Chapter 22: 13DQ (page 1013)
Under what conditions is a market-based transfer price most likely to be used?
Market-based transfer price is used afterconsidering the competition in the market, interdependency of the business units, and cost and benefits of transferring the goods externally.
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Heart & Home Properties is developing a subdivision that includes 600 home lots. The 450 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 150 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is \(55,000 and for each Hilltop lot is \)110,000. The developer acquired the land for \(4,000,000 and spent another \)3,500,000 on street and utilities improvements. Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot.
Define and describe cycle efficiency.
ZNet Co. is a web-based retail company. The company reports the following for 2017.
The company’s CEO believes that sales for 2018 will increase by 20% and both profit margin (%) and the level of average invested assets will be the same as for 2017.
Sales | $5,000,000 |
Operating income | 1,000,000 |
Average invested assets | 12,500,000 |
1. Compute return on investment for 2017.
2. Compute profit margin for 2017.
3. If the CEO’s forecast is correct, what will return on investment equal for 2018?
4. If the CEO’s forecast is correct, what will investment turnover equal for 2018?
Question: Pablo Management has five part-time employees, eachof whom earns $250 per day. They are normally
paid on Fridays for work completed Monday through Friday of the same week. Assume that December 28,
2017, was a Friday, and that they were paid in full on that day. The next week, the five employees worked
only four days because New Year’s Day was an unpaid holiday.
a. Assuming that December 31, 2017, was a Monday, prepare the adjusting entry for wages expense that
would be recorded at the close of that day.
b. Assuming that January 4, 2018, was a Friday, prepare the journal entry that would be made to record
payment of the employees’ wages for that week.
Apple Inc. reports the following for three of its geographic segments for a recent year.
\( millions | Americas | Europe | China |
Operating income | \)31,186 | \(16,527 | \)23,002 |
Sales | 93,864 | 50,337 | 58,715 |
Compute profit margin for each division. Express answers as percentages, rounded to one decimal place.
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