Questions and Answers of Fundamental Managerial Accounting Concepts 10th

Budgeting for a Service Company Lakeside Country Club has 425 members at the end of 2008 (including 20 new members who joined during the year). Each member has paid a $10,000 initiation fee and pays
Static versus Flexible Budgeting (Service Firm)Wasatch Medical Clinic has three doctors on staff. The clinic’s budget for 2009 is as follows:Required:1. Is this a static or flexible budget?2.
Static versus Flexible Budgeting (Service Firm)Peterson Management, Inc., is a small firm that sponsors time-management seminars in hotels throughout the country. It sponsors 20 two-day seminars
Cash Budgeting (Manufacturing Company)Hare Manufacturing Company makes wax for automobiles. As part of overall planning, a cash budget is prepared quarterly each year. You have been asked to assist
Cash Budgeting (Merchandising Company)Jim Henry, owner of Henry’s Retail, is negotiating a $100,000, 15%, four-month loan from the Garfield County Bank, effective October 1, 2009. The bank loan
Cash Budgeting Athletic World is a sporting goods store. The following data are for use in preparing its forecast of cash needs for June:a. Current assets (May 31):b. Sales are made 60% on credit and
Unifying Concepts: The Pro-Forma Income Statement, Balance Sheet, and Statement of Cash Flows Pun Corporation makes construction cranes. During the past few days, the company’s accountants have
Pro-Forma Income Statement and Balance Sheet Style Right Company makes hair dryers. During the past few days, its accountants have been preparing the master budget for the coming year, 2009. To date,
Pro-Forma Statement of Cash Flows The accountants at Boise Department Store are preparing the pro-forma statement of cash flows for 2009. The following information is available:Required:Prepare the
West Mountain Canning Company West Mountain Canning Company produces several food items, including certain tomatobased products. For about nine months during the year, the company is able to purchase
Tip Top Company Tip Top Company recently hired a new hot-shot CEO. Traditionally, the budgeting process at Tip Top has been pretty relaxed, with the executive vice president for sales
New Age Budgeting Manes.com is an Internet company that searches out job listings on corporate home pages, organizes them by type of job, and lists them so that individuals seeking jobs can see the
Disagreements over the Value of Budgets Tueller Enterprises is a large manufacturer of airplane parts for commercial and military aircraft.In addition to making parts, it also serves as a distributor
You Decide: Is budgeting a necessary tool to help a fast-growing company plan and prepare for the future, or is budgeting too complicated and subjective for a growing company?A budget is a good tool
You Decide: Should pro-forma financial statements be prepared in a manner consistent with GAAP, or do pro-forma statements provide enough useful information to investors in their current form?Most
Wal-Mart Auditors are extremely reluctant to publish any projections of future financial performance for the companies they are auditing. Ernst & Young LLP obviously has made no such predictions
Participative Living, Inc.Participative Living, Inc. (a fictitious name) is an actual charitable organization in a mediumsize community in Canada. It was organized by parents of disabled adults to
It’s Not Easy Being an Accountant in Poland (Applying U.S-Type Budgeting in a Different Country)The late 1980s and early 1990s were a very significant time for Eastern Europe. Several national
Skipper Enterprises (Manipulated Revenues)You are the management accountant for Skipper Enterprises, a manufacturer of screen doors. Recently, one of the commissioned salespersons (your close
Preparing a Personal Budget Most people have the ability to spend more than they make. As a student, you probably fit in that category. This writing assignment requires you to prepare a personal
Budgeting in a Manufacturing Firm The following information is available for the Call Company:Additional information:a. Seventy-five percent of a month’s sales is collected by the month’s end;
What are the variances used to analyze revenues inprofit and investment centers?
Centralization versus Decentralization Which one of the following statements is not an advantage of decentralization?a. Segment managers usually have more information regarding matters within their
Responsibility Accounting The company is producing an exception report. One division had $47,500 in budgeted costs, but it actually spent $45,000. How would this variance appear on the exception
Responsibility Centers Which one of the following is not an example of a responsibility center in an organization?a. Profit centerb. Asset centerc. Cost centerd. Investment center
Standard Cost Card Using the following standard quantities and standard rates, calculate the standard costs of direct materials, direct labor, and variable and fixed manufacturing overhead and
Materials Price Variance The company purchased 10,000 pounds of raw materials at $2.75 per pound. The company’s standard cost per pound is $2.50. Calculate the materials price variance for this
Accounting for Materials Price Variances Refer to the data in PE 19-5. Make the necessary journal entry to record the cash purchase of the raw materials inventory at standard cost.
Materials Quantity Variance The company used 5,500 board feet of raw materials with a standard cost of $6.00 per board foot to make 400 tables. The company’s standard is 14 board feet per table.
Accounting for Materials Quantity Variance Refer to the data in PE 19-7. Make the necessary journal entry to record the transfer of these raw materials into work-in-process inventory.
Labor Rate Variance Using the following information, compute the labor rate variance. Number of nightstands produced 150 Actual hours used to produce nightstands 720 Actual labor rate per hour.
Labor Efficiency Variance Refer to the data in PE 19-9. Compute the labor efficiency variance.
Accounting for Labor Variances Refer to the data in PE 19-9 and PE 19-10. Make the necessary journal entry to record direct labor at the standard rates.
Segment Margin Statement The company reports the following costs and revenues for one of its segments:Of these costs, cost of goods sold and selling and administrative costs are variable, advertising
Segment-Margin Ratio Refer to the data in PE 19-12. Compute the segment-margin ratio.
Revenue Variances Which of the following are not examples of revenue variances (you may select more than one)?a. Sales price varianceb. Spending variancec. Materials price varianced. Sales volume
Computing Revenue Variances The company sells one product, which is called Product A. Actual and expected sales data for the most recent year are as follows:Using these data, compute the following:1.
Return on Investment The company’s profit margin is 12%, and its asset turnover is 3.1. Compute the company’s return on investment (ROI).
Residual Income The company had $360,000 in total assets and $94,000 in operating profit this year, and the company requires at least a 12% return on assets. Compute the company’s residual income.
Variable Manufacturing Overhead Spending Variance Using the following data, compute the variable manufacturing overhead spending variance. Number of nightstands produced Actual hours used to produce
Variable Manufacturing Overhead Efficiency Variance Refer to the data in PE 19-18. Compute the variable manufacturing overhead efficiency variance.
Fixed Manufacturing Overhead Budget and Volume Variances The company spent $80,000 on fixed manufacturing overhead during the year. As of the beginning of the year, the company had budgeted to spend
Accounting for Manufacturing Overhead Variances The company has the following manufacturing overhead variances:Make the journal entry necessary to close the manufacturing overhead account and
Responsibility Accounting Reports Lorlily Company is an agricultural supply firm. The management of the company is decentralized, with division managers heading the two operating divisions: Machinery
Materials Price Variance Hogan Manufacturing Company has just adopted a standard cost system. You have been asked to analyze the materials purchases and usage for the month of August to determine the
Materials Price and Quantity Variances—Journal Entries Genesis Enterprises produces one product—MX4. The following information relating to raw materials is available for the month of March:The
Direct Materials Purchased and Used Mary Clarke is concerned about her performance as a recently employed purchasing agent.The accounting department has provided her with the following performance
Analyzing Materials Cost Mr. Rogers, the production manager, has received a report showing a $10,800 unfavorable total materials variance (materials price variance plus materials quantity variance).
Materials Price and Quantity Variances Daniel Smith, production manager, has just received a report stating that the total materials variance (materials price variance plus materials quantity
Materials Price and Quantity Variances—Journal Entries Starship Enterprises produces and sells calibrators. The company began the period with the following inventory of raw material:200 units at
Labor Rate and Efficiency Variances To produce one unit of Product CD requires eight hours of labor at a standard cost per hour of $21.00. During the month of September, 5,000 units were produced.
Responsibilities for Labor Costs Raymond Stone, a recent business school graduate, has taken a job with Farben Corporation as production manager. His job is to see that production is efficient. After
Labor Variances During the year, Thompson Plastics was in negotiation with the local union over wages.A settlement was finally reached, and the average wage per hour was increased to $32.Production
Labor Variances Compute the missing amounts. Total labor variance (efficiency plus rate variances) Labor efficiency variance Actual labor hours incurred Units produced... $ 47,500 U 42,000 U 110,000
Segment Margin Statements Professional Management, Inc., is a company that sponsors seminars for executives. It has two profit centers, or divisions: a time-management group and a money-management
Evaluating Performance with Segment and Contribution Margins Sunshine Center’s three profit centers had the following operating data during 2009:Sunshine’s management is concerned because the
Measuring Performance Using Segment and Contribution Margins El Pico Company has two divisions: Maya and Aztec. During 2009, they had the following operating data:1. Compute each division’s
Revenue Variances Fabulous Fragrances makes two products: lotion and shampoo. Actual and expected revenue data for the two products are as follows:Using the above data, compute the sales price and
Revenue Variances Telling Time is a watch retailer. It sells two types of watches: digital and analog. The results for the third quarter for Telling Time are as follows:1. Calculate the sales price
Return on Investment Compute the missing data, items (a) through (i), in the following table: Revenue Operating profit Total assets Profit margin ratio Asset turnover ratio ROI Pittsburgh Cecil
Return on Investment During 2009, the Hopewell and Hamilton divisions of Granger Company reported the following:1. What was each division’s asset turnover ratio in 2009?2. What profit margin ratio
Measuring Performance: Residual Income and ROI McCormick Corporation measures the performance of its divisions by using the residual income approach, with a minimum accepted rate of return of 16%. In
Measuring Performance: Residual Income and ROI An investment center of Southwick Corporation made three investment proposals. Details of the proposals follow.Southwick Corporation uses the residual
Variable and Fixed Manufacturing Overhead Variances Lauder Company manufactures one product. The standard capacity is 20,000 units per month. Manufacturing overhead costs are budgeted and applied on
Manufacturing Overhead Variances Rollins Manufacturing Company estimates variable manufacturing overhead for the month of November to be $80,000. Fixed manufacturing overhead is estimated to be
Responsibility Accounting Reports Ryhan Company is a multinational computer services firm. The management of the company is decentralized, with division managers heading the following three
Materials and Labor Variances The standard cost data for Madison Machinery Company show the following costs for producing one of its machines:During April, four machines were built, with actual total
Materials and Labor Variances Mayhem Manufacturing provides the following standard cost data for one of its products:During the month of February, the following actual cost data were
Materials and Labor VariancesRequired:Compute the missing amounts. Actual materials Actual hours used Standard materials for output (tons) Standard hours for output. Actual cost per ton of material
Materials and Labor Variances Sports Manufacturing, Inc., produces and sells footballs. The standard cost for materials and labor for one regulation-size football is as follows:During the period,
Materials and Labor Variances The following information was taken from the records of Liberty Tool Manufacturing Company for its production of jack-hammers in the month of July:Required:1. Calculate
Materials and Labor Variance Analysis Cooke Manufacturing Company produces high-quality men’s pajamas for several large retail stores. The standard costs for each dozen pairs of pajamas is as
Determining How Variances Are Computed Helon Company uses a standard cost system in its accounting for the manufacturing costs of its only product. The standard cost information for materials and
Evaluation of Profit Centers—Segment Margin Della Brown is the manager of one of the stores in the nationwide EatRite supermarket chain. The following information has been gathered about the
Evaluation of Profit Centers—Segment Margin Derrald Pearl Company has two divisions, Computer Consulting and Construction. During the most recent year, the two divisions had the following operating
Revenue Variances Menendez Company is a merchandiser that sells three products: Salsa, Tortillas, and Queso.The following are the actual and expected (standard) data for the three
Revenue Variances Family Friendly Photography has just finished its first year of business. It specializes in group portraits, though the company also handles individual portraits. Revenue is
ROI and Contribution-Margin Analysis Macro Data Corporation’s three divisions had the following operating data during 2009:Required:1. Compute the contribution margin for each division.2. Compute
ROI Frank’s Fixtures has two divisions: the Plumbing Division and the Electrical Division.Following are their operating data for 2009:Required:1. Calculate the ROI for each division.2. Interpretive
ROI The following information for 2009 applies to the two sales divisions of Ward Enterprises:Required:1. Calculate each division’s revenue.2. Calculate each division’s asset turnover ratio
ROI and Residual Income Pacific Corporation has a number of autonomous divisions. Its real estate division has recently reviewed a number of investment proposals.a. A new office building would cost
ROI and Residual Income Albertson Furniture Company is a retailer of home furnishings. It currently has stores in three cities—San Francisco, Los Angeles, and Phoenix. Operating data for the three
ROI and Residual IncomeRequired:Compute the missing data, labeled (a) through (p). Revenue Operating profit Total assets Profit margin ratio Asset turnover ratio ROI Minimum accepted rate of return
Measuring Performance: Residual Income and ROI The gaming division of Nevada Corporation had income of $550,000 and total assets of$3 million in 2009. The figures are expected to be similar in 2010.
ROI and Residual Income The manager of the manufacturing division of Minolta Company is evaluated on a residual income basis. He is in the process of evaluating three investment proposals.a. Pay
Manufacturing Overhead Variances Engraph Manufacturing Company uses standard direct labor hours as a basis for charging manufacturing overhead to Work-in-Process Inventory. The following data were
Variable Manufacturing Overhead Variances Grover Glove Company attempts to control manufacturing overhead costs through the use of a flexible budget. Standards are set by studying historical overhead
Fixed Manufacturing Overhead Variances Standard and actual cost data for Willey Corporation for the first three quarters of the year are shown below.Required:1. Compute the fixed overhead budget
Variable Manufacturing Overhead Spending and Efficiency Variances The following production information is available for Porter Corporation:Required:1. Calculate the following variances for Porter
Continuous Improvement Needed One evening after a strenuous day at the office, Janis Walker, president of Western Mills, Inc., a leading textile manufacturing firm, was out jogging to help relieve
What Are My Costs Anyway?You have recently been promoted to be the manager of the camera division of a large corporation.Your most profitable product is a thin, pocket-sized digital camera.
You Decide: Can a company make a conscious decision and set the prices of its products, or does the supply and demand of the market automatically dictate the price?You were talking to your good
Wal-Mart In the 2006 Annual Report for Wal-Mart (provided in Appendix A), you will find Segment Information in Note 11 in the Notes to the Financial Statements.1. As you can see, Wal-Mart has four
Petersen Pottery Just outside Elkins, West Virginia, Clive Petersen has been making ceramic bathroom fixtures(sinks, toilets, and bathtubs) since 1960. Petersen’s fixtures had become known over the
Target Costing in Japan Japan is always a good place for useful insight on innovative management accounting practice and technique. From early on, the Japanese recognized that the most efficient way
Cool Air, Inc.Jack Lear, an internal auditor for Cool Air, Inc., met with Paul Marsh, the manager of the cost accounting department, to discuss a concern about a possible “glitch” in the standard
Qualitative Variance Analysis With the push for continuous improvement, stable standards may become a thing of the past. As companies strive for and achieve zero defects and no waste, variances
Materials, Labor, and Revenue Variances The standard cost sheet for Kendra Box Company shows the following unit costs for direct materials and direct labor for each box made:During the month of
Variable and Fixed Manufacturing Overhead Variances Use the information given in the previous problem, plus the following information, to address issues associated with Kendra Box Company’s
Compare Exhibits 6 and 7. Why does the total“flavor gross profit” differ in the two exhibits?

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