Question & Answer

What is springback in sheet-metal bending?

Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the company, including its reported performance, before making the final decision. The inventory account, currently valued on the FIFO basis, consists of 1,000,000 units at $8 per unit on January 1, 2014. There are 1,000,000 shares of common stock outstanding as of January 1, 2014, and the cash balance is $400,000. The company has made the following forecasts for the period 2014–2016. 2014 2015 2016 Unit sales (in millions of units) 1.1 1.0 1.3 Sales price per unit $10 $12 $12 Unit purchases (in millions of units) 1.0 1.1 1.2 Purchase price per unit $8 $9 $10 Annual depreciation (in thousands of dollars) $300 $300 $300 Cash dividends per share $0.15 $0.15 $0.15 Cash payments for additions to and replacement of plant and equipment (in thousands of dollars) $350 $350 $350 Income tax rate 40% 40% 40% Operating expenses (exclusive of depreciation) as a percent of sales 15% 15% 15% Common shares outstanding (in millions) 1 1 1 Instructions (a) Prepare a schedule that illustrates and compares the following data for Harrisburg Company under the FIFO and the LIFO inventory method for 2014–2016. Assume the company would begin LIFO at the beginning of 2014. (1) Year-end inventory balances. (3) Earnings per share. (2) Annual net income after taxes. (4) Cash balance. Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred. (b) Using the data above, your answer to (a), and any additional issues you believe need to be considered, prepare a report that recommends whether or not Harrisburg Company should change to the LIFO inventory method. Support your conclusions with appropriate arguments.

Reciprocal method The Brown and Brinkley Brokerage firm is organised into two major sales divisions: institutional clients and retail clients. The firm also has two support departments: research and administration. The research department’s costs are allocated to the other departments based on a log of hours spent on tasks for each user. The administration department’s costs are allocated based on the number of employees in each department.   Records are available for last period as follows.   Required Using the reciprocal method, determine the total cost of operations for each sales division. Use either simultaneous equations or Excel Solver.

In a turning operation on ductile steel, it is desired to obtain an actual surface roughness of 63 µ-in with a 2/64 in nose radius tool. The ideal roughness is given by Eq. (24.1) and an adjustment will have to be made using Figure 24.2 to convert the 63 µ-in actual roughness to an ideal roughness, taking into account the material and cutting speed. Disposable inserts are used at a cost of $1.75 per cutting edge (each insert costs $7.00 and there are four edges per insert). Average time to change each insert = 1.0 min. The workpiece length = 30.0 in and its diameter = 3.5 in. The machine and operator’s rate = $39.00 per hour including applicable overheads. The Taylor tool life equation for this tool and work combination is given by: vT0.23 f 0.55 = 40.75, where T = tool life, min; v = cutting speed, ft/min; and f = feed, in/rev. Solve for (a) the feed in in/rev that will achieve the desired actual finish, (b) cutting speed for minimum cost per piece at the feed determined in (a). Hint: To solve (a) and (b) requires an iterative computational procedure. Use of a spreadsheet calculator is recommended for this iterative procedure

Illustrate on four separate diagrams (as in Figure 3.6) the effect of different elasticities of demand and supply on the incidence of a subsidy.

What are the relative advantages and disadvantages of mechanical presses versus hydraulic presses in sheet metalworking?

In addition to surface cleaning, what is the main function performed by shot peening?

Is sustainability achievable in all organisations regardless of their           operating activities?

Describe the graduated-payment mortgage. What type of homeowners would prefer this type of mortgage? (LO2)

(1)   {Planning} Laurie is thinking about investing in one or several of the following investment options: Corporate bonds (ordinary interest paid annually) Dividend-paying stock (qualified dividends) Life insurance (tax-exempt) Savings account Growth stock   a. Assuming all of the options earn similar returns before taxes, rank Laurie’s investment options from highest to lowest according to their after-tax returns.   b. Which of the investments employ the deferral and/or conversion tax planning strategies?   c. How does the time period of the investment affect the returns from these alternatives?   d. How do these alternative investments differ in terms of their nontax characteristics?

If this analysis is correct, namely that a reduction in wages will reduce the aggregate demand for goods, what assumption must we make about the relative proportions of wages and profits that are spent (given that a reduction in real wage rates will lead to a corresponding increase in rates of profit)?

According to the video on sheet-metal shearing, what is the blade rake angle?

Franklin, Jefferson, and Washington formed the Independence Partnership (a calendar-year-end entity) by contributing cash 10 years ago. Each partner owns an equal interest in the partnership and has an outside basis in their partnership interest of $104,000. On January 1 of the current year, Franklin sells their partnership interest to Adams for a cash payment of $122,000. The partnership has the following assets and no liabilities as of the sale date: Tax Basis Fair Market Value Cash $ 18,000 $ 18,000 Accounts receivable -0- 12,000 Inventory 69,000 81,000 Equipment 180,000 225,000 Stock investment 45,000 30,000    Totals $ 312,000 $ 366,000 The equipment was purchased for $240,000, and the partnership has taken $60,000 of depreciation. The stock was purchased seven years ago. a. What is Franklin’s overall gain or loss on the sale of their partnership interest? b. What is the character of Franklin’s gain or loss?

What is the difference between a CPA’s unqualified opinion or “clean” opinion and a qualified one?

Explain why the medical expense provisions are sometimes referred to as “wherewithal” deductions and how this rationale is reflected in the limits on these deductions.

List the factors that affect the hold down pressure in a drawing operation according to the video on sheet-metal stamping dies and processes.

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to statement of financial position (balance sheet) reporting.

Simms Company has significant amounts of trade accounts receivable. Simms uses the allowance method to estimate bad debts instead of the direct write-off method. During the year, some specific accounts were written off as uncollectible, and some that were previously written off as uncollectible were collected. Instructions (a) What are the deficiencies of the direct write-off method? (b) What are the two basic allowance methods used to estimate bad debts, and what is the theoretical justification for each? (c) How should Simms account for the collection of the specific accounts previously written off as uncollectible?

Reciprocal method. Paul’s Valley Protection Service has three support departments (S1, S2 and S3) and three operating departments (P1, P2, and P3). The direct costs of each department are $30 000 for S1, $20 000 for S2, and $40 000 for S3. The proportions of service provided by each support department to the others are given in the following table. Required Using the reciprocal method, allocate the support department costs to the operating departments.

Cardinals Corporation purchased a computer on December 31, 2013, for $105,000, paying $30,000 down and agreeing to pay the balance in five equal installments of $15,000 payable each December 31 beginning in 2014. An assumed interest rate of 10% is implicit in the purchase price. Instructions (Round to two decimal places.) (a) Prepare the journal entry(ies) at the date of purchase. (b) Prepare the journal entry(ies) at December 31, 2014, to record the payment and interest (effectiveinterest method employed). (c) Prepare the journal entry(ies) at December 31, 2015, to record the payment and interest (effectiveinterest method employed). E10-16 (Asset Acquisition) Hayes Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $100,000 cash. The following informationwas gathered. Depreciation to Initial Cost on Date on Seller’s Book Value on Description Seller’s Books Books Seller’s Books Appraised Value Machinery $100,000 $50,000 $50,000 $90,000 Equipment 60,000 10,000 50,000 30,000 Asset 3: This machine was acquired by making a $10,000 down payment and issuing a $30,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $15,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $35,900. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $100,000 Accumulated depreciation to date of sale 40,000 Fair value of machinery traded 80,000 Cash received 10,000 Fair value of machinery acquired 70,000 Asset 5: Equipment was acquired by issuing 100 shares of $8 par value common stock. The stock had a market price of $11 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $150,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment 2/1 $120,000 6/1 360,000 9/1 480,000 11/1 100,000 To finance construction of the building, a $600,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $200,000 of other outstanding debt during the year at a borrowing rate of 8%. Instructions Record the acquisition of each of these assets.

A country’s central bank (e.g. the Bank of England or the US Federal Reserve) has a key role in ensuring the stability of the banking system. In many countries the central bank is prepared to bail banks out which find themselves in financial difficulties. Although this has the benefit of reducing the chance of banks going bankrupt and depositors losing their money, it can create a moral hazard. Explain why.

There are 20 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 6.1 Which of the following properties or characteristics are inconsistent with the metals (two correct answers): (a) good thermal conductivity, (b) high strength, (c) high electrical resistivity, (d) high stiffness, and (e) ionic bonding? 6.2 Which one of the metallic elements is the most abundant on the earth: (a) aluminum, (b) copper, (c) iron, (d) magnesium, or (e) silicon? 6.3 The predominant phase in the iron-carbon alloy system for a composition with 99% Fe at room temperature is which one of the following: (a) austenite, (b) cementite, (c) delta, (d) ferrite, or (e) gamma? 6.4 A steel with 1.0% carbon is known as which one of the following: (a) eutectoid, (b) hypoeutectoid, (c) hypereutectoid, or (d) wrought iron? 6.5 The strength and hardness of steel increases as carbon content (a) increases or (b) decreases? 6.6 Plain carbon steels are designated in the AISI code system by which of the following: (a) 01XX, (b) 10XX, (c) 11XX, (d) 12XX, or (e) 30XX? 6.7 Which one of the following elements is the most important alloying ingredient in steel: (a) carbon, (b) chromium, (c) nickel, (d) molybdenum, or (e) vanadium? 6.8 Which one of the following is not a common alloying ingredient in steel: (a) chromium, (b) manganese, (c) nickel, (d) vanadium, (e) zinc? 6.9 Solid solution alloying is the principal strengthening mechanism in high-strength low-alloy (HSLA) steels: (a) true or (b) false? 6.10 Which of the following alloying elements are most commonly associated with stainless steel (two best answers): (a) chromium, (b) manganese, (c) molybdenum, (d) nickel, and (e) tungsten? 6.11 Which of the following is the most important cast iron commercially: (a) ductile cast iron, (b) gray cast iron, (c) malleable iron, or (d) white cast iron? 6.12 Which one of the following metals has the lowest density: (a) aluminum, (b) magnesium, (c) tin, or (d) titanium.? 6.13 Which of the following metals has the highest density: (a) gold, (b) lead, (c) platinum, (d) silver, or (e) tun gsten? 6.14 From which of the following ores is aluminum derived: (a) alumina, (b) bauxite, (c) cementite, (d) hematite, or (e) scheelite? 6.15 Which of the following metals is noted for its good electrical conductivity (one best answer): (a) copper, (b) gold, (c) iron, (d) nickel, or (e) tungsten? 6.16 Traditional brass is an alloy of which of the following metallic elements (two correct answers): (a) aluminum, (b) copper, (c) gold, (d) tin, and (e) zinc? 6.17 Which one of the following metals has the lowest melting point: (a) aluminum, (b) lead, (c) magnesium, (d) tin, or (e) zinc?

In each of the following independent cases, indicate the amount (1) deductible for AGI, (2) deductible from AGI, and (3) neither deductible for nor deductible from AGI before considering income limitations or the standard deduction.

For the preceding problem, use the inverse lever rule to determine the proportions of liquid and solid phases present in the alloy.

For the preceding problem, use the inverse lever rule to determine the proportions of liquid and solid phases present in the alloy.