Accelerated depreciation does increase the value of an investment, however before it is explained how, it is important to define and point out the relevance of depreciation, book value, market value, inter-period tax allocation and deferred tax liability. Depreciation is a non-cash expense that lowers the value of assets over a period of time. Assets are depreciated for two reasons – wear and tear and old models becoming obsolete. Depreciation’s relevance to accelerated depreciation is that accelerated depreciation is taking base depreciation and accelerating it to report more depreciation earlier in the depreciation cycle. Book value is the value that an asset is on the balance sheet.
Once the predicted demand is frozen, L.L. Bean uses its historical demand and forecast data to analyze the forecasting errors. The forecast errors are calculated for each individual item and a frequency distribution of these is made, which is further used as a probability distribution for future errors. Thus, if 50% of the errors were within 0.7 and 1.6, the forecast for this year would be adjusted accordingly. Next, each item commitment quantity was calculated using its contribution margin and its total contribution in dollar to the revenue of the company.
The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level. This has a heavy emphasis on the materiality of the account being assessed, and the lower the audit risk the better. The sales cutoff tests are usually performed based on the existence and completeness assertions regarding the accounts receivable balance (SAS No. 67, AU Section 330.09). 2.
For the first step, we will calculate the cost of capital before the firm had undergone the restructuring. There are some assumptions that we need to make in order to calculate this. Please see the attached document step 1 for the assumptions. Next we will focus on calculating the betas for the individual product lines after utilizing the capital. This is important because the D/E ratio has obviously changed after using the capital for the various acquisitions.
There are several underlying assumptions to the aggregate expenditure model established by Keynes. Keynes described real gross domestic product formulaically as: GDP = C + I + G + NX In this formula, GDP (planned spending, or aggregate expenditures) equals the sum of C (planned consumption), I (planned investment), G (government spending), and NX (net exports). Consumption, government spending, and exchange through imports and exports always occur, but planned investment would vary and could not always be assumed to occur. Keynes noted that companies upon completing inventories would find that they had a larger amount of unsold goods than expected, and would attribute this to sales in the economy not being strong enough to support the
For instances, company can choose cost model or revaluation model for property, plant, and equipment. The inventory must be measured at the lower of cost or net realizable value. In addition, according to Mautz (1973), it stated that if who rely on the financial report that measured on historical cost to make decision, found that the information is not useful, then the accounting method will change since it have been made. However, during the times of rising prices, the historical cost accounting has limitations. This is because according to Elliot (1986), it stated that historical cost assumes money holds a constant purchasing power.
Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 18 Spoilage, Rework, and Scrap Objective 18.1 1) Managers often cite reductions in the costs of spoilage as a(n): A) major justification for implementing a just-in-time production system B) measurement of improved output quality C) immaterial item that is not to be tracked D) indication of improvement in the accounting system Answer: A Diff: 2 Terms: spoilage Objective: 1 AACSB: Analytical skills 2) Unacceptable units of production that are discarded or sold for reduced prices are referred to as: A) reworked units B) spoilage C) scrap D) defective units Answer: B Diff: 1 Terms: spoilage Objective: 1 AACSB: Ethical reasoning 3) Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are: A) reworked units B) spoilage C) scrap D) defective units Answer: A Diff: 1 Terms: rework Objective: 1 AACSB: Reflective thinking 4) Costs of poor quality production include the: A) opportunity cost of the plant and workers B) effect on current customers C) effect on potential customers D) All of these answers are correct. Answer: D Diff: 2 Terms: spoilage Objective: 1 AACSB: Reflective thinking 5) Material left over when making a product is referred to as: A) reworked units B) spoilage C) scrap D) defective units Answer: C Diff: 1 Terms: scrap Objective: 1 AACSB: Reflective thinking 6) A production process which involves spoilage and rework occurs in: A) the manufacture of high precision tools B) semiconductor units C) the manufacture of clothing D) All of these answers are correct. Answer: A Diff: 2 Terms: spoilage, rework Objective: 1 AACSB: Reflective thinking 7) Some amounts of spoilage, rework, or scrap are inherent in many production processes. Answer: TRUE Diff: 2 Terms:
Paramus, NJ: Prentice Hall. Whittaker, W. (2005). Compensatory Time vs. Cash Wages: Amending the Fair Labor Standards Act? Retrieved June 5, 2014, from: http://digitalcommons.ilr.cornell.edu/cgi/vieewcontent.cgi?article=1205
Question 1 To analyze how Global Sourcing Division - GSD can generate added value to their customers and to the rest of GPV's organization, we suggest to make an internal audit of GSD’s production and delivery process in terms of “Seven wastes of lean management”: 1. Overproduction, which leads to higher inventory costs; 2. Waiting time within the product process; 3. Transport, optimizing logistic can decrease the time-to-market rapidly; 4. Inappropriate processing; 5.
There are two types of Fiscal policy put in place to alter the level of aggregate demand; Expansionary fiscal policy and Contractionary fiscal policy. When an economy is in a recession, expansionary fiscal policy is in order. Typically this type of fiscal policy results in increased government spending and/ or lower taxes. A recession results in a recessionary gap meaning that aggregate demand is at a level lower than it would be in a full employment situation. In order to close this gap, a government will typically increase their spending which will directly increase the aggregate demand curve (since government spending creates demand for goods and services).