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PR 7-3A Weighted average cost method with perpetual inventory (Page 349 of Accounting 25e Warren-Reeve-Duchac)

The beginning inventory for RTE Office Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A.

Instructions

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from

sales for the period.

3. Determine the ending inventory cost as of August 31, 2014.

(Should be Gross Profit $193,100)

PR 8.3A Bank Reconcilliation and entries (Page 395 of Accounting 25e Warren-Reeve-Duchac)

The cash account for Remedy Medical Co. at April 30, 2014, indicated a balance of $18,885.

The bank statement indicated a balance of $23,775 on April 30, 2014. Comparing the bank

statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

a. Checks outstanding totaled $7,840.

b. A deposit of $3,580, representing receipts of April 30, had been made too late to appear on the bank statement.

c. The bank collected $3,780 on a note left for collection. The face of note was $3,600.

d. A check for $770 returned with the statement had been incorrectly recorded by Remedy Medical Co. as $700. The check was for the payment of an obligation to Copelin Co. for a purchase on account.

e. A check drawn for $330 had been erroneously charged by the bank as $3,300.

f. Bank service charges for April amounted to $110.

Instructions

1. Prepare a bank reconciliation.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet were prepared for Remedy Medical Co. on April 30, 2014, what amount should be reported as cash?

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Show the step by step solutions to the following questions:

A firm is able to sell 10,000 units at $ 12 per piece. The company fixed cost is $30,000. Variable cost is $6 per unit.

What is the contribution per unit?

What is the breakeven sales in $? What is the breakeven sale in units?

What is the markup on sales price? What is the mark up on total cost?

They raise the price to $15 and demand drops to 8000.

4. Calculate the price elasticity.

5. What is the n e w markup (profit margin %) on the sales price ($15)? What is the new mark up ( profit margin %) on total cost?

6. Please calculate the total profit for this company as well as the profit per each toy sold. Are they better off raising the price?

2. A firm is able to sell 10,000 units. The company fixed cost is $10,000. Variable cost is $6 per unit. Contribution margin (CM) is $4.

1. What is the markup (profit margin %) on sales price? What is the mark up on total cost (profit margin %)?

2. If the price elasticity of demand is 2, how many units they can sell if they drop the SP by $2.

3. What is the new markup on sales price? What is the new mark up on total cost? (Hint: use the new sales)

4. Please calculate the total profit for this company as well as the profit per each toy sold (Hint: use the new demand)

3. A company manufacturing toys has a fixed cost of $100,000. Variable cost is $6 per toy. Selling price is $10 per toy. Company target profit is $120,000.

How many toys should be sold to reach the target profit?

The company found that its variable cost is going to increase by $2 and plans to raise its selling price by $3 and reduced the fixed costs by $20,000. How many more(less) toys have to be sold at the new price to reach the target profit of $120,000?

What is the markup (profit margin %) on sales price at this new sales volume? What is the markup (profit margin %) on total cost?

Sam is developing a business plan for starting Pizza business in Waltham. Sam specializes in pepperoni pizza. Based on the secondary data he has found out that there are 20,000 families in the area and about 20% of these families are strict vegetarians. He believes that he can get 10% of the market share of the potential customers. His research reveals an average family consumes 10 pizzas per year.

It costs a total of $ 6 to make a Pepperoni pizza. Sam is planning to introduce his Pepperoni pizza at $ 8 and raise the price by $2 in the second year. Price elasticity of demand for pizza is 0.50

1. Estimate the demand for Sam’s pizza in the first year

2. Calculate the % markup (profit margin %) on sales price and total cost in the first year

b. Estimate the demand for Pizza in the second year with the new price.

d. Calculate the % mark up on sales price and total cost in the second year

5. NE is planning to replace the central A/C system for the class rooms. In response to their request for proposal, NEU received two proposals. The details of the proposal are given below.

Company A Company C

A/C system cost including installation $ 35,000 45,000

Life in years 10 10

Insurance per year $ 900 1,200

Electricity charge per month $ 800 450

Maintenance charges per quarter $ 350 300

System Overhaul – number per year 4 3 in two years

Material Cost per overhaul $ 1,000 400

Numberoflabor hoursperoverhaul 8 3

Labor rate for overhaul $/hour 100 100

Use life cycle costs to recommend a system for NEU. Show the calculations to support your recommendations.