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Zeta, Inc., produces handwoven rugs. Budgeted production is 5,000 rugs per month and the standard direct labor required to make each rug is 2 hours. All overhead is allocated based on direct labor hours. Zeta’s manager is interested in what caused the recent month’s $3,000 unfavorable overhead variance. The following information was available to aid in the analysis:

a. What was the overhead spending variance for the month?
b. What was the overhead volume variance?
c. What corrective actions should Zeta’s manager undertake related to the unfavorable overheadvariance?

Zeta Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:

Units Produced ... Total Costs

45,000 ...... $1,535,000

50,000 ...... 1,650,000

70,000...... 2,110,000

a. Determine the variable cost per unit and the fixed cost.

b. Based on part (a), estimate the total cost for 60,000 units of production.

Zero Calories Company has 16,000 shares of cumulative preferred 1% stock, $40 par and 80,000 shares of $150 par common stock. The following amounts were distributed as dividends:

Year 1....$ 21,600

Year 2.... 4,000

Year 3 ...100,800

Determine the dividends per share for preferred and common stock for each year.

Zenith Corporation acquired 70 percent of Down Corporation’s common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

At the date of the business combination, the book values of Down’s assets and liabilities approximated fair value except for inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31, 20X4, Zenith reported accounts payable of $12,500 to Down, which reported an equal amount in its accounts receivable.

Required
a. Give the elimination entry or entries needed to prepare a consolidated balance sheet immediately following the business combination.
b. Prepare a consolidated balance sheet worksheet.
c. Prepare a consolidated balance sheet in goodform.

Zelda Manufacturing organized in June and recorded the following transactions during June, its first month of operations:

1. Purchased materials costing $800,000.

2. Used direct materials in production costing $485,000.

3. Applied direct labor costs of $500,000 to various jobs.

4. Applied manufacturing overhead at a rate of $10 per direct labor hour. (Direct labor workers earn $20 per hour.)

5. Incurred actual manufacturing overhead costs of $245,000 (credit “Various Accounts”).

6. Transferred completed jobs costing $745,000 to finished goods.

7. Sold completed jobs for $1,000,000 on account. The cost applied to the jobs sold totaled $615,000.

8. Closed the Manufacturing Overhead account directly to Cost of Goods Sold on June 30.

a. Prepare a journal entry for each of the eight transactions listed above.

b. Compute the balance of the Cost of Goods Sold account at June 30.

c. Determine the company’s inventory balances at the end of June.

Zeiss Multinational, Inc., has divisions in the United States, Germany, and New Zealand. The U. S. division is the oldest and most established of the three and has a cost of capital of 6.5%. The German division was started 3 years ago when the exchange rate for the euro was 1 euro = $ 1.40. The German division is a large and powerful division of Zeiss, Inc., with a cost of capital of 10%. The New Zealand division was started this year, when the exchange rate was 1 New Zealand Dollar (NZD) – $ 0.75. Its cost of capital is 13%. Average exchange rates for the current year are 1 euro = $ 1.50 and 1 NZD = $ 0.60. Other information for the three divisions includes:

1. Translate the German and New Zealand information into dollars to make the divisions comparable. Find the after-tax operating income for each division and compare the profits.
2. Calculate ROI using after-tax operating income. Compare among divisions.
3. Use after-tax operating income and the individual cost of capital of each division to calculate residual income and compare.
4. Redo requirement 2 using pretax operating income instead of net income. Why is there a big difference, and what does it mean for performanceevaluation?

Next year, the company will be limited to 160,000 machine hours and 120,000 labor hours. Fixed costs for the year are $1,000,000.
1. Compute the most profitable combination of products to be produced next year. Explain your answer.
2. Prepare an income statement using the contribution margin format for the product volume computed in1.