Accounting 350 | Accounting homework help

1-27 Planning and control decisions, Internet company. PostNews.com offers its subscribers several services,

such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main

revenue sources are fees for banner advertisements and fees from subscribers. Recent data are as follows:

Month/Year Advertising Revenues Actual Number of Subscribers Monthly Fee per Subscriber

June 2011 $ 415, 972 29, 745 $15.50

December 2011 867, 246 55, 223 20.50

June 2012 892, 134 59, 641 20.50

December 2012 1,517, 950 87 ,674 20.50

June 2013 2,976, 538 147, 921 20.50

The following decisions were made from June through October 2013:

a. June 2013: Raised subscription fee to $25.50 per month from July 2013 onward. The budgeted number

of subscribers for this monthly fee is shown in the following table.

b. June 2013: Informed existing subscribers that from July onward, monthly fee would be $25.50.

c. July 2013: Offered e-mail service to subscribers and upgraded other online services.

d. October 2013: Dismissed the vice president of marketing after significant slowdown in subscribers and

subscription revenues, based on July through September 2013 data in the following table.

e. October 2013: Reduced subscription fee to $22.50 per month from November 2013 onward.

Results for July–September 2013 are as follows:

Month/Year Budgeted Number of Subscribers Actual Number of Subscribers Monthly Fee per Subscriber

July 2013 145,000 129,250 $25.50

August 2013 155,000 145, 726 25.50

September 2013 165,000 145,643 25.50

1. Classify each of the decisions (a–e) as a planning or a control decision.

2. Give two examples of other planning decisions and two examples of other control decisions that may

be made at PostNews.com.

1-28 Strategic decisions and management accounting. Consider the following series of independent

situations in which a firm is about to make a strategic decision.

Decisions

a. Pedro Phones is about to decide whether to launch production and sale of a cell phone with standard

features.

b. Flash Computers is trying to decide whether to produce and sell a new home computer software package

that includes the ability to interface with a sewing machine and a vacuum cleaner. There is no such software

currently on the market.

c. Celine Cosmetics has been asked to provide a “store brand” lip gloss that will be sold at discount retail stores.

d. Nicholus Meats is considering developing a special line of gourmet bologna made with sun-dried

tomatoes, pine nuts, and artichoke hearts.

1. For each decision, state whether the company is following a cost leadership or a product differentiation

strategy.

2. For each decision, discuss what information the management accountant can provide about the

source of competitive advantage for these firms.

Required

2-40 Comprehensive problem on unit costs, product costs. Atlanta Office Equipment manufactures and

sells metal shelving. It began operations on January 1, 2014. Costs incurred for 2014 are as follows (V stands

for variable; F stands for fixed):

Direct materials used $149,500 V

Direct manufacturing labor costs 34,500 V

Plant energy costs 6,000 V

Indirect manufacturing labor costs 12,000 V

Indirect manufacturing labor costs 17,000 F

Other indirect manufacturing costs 7,000 V

Other indirect manufacturing costs 27,000 F

Marketing, distribution, and customer-service costs 126,000 V

Marketing, distribution, and customer-service costs 47,000 F

Administrative costs 58,000 F

Variable manufacturing costs are variable with respect to units produced. Variable marketing, distribution,

and customer-service costs are variable with respect to units sold.

Inventory data are as follows:

Beginning: January 1, 2014 Ending: December 31, 2014

Direct materials 0 lb 2,300 lbs

Work in process 0 units 0 units

Finished goods 0 units ?units

Production in 2014 was 115,000 units. Two pounds of direct materials are used to make one unit of finished

product.

Revenues in 2014 were $540,000. The selling price per unit and the purchase price per pound of direct

materials were stable throughout the year. The company’s ending inventory of finished goods is carried at

the average unit manufacturing cost for 2014. Finished-goods inventory at December 31, 2014, was $15,400.

1. Calculate direct materials inventory, total cost, December 31, 2014.

2. Calculate finished-goods inventory, total units, December 31, 2014.

3. Calculate selling price in 2014.

4. Calculate operating income for 2014.

omprehensive problem on unit costs, product costs.

Atlanta Office Equipment manufactures and