P2-5 Converting from cash to accrual basis (LO 2.1. LO 2-12) ements: During August 20X1. Packer Manufacturing had the following cash receipts and disbursemen Cash received from customers $319,000 Cash received from selling equipment 11.200 Cash paid for salaries 47,000 Cash paid to suppliers for inventory purchases 130,000 In addition, the following balance sheet account balances were shown on Packer's books July 31, 20X1 August 31, 20X1 Accounts receivable $128.000 $135.000 Inventory 33.000 25,000 Accounts payable 21.000 25.000 Salaries payable 8,000 5,000 Assume all sales and purchases are on account. Required: 1. Determine sales for August 20X1. 2. Determine salary expense for August 20X1. 3. Determine cost of goods sold for August 20X1. P2-15: American Cinema American Cinema shows first-ron movies. It pays the company distributing the movies a fixed fee of S1.000 per week plus a percentage of the grow box office receipts. In the fint two weeks a movie is released, the theater pays the fixed fee of $1.000 per week plus 90 percent of grow box office receipts to the distributor. If the theater keeps the movie for week 3 and 4, the theater pays the din tributor $1.000 per week plus 80 percent of its gross box office receipts received during those two weeks. American Cinema charges 56,50 per ticket for all movies, including those shown for two weeks and those shown for four weeks American Cinema must decide what movies to show and for how many wecks to show each movie (either two weeks only or four weeks) before the movie is released. For most mies, the audience demand is higher in the first two weeks than in the next two week American Cinema is evaluating two similar comedies. The first onc. Paris Is for Lovers, is scheduled for release on October 1. The second comedy, I Do, is scheduled for release on October 14. American Cinema has decided to rent Paris Is for Lovers but must decide whether to run it for four weeks or to run it for two weeks and then replace it with / Do. Based on all the information about the stars in the movie.production costs, and prerelease publicity, management expects the two movies will have the same demand in the first two weeks and will have the same flower) demand in weeks 3 und 4. Required: a. The only movie being released on October 14 is 1 De How should management po about deciding whether to rent Paris for four weeks or to rent it for two weeks and then replace it with / Do? In other words, provide American Cinema management with a decision-making rule to use in choosing between renting Paris for four weeks or just two weeks. American Cinemas turite is zero. Be sure to justify your advice with clearly described analysis. A How does your answer in part (a change if American Cinema's income tax rates 30 percent? American Cinema's average movie patron purchases soda.popcom, and candy that yields profits of S2 after supplies and labor. How does profit on these concession items affect your answer to part (al(Ignore tuxes.) Comments: This seems to me as though we are deciding what to do in weeks 3 and 4. The choice seems to be stay or switch. There's a level of expected ticket sales for "Paris" in weeks 3 and 4, and a level of expected ticket sales for "I Do in those weeks. The question might be phrased "what level of expected ticket sales for Paris gives the same profit as might be expected for Do?" This makes it a kind of an opportunity cost question -- at what level of ticket sales for I Do, does I Do beat the opportunity cost of staying with Paris? P2-7: ETB ETB plans to manufacture a slim bamboo hard case for the Apple iPad, which will be sold for 565. ETB estimates that it can produce and sell between 3,000 and 5,000 bamboo cases a month The following data summarize ETB's cost structure at various output (sales) levels: 5.000 Production (Unix) 3.000 3,500 4.500 Variable manufacturing cost SMO $35.000 $36.00 $60,000 Fixed manufacturing cost $60.000 $60,000 S60,000 S60,000 Variable selling and admin cost $26.100 $28,000 $31.500 SI5,000 Fixed selling and admin cost $40.000 540,00 $40,000 $40,000 Required: 4. What monthly production sites) level minimizes the average cost of the bamboo iPad case? How many bamboo iPad cases should ETB produce monthly We usually believe that variable costs are constant per unit across the range of activity. In this case, it appears that the variable costs apply locally, but not across the entire range of activity. For example, the variable manufacturing costs per unit seems to be a local variable cost and changes as the activity range changes. That's not something we generally want to see in a problem, nevertheless, it happens here. Production units 3.000 3.500 4,500 5,000 Variable manufacturing cost $36.000 $35,000 $36,000 $60,000 Fixed manufacturing cost $60.000 $60,000 $60,000 S60,000 Variable selling and admin cost $26.100 $28,000 $31,500 S35,000 Fixed selling and admin cost $40,000 $40,000 $40,000 $40,000 Variable manufacturing cost per unit $36,000/3,000 - 12 Variable selling and admin cost per unit 8.7 8 7 7 10 8 12 This creates a bit of tension between (I) wanting to produce as much as possible to spread the fixed cost across as many units as possible, and (2) recognizing that variable manufacturing costs per unit will increase to S12 per unit at 5.000 units