plastic material with yield stress = 105 MPa. Determine (a) area reduction, (b) draw stress, (c) draw force required for the operation, and (d) power to perform the operation if exit velocity = 1.0 m/min

What is meant by the term overcut in electric discharge machining?

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for intangible assets.

Riegel Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2014, consists of products D, E, F, G, H, and I. Relevant per unit data for these products appear below. Item D Item E Item F Item G Item H Item I Estimated selling price $120 $110 $95 $90 $110 $90 Cost 75 80 80 80 50 36 Cost to complete 30 30 25 35 30 30 Selling costs 10 18 10 20 10 20 Using the LCNRV rule, determine the proper unit value for statement of financial position reporting purposes at December 31, 2014, for each of the inventory items above.

The starting diameter of a shaft is 25.00 mm. This shaft is to be inserted into a hole in an expansion fit assembly operation. To be readily inserted, the shaft must be reduced in diameter by cooling. Determine the temperature to which the shaft must be reduced from room temperature (20°C) in order to reduce its diameter to 24.98 mm. Refer to Table 4.1.