Questions and Answers of Fundamental Managerial Accounting Concepts 10th

Unifying Concepts: Analysis of Manufacturing Cost Flows, the Cost of Goods Manufactured Schedule, and the Cost of Goods Sold Schedule The following T-accounts represent manufacturing cost flows for
Computing Overhead Rates and Client Billing in a Service Firm Sutherland Estimating Company employs three professional estimators, each having a different specialty. John Spencer specializes in
Service Costing—Journal Entries Following are transactions for Michael Custodial, Inc. Assume the company’s beginning work-in-process services account balance is zero.a. Purchased supplies
Service Costing—Journal Entries Blake Accounting Services has the following transactions. Its beginning work-in-process services account balance is zero.a. Purchased supplies costing $11,000 on
Service Cost Flows Allee Company had the following balances at the beginning of 2009:Allee estimates that its total 2009 overhead will amount to $400,000. It allocates overhead based on direct labor
FIFO Cost Flow—Process Costing The cleaning division of Clark Corn Company had the following data for January:Required:1. Using the FIFO cost flow method, compute the per-ton cost of corn processed
FIFO Cost Flow—Process Costing in a Service Organization C&H Square Company provides a tax return processing service. C&H essentially has two processing centers—staff and managers. The
FIFO Cost Flow—Process Costing with Prior Department Costs The assembly department of Charles Manufacturing Company reported the following data for the month of August:(Note: Materials used in the
Equivalent Units and FIFO Cost Flow—Process Costing in a Service Center with Partial Materials Wheelie Electric, Inc. performs tune-ups on automobiles. It has five service bays. During September,
Packard, Inc.Packard, Inc., produces and sells mousetraps. The cost of a mousetrap can be broken down as follows:The traps are then sold for 120% of cost, or $0.53 each. The manufacturing overhead is
US MacDonald Corporation You work for US MacDonald Corporation (USMC), an airplane manufacturer. USMC makes airplanes for commercial airlines, such as United, American, and Delta, and for the U.S.Air
Service Cost Flows The CPA firm you work for has just been hired by Phillips Attorneys at Law to perform an audit. In the process of the audit, you notice that Phillips’ accountant has been
You Decide: With advancements in the Internet and e-commerce, will retailers be important to the future success of businesses, or will their services be eliminated in order to decrease
You Decide: Should the costs associated with an uncompleted consulting project be classified as a work-in-process asset on the balance sheet, or should the cost be expensed on the income statement as
Wal-Mart Wal-Mart, as the world’s largest retailer, is well known for its ability to keep its cost of goods sold very low. However, as pointed out in its Management’s Discussion and Analysis for
Pump, Inc.Acquiring management accounting data on real companies can be a challenge because this information is generally highly proprietary and of significant competitive value. The cost data below
Management Accounting in France France has a well-developed set of financial accounting rules, as embodied in the Plan Comptable Général (PCG). The French PCG is comparable to U.S. GAAP. You may
State Home Builders Inc.You have recently been hired as an accountant for the largest residential construction company in the state. Your primary responsibility is to track costs for each home being
Trends in Product Cost Relationships The ratios among the three types of product costs have changed quite a bit over the last 150 years of business. Generally, costs of direct materials have
Job Order Costing Salem Manufacturing Company applies manufacturing overhead costs on the basis of direct materials costs. The year 2009 estimates are:For every dollar of direct materials costs, 60
Accounting for Overhead in a Service Business Columbus & Hercules, a public accounting firm, is computing the overhead rates to use when billing customers and bidding on jobs. Columbus &
Process Costing Cleveland Enterprises produces flour in a continuous manufacturing process. The flour is mixed in one step and transferred to the finished goods department. At the beginning of
Describe some possible resources that organizations can use to help in the effort to improve quality while also reducing product costs.
What is a service organization?
What exactly did Donaldson Brown, the chief financial officer for DuPont, develop, and why was it so revolutionary?
The chapter states that the focus of management accounting is to create information to fill a competitive need. Explain how management accounting can provide a competitive edge in business.
What is C-V-P analysis used for? In the process of using C-V-P analysis, what does it mean to “break even”?
DuPont’s Development of ROI (Return on Investment)Which one of the following statements best describes the reason DuPont developed return on investment (ROI) into an important management
Management Accounting and Financial Accounting Which one of the following is correct?a. Management accounting reports are usually available to the public.b. Management accounting is legislated and
Management Accounting and Financial Accounting Which one of the following is incorrect?a. Management accounting is not as important as financial accounting for the competitive success of a company.b.
Primary Management Functions The three primary management functions are:a. Planning, surveying, and competing.b. Planning, evaluating, and aerating.c. Planning, controlling, and evaluating.d.
Planning Which one of the following is correct?a. Short-run planning includes capital budgeting and operational budgeting.b. Long-run planning includes production and process prioritizing.c. Long-run
Controlling Which one of the following is a correct description of “controlling” in a management accounting context?a. Deciding on the acquisition of long-term assetsb. The real-time, day-to-day
Evaluating Which of the following is not an example of evaluating?a. Comparing actual costs and budgeted costsb. Budgeting costs between various departmentsc. Assessing the performance of products
Fixed Costs and Variable Costs Which of the following is an example of a variable cost?a. Insurance premium for fire insurance on the factory buildingb. The salary of the company presidentc. Wood
Product and Period Costs Which one of the following is an example of a product cost for a manufacturing company?a. Office supplies at corporate headquartersb. Wages paid to office staffc. Fire
Types of Product Costs Which one of the following statements is incorrect?a. Manufacturing overhead includes all direct material and direct labor costs.b. Indirect materials include those materials
Computing the Cost of a Manufactured Product The company manufactures filing cabinets. The company’s costs are as follows:In an average year, the company manufactures 40,000 units.What is the
Direct and Indirect Costs Which one of the following statements best explains why companies want to distinguish between direct and indirect costs?a. To evaluate business segments on the basis of only
Differential Costs and Sunk Costs Which one of the following statements is incorrect?a. Sunk costs should be irrelevant in decision making.b. Differential costs are the costs a company should
Out-of-Pocket Costs and Opportunity Costs Which one of the following is an example of an opportunity cost?a. Revenue lost from sale of cakes by deciding to sell only cookiesb. Wages paid to
Ethics in Management Accounting Which one of the following statements is correct?a. The Institute of Management Accountants has implemented a perfect set of rules to resolve every conflict.b. The top
Changes in Business Affecting Management Accounting You are at the student union having lunch with a friend who is attending law school. In the course of your conversation, you tell your friend that,
Characteristics of Accounting Reports Indicate whether each of the following is characteristic of financial accounting reports, management accounting reports, or both.1. They are used primarily by
Financial and Management Accounting A friend who is thinking about majoring in accounting has asked you to distinguish between the work of financial accounting and management accounting. What is your
Period Costs and Product Costs Balls, Hoops, and Bats, Inc., a producer of sports equipment, incurs the following types of costs:a. Depreciation on the production plantb. Depreciation on the
Manufacturing Costs Jordan Industries is a manufacturing company that produces solid oak office furniture.During the year, the following costs were incurred. The building depreciation and the
Manufacturing and Nonmanufacturing Costs The Benson Manufacturing Company produces rides for amusement parks. Parts for the rides are purchased from other suppliers. Rides are then assembled in
Performance Measurement The president of Radkline Corporation, Karen Pinkus, has asked you, the company’s controller, to advise her on whether Radkline should develop a new inventory management
Cost Classifications The following are costs associated with manufacturing firms, merchandising firms, or service firms:a. Miscellaneous materials used in productionb. Salesperson’s commission in a
Cost Classifications The following are costs associated with manufacturing firms, merchandising firms, or service firms:a. Legal services for an accounting firmb. Car leases for company managementc.
C-V-P Analysis Jesse, Inc., located in Mesa, Arizona, manufactures high-end baby chairs. The firm’s cost accountant, Lisa, has been assigned by the CEO to determine how many baby chairs Jesse,
C-V-P Analysis The Dallas Mavericks basketball team has hired you as its new accountant. On your first day on the job, Mavericks’ owner, Mark Cuban, comes to you and asks, “How many tickets must
Product Costing The total manufacturing cost data on DuPont’s Teflon product line are provided below.Assuming that DuPont expects to produce 100,000 gallons in the next month, what appearsto be the
Product Costing BatsRUs, Inc., has created a unique line of aluminum baseball bats that, while illegal for league use, are designed to nearly double the average length of a batted ball. They are a
Product Costing and C-V-P Analysis Wakefield, Inc., offers a CPA review course in cities throughout the eastern United States.Wakefield hires local CPAs to do the teaching. Each instructor is paid
Decisions about Business Segments You are the accountant for the largest manufacturer of sheet steel. The company’s hottest product is the RX-6, which provides most of the firm’s revenue.
Developing Management Accounting Information (DuPont)The story of E. I. Du pont de Nemours and Company detailed at the beginning of this chapter provides key insights into the development of
Supporting the Management Process (IBM)International Business Machines Corporation (IBM) has faced challenges this last decade due to increased competition in the home-consumer segment of the
You Decide: When allocating costs, if you don’t know where costs should be allocated, should you take time to figure out if the costs relate to materials or labor, or should you allocate all the
Wal-Mart Wal-Mart employs 1.8 million people worldwide through more than 3,800 stores in the United States and more than 2,600 stores in other countries. The March 22, 2006, grand opening of the new
DuPont As described in the chapter, the challenge facing DuPont in the early twentieth century was how to manage the diverse set of businesses operating under the control of the DuPont management
Toyota Toyota Motor Corporation was started in 1918 by Sakichi Toyoda as the Toyota Spinning and Weaving Company; in fact, a subsidiary of Toyota still makes spinning and weaving equipment today. By
Whom to Tell about Medicare OverbillingProfessor Mary Allen is sitting in her office one day when Mark Sullivan, an accounting graduatefrom five years ago, knocks on her door. Mark had been an
Opportunity CostsClark is employed by a company that currently pays him $90,000 per year. He owns a newcar that he bought for cash of $39,000. Clark is thinking about returning to school to obtaina
Segment Analysis and Opportunity CostsAssume that sales of Kevlar at DuPont have dropped significantly. DuPont reported the followingresults for this product line for the past month and expects this
Costs May Be Sunk, but They Aren’t ForgottenYou are the manager of the tire manufacturing subdivision of Uniyear Diversified Products.Last year, you were successful in convincing corporate
Categories of Cash Inflows and Outflows Which one of the following is not one of the three main sections in the statement of cash flows for a company?a. Earning activities.b. Financing activities.c.
Identifying Operating Activities Which one of the following is an example of an operating activity?a. Cash payments to repay principal amounts borrowed.b. Cash payments to suppliers for inventory
Identifying Investing Activities Which one of the following is an example of an investing activity?a. Cash payments to lenders for interest expense.b. Cash receipts from borrowing notes.c. Cash
Identifying Financing Activities Which one of the following is an example of a financing activity?a. Cash payments to purchase debt or equity securities of other entities (other than trading
Computing Net Change in Cash for the Period The company had a beginning cash balance of $215. In addition, the company reported the following amounts of cash provided by (used in) each category of
Computation of Cash from Operating Activities Using the following information, compute the amount of cash provided by operating activities. Payments for miscellaneous expenses Payment to stockholders
Solving for Cash from Investing Activities Using the following information, compute the amount of cash provided by (used in) investing activities: Cash from operating activities Cash from financing
Using Accounts Receivable to Compute Cash Collections Assume all of the company’s sales are on account. The accounts receivable balance at the beginning of the year was $512, and the ending balance
Identifying Noncash Flow Items and Nonoperating Activity Items Using the following income statement accounts, identify the items that are noncash items and/or should not be included in the operating
Using Inventory and Accounts Payable to Compute Cash Paid for Inventory Using the following information and assuming that all inventory is purchased on account, compute cash paid for inventory: Cost
Using Taxes Payable to Compute Cash Paid for Taxes Using the following information, compute cash paid for taxes. Income tax expense Taxes payable, beginning balance Taxes payable, ending balance
Indirect Method Using the following information, prepare the operating activities section of the statement of cash flows using the indirect method. Income Statement Adjustments Cash Flows from
Direct Method Refer to the data in PE 13-12. Prepare the operating activities section of the statement of cash flows using the direct method.
Computing Cash Paid for Property, Plant, and Equipment The company reported the following information related to its long-term assets:In addition, the company disclosed that it sold equipment with a
Computing Gain on Sale of Property, Plant, and Equipment Refer to the data in PE 13-14. Compute the realized gain on the sale of equipment.
Computing Cash from Financing Activities Using the following information, compute the amount of cash from financing activities:1. The company purchased $12,000 of its own common stock to be held in
Using Information from the Statement of Cash Flows to Make Decisions Using the following information about a company, decide whether you would want to loan money to the company. Net income Cash
Classification of Cash Flows Indicate whether each of the following items would be associated with a cash inflow (I), cash outflow (O), or noncash item (N) and under which category each would be
Classification of Cash Flows The following items summarize certain transactions that occurred during the past year for Alta Inc. Show in which section of the statement of cash flows the information
Transaction Analysis Following are the transactions of McKinley Company:a. Sold equipment for $3,600. The original cost was $11,100; the book value is $3,050.b. Purchased equipment costing $77,000 by
Transaction Analysis The Vikon Company had the following selected transactions during the past year:a. Sold (issued) 1,000 shares of common stock, $10 par, for $25 per share.b. Collected $100,000 of
Preparing a Simple Cash Flow Statement Assume you have access to the ledger (specifically, the detail of the cash account) for Stern Company, represented by the following T-account:The transactions
Determining Cash Receipts and Payments Assuming the following data, compute:1. Cash collected from customers.2. Cash paid for wages and salaries.3. Cash paid for inventory purchases.4. Cash paid for
Adjustments to Cash Flows from Operations (Indirect Method)Assume that you are using the indirect method of preparing a statement of cash flows.For each of the changes listed, indicate whether it
Cash Flows from Operations (Direct Method)Neil Brown is the proprietor of a small company. The results of operations for last year are shown, along with selected balance sheet data. From the
Cash Flows from Operations (Indirect Method)Given the data in E 13-25, show how the amount of net cash flows from operating activities would be calculated using the indirect method.
Cash Flows Provided by Operations (Direct Method)The following information was taken from the comparative financial statements of Imperial Corporation for the years ended December 31, 2008 and
Cash Flows Provided by Operations (Indirect Method)Given the data in E 13-27, show how the amount of cash provided by operations for 2009 is computed using the indirect method.
Cash Flows Provided by Operations (Direct Method)The following information was taken from the comparative financial statements of Dougal Industries, Inc., for the years ended December 31, 2008 and
Cash Flows Provided by Operations (Indirect Method)Given the data in E 13-29, show how the amount of cash flows provided by operations for 2009 is computed using the indirect method.
Net Cash Flows (Indirect Method)Given the following selected data for Milton Corporation, using the indirect method to report cash flows from operating activities, determine the net increase
Net Cash Flows (Direct Method)Based on the following information, determine the net increase (decrease) in cash for Luther Corp. for the year ended December 31, 2009. Use the direct method to report
Statement of Cash Flows (Indirect Method)North Western Company provides the following financial information. Prepare a statement of cash flows for 2009, using the indirect method to report cash flows

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