Questions and Answers of Managerial Accounting The Cornerstone Of Business Decision Making

East Mullett Manufacturing earned operating income last year as shown in the following income statement:Sales ................................................................$3,750,000Cost of goods
Data follow for Andrus Inc.:Required:1. Compute the margin and turnover ratios for each year.2. Compute the ROI for the company for each year. Sales Operating income Average operating assets Year 1 $
Clariday Company has been tracking data on sales, costs, and investment for several years. They are analyzing the data to see if there are any trends in sales and costs that may be expected to
The Orlon Division of Mondragon Company had operating income last year of $118,000 and average operating assets of $1,900,000. Mondragon’s minimum acceptable rate of return is 7%.Required:1.
Leesum Company has two divisions: the Leone Division and the Letwo Division. The following information pertains to last year’s results:Leesum’s actual cost of capital was 12%.Required:1.
Leesum Company has two divisions: the Leone Division and the Letwo Division. The following information pertains to last year’s results:Leesum’s actual cost of capital was 12%.Required:1.
Algodones Inc. has a number of divisions, including a Mattress Division and a Furniture Division. The Furniture Division owns and operates a chain of furniture stores in the Midwest. Each year, the
Algodones Inc. has a number of divisions, including a Mattress Division and a Furniture Division. The Furniture Division owns and operates a chain of furniture stores in the Midwest. Each year, the
Algodones Inc. has a number of divisions, including a Mattress Division and a Furniture Division. The Furniture Division owns and operates a chain of furniture stores in the Midwest. Each year, the
Suppose that a company has experienced 2 years of declining ROI. Give an example to show how data analysis from two different perspectives of the Balanced Scorecard could be used to diagnose the
Beloit Company divided its factory into manufacturing cells. Each cell produces one product. The cordless drill cell had the following data for last quarter: Maximum units produced in a quarter:
Alikaj Company found that one of its manufacturing cells had actual cycle time of 15 minutes per unit. The theoretical cycle time for this cell was 12 minutes per unit.Required:1. Calculate the
Which of the following represents a step in the short-run decision-making model?a. Defining the problem.b. Identifying alternatives.c. Identifying the costs and benefits of feasible alternatives.d.
What are some ways that a manager can identify a feasible set of decision alternatives?
Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled $340,000, of which
Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model IJ5 at a price of $5 each. The new customer is geographically separated from the
Arches Manufacturing had always made its components in-house. However, Canyonlands Component Works had recently offered to supply one component, DA, at a price of $50 each. Arches uses 100,000 units
Shown below is a segmented income statement for Hickory Company’s three wooden flooring product lines:Refer to the information for Hickory Company above. Relevant fixed costs associated with this
Arches Manufacturing had always made its components in-house. However, Canyonlands Component Works had recently offered to supply one component, DA, at a price of $50 each. Arches uses 100,000 units
Shown below is a segmented income statement for Mullett Marina’s three main boating service lines:Mullett’s management is deciding whether to keep or drop the Boat Maintenance service line.
Shown below is a segmented income statement for Hickory Company’s three wooden flooring product lines:Refer to the information for Hickory Company above. Hickory’s management is deciding whether
Shown below is a segmented income statement for Mullett Marina’s three main boating service lines:Relevant fixed costs associated with this line include 70% of Boat Maintenance’s garage/warehouse
The Cool Can Company manufactures drink koozies and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $7.00. The new customer is geographically
Which of the following statements is false?a. Fixed costs are never relevant.b. Variable costs are never relevant.c. Usually, variable costs are irrelevant.d. Step costs are irrelevant when a
Jack’s Lumber Yard receives 8,000 large trees each period that it subsequently processes into rough logs by stripping off the tree bark and leaves (i.e., one tree equals one log). Jack’s then
Britney’s Butters receives 2,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any
The Cool Can Company manufactures drink koozies and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $7.00. The new customer is geographically
Midlife Orthopedics Inc. provides two types of physical therapy service sessions, Injury Rehabilitation and Preventative Care, with unit contribution margins of $200 and $300, respectively.
Chiltina Inc. produces two types of fleeces—full-zip and half-zip—in a single factory. The following information was provided for the coming year.A sales commission of 10% of sales is paid for
Using a complex mathematical algorithm to help identify the optimal make-or-buy decision outcome represents an example of [Refer to Exhibit 2.2 on p. 39]:a. Diagnostic data analyticsb. Prescriptive
Midlife Orthopedics Inc. provides two types of physical therapy service sessions, Injury Rehabilitation and Preventative Care, with unit contribution margins of $200 and $300, respectively.
The Cool Can Company manufactures drink koozies and has been approached by a new customer with an offer to purchase 15,000 units at a per-unit price of $7.00. The new customer is geographically
Integrity Accounting Firm provides various financial services to organizations. Integrity has decided to price its jobs at the total variable costs of the job plus 15%. The job for a medium-sized
Mateo Consulting Firm provides various environmental consulting services to organizations. Mateo has decided to price its jobs at the total direct variable costs of the job plus 20%. The job for a
Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows:Direct fixed expenses consist of depreciation and advertising. All depreciation on the
Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don’t Drink and Dial) that prevents the phone from dialing an owner-defined list of phone numbers between the
Agostinho, Inc. produces industry-level 3D printers for use in additive manufacturing applications, including tooling aids, functional prototypes, and end-use parts. The new 3D printer model has a
Charlevoix Company produces three products: Torch, Elk, and Walloon. A segmented income statement follows:Direct fixed expenses consist of depreciation and advertising. All depreciation on the
A segment could be which of the following?a. Productb. Customer typec. Geographic regiond. All of these.e. None of these.
Garrett Company provided the following information:Common fixed cost totaled $46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped,
Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at
Jennings Hardware Store marks up its merchandise by 30%. If a part costs $25.00, which of the following is true?a. The price is $7.50.b. The markup is $32.50.c. The price is $32.50.d. The markup is
Briefly explain how predictive data analytics can be beneficial to tactical decision making.
In the sell-or-process-further decision,a. Joint costs are always relevant.b. Total costs of joint processing and further processing are relevant.c. All costs incurred prior to the split-off point
H. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market. The toaster will have four slots that adjust in thickness to accommodate both slim slices of
Pets Plus, Inc. produces otic fluid for dogs. The otic fluid is sold in 12-ounce plastic bottles. The sales budget for the first 4 months of the year is as follows:Company policy requires that ending
Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. Basic Diet is a standard mixture
Liang Company produces wheelbarrows. The unit sales for selected months of the year are as follows:Company policy requires that ending inventories for each month be 20% of next month’s sales.
Wehner Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.10 per ounce. Wehner molds the plastic into the proper
Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for
Duran Company produces asphalt roofing materials. The production budget in bundles for Duran’s most popular weight of asphalt shingle is shown for the following months:Each bundle produced requires
Tsosie Company is a medical billing services firm. All sales of billing services are billed to the client (there are no cash sales). Tsosie expects that, on average, 15% will be paid in the month of
Selig Inc. found that about 20% of its sales during the month were for cash. The company has the following accounts receivable collection experience:Selig’s anticipated sales for the next few
Ollie Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account:Ollie typically pays 15% on account in the
Erewon Inc. sells all of its product on account. Erewon has the following accounts receivable collection experience:To encourage payment in the month of sale, Erewon gives a 2% cash discount. The
When a company amasses data during the preparation of the master budget, it is primarily doing so for which of the following purposes?a. Descriptiveb. Predictivec. Prescriptived. Diagnostic
Suppose that a manager gathers data to prepare a flexible budget for several levels of sales for the coming year—pessimistic level, optimistic level, and most likely level. Is the manager using
Cerium Inc. produces a variety of household cleaning products. Cerium’s controller has developed standard costs for the following four overhead items:Next year, Cerium expects production to require
Cerium Inc. produces a variety of household cleaning products. Cerium’s controller has developed standard costs for the following four overhead items:Next year, Cerium expects production to require
Hungry Hannah’s is a small start-up company that delivers food and beverages to customers in business and residential locations via a fleet of autonomous motorized devices, including self-driving
Hungry Hannah’s is a small start-up company that delivers food and beverages to customers in business and residential locations via a fleet of autonomous motorized devices, including self-driving
Pizza Vesuvio makes specialty pizzas. Data for the 8 months were collected. Coefficients shown by a regression program for Pizza Vesuvio’s data are: Intercept 4,517 X Variable 8.20Required:Use
Hungry Hannah’s is a small start-up company that delivers food and beverages to customers in business and residential locations via a fleet of autonomous motorized devices, including self-driving
During the most recent year, Genelia Company had the following data associated with the product it makes:Required:1. How many units are in ending inventory?2. Using absorption costing, calculate the
During the most recent year, Judson Company had the following data associated with the product it makes:Required:1. How many units are in ending inventory?2. Using variable costing, calculate the
During the most recent year, Genelia Company had the following data associated with the product it makes:Required:1. How many units are in ending inventory?2. Using variable costing, calculate the
Over the past 24 months, Allen Company has found that overhead was consistently overapplied and the company had begun to lose jobs. Allen will adjust the predetermined overhead rate so that applied
Bienestar Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows:Required:1. Calculate the consumption ratios for the four drivers (round to
A batch-level driver is consumed by a product each and every time thata. A batch of products is produced.b. A unit is produced.c. A purchase order is issued.d. A customer complains.e. None of these.
Consider the information given on two products and their activity usage:Refer to the information above. The consumption ratios for the inspection activity for each product area. 0.167; 0.833.b.
Perkins National Bank has collected the following information for four activities and two types of credit cards:There are 7,500 holders of Classic cards and 30,000 holders of Gold
What are nonunit-level overhead activities? Nonunit-based cost drivers? Give some examples.
University Credit Union has collected the following information for four activities and two types of credit cards:There are 18,750 holders of Silver cards and 75,000 holders of Premium
Davis Company produces electronic components for cell phone producers. The receiving department at Davis has eight clerks who process incoming goods. The total cost of their salaries is $480,000. The
Suppose that a surgical ward has gathered the following information for four nursing activities and two types of patients for the current period:Required:1. Determine the total nursing costs assigned
Lavadora Company produces dishwashers for 108 retail outlets. Of the 108 retail outlets, 102 are small, separately owned appliance stores, and six are large retail chains. The six large retailers buy
Sandoval Inc. manufactures tractors for agricultural usage. Sandoval purchases the engines needed for its tractors from two sources: Johnson Engines and Watson Company. The Johnson engine has a price
What is activity-based product costing?
What is an activity dictionary?
Interview questions are asked to determinea. What activities are being performed.b. Who performs the activities.c. The relative amount of time spent on each activity by individual workers.d. Possible
The receiving department employs one worker who spends 25% of his time on the receiving activity and 75% of his time on inspecting products. His salary is $40,000. The amount of cost assigned to the
What are value-added activities? Value-added costs?
What are nonvalue-added activities? Nonvalue-added costs? Give an example of each.
What is cycle time? Velocity?
Suppose that a company is spending $60,000 per year for inspecting, $30,000 for purchasing, and $40,000 for reworking products. A good estimate of nonvalue-added costs would bea. $70,000.b.
What data analytic type is being used when the ABC unit cost is calculated for only value added activities.
The total activity-based cost per unit of a product is $15.00. After an analysis of all activities, it was discovered that of the $15 per unit, $10.00 is value-added and $5.00 is non-value added. The
Perez Pharmaceutical produces antibiotics. During April, Perez’s tableting department had the following data:Required:Calculate April’s output for the tableting department in equivalent units of
Recently, Stillwater Designs expanded its market by becoming an original equipment supplier to Jeep Wrangler. Stillwater Designs produces factory upgraded speakers specifically for Jeep Wrangler. The
During August, the drilling department of Alajuela Inc. completed and transferred out 285,000 units. At the end of August, there were 64,050 units in process, 70% complete. Alajuela incurred
Cardenas Enterprises produces strawberry gelato. Output is measured in quarts. Cardenas uses the weighted average method. During July, Cardenas had the following production data:Required:1. Using the
Bukavu Company produces a product where all manufacturing inputs are applied uniformly. Bukavu produced the following physical flow schedule for April:Required:Prepare a schedule of equivalent units
Tapyt Inc. manufactures throw rugs. The throw rug department weaves cloth and yarn into throw rugs of various sizes. Tapyt uses the weighted average method. Materials are added uniformly throughout
Verner Inc. just finished its third month of operations. Verner mass-produces carburetors used in motorcycle engines. The following production information is provided for December:Required:Prepare a
Tapyt Inc. manufactures throw rugs. The throw rug department weaves cloth and yarn into throw rugs of various sizes. Tapyt uses the weighted average method. Materials are added uniformly throughout
Aoyagi Inc. manufactures precision tools in two departments: molding and finishing. Aoyagi uses the weighted average method. Manufacturing costs are added uniformly throughout the process. The
During the month of May, the grinding department produced and transferred out 2,300 units. EWIP had 500 units, 40% complete. There was no BWIP. The equivalent units of output for May area. 2,000.b.
Describe three complications to the simple process-costing data analytic model when WIP inventories are present.
The mixing department incurred $46,000 of manufacturing costs during the month of September. The department transferred out 2,300 units and had 500 units in EWIP, 40% complete. There was no BWIP.The
The mixing department incurred $46,000 of manufacturing costs during the month of September. The department transferred out 2,300 units and had 500 units in EWIP, 40% complete. There was no BWIP.The

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