Questions and Answers of Fundamental Managerial Accounting Concepts 10th

Limiting Assumptions of C-V-P Analysis Which one of the following is not an assumption of C-V-P analysis?a. Fixed costs are always greater than variable costs.b. All costs can be divided into fixed
Sales Mix The company has fixed costs of $43,000 and the following sales mix:Using this same sales mix, calculate the required sales (in dollars) to earn a target income of $50,000. Product A Product
Cost Structure If you experience much higher sales than expected this year, which kind of operating leverage would you like to have in your company for profit maximization?a. High operating
Variable and Fixed Costs over the Relevant Range Cook Corporation manufactures plastic garbage cans. In a typical year, the firm produces between 40,000 and 50,000 cans. At this level of production,
Fixed Costs—The Relevant Range Sabrina Company manufactures large leisure boats. The following schedule shows total fixed costs at various levels of boat production:1. What is the fixed cost per
Scattergraph Method of Analyzing Mixed Costs Wyoming Company makes windmills. The company has the following total costs at the given levels of windmill production:1. Use the scattergraph method to
Scattergraph Method of Analyzing Mixed Costs Given the following mixed costs at various levels of production, complete the requirements.1. Plot the data on a scattergraph, and visually fit a straight
Scattergraph Method and High-Low Method of Analyzing Mixed Costs Sailmaster makes boats and has the following costs and production levels for the last eight quarters:1. Plot the data on a
High-Low Method of Analyzing Mixed Costs The Stamford Times has determined that the annual printing of 850,000 newspapers costs 13 cents per copy. If production were to be increased to 1,250,000
Contribution Margin Calculations Jerry Stone owns and operates a small beach shop in a mall on Sanibel Island, Florida. For the last six months, Jerry has had a display of sunglasses in the front
Contribution Margin Income Statement The following data apply to Gordon Company for 2009:1. Prepare a contribution margin income statement. Assume there were no beginning or ending inventories in
Analysis of a Contribution Margin Income Statement Fill in the missing amounts for the following three cases. Note: There is no manufacturing overhead in this exercise. Case I Case II Case III Sales
Analysis of the Contribution Margin Dr. Hughes and Dr. Hawkins, owners of the Spanish Fork Care Clinic, have $350,000 of fixed costs per year. They receive 30,000 patient visits in a year, charging
Contribution Margin Analysis Compute the missing amounts for the following independent cases. (Assume zero beginning and ending inventories.) Sales volume (units) Sales price per unit Variable costs
Break-Even Point and Target Income Detienne Company manufactures and sells one product for $10 per unit. The unit contribution margin is 30% of the sales price, and fixed costs total $90,000.1. Using
Break-Even Point and Target Income Steven Newman, Inc., estimates 2009 costs to be as follows:1. Assuming that Newman will sell 55,000 units, what sales price per unit will be needed to achieve a
Break-Even Point—Graphic Analysis Using the graph below, answer the following questions:1. Copy the graph and identify (label) fixed costs, variable costs, total revenues, the total cost line, and
The Profit Graph Using the graph below, answer the following questions:1. What is the break-even point in sales volume (in units)?2. Approximately what volume of sales (in units) must this company
Graphing Revenues and Costs Montana Company manufactures chocolate candy. Its manufacturing costs are as follows:1. Plot variable costs, fixed costs, and total costs on a graph for activity levels of
C-V-P Analysis—Changes in Variables Tracy, Inc., estimates that next year’s results will be:Recompute profit, assuming each of the following independent conditions:1. A 9% increase in the
C-V-P Analysis—Changes in Variables Modern Fun Corporation sells electronic games. Its five salespersons are currently being paid fixed salaries of $30,000 each; however, the sales manager has
C-V-P Analysis Mower Manufacturing’s income statement for January 2009 is given below.1. Calculate the company’s break-even point in sales dollars and units.2. The company is contemplating the
Operating Leverage Ludlam Company and Kassandra Company both make school desks. They have the same production capacity, but Ludlam is more automated than Kassandra. At an output of 2,500 desks per
Graphing Revenues and Costs Cloward and Hawkins, CPAs, took in $350,000 of gross revenues this year. Besides themselves, they have two professional staff (one manager and one senior) and a full-time
High-Low and Scattergraph Methods of Analysis Woodfield Company makes bed linens. During the first six months of 2009, Woodfield had the following production costs:Required:1. Use the high-low method
Contribution Margin Income Statement Early in 2010, Lili H Company (a retailing firm) sent the following income statement to its stockholders:Required:1. Prepare a contribution margin income
Contribution Margin Income Statement Susan Young is an attorney for a small law firm in Arizona. She is also a part-time inventor and an avid golfer. One day Susan’s golf foursome included a man
Functional and Contribution Margin Income Statements Bassically Jammin’, Inc. (BJI) is a retail outlet for customized bass guitars. The average cost of a bass guitar to the company is $1,000. BJI
Contribution Margin and Functional Income Statements The following information is available for Dabney Company for 2009:Required:1. Prepare a contribution margin income statement.2. Prepare a
Unifying Concepts: High-Low Method, Contribution Margins, and Analysis Press Publishing Corporation has two major magazines: Star Life and Weekly News. During 2009, Star Life sold 3 million copies at
Contribution Margin Analysis Clearview Company is a manufacturer of blown glass vases. The following information pertains to Clearview’s 2009 sales:Required:1. Determine Clearview Company’s
Break-Even Analysis Jane Tamlyn paid $225 to rent a carnival booth for four days. She has to decide whether to sell doughnuts or popcorn. Doughnuts cost $1.80 per dozen and can be sold for $3.60 per
Graphic Analysis Using the graph below, complete the requirements.Required:1. Determine the following:a. The break-even point in sales dollars and volume.b. The sales price per unit.c. Total fixed
Contribution Margin Analysis—Changes in Variables SMC, Inc., is a producer of hand-held electronic games. Its 2009 income statement was as follows:In preparing its budget for 2010, SMC is
Income Statement and Break-Even Analysis Zimmerman Company records the following costs associated with the production and sale of a steel slingshot:Required:Assume that in 2009 the beginning and
C-V-P Analysis—Return on Sales The federal government recently placed a ceiling on the selling price of sheet metal produced by MOB Company. In 2009, MOB was limited to charging a price that would
Unifying Concepts: C-V-P Analysis and Changes in Variables The 2009 pro-forma income statement for Grover Company is as follows (ignore taxes):Required:1. Compute how many units must be sold to break
Unifying Concepts: High-Low and Scattergraph Methods You have been hired as a consultant for Jones Inc. The company manufactures high-density compact disks and sells them to a wide variety of
Sales Mix Mike’s Ice Cream Company produces and sells ice cream in three sizes: quart, half-gallon, and gallon. Relevant information for each of the sizes is as follows:Mike anticipates sales of
Unifying Concepts: Break-Even Point and Operating Leverage The following summary data are provided for Spencer Mercantile Corporation and James Service, Inc. During the year for which these data are
Colorado Outdoors Federation The Colorado Outdoors Federation sponsors an annual banquet. This year the guest speaker is a noted wildlife photographer and lecturer. In planning for the event, the
Entertainment Enterprises Entertainment Enterprises, a firm that sells magazine subscriptions, is experiencing increased competition from a number of companies. The president, Betty Kincher, has
You Decide: Should companies have large amounts of inventory on hand for customers, or should companies keep inventory at a minimum to free up cash for other parts of the business?Your uncle, Tim,
Microsoft Annual revenues, as well as sales and marketing expenses, for the 1991–2002 years are provided below for Microsoft Corporation:1. Operating output data, such as the number of software
Star Video It is likely that a number of grocery stores in your town have video rental departments.Generally, however, grocery stores do not focus much management attention on their small video
The Paper Company The Ghanata Group of Companies (GGC) is a locally owned and controlled company in Ghana, West Africa. One of its principal operating divisions, The Paper Company, is one of
Pickmore International Joan Hildabrand is analyzing some cost data for her boss, Ross Cumings. The data relate to a special sales order that Pickmore International is considering from a large
Issues of Quality and Time on C-V-P Analysis Decisions This chapter described how to analyze whether the difference between sales price and variable costs, as well as the volume of sales, is
Budgeting, Control, and C-V-P Analysis Livingston, Padden, & Company (LPC) makes specialized compact discs that are used for high-density data storage. LPC forecasts an increase of 300 units per
Variable and Fixed Costs Analyses Blade Corporation manufactures two types of inline skates—a basic model and a racing model. During the year 2009, Blade accumulated the following summary
Assessing the Effects of Changes in Costs, Prices, and Volume on Profitability K&D Company plans the following for the coming year:Required:1. Determine K&D’s target income.2. Compute what
Personal Budgeting Which one of the following is not a characteristic of a successful personal budgeter?a. Goal-drivenb. Flexiblec. Proactived. Disciplinede. Impulsive
Behavioral Considerations of Budgeting Which one of the following is not a behavioral consideration of the budgeting process?a. Top management must support the budgeting process.b. All managers, and
Top-Down versus Bottom-Up Budgeting Which one of the following statements is false?a. An advantage of top-down budgeting is that upper management knows the strategic objectives of the company.b. An
Master Budget Which one of the following is not part of the master budget of a manufacturing firm?a. Sales budgetb. Depreciation budgetc. Production budgetd. Direct labor budgete. Selling and
Master Budget Information Flow Place the following schedules in chronological order from start to finish in the master budgeting process.a. Cash budgetb. Pro-forma income statementc. Production
Sales Budget Is the following statement true or false?Since external variables (such as customer tastes and economic conditions) cannot be controlled by a company, those inputs are not used when
Production Budget Using the following information, compute the number of units to be produced. Desired ending inventory (in units) Beginning inventory (in units) Expected sales (in units) .. 3,750
Direct Materials Budget Refer to the data in PE 18-7. Using the following additional information, compute the cost of materials to be used in the coming period. (Assume no beginning nor ending direct
Direct Labor Budget Refer to the data in PE 18-7. Using the following additional information, compute the direct labor cost. Direct labor hours per unit. Rate per direct labor hour 6 $12
Manufacturing Overhead Budget Using the following information, compute total manufacturing overhead. Indirect labor rate.. Indirect materials rate Utilities rate Property tax expense Depreciation
Purchases Budget Using the following information, compute the dollar amount of total purchases to be made in the coming period. Beginning inventory (in units) Expected sales (in units) .. Desired
Master Budget for Manufacturing Firms versus Service Firms Which one of the following budgets do manufacturing firms and service firms have in common?a. Direct labor budgetb. Supplies budgetc.
Revenue Budget The company performs tune-ups on standard diesel engines. Using the following information, compute the budgeted gross revenue for the period. Gross revenue per tune-up. Tune-up
Flexible Budgets Using the following manufacturing costs per unit, prepare a flexible budget for the company at levels of production of 550, 600, and 650 units. Direct materials Direct labor
Flexible Budget Performance ReportRefer to the data in PE 18-14. Using the flexible budget created in PE 18-14 and the following actual data, prepare a flexible budget performance report. Actual
Cash Budget Using the following information, determine how much external funding will be necessary during the coming period (if any). Collections from customers Minimum cash balance desired Direct
Pro-Forma Financial Statements Which one of the following statements regarding pro-forma financial statements is false?a. Pro-forma financial statements include an income statement, a balance sheet,
Personal Budgeting Jennifer Swartz works as an interior decorator for Modern Fashion Corporation. Her annual salary is $36,500. Of that amount, 20% is withheld for federal income taxes, 7.15% for
Personal Budgeting George Marcus, a recent college graduate, has been hired by Taylor Corporation at a salary of $54,000 per year. In anticipation of his salary, George purchased a $20,000 new ski
Budgeting Sales Revenue and Collections Fred’s Frames mass produces and wholesales wooden picture frames at an average price of$7 per frame. Expected sales volumes over the first six months of 2009
Production Budgeting Daytona Electric makes and sells two kinds of portable music players—a CD player and an MP3 player. The sales forecasts for these players for the next four quarters are as
Production Budgeting Jim Seagal is the CEO of Seagal Monitor Company, a manufacturer of computer monitors.Seagal manufactures three types of flat panel LCD computer monitors: 15-inch, 17-inch, and
Direct Materials Budgeting Shaver Bicycle Shop assembles and sells tricycles and bicycles. The frames are purchased from one supplier and the wheels from another. The following materials are
Direct Materials Budgeting Shanahan Corporation produces three types of videocassettes: VHS, S-VHS, and 8 millimeter. Shanahan purchases tape for the videocassettes from a firm in Mexico and
Direct Labor Budgeting Super Rich Chocolate Company makes and sells two kinds of candy: chocolate peanut bars and caramel bars. The production budget for the next three months for each of the bars is
Direct Labor Budgeting Sanford Shoe Company makes three shoe styles: loafers, work boots, and tennis shoes. The production budget for the next three months for each type of shoe is:From experience,
Production Overhead Cost Budget Linden Nursery grows and sells potted perennial plants, as well as ornamental and fruit trees. The owner of Linden Nursery has determined that variable overhead costs
Budgeted Product Costs Home Run Bat Company makes two types of baseball bats: aluminum and wood. During the past several years, management has kept accurate records of costs and resource requirements
Operations Budgeting (Service Company)Dr. Dawn Gifford is a new dentist specializing in treating children under the age of 18. Dr.Gifford has two primary sources of revenues: (1) fees from regular
Static versus Flexible Budgeting—Performance Reports (Service Firm)Flannery Muffler Shop has budgeted to repair 10,000 mufflers during 2009. Each repair job takes 11⁄ 2 hours, and employees are
Flexible Budgets (Service Firm)Outdoors Unlimited operates a fishing lodge in northern Canada. The following cost information has been developed by the company’s accountant:1. In planning for its
Cash Budgeting—Hospital The management of Table Rock Memorial Hospital needs to prepare a cash budget for July 2009. The following information is available:a. The cash balance on July 1, 2009, is
Cash Budgeting Medical Supplies, Inc., purchases first-aid items from large wholesalers. Medical Supplies then assembles and sells first-aid kits to businesses and contracts to maintain the first-aid
Cash Budgeting (Merchandising Company)Whitlock, Inc., buys hardware parts from various manufacturers and sells them to retail stores. Management is currently trying to prepare a cash budget for
Pro-Forma Income Statement Gamma Manufacturing, Inc., is a manufacturer of electric pencil sharpeners. The following is information regarding Gamma Manufacturing for the fiscal year-end, May 31,
Pro-Forma Income Statement Silver Company has asked you to prepare a pro-forma income statement for the coming year. The following information is available:Prepare a pro-forma contribution margin
Pro-Forma Statement of Cash Flows The accountants at Karl’s Fish Hatchery are currently preparing the pro-forma statement of cash flows for May. In getting ready to prepare the statement, they have
Pro-Forma Income Statement and Balance Sheet (Service Industry)Bel-Air, Inc., is a small engineering corporation that surveys land for development. The company has grown rapidly over the past few
Personal Budgeting Ben Fleming has just received a job offer of $35,000 salary per year plus overtime pay, which will amount to 10% of his salary. Ben estimates his living costs as
Personal Budgeting Kathy Bourne is an advertising specialist for Success Advertising, Inc. Her annual salary is$42,000, of which 20% is withheld for federal income taxes, 7% for state income taxes,
Sales Revenue Budgeting (Service Firm)Six-Peak Pools in Montana is open May through September. It has the capability of serving approximately 600 patrons each day. July is the peak month for Six-Peak
Sales Collections Rocky Peak Company plans on the following collection pattern on its sales:Budgeted sales for the last six months of 2009 are shown below.Required:1. What are the estimated total
Production Budgeting Carry-It-All Company makes and sells two products: leather and vinyl briefcases. The sales forecasts for these briefcases for the next four quarters are as follows:On January 1,
Production and Direct Materials Budget Chandler Manufacturing Company makes two products: widgets and gidgets. The following information is available on May 1:a. Direct materials needed to make a
Manufacturing Overhead Cost Budget World-Wide Gym, Inc. makes weight lifting equipment. It designs and manufactures its own weight plates, as well as home gym sets such as workout towers, strength
Budgeted Product Cost Sheet New Harbour Candy Company makes and sells two kinds of candy bars: chocolate almond and coconut. During the past several years, the company has kept accurate records of
Unifying Concepts: Sales, Cash Collections, and Purchases Budgets The following information is available for Laurel Company, a wholesale company:Additional information:a. Each month 75% of sales is
Unifying Concepts: Production, Direct Materials, Direct Labor, and Manufacturing Overhead Budgets; and Budgeted Product Cost Sheets San Antonio Furniture Company makes two products: bookshelves and
Unifying Concepts: Sales, Cash Collections, Production, Direct Materials, and Direct Labor Budgets The following information is available for Raleigh Company:Additional information:a. Each month 70%

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