Questions and Answers of Managerial Accounting Tools For Business Decision Making 9th

Taylor Processing Company uses a weighted-average process costing system and manufactures a single product-a premium rug shampoo and cleaner. The manufacturing activity for the month of October has
Nicholas Company manufactures basketballs and soccer balls. For both products, materials are added at the beginning of the production process and conversion costs are incurred uniformly. Nicholas
Pepsi Company manufactures a nutrient, Ever life, through two manufacturing processes: Blending and Packaging. All materials are entered at the beginning of each process. On August 1, 2002,
Aquatic Corporation manufactures water skis through two processes: Molding and Packaging. In the Molding Department fiberglass is heated and shaped into the form of a ski. In the Packaging
Freedo Corporation manufactures in separate processes refrigerators and freezers for homes. In each process, materials are entered at the beginning and conversion costs are incurred uniformly.
Wang Company has several processing departments. Costs charged to the Assembly Department for October 2002 totaled $1,347,200 as follows.Production records show that 25,000 units were in beginning
Clemente Company manufactures bicycles and tricycles. For both products, materials are added at the beginning of the production process, and conversion costs are in- curred uniformly. Production and
B Magic Cleaner Company uses a weighted-average process costing system and manufactures a single product —an all-purpose liquid cleaner. The manufacturing activity for the month of March has just
Jessica Company manufactures bicycles and tricycles. For both products, mate- rials are added at the beginning of the production process, and conversion costs are in- curred uniformly. Jessica
English Bay Beach Company manufactures suntan lotion, called Surtan, in 11 -ounce plastic bottles. Surtan is sold in a competitive market. As a result, management is very cost-conscious. Surtan is
Logan Furniture Company manufactures living room furniture through two departments: Framing and Upholstering. Materials are entered at the beginning of each process. For May, the following cost data
General Microwave Corp. is engaged primarily in the design, development, manufacture, and marketing of microwave, electronic, and fiber-optic test equipment. components, and subsystems. A substantial
Catherine Harper was a good friend of yours in high school and is from your home town. While you chose to major in accounting when you both went away to college, she majored in marketing and
R. B. Robin Company manufactures a high-tech component that passes through two production processing departments, Molding and Assembly. Department managers are partially compensated on the basis of
Mynex Co. identifies the following activities that pertain to manufacturing over- head: Materials Handling, Machine Setups, Factory Machine Maintenance, Factory Supervision, and Quality Control. For
Multi-Products Company manufactures four products in a single production facility. The company uses activity-based costing. The following activities have been iden- tified through the company's
Martinez Company identifies three activities in its manufacturing process: ma- chine setups, machining, and inspections. Estimated annual overhead cost for each ac- tivity is $180,000, $325,000, and
Hats Galore, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal hats. Compute the activity-based overhead rates using the following budgeted
Electronic Parts, Inc., a manufacturer of woofers and chips for computers, employs activity-based costing. Compute activity-based overhead rates from the following budgeted data for each of the
Norm Johnson Novelty Company identified the following activities in its pro- duction and support operations. Classify each of these activities as either value-added or nonvalue-added.(a)
Loggers Construction Company, a builder of log cabins on order for farm machinery storage, identifies the following six activities:(1) receiving and handling materials,(2) painting and maintaining
Ayala and Ortiz is an architectural firm that is contemplating the installation of activity-based costing. The following activities are performed daily by staff architects. Classify these activities
Pete's Pix Center is a large film developing and processing center that serves 130 outlets in grocery stores, service stations, camera and photo shops, and drug stores in 16 nearby towns. The Center
Mechanic's Aids Company operates 20 injection molding machines in the pro- duction of tool boxes of four different sizes, named the Apprentice, the Handyman, the Journeyman, and the Professional.
Waring Corporation manufactures safes—large mobile safes, and large walk-in sta- tionary bank safes. As part of its annual budgeting process, Waring is analyzing the profitability of its two
Lieberman Clothing Company manufactures its own designed and labeled sports attire and sells its products through catalog sales and retail outlets. While Lieberman has for years used activity-based
Nutrition Products, Inc., uses a traditional product costing system to assign over- head costs uniformly to all products. To meet Food and Drug Administration require- ments and to assure its
Quick Copies Company is a small printing and copying firm with three high-speed offset printing presses, five copiers (two color and three black and white), one collator, one cutting and folding
Gulino Corporation manufactures snowmobiles in its White Mountain, Wisconsin plant. The following costs are budgeted for the first quarter's operations.InstructionsClassify the above costs of Gulino
Tommy Colina' s Rijo Vineyards in Mendocino, California produces three varieties of wine: Merlot, Viognier, and Pinot Noir. His winemaster, Richard Watson, has identified the following activities as
E4-7 Andrea Boss, Inc. manufactures five models of kitchen appliances at its Vista plant. The company is installing activity-based costing and has identified the following activi- ties performed at
Fribourg Instrument. Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs
Andrea Boss, Inc. is interested in using its activity-based costing system to improve its operating efficiency and its profit margins by applying activity-based management techniques. As part of this
Cheatham and Howe is a law firm that is initiating an activity-based costing sys- tem. Jim Cheatham, the senior partner and strong supporter of ABC, has prepared the following list of activities
Paul DiGiovanni & Sons, Inc. is a small manufacturing company in Balboa that uses activity-based costing. DiGiovanni & Sons accumulates overhead in the following activity cost
Curly-Soo, Inc. manufactures hair curlers and blow-dryers. The handheld hair curler is Curly-Soo's high volume product (80,000 units annually). It is a "large barrel," 20-watt, triple-heat appliance
Petty Plastics, Inc. manufactures two plastic thermos containers at its plastic molding facility in Elm, Washington. Its large container, called the Ice House, has a volume of 5 gallons, side
Castro Cabinets Company designs and builds upscale kitchen cabinets for luxury homes. Many of the kitchen cabinet and counter arrangements are custom made, but occasionally the company does mass
Frazzle Corporation produces two grades ol wine From grapes that it buys from( California growers. It produces and sells, in 1 -gallon jugs, roughly 800,000 gallons peryear of a low-cost, high-volume
Horses and Dogs Veterinary Clinic is a small-town partnership that offers two primary services, farm animal services and pet care services. Providing veterinary careto farm animals requires travel to
Fire Safety Products, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a
Jackson Electronics manufactures two large-screen television models: the Royale which sells for $$1,600$, and a new model, the Majestic, which sells for $$1,300$. The pro- duction cost computed
Customized Stairs Co. of Poway designs and builds factory-made premium wooden stairs for homes. The manufactured stair components (spindles, risers, hangers, hand rails) permit installation of stairs
Bastille Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called
Les and Moore is a public accounting firm that offers two primary services, auditing and tax return preparation. A controversy has developed between the partners of the two service lines as to who is
Valley West Hospital is a primary medical health care facility and trauma center that serves 11 small, rural midwestern communities within a 40-mile radius. The hospital offers all the
Cost Technology describes itself as a "global consulting company specializing in profit management." The company helps manufacturing, service, and government organizations implement methods, such as
The April 1998 issue of Management Accounting includes an article by Kip R. Krumwiede entitled "ABC: Why It's Tried and How It Succeeds."InstructionsRead the article and answer the following
Ernie Lobb, the cost accountant for Superior Mower Company, recently in- stalled activity-based costing at its St. Louis lawn tractor (riding mower) plant where three models-the 8-horsepower Blade
(a) Jenny Beason asks your help in understanding the term "activity index." Explain the meaning and importance of this term for Jenny.(b) State the two ways that variable costs may be defined.
Leon claims that the relevant range concept is important only for variable costs.(a) Explain the relevant range concept.(b) Do you agree with R.E.'s claim? Explain.
Bart Gomez is confused. He does not understand why rent on his apartment is a fixed cost and rent on a Hertz rental truck is a mixed cost. Explain the difference to Bart.
Patty Dye defines contribution margin as the amount of profit available to cover operating expenses. Is there any truth in this definition? Discuss.
Doolin Company's Speedo pocket calculator sells for $$40$. Variable costs per unit are estimated to be $$24$. What are the contribution margin per unit and the contribution margin ratio?
Total fixed costs are $$22,000$ for Froelich Inc. It has a contribution margin per unit of $$15$, and a contribution margin ratio of 20%. Compute the break-even sales in dollars.
Linda Fearon asks your help in constructing a CVP graph. Explain to Linda (a) how the break-even point is plotted, and (b) how the level of activity and dollar sales at the break-even point are
Jung Company's break-even sales are $$600,000$. Assuming fixed costs are $$240,000$, what sales volume is needed to achieve a target net income of $56,000?
The traditional income statement for Reeves Company shows sales $$900,000$, cost of goods sold $$600,000$, and operating expenses $$200,000$. Assum- ing all costs and expenses are 70% variable
Monthly production costs in Obianwu Company for two levels of production are Classify costs as variable. as follows.Indicate which costs are variable, fixed, and mixed, and give the reason for each
For Lundy Company, the relevant range of production is 40-80% of capacity. At 40% of capacity, a variable cost is $$2,000$ and a fixed cost is $$4,000$. Diagram the behavior of each cost within
For Skole Company, a mixed cost is $$40,000$ plus $$8$ per direct labor hour. Diagram the behavior of the cost using increments of 1,000 hours up to 5,000 hours on the horizontal axis and
Sass Company accumulates the following data concerning a mixed cost, using miles as the activity level.Compute the variable and fixed cost elements using the high-low method. Miles Total Miles Total
Determine the missions amounts. Unit Selling Price Unit Variable Costs Contribution Margin per Unit Contribution Margin Ratio $250 $160 (a) 2. (b) 36% $500 (c) $150 3. (e) (1) 20 RHU $360 (d) 30%
Low Company has a unit selling price of $$400$, variable costs per unit of $$280$, and fixed costs of $$150,000$, Compute the break-even point in units using(a) the mathematical equation(b)
For Koren Company actual sales are $$1,200,000$ and break-even sales are $$900,000$. Compute (a) the margin of safety in dollars and (b) the margin of safety ratio.
For Bianco Company, variable costs are 75% of sales, and fixed costs are $180,000. Management's net income goal is $60,000. Compute the required sales in dollars needed to achieve management's target
Friedman Manufacturing Inc. has sales of $1,800,000 for the first quarter of 2002. In making the sales, the company incurred the following costs and expenses.Prepare a CAT income statement for the
Gigliuto Company's fixed overhead costs are $$4$ per unit, and its vari- able overhead costs are $$8$ per unit. In the first month of operations, 50,000 units are produced, and 45,000 units are
Fox Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.Instructions(a) Define the terms variable costs,
The controller of Getty Industries has collected the following monthly expense data for use in analysis the cost behavior of maintenance costs.Instructions(a) Determine the fixed and variable cost
In the month of June, Andrea's Beauty Salon gave 2,500 haircuts, shampoos, and permanents at an average price of $$30$. During the month, fixed costs were $$18,000$ and variable costs were 70% of
Ewing Company estimates that variable costs will be 50% of sales, and fixed costs will total $$800,000$. The selling price of the product is $4.Instructions(a) Prepare a CVP graph, assuming maximum
In 2002, Donnin Company had a break-even point of $$350,000$ based on a selling price of $$7$ per unit and fixed costs of $$140,000$. In 2003, the selling price and the variable cost per unit
Jain Company had $$150,000$ of net income in 2002 when the selling price per unit was $$150$, the variable costs per unit were $$90$, and the fixed costs were $$750,000$. Management expects
Gomez Company reports the following operating results for the month of August: Sales $$300,000$ (units 5,000); variable costs $210,000; and fixed costs $80,000.Management is considering the
Halko Company had sales in 2002 of $$1,500,000$ on 60,000 units. Variable costs totaled $$720,000$, and fixed costs totaled $500,000.A new raw material is available that will decrease the
Wu Equipment Company manufactures and distributes industrial air compres sors. The following costs are available for the year ended December 31, 2002. The company has no beginning inventory. In 2002,
Joe Vida owns the Peace Barber simple . He employs five barbers and pays each a base rate of $1,200 per month. One of the barbers serves as the manage) and receives an extra $600 per month. In
Tyson Company bottles and distributes NO-KAL, a diet soft drink. The beverage is sold for 40 cents per 16-ounce bottle to retailers, who charge customers Instructions (a) Prepare a CVP income
Cruz Manufacturing's sales slumped badly in 2002. For the first time in its his- tory, it operated at a loss. The company's income statement showed the following results from selling 600,000 units of
Lois Baiser is the advertising manager for Value Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased
AFN produces plastic that is used for injection molding applications such as gears for small motors. In 2002, the first year of operations, AFN produced 4,000 tons of plastic and sold 3,000 tons. In
The College Barber Shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $$2,000$ per month. The other barbers are paid $$1,400$ per month. In addition, each
Corbin Company bottles and distributes LO-KAL, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bot- tle. At full (100%) plant
Griffey Manufacturing had a bad year in 2002. For the first time in its historj it operated at a loss. The company's income statement showed the following results Irom selling 60,000 units of
Zaki Metal Company produces the steel wire that goes into the production of paper clips. In 2002, the first year of operations, Zaki produced 40,000 miles of wire and sold 30,000 miles. In 2003, the
Cedeno Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method.The manufacturing method will not affect
The condensed income statement for the Rivera and Santos partnership for 2002 is as follows.A cost behavior analysis indicates that 75% of the cost of goods sold arc variable, 50%of the selling
The February 1998 issue of Management Accounting includes an article by Bonnie Stivers, Teresa Coven, Nancy Green Hall, and Steven Smalt entitled "How Nonfinancial Performance Measures Are
Donny Blake is an accountant for Swenson Company. Early this year Donny made a highly favorable projection of sales and profits over the next 3 years for Swen- son's hot-selling computer PLEX. As a
The benefits of budgeting include all but one of the following:(a) Management can plan ahead.(b) An early warning system is provided for potential problems.(c) It enables disciplinary action to be
Valerie Flynn and Ken Leask are discussing the benefits of budgeting. They ask you to identify the primary advantages of budgeting. Comply with their request.
Lorraine Scott asks your help in understanding the essentials of effective budgeting. Identify the essentials for Lorraine.
Mary Miller maintains that the only difference be- tween budgeting and long-range planning is time. Do you agree? Why or why not?
Wheaton Company has 8,000 beginning finished goods units. Budgeted sales units are 160,000. II management desires 20,000 ending Finished goods units, what are the required units of production?
The production budget of Hinsdale Company calls for 90,000 units to be produced. If it takes 30 minutes to make one unit and the direct labor rale is s ] 4 per hour, what is the total budgeted direct
Villanova Company's manufacturing overhead budget shows total variable costs of ^1^8,000 and total Fixed costs of $$147,000$. Total production in units is expected to be 160,000. It takes 15
Westphal Company's variable selling and administra- tive expenses are 15% of net sales. Fixed expenses are $$60,000$ per quarter. The sales budget shows expected sales of $$200,000$ and
For Advent Company, the budgeted cost for one unit of product is direct materials $$10$, direct labor $$20$, and manufacturing overhead 80% of direct labor cost. If 25,000 units are expected to
Andrew Manion Company has credit sales of $500,000 in January. Past experience suggests that 45% is collected in the month of sale, 50% in the month following the sale, and 4% in the second month

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