Expert Answers

Zylex Corporation has multiple factories across the United States. The upper management at Zylex evaluates each factory based on the capital turnover ratio from the DuPont system. Below is information for the factory in Pennsylvania for the past year.
Year 2
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Operating expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200,000
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 220,000

Compute the capital turnover ratio using (1) total assets and (2) assets net of depreciation.
Which investment base will the Pennsylvania factory manager prefer and why?

Zunz Company, a producer of wooden toys, is about to adopt a lean operating environment. In anticipation of the change, Zunz??s controller prepared the following list of costs for December:

Required
1. Identify each cost as direct or indirect, assuming that it was incurred in a traditional manufacturing setting.
2. Identify each cost as direct or indirect, assuming that it was incurred in a lean operating environment.
3. Assume that the costs incurred in the lean operating environment are for a work cell that completed 1,250 toy cars in December. Compute the total direct cost and the direct cost per unit for the carsproduced.

Zucker Management Services opens for business and completes these transactions in November.

Nov. 1 Matt Zucker, the owner, invested $30,000 cash along with $15,000 of office equipment in the company.

2 The company prepaid $4,500 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $4,500.)

4 The company made credit purchases of office equipment for $2,500 and of office supplies for $600. Payment is due within 10 days.

8 The company completed work for a client and immediately received $3,400 cash.

12 The company completed a $10,200 project for a client, who must pay within 30 days.

13 The company paid $3,100 cash to settle the payable created on November 4.

19 The company paid $1,800 cash for the premium on a 24-month insurance policy.

22 The company received $5,200 cash as partial payment for the work completed on November 12.

24 The company completed work for another client for $1,750 on credit.

28 M. Zucker withdrew $5,300 cash from the company for personal use.

29 The company purchased $249 of additional office supplies on credit.

30 The company paid $831 cash for this month’s utility bill.

Required

1. Prepare general journal entries to record these transactions (use account titles listed in part 2).

2. Open the following ledger accounts — their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); M. Zucker, Capital (301); M. Zucker, Withdrawals (302); Services Revenue (403); and Utilities Expense (690). Post the journal entries from part 1 to the ledger accounts and enter the balance after each posting.

3. Prepare a trial balance as of the end of November.

Zubac Company is a large retail furniture company that operates in two adjacent warehouses. One warehouse is a showroom, and the other is used to store merchandise. On the night of April 22, 2014, a fire broke out in the storage warehouse and destroyed the merchandise stored there. Fortunately, the fire did not reach the showroom, so all the merchandise on display was saved.
Although the company maintained a perpetual inventory system, its records were rather haphazard, and the last reliable physical inventory had been taken on December 31. In addition, there was no control of the flow of goods between the showroom and the warehouse. Thus, it was impossible to tell what goods should have been in either place. As a result, the insurance company required an independent estimate of the amount of loss. The insurance company examiners were satisfied when they received the following information:
Merchandise inventory on December 31, 2013 .....$1,454,800
Purchases, January 1 to April 22, 2014 ........ 2,412,200
Purchases returns, January 1 to April 22, 2014 ..... (10,706)
Freight-in, January 1 to April 22, 2014 ........ 53,100
Sales, January 1 to April 22, 2014 ........... 3,959,050
Sales returns, January 1 to April 22, 2014 ........ (29,800)
Merchandise inventory in showroom on April 22, 2014 . 402,960
Average gross margin............... 44%

Required
1. Prepare a schedule that estimates the amount of the inventory lost in the fire.
2. What are some other reasons management might need to estimate the amount of inventory?

Zortek Corp. budgets production of 400 units in January and 200 units in February. Each finished unit requires five pounds of raw material Z, which costs $ 2 per pound. Each month’s ending inventory of raw materials should be 40% of the following month’s budgeted production. The January 1 raw materials inventory has 130 pounds of Z. Prepare a direct materials budget for January.

Zoom-o-licious makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Zoom-o-licious makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Zoom-o-licious has a total capital investment of $ 15,000,000. It expects to produce and sell 300,000 cases of candy next year. Zoom-o-licious requires a 10% target return on investment. Expected costs for next year are:

Variable production costs ............$ 4.00 per case

Variable marketing and distribution costs .......$ 1.00 per case

Fixed production costs ..............$ 300,000

Fixed marketing and distribution costs .......$ 400,000

Other fixed costs ................$ 200,000

Zoom-o-licious prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital.

Required

1. What is the target operating income?

2. What is the selling price Zoom-o-licious needs to charge to earn the target operating income? Calculate the markup percentage on full cost.

3. Zoom-o-licious’s closest competitor has just increased its candy case price to $ 16, although it sells 36 candy bars per case. Zoom-o-licious is considering increasing its selling price to $ 15 per case. Assuming production and sales decrease by 4%, calculate Zoom-o-licious’ return on investment. Is increasing the selling price a good idea?

Zolf Corporation issued $60,000 of 6 percent, 10-year bonds on January 1, 2013, for a price that reflected a 7 percent market rate of interest. Interest is payable annually on December 31.

Required
a. What was the selling price of the bonds?
b. Prepare the journal entry to record issuing the bonds.
c. Prepare the journal entry for the first interest payment on December 31, 2013, using the effective interest rate method.

ZMT Products?? controller gave the production manager a report containing the following information:

The controller asked for a response. How would you respond? What additional information might you need to prepare yourresponse?

Zippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Zippy's financial statements for the year ended September 30, management has asked you to review some computations made by Zippy's cost accountant. Your working papers disclose the following about the company's operations: Standard costs per drum of product manufactured:

Costs and expenses during September:
Chemicals: 645,000 gallons purchased at a cost of $1,140,000; 600,000 gallons used.
Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used.
Direct labor: 81,000 hours worked at a cost of $654,480. Factory overhead: $768,000.

Required:
Calculate the following variances for September, using the formulas on pages 402 and 403:
1. Materials quantity variance.
2. Materials purchase price variance.
3. Labor efficiency variance.
4. Labor ratevariance.

Zimmerman Company performs the following accounting tasks during the year.
________Analyzing and interpreting information.
________Classifying economic events.
________Explaining uses, meaning, and limitations of data.
________Keeping a systematic chronological diary of events.
________Measuring events in dollars and cents.
________Preparing accounting reports.
________Reporting information in a standard format.
________Selecting economic activities relevant to the company.
________Summarizing economic events.
Accounting is “an information system that identifies, records, and communicates the economic events of an organization to interested users.”

Instructions
Categorize the accounting tasks performed by Zimmerman as relating to either the identification (I), recording (R), or communication (C) aspects of accounting.