Questions and Answers of Horngrens Financial & Managerial Accounting

Provide an explanation of the capital budgeting process and the importance of capital investments.
The following sources of financing their proportions, and their cost of capital rates are for a mer- chandising company. Calculate and interpret the WACC for this company. Bank loan. Equity capital
JB Enterprises has a cost of capital of 12%. Calculate the present value of the following investment opportunities:a. An investment project promises a return of $$3,000$ at the end of year 3 and
Calculate the individual after-tax cash flow effect of each of the following relevant items, assuming the income tax rate is 30%:a. Cash revenue received of $90,000b. Cash operating expenses paid of
Mining Equipment Manufacturer is considering the purchase of a new building. The building would require an initial outlay of $$350,000.$ It would be depreciated using the straight-line method over
The Farm Company is considering investing in solar panels to generate enough power to run its irrigation system. The local utility company has agreed to purchase any unused power generated by the
The Farm Company is considering investing in solar panels to generate enough power to run its irrigation system. The local utility company has agreed to purchase any unused power generated by the
Environmental Business Consultants (EBC) is deciding whether to purchase an office building. EBC has found a three-story Class A office building in San Jose, California, with a purchase price of
Carolina Company is evaluating a possible $$150,000$ investment in equipment that would increase cash flows from operations for four years. The equipment will have no salvage value. The income tax
Nelson Electronics Inc. began a new standard cost accounting system after monitoring costs over the past several years. Based on expected production of 8,000 units, Nelson’s new standard costing
Feagin Company planned to produce 22,000 units of product during the current month. In order to produce this level of output, the standard costing system predicts the use of 88,000 feet of material
Feagin Company purchased and used 90,000 feet of material at $$2.90$ per foot to make 22,000 units of a finished product. The per-unit standard for material is 4 feet @ $$3.00$ = $$12.00.$ What
Feagin Company’s actual hours worked were 35,000 at a rate of $$7.50$ per hour to make 22,000 units of a finished product. The per-unit standard for labor is 1.5 hours @ $$7.00$ per hour =
Feagin Company's actual variable overhead was $$63,000.$ Actual hours were 35,000 to make 22,000 finished products. The per-unit standard for variable overhead is 1.5 hours ($$2.00,$or
Assume Paterson Company reports sales of $$500,000,$ cost of goods sold (based on standard costs) of $$460,000$ for 2019. However, during the year the company also reports the following
D'Adduzio Company planned to produce 11,000 units of finished product during the current month. The com- pany was able to achieve this desired level of production. During the month, D'Adduzio
Environmental Business Consultants. Inc. (EBC) has hired several new staff members in the last year and has invested considerable effort in training these new employees in the EBC approach to
Crenshaw Manufacturing, Inc. planned to produce 25,000 units of its only product during the year. The standard cost data for this product are as follows:The actual level of production was 24,000
Carson CPAs specializes in preparing 1040EZ returns for low-income clients. The firm charged $$100$ per return this year and budgeted $$100$ per return. Additional information for the firm
The following static budget performance report was prepared for Chip Manufacturing for July.Using a flexible budget, calculate Chip’s total flexible budget variance for variable costs. Actual
Access the most recent 10-K filing of PACCAR at edgar.sec.gov. What operating segments does PACCAR report (search for the term "segment" under Item 1 of the 10-K filing)?
Departmental revenue is $$600,000$ for Department X, and departmental operating income is $$350,000.$ Traceable expenses for this department are as follows:Compute common expenses for this
Company X has a profit margin of 8% and a return on investment of 10%, with a net profit for the year of $$50,000.$ The required return for the company investments has been set at 8%. The company
Assume that you are the managing partner of a small CPA firm. You have decided to evaluate the firm’s performance using a balanced scorecard. Identify at least one measure that you might use in
Able Corporation has a manufacturing division that manufactures valves and an assembly divi- sion that produces final products. Currently, the manufacturing division has sufficient capacity to
In addition to evaluating its operations by office as shown earlier, EBC also wishes to evaluate the performance of its two lines of business. Solid Waste and Water/ Wastewater (Water WW). EBC
LT Roofing Company sells roofing products through two departments, composite and steel. Operating information for 2019 is as follows:Common operating expenses of the firm were $180,000.Requireda.
Environmental Business Consultants (EBC) compensates all of its employees as salaried workers. Thus, EBC considers its labor cost as fixed—that is, EBC consultants are paid their full salary and
Tuttle Manufacturing Company produces only one product, which sells for $$50.$ Product costs at the normal level of manufacturing operations (10,000 units) are the following:Selling expenses (100%
A yard tool manufacturer can produce either metal shovels or rakes. Given the following estimated operating data, use differential analysis to determine which product would result in the highest net
Current sales are 50.000 units at $$25$ per unit Production capacity is 80,000 units. Variable costs are $$14$ per unit. Fixed costs are $$400,000.$ A special order for 10,000 units at $$20$
Scott Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as followsLarson Company
GPS Corporation, a manufacturer of global positioning system devices, is considering eliminating the Oceania Model from its line of devices because of losses over the past year. The past year's
Wright Company produces two products from a joint batch process. Both products are processed further before they are sold. Joint costs per batch are $350,000. Information for each product includes:If
Product A requires 2 machine hours per unit, has a unit contribution margin of $$15,$ and has a contribution margin ratio of 60%. Product B requires 1 machine hour per unit, has a unit contribution
Environmental Business Consultants, LLC (EBC) has been approached by Terrabean Cof- fee, a large retail coffee company with 5,000 shops across North America. to manage Ter- rabean Coffee's waste
Assume that you are performing a SWOT analysis for the retail company Target. List at least two strengths, weaknesses, opportunities, and threats that might apply to the company in the coming years.
All of the following are advantages of budgeting except:a. Helps management ensure that operating activities will help achieve the overall corporate strategy.b. Provides guidance to mid-level
Place the following budgets in the order that they would normally be prepared: 1. Direct materials budget 2. Production budget 3. Manufacturing overhead budget 4. Capital expenditures budget 5. Cash
Zinc Company's management team is preparing a cash budget for the coming quarter. They have prepared the following budgeted information for the first quarter:The company expects to collect 60% of its
What is the proper order for the preparation of the budgeted financial statements?a. Budgeted income statement, budgeted balance sheet, budgeted statement of cash flowsb. Budgeted statement of cash
Refer to the Environmental Business Consultants (EBC) illustration on page 1037 in the chapter. Assume that local governments (EBC's target market) are experiencing a sharp reduction in the
The sales department of Jackson Manufacturing, Inc. has completed the following sales forecast for the months of January through March 20XS for its only two products: 40,000 units of X1 to be sold at
Environmental Business Consultants (EBC) has two offices, one in northern California and one in southern California. EBC provides three basic services to its clients: rate reviews, contract
Maricopa Corporation has developed the budget for its next year of operations. The budget included the following:Requireda. What is Maricopa’s break-even point, in units and in dollars, for next
How are fixed overhead production costs treated under absorption and variable costing methods? Absorption Variable Costing a. b. Period Product Period Product C. Period Product d. Product Period
Tilley Manufacturing Company produces one product, which sells for $100. Product costs at the normal level of manufacturing operations (100,000 units) are the following:During its first year of
Assume that Fezzari’s reported absorption costing income was $$1,600,000$ in 2019. What woul variable costing income be if Fezzari’s inventory increased by 100 units during 2019 and fixed
Which of the following is a disadvantage of using the variable costing method to value inventory?a. Managers are able to determine the amount of revenue needed to cover fixed costs.b. Because net
Environmental Business Consultants, LLC (EBC) has a contract with Terrabean Coffee, alarge retail coffee company with 5,000 shops across North America, to manage the company’swaste disposal and
Kensington Corp. makes gourmet brownies. Brownies are produced in a three-stage process. In the Baking Department, the raw materials for the brownies are mixed, poured into large trays, and baked. In
Only Chips specializes in making two types of chip cookies, semi-sweet and butterscotch, and delivering them to customers while they are still warm from the oven. The butterscotch cookies tend to be
Assume you are a controller for a manufacturing company that uses a traditional product costing system, but is looking to transition to ABC. The CEO has asked you why this would be a useful
A company has a significantly varied product and service mix, with many high-volume, homogeneous products and many low-volume, complex products. Historically, the company has used a single,
Quality Meats provides standard cuts of beef, lamb, and pork to restaurant chains for use in preparing customer meals. The price and cost of the beef, lamb, and pork is the same for all customers,
In using activity-based management techniques, management would be most likely to try to eliminate or reduce which of the following activities? (Which activity adds the least value from the
Environmental Business Consultants (EBC) serves three different sizes of clients (large,medium, and small). EBC’s solid waste rate review projects are fairly standardized androutine; hence, the
Using the cost assumptions in Exhibit 19-5, what are the total costs Fezzari will incur to mount ; water bottle cages on 40,000 bikes? Exhibit 19-5 Mixed Cost Behavior Pattern Total Mixed Cost
Can the concept of relevant range be applied to mixed costs, fixed costs, and variable costs?
Given the following cost and volume levels, calculate the variable cost per unit and fixed cost within this relevant range using a the high-low method andb. least squares regression method. Cost
Sam runs his own sandwich truck on the U of C campus. The monthly cost of the truck and necessary campus permit is $$595.$ Sam spends $$2.10$ on each sandwich sold, including all of the
Sam runs his own sandwich truck on the U of C campus. The monthly cost of the truck and nec- essary campus permit is $$595.$ Sam's contribution margin per unit is $$1.40,$ and the contribution
Hungry Hikers buys nutrition bars for $$1.25$ each and sells them for $$5.00.$ Management budgets monthly fixed expenses of $$12,675$ for sales volumes between 0 and 10,000 bars.Requirements.1.
Would the following activities be associated with financial accounting or managerial accounting? 1. Issuing a quarterly earnings report to investors. 2. Determining the cost of producing a product.
For each of the following companies, identify whether they are a manufacturing, merchandis ing, or service firm. Exxon Mobil Co. Southwest Airlines Costco Walmart Hershey Co. Boston Consulting Group
Match each term to the appropriate description:a. A sportswear manufacturer takes steps to improve water efficiency by 15% per unit in ap- parel materials dyeing and finishing and to reduce waste
According to the text, what percentage of accounting students begin their careers in public accounting and what percentage eventually leave for positions outside public accounting? Begin in public
Visit the website of at least two organizations from Exhibit 14-1, or another organization that provides a professional certification, and learn the minimum education requirement to take the exam.
Classify each of the following costs relative to the cost object “Apple iPad”: Assembly labor iPad case CEO salary Microprocessor. Depreciation on Apple corporate headquarters Health insurance
Which of the following represents the correct sequence of the flow of costs in a typical manufactur-ing company? The solution is ona. Direct materials, cost of goods sold, work-in-process inventory,
Shea Company reported raw material purchases of $$1,400,$ paid $$1,200$ in factory labor, and incurred and applied $$900$ in factory overhead for March. The March 1 inventory balances were
Shea Company reported raw material purchases of $$1,400,$ paid $$1,200$ in factory labor, and incurred and applied $$900$ in factory overhead for March. The March 1 inventory balances were
Environmental Business Consultants, LLC (EBC), is a consulting firm that specializes in the areas of recycling and solid waste and water/wastewater management services. The firm has offices located
At December 31, 2019, the end of its fiscal year, Perez Manufacturing Corporation collected the following data for 2019:Required Prepare a schedule of cost of goods manufactured and sold for Perez
Which costing system (job order or process) would most likely be used by the following industries? Production of chemicals in large batches Custom printing of wedding announcements or marketing
Assume you own a manufacturing company that budgets an estimated $$250,000$ in overhead for the coming year and 10,000 direct labor hours. Also assume your manufacturing overhead application base
Match the account that should be debited with the recorded activity (the accounts may be used Activity Apply manufacturing overhead Record direct labor incurred Record purchase of raw materials
You are a junior accountant at Angel Manufacturing. The controller has asked you to prepare the joumal entries associated with a special order (#144) recently completed for a new customer. She hands
KRH Enterprises has two service departments (S1 and S2) and two production departments (P1 and P2). Information from the most recent year shows the following for each department:KRH allocates S1 to
Assume that a manufacturer has three producing departments: molding, machining, and painting. The capacity measure for molding and machining is machine hours, whereas the capacity measure for
Environmental Business Consultants, LLC (EBC) worked on and completed two projects during June 2019: a review of appropriate rates for solid waste and recycling collection within Klamath County, and
The annual budget for Diamond Corporation for 2019 included the following costs and expenses:Requireda. Compute the plant-wide predetermined manufacturing overhead rate for 2019 using direct labor
Beginning work-in-process is composed of 100 units. Also assume that 700 units are started and completed during the period, and ending work-in-process includes 90 units. Summarize "Where do the units
Assume all materials are added at the beginning of the production process, and conversion costs are added uniformly throughout the process. Beginning work-in-process is composed of 100 units, which
Assume that you have 890 total equivalent units of materials and 863 total equivalent units of conversion costs. Also assume that your beginning inventory is composed of $$3,390$ of materials and
Assume that you have completed and transferred 800 units out of your department during the period and that you have determined your average cost per equivalent unit of direct materials to be
Assume that your ending inventory is composed of 90 equivalent units of materials and 63 equiva- lent units of conversions costs and that you have determined your average cost per equivalent unit of
Assume the following cost information related to May production, and only one manufacturing dement. What journal entries would be made to capture May production? Direct materials. Direct labor
The following attributes are associated with the corporate form of organization. Identify each one. as either an advantage or a disadvantage of the corporate form over other forms of organization: 1.
Which of the following sentences is false?a. In the early days of corporations, the par value represented the market value of the stock.b. Par value represents the average value of the stock.c. In
Match the description in the right column with the appropriate term in the left column: 1. Authorized 2. Outstanding 3. Common stock 4. Preemptive right 5. Preferred stock 6. Cumulative preference a.
Wyatt Industries began operations on June 1 by issuing 10 .000 shares of $$1$ par value common stock for cash at $$9$ per share. How much Additional Paid-in Capital will be reported by Wyatt
Aston Enterprises currently has 500,000 common shares outstanding with a par value of $$3.00.$ Joe Smith owns 500 of those shares. If Aston were to execute a 3-for-1 split, what would be the
The Fullerton Corporation purchased 5,000 shares of its outstanding $$2$ par value common stock for $$75,000$ cash on November 1. Management anticipates holding the stock in the treasury until
Fango Company's president would like to know the financial impact that a cash dividend and a stock dividend will have on the company's retained earnings account. The current balance in retained
Dior Company had beginning balances at January 1, 2019, of $$100.000$ Common Stock, $$900.000$ Paid-in Capital in Excess of Par Value, $$50.000$ Retained Earnings, and $$10,000$ Treasury
Century Co. reports the following information for the current year:Calculate Century’s (a) return on common stockholders’ equity; (b) dividend yield; and (c) dividendpayout ratio. Net
Following is the stockholders’ equity section of Bayside Corporation’s December 31 balance sheet:Requireda. What is Bayside’s legal capital at December 31?b. What is the number of common shares
Classify each of the cash flow events listed below as either an (1) operating activity, (2) investing activity, or (3) financing activity: 1. Cash received from customers 2. Cash sale of land 3. Cash
Husky Company’s 2019 income statement and comparative balance sheets as of December 31 of 2019 and 2018 are shown below:Cash dividends of $$58,000$ were declared and paid during 2019. Plant

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