Do My Accounting Assignment using Excel Sheet related to Liberty Corporation, Chapman Inc., Rancho Industries

Question -
Answer the following questions in Microsoft Excel File with a separate, labelled tab for each question. Format the spreadsheets so that they are easy to follow and calculations are readily apparent. Verbal answers need to be detailed and clear.
LIBERTY Corporation operates a Marketing Research department. This department compiles information from published sources, and from its own consumer studies, to assist marketing personnel in forecasting product demand and making pricing and promotion decisions. A large marketing research firm has bid $280,000 per year for a three-year contract to perform the same services. For the most recent year, LIBERTY’s controller determined the cost of operating the Marketing Research department t ...Read More o be $346,000:
Salary and fringes:
Senior researcher$68,000
Staff researcher 48,000
Clerical staff 70,000
VP Marketing (1) 62,000
Occupancy (2) 31,000
Subscriptions and travel (3) 67,000
Represents 30% of cost of the VP, who is estimated to spend 30% of his time
on marketing research issues
Occupancy costs are $31/sq ft: depreciation, $14; utilities, $11; maintenance, $6.
Utilities are 70% variable; maintenance is an allocation of fixed costs. There are no plans for alternate use of the space.
Subscriptions and travel costs would be borne by outside research firm.
Required:
Determine the cost differential to LIBERTY of outsourcing versus retaining this function.
Discuss the factors that LIBERTY management should consider in making this decision.
Chapman, Inc. is a manufacturer with a calendar accounting year. A physical inventory is taken on January 1, and any items not in inventory are charged to cost of goods sold. a. In late March, Chapman signed a $3,600,000 contract with Hawthorn, Inc. for production and installation of custom machinery at Hawthorn’s plant. On December 22, Chapman shipped Hawthorn the completed machinery, and billed Hawthorn $3,600,000, debiting a receivable and crediting revenue. Chapman also debited COGS and credited inventory for $2,750,000, the cost of producing the machinery. The machinery is of no use to Hawthorn without installation and calibration by Chapman employees. This work had not begun as of December 31.
b. This year, Chapman began selling multi-year extended service contracts on some of its products. Chapman sold $3,800,000 of service contracts, recording the entire amount as revenue. Of that amount, 80% relates to service to be performed in future years.
c. In August, Chapman signed a lease on an office building to be used for administrative (not manufacturing) purposes. An advance rent payment of $1,000,000 was made and debited to Prepaid Rent. The controller forgot to make the year-end adjusting entry to record the expiration of $450,000 of this prepayment during 2013.
d. In December, Chapman shipped goods on consignment to a dealer, booking revenue of $350,000 and cost of goods sold of $235,000. None of these goods had actually been sold to customers by year-end.e. Two years ago, Chapman acquired another manufacturing company whose operations have been integrated with Chapman’s. The acquisition price included $1,000,000 for customer lists, which has not been amortized. An appraiser with expertise in this industry estimates that the customer lists have lost 40% of their original value due to competitive changes in the industry. Chapman’s management disregarded this appraisal in preparing the financial statements.For 2013, Chapman reported operating income (before interest and taxes) of $20,000,000. Compute the correct amount of operating income/loss, showing any necessary calculations and explaining your reasoning.
Rancho Industries, Inc. is a manufacturer of soup and condiment products under its own standard and premium labels. The company has been in business for many years, and is a “household name”. Their Denver soup plant has a capacity of 120,000 cases/month, but has been operating at a normal volume of 75,000 cases/month Rancho has been approached by Mondo Mart, a large discount retailer, about producing a line of soups under a Mondo Mart house label. Mondo would initially place an order for 10,000 cases/month, with the understanding that the order will be expanded if the product is successful. The initial order would be for a reduced line of four relatively simple, standard-label soups, following Rancho’ normal recipes.
All of these soups have essentially the same production cost of $27 per case, as follows: ingredients and packaging, $14; direct labor, $2; overhead, $11. The overhead is 65% fixed manufacturing costs, 20% variable manufacturing costs, and 15% allocated general corporate overhead. Rancho would incur $2,000/month additional setup costs if the order is accepted. Packaging would cost ten cents/case less because of a cheaper label used by Mondo.Rancho normally sells these soups for $34/case. Mondo Mart has offered $23/case, arguing that the steep discount is necessary for them to price the product in conformity with their pricing philosophy and customer expectations.
The regional marketing director is inclined to reject the offer, because it is below cost, and therefore Rancho will lose money on the contract. The ultimate decision is up to the regional director of operations. Discuss the factors that the operations director should consider in making the decision.
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