Chapter 22: Q9PSA (page 986)
Refer to the bond details in Problem 10-4A.
Required
1. Compute the total bond interest expense over the bonds’ life
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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.
A machine costing \(257,500 with a four-year life and an estimated \)20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its life. It actually produces the following units: 220,000 in 1st year, 124,600 in 2nd year, 121,800 in 3rd year, 15,200 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)
Required
Prepare a table with the following column headings and compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method
Year | Straight line | Units of production | Double declining balance |
The windshield division of Fast Car Co. makes windshields for use in Fast Car’s assembly division. The windshield division incurs variable costs of \(200 per windshield and has capacity to make 500,000 windshields per year. The market price is \)450 per windshield. The windshield division incurs total fixed costs of $3,000,000 per year. If the windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the windshield and assembly divisions? Explain.
Why is overhead allocation under ABC usually more accurate than either the plant-wide overhead allocation method or the departmental overhead allocation method?
What is a transfer price? What are the three main approaches to setting transfer prices?
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