Question & Answer

Identify the most common types of coating processes.

Explain the difference between roughing and finishing operations in machining.

The flow rate of liquid metal into the downsprue of a mold = 1 liter/sec. The cross-sectional area at the top of the sprue = 800 mm2 , and its length = 175 mm. What area should be used at the base of the sprue to avoid aspiration of the molten metal?

Presented below is the trial balance of Scott Butler Corporation at December 31, 2014.   Instructions Prepare a balance sheet at December 31, 2014, for Scott Butler Corporation. (Ignore income taxes.)

Transfer pricing Georgina Chan is the chief financial officer of Colorado Pty Ltd, which has three interdependent divisions where, on average, about 30 per cent of the output of one division is transferred to one of the other divisions. She is currently dealing with a dispute within the accounting office about the best way to treat transfer pricing within the company. The chief executive officer has advised that any change to the policy should not compromise what is best for the company overall. Senior accountant Andy Chan says ‘as we are a highly decentralised firm, the only way to go is to use market price as the key method and allow sourcing autonomy’. Meanwhile, graduate accountant Roger Singh says ‘I disagree. If we go with full cost plus a 15 per cent mark-up and no sourcing autonomy, that would be best’.   Required State one advantage and one disadvantage of each proposed policy and advise which policy you think would serve the company best. Briefly explain.

If a country imports a whole range of goods whose average income elasticity of demand is the same as for home-produced goods, will the mpm rise or fall as national income rises?

Why does an unstable demand for money make it difficult to control the supply of money?

Wasserman Corporation issued 10-year bonds on January 1, 2014. Costs associated with the bond issuance were $160,000. Wasserman uses the straight-line method to amortize bond issue costs. Prepare the December 31, 2014, entry to record 2014 bond issue cost amortization.

Assume that there are several chemical firms in an industry, each one producing different levels of an effluent, whose damage to the environment depends on the location of the firm. Compare the relative merits of using green taxes, tradable permits and controls as means of achieving the socially optimum levels of effluent from these firms.

What is dressing, in reference to grinding wheels?

What is endogenous about endogenous growth theory?

The immutability of blockchain technology, which makes it very difficult to tamper with data stored on the network, is one of its primary benefits. In light of the various issues that people and companies encounter when it comes to forging and manipulating contracts and other business papers, how do you anticipate blockchain technology developing going forward? Provide a few instances of prospective applications for blockchain technology. (LO2)

Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 11% interest, to meet his needs?

On December 31, 2014, Conchita Martinez Company signed a $1,000,000 note to Sauk City Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Conchita Martinez’s financial situation worsened. On December 31, 2016, Sauk City Bank determined that it was probable that the company would pay back only $600,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,000,000 loan. Instructions (a) Determine the amount of cash Conchita Martinez received from the loan on December 31, 2014. (b) Prepare a note amortization schedule for Sauk City Bank up to December 31, 2016. (c) Determine the loss on impairment that Sauk City Bank should recognize on December 31, 2016.

What are the criteria necessary to meet the “not essentially equivalent to a dividend” change-in-stock-ownership test in a stock redemption?

Clark owns stock in BCS Corporation that he purchased in January of the current year. The stock has appreciated significantly during the year. It is now December of the current year, and Clark is deciding whether he should sell the stock. What tax and nontax factors should Clark consider before making the decision on whether to sell the stock now?

Edna Millay Inc. is a manufacturer of electronic components and accessories with total assets of $20,000,000. Selected financial ratios for Millay and the industry averages for firms of similar size are presented below. 2014 Edna Millay Industry 2012 2013 2014 Average Current ratio 2.09 2.27 2.51 2.24 Quick ratio 1.15 1.12 1.19 1.22 Inventory turnover 2.40 2.18 2.02 3.50 Net sales to stockholders’ equity 2.71 2.80 2.99 2.85 Return on common stock equity 0.14 0.15 0.17 0.11 Total liabilities to stockholders’ equity 1.41 1.37 1.44 0.95 Millay is being reviewed by several entities whose interests vary, and the company’s financial ratios are a part of the data being considered. Each of the parties listed below must recommend an action based on its evaluation of Millay’s financial position. Archibald MacLeish Bank. The bank is processing Millay’s application for a new 5-year term note. Archibald MacLeish has been Millay’s banker for several years but must reevaluate the company’s financial position for each major transaction. Robert Lowell Company. Lowell is a new supplier to Millay and must decide on the appropriate credit terms to extend to the company. Robert Penn Warren. A brokerage firm specializing in the stock of electronics firms that are sold overthe- counter, Robert Penn Warren must decide if it will include Millay in a new fund being established for sale to Robert Penn Warren’s clients. Working Capital Management Committee. This is a committee of Millay’s management personnel chaired by the chief operating officer. The committee is charged with the responsibility of periodically reviewing the company’s working capital position, comparing actual data against budgets, and recommending changes in strategy as needed. Instructions (a) Describe the analytical use of each of the six ratios presented on page 1535. (b) For each of the four entities described above, identify two financial ratios, from the ratios presented on page 1535, that would be most valuable as a basis for its decision regarding Millay. (c) Discuss what the financial ratios presented in the question reveal about Millay. Support your answer by citing specific ratio levels and trends as well as the interrelationships between these ratios.

Describe the calendering process.

Relative to arm’s-length transactions, why do related-party transactions receive more IRS scrutiny?

Adjusting data for use with regression; outlier Smeyer Industries is a large entity with more than 40 departments, each employing 35 to 100 persons. Recent experience suggests that the cost function used to estimate overhead in Department IP-14 is no longer appropriate. The current function was developed three years ago. Since then, a number of changes occurred in the facilities and processes used in Department IP-14. The changes happened one at a time. Each time a change was made, the cost accountant felt the change was not major enough to justify calculating a new overhead cost function. Now it is clear that the cumulative effect of the changes has been large. You have been assigned the task to develop a new cost function for overhead in Department IP-14. Initial analysis suggests that the number of direct labour hours is an appropriate cost driver. Departmental records are available for nine months. The records reveal the following information.       An assistant has analysed the data for March through July and made the appropriate adjustments except for the following items (for which the assistant was unsure of the proper treatment).                            (i)              The semi-annual property tax bill for Department IP-14 was paid on June 30. The entire amount of $3,000 was charged to overhead for June.                          (ii)              The costs to install a new piece of equipment with a life of 10 years in the department were charged to overhead in April. The installation costs were $4,300.                        (iii)              Factory depreciation is allocated to Department IP-14 every month. The department’s share, $8,000, is included in overhead.                        (iv)              A strike closed the plant for three weeks in July. Several non-union employees were kept on payroll during the strike. Their duties were general housekeeping and 'busy work' These costs were charged to overhead.   You also have the details for the overhead account for the months of August and September. They are presented in the following table. You were hired on October 1 and have been keeping the department accounts since then. Therefore, you know that the data for October and November are correct, except for any adjustments needed for the preceding items.       Required (a)          Using the information provided, adjust the monthly cost data to more accurately reflect the overhead costs incurred during each month. (b)          Discuss whether the data for July should be included in the estimate of future costs. Use a scatter plot to help you answer this question. (c)           Develop a cost function by regressing overhead costs in Department IP-14 on direct labour hours. Discuss whether your cost function would be reasonable for estimating future overhead costs. Ignore any items you will discuss in part (d). (d)          Identify and discuss any additional adjustments that might be needed to more accurately measure overhead costs for the regression in part (c). (e)           Explain why adjustments probably need to be made to information from accounting records when estimating a cost function.

A tensile test specimen has a starting gage length = 75.0 mm. It is elongated during the test to a length = 110.0 mm before necking occurs. Determine (a) the engineering strain and (b) the true strain. (c) Compute and sum the engineering strains as the specimen elongates from: (1) 75.0 to 80.0 mm, (2) 80.0 to 85.0 mm, (3) 85.0 to 90.0 mm, (4) 90.0 to 95.0 mm, (5) 95.0 to 100.0 mm, (6) 100.0 to 105.0 mm, and (7) 105.0 to 110.0 mm. (d) Is the result closer to the answer to part (a) or part (b)? Does this help to show what is meant by the term true strain?

Loveless Corporation had the following 2014 income statement. Revenues $100,000 Expenses 60,000 $ 40,000 In 2014, Loveless had the following activity in selected accounts. Allowance for Accounts Receivable Doubtful Accounts 1/1/14 20,000 1,200 1/1/14 Revenues 100,000 1,000 Write-offs Write-offs 1,000 1,840 Bad debt expense 90,000 Collections 12/31/14 29,000 2,040 12/31/14 Prepare Loveless’s cash flows from operating activities section of the statement of cash flows using (a) the direct method and (b) the indirect method.

What interest rates should be used in determining the amount of interest to be capitalized? How should the amount of interest to be capitalized be determined?

What is the difference between a cost that is variable and variable costing?

Many governments around the world during the COVID-19 pandemic introduced job retention schemes allowing workers to be furloughed. Is this a use of fiscal policy to affect aggregate demand or aggregate supply?