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managerial accounting
Managerial Accounting 1st Edition Stacey WhitecottonRobert LibbyRobert Libby, Patricia LibbyRobert Libby, Fred Phillips - Solutions
Prigett Company is considering allowing the managers of its two divisions to negotiate a transfer price for the component that Division A manufactures and sells to Division B. Identify the range of possible transfer prices that could result from the negotiation. Briefly describe benefits and pos¬
Tuttle Company recently had a computer malfunction and lost a portion of its accounting records. The company has reconstructed some of its financial performance measurements including components of the return on investment calculations.Required:Help Tuttle rebuild its information database by
Norshon Company recently had a computer malfunction and lost a portion of its accounting records. The company has reconstructed some of its financial performance measurements including components of the return on investment calculations.Required:Help Norshon rebuild its information database by
Mancell Company has sales of \($500,000,\) cost of goods sold of \($370,000,\) other operating expenses of \($50,000,\) average invested assets of \($1,400,000,\) and a hurdle rate of 8 percent.Required:1. Determine Mancell’s return on investment (ROI), investment turnover, profit margin, and
LaTreme Company has sales of \($1,210,000,\) cost of goods sold of \($735,000,\) other operating expenses of 148,000, average invested assets of \($5,335,000,\) and a hurdle rate of 13 percent.Required:1. Determine LaTreme’s return on investment (ROI), investment turnover, profit margin, and
Francis Corp. has two divisions, Eastern and Western. The following information for the past year is for each division:Francis has established a hurdle rate of 9 percent.Required:1. Compute each division’s return on investment (ROI) and residual income for last year. Determine which manager seems
Sullivan Company has three divisions, Larry, Moe, and Curly. The company has a hurdle rate of 5 percent. Selected operating data of the three divisions follow:Required1. Compute the return on investment for each division.2. Compute the residual income for each division. Sales Cost of goods sold
The Fabrication Division of Hawking Company manufactures an antenna component used by the Electronics Division. This antenna is also sold to external customers for \($35\) per unit. Variable costs for the antenna are \($17\) per unit and fixed cost is \($7\) per unit. Hawking executives would like
Refer to the information presented in E11-12. Assume that the Fabrication Division has enough excess capacity to accommodate the request.Required:1. Explain whether the Fabrication Division should accept the \($25\) transfer price proposed by management.2. Calculate the effect on Fabrication
Refer to the information presented in E11-12, but assume that the Electronics Department requires the antenna to be made from a specific blend of metals. This would raise the variable cost per unit to \($27.\)Required:1. Explain whether the Fabrication Department should accept the \($25\) transfer
Coleman Company is a lumber company that also manufactures custom cabinetry. It is made up of two divisions, Lumber and Cabinetry. The Lumber Division is responsible for harvesting and pre¬ paring lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the
Womack Company is made up of two divisions, A and B. Division A produces a widget that Division B uses in the production of its product. Variable cost per widget is \($0.50;\) full cost is \($0.70.\) Comparable widgets sell on the open market for \($1.10\) each. Division A can produce up to 2
CandleGlow, Inc., manufactures scented pillar candles. Its standard cost information for the month of February follows:CandleGlow has the following actual results for the month of February:Required:Calculate the following for CandleGlow:1. Direct materials price, quantity, and total spending
Refer to the information for CandleGlow in PB 10-1.Required:Compute the following for CandleGlow:1. Fixed overhead spending variance.2. Fixed overhead volume variance.3. Total over- or underapplied fixed manufacturing overhead.Data from PB10-1CandleGlow, Inc., manufactures scented pillar candles.
Refer to the information in PB10-1 for CandleGlow.Required:Prepare the journal entry to record the following for CandleGlow:1. Direct materials costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.2. Direct labor and related
Refer to the information in PB10-1 for CandleGlow.Required:Prepare the journal entry to record CandleGlow’s fixed manufacturing overhead costs and related variances for last year.Data from PB10-1CandleGlow, Inc., manufactures scented pillar candles. Its standard cost information for the month of
Gotta Cotta, Inc., manufactures basic terra cotta planters. Its standard cost information for the past year follows:Gotta Cotta has the following actual results for the past year:Required:Calculate the following for Gotta Cotta:1. Direct materials price, quantity, and total spending variances.2.
Refer to the information for Gotta Cotta in PB 10-5.Required:Compute the following for Gotta Cotta:1. Fixed overhead spending variance 2. Fixed overhead volume variance.3. Over or underapplied fixed manufacturing overhead.Data from PB10-5Gotta Cotta, Inc., manufactures basic terra cotta planters.
Refer to the information in PB10-5 for Gotta Cotta.Required:Prepare the journal entry to record the following for Gotta Cotta:1. Direct materials costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.2. Direct labor and
Refer to the information in PB10-5 for Gotta Cotta.Required:Prepare the journal entry to record Gotta Cotta’s fixed manufacturing overhead costs and related variances for last year.Data from PB10-5Gotta Cotta, Inc., manufactures basic terra cotta planters. Its standard cost information for the
Catch a Wave Company manufactures surfboards. Its standard cost information follows.Catch a Wave has the following actual results for the month of June:Required:Calculate the following variances for Catch a Wave.1. Variable overhead rate variance.2. Variable overhead efficiency variance.3. Total
Refer to the information in PB10-9 for Catch a Wave.Required:Prepare journal entries to record the following for Catch a Wave:1. Variable overhead costs and related variances.2. Fixed overhead costs and related variances.Data from B10-9Catch a Wave Company manufactures surfboards. Its standard cost
The variances calculated in this chapter are not appropriate for every organization. Industries and/or individual companies must often develop and use variances that make the most sense for evaluating performance for their specific circumstances. The construction industry is one example.Required:1.
Briefly explain the difference between segment margin and bottom-line profit margin.
Briefly explain a company’s hurdle rate including how it is set and how it is used in evaluating investment center performance.
What does the term excess capacity mean? How does excess capacity affect a transfer price?
Drink Well, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:Drink Well had the following actual results last year:Required:Calculate the following for Drink Well:1. Direct materials price, quantity, and total spending variances.2. Direct labor
Refer to the information for Drink Well in PA10-1.Required:Compute the following for Drink Well:1. Fixed overhead spending variance.2. Fixed overhead volume variance.3. Total over- or underapplied fixed manufacturing overhead.Data from PA10-1Drink Well, Inc., manufactures custom-ordered
Refer to the information in PA10-1 for Drink Well.Required:Prepare the journal entry to record the following for Drink Well:1. Direct materials costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.2. Direct labor and related
Refer to the information in PA10-1 for Drink Well.Required:Prepare the journal entry to record Drink Well’s fixed manufacturing overhead costs and related variances for last year.Data from PA10-1Drink Well, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information
Darting Around Company manufactures dartboards. Its standard cost information follows:Darting Around has the following actual results for the month of September:Required:Calculate the following for Darting Around:1. Direct materials price, quantity, and total spending variances.2. Direct labor
Refer to the information in PA10-5.Required:Calculate the following for Darting Around:1. Fixed overhead spending variance.2. Fixed overhead volume variance.3. Total over- or underapplied fixed manufacturing overhead.Data from PA10-5Darting Around Company manufactures dartboards. Its standard cost
Refer to the information in PA 10-5 for Darting Around Company.Required:Prepare the journal entry to record the following for Darting Around:1. Direct materials costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.2. Direct
Refer to the information in PA10-5 for Darting Around.Required:Prepare the journal entry to record Darting Around’s fixed manufacturing overhead costs and related variances for last year.Data from PA10-5Darting Around Company manufactures dartboards. Its standard cost information follows:Darting
Catch a Wave Company manufactures surfboards. Its standard cost information follows:Catch a Wave has the following actual results for the month of June:Required:Calculate the following for Catch a Wave:1. Direct materials price, quantity, and total spending variances.2. Direct labor rate,
Refer to the information in PA10-9 for Catch a Wave.Required:Prepare the journal entries to record the following for Catch a Wave:1. Direct materials costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.2. Direct labor and
In 1995, BusinessWeek ran a cover story entitled “Blind Ambition: How the Pursuit of Results Got Out of Hand at Bausch and Lomb.” The two-part article details a number of games Bausch and Lomb (B&L) managers played to artificially achieve short-term results at the expense of long¬ term
Budgets can be used in almost any type of organization including large corporations, small businesses, government organizations, universities, churches, and student clubs.Required:Choose any local organization and interview two people who are involved in its budget process. Try to choose one person
Numerous personal financial planning or budgeting tools are available on the Internet, many of them free. Choose at least two different online budgeting sites and input information for a typical person of your age. (Note: You may either create a fictitious profile or use your own personal
What are the two variable overhead variances? Who is most likely responsible for each of these?
What is the fixed overhead spending variance? Who is most likely responsible for it?
In distinguishing between budgets and standards, which of the following is true?a. The terms mean exactly the same thing.b. Standards are used to develop budgets.c. Budgets are used to develop standards.d. Budgets and standards are unrelated.
Variances are always noted as favorable or unfavorable. What do these terms indicate?a. Whether actual results are more or less than standard or budgeted amounts.b. Whether the manager in a particular department is doing a good job.c. Whether a company is performing as well as its competitors.d.
What type of budget is an integrated set of operating and financial budgets that reflects managements’ expectations for a given sales level, and what type shows how budgeted costs and revenues will change across different levels of sales volume?a. Flexible budget, master budget.b. Standard
When evaluating performance in a standard cost system, actual results are compared toa. The flexible budget.b. The master budget.c. The variances.d. Last year’s actual results.
Spending variances may be separated intoa. Price and quantity variances.b. Price and volume variances.c. Volume and quantity variances.d. Quantity and quality variances.
Temecula Company has calculated its direct materials price variance to be \($1,000\) favorable and its direct materials quantity variance to be \($3,000\) unfavorable. Which of the following could explain both of these variances?a. The production manager has recently hired more skilled laborers.b.
In producing its product, Ranger Company used 1,500 hours of direct labor at an actual cost of \($15\) per hour. The standard for Ranger’s production level is 1,400 hours at \($14\) per hour. What is Ranger’s direct labor rate variance?a. \($1,500\) favorable.b. \($1,400\) favorable.c.
Refer to the preceding question about Ranger Company. In producing its product, Ranger Company used 1,500 pounds of direct materials at an actual cost of \($1.50\) per pound. The standard for Ranger’s production level was 1,400 pounds at \($1.40\) per pound. What is Ranger’s direct materials
An unfavorable fixed overhead volume or capacity variance indicates that a companya. Manufactured fewer units than it expected.b. Manufactured more units than it expected.c. Underestimated its total fixed overhead cost.d. Overestimated its total fixed overhead cost.
Phantom Corp. has calculated its direct materials price and quantity variances to be \($500\) favorable and \($800\) unfavorable, respectively. Phantom’s production manager believes that these variances indicate that the purchasing department is doing a good job but production is doing a poor
Randolph, Inc., has determined a standard direct materials cost per unit of \($6\) (2 feet × \($3\) per foot). Last month, Randolph purchased and used 4,200 feet of direct materials for which it paid \($12,180.\) The company produced and sold 2,000 units during the month. Calculate the direct
Clayton Corp. has determined a standard labor cost per unit of \($12\) (1 hour × \($12\) per hour). Last month, Clayton incurred 1,900 direct labor hours for which it paid \($23,940\). The company also produced and sold 2,000 units during the month. Calculate the direct labor rate, efficiency, and
Montour Company has determined a standard variable overhead rate of \($1.10\) per direct labor hour and expects 1 labor hour per unit produced. Last month, Montour incurred 1,900 actual direct labor hours in the production of 2,000 units. The company has also determined that its actual variable
LaPaz Company’s standard fixed overhead rate is based on budgeted fixed manufacturing overhead of \($9,000\) and budgeted production of 30,000 units. Actual results for the month of October reveal that LaPaz produced 28,000 units and spent \($9,200\) on fixed manufacturing overhead costs.
Refer to M10-9 for LaPaz Company. Calculate LaPaz’s fixed overhead rate and the fixed overhead volume variance.Data from M10-9LaPaz Company’s standard fixed overhead rate is based on budgeted fixed manufacturing overhead of \($9,000\) and budgeted production of 30,000 units. Actual results for
During May, Willett Corp. purchased direct materials for 4,250 units at a total cost of \($61,625\). Willett’s standard direct materials cost is \($14\) per unit. Prepare the journal entry to record this transaction.
Bowman Company reported the following information for the month of November. The standard cost of labor for the month was \($38,000\), hut actual wages paid were \($40,000\). Bowman has calculated its direct labor rate and efficiency variances to be \($2,500\) unfavorable and \($500\) favorable,
Three Pigs Company manufactures cast-iron barbeque cookware. During a recent windstorm, it lost some of its cost accounting records. Three Pigs has managed to reconstruct portions of its standard cost system database but is still missing a few pieces of information.Required:Use the information in
Follett Company makes handwoven blankets. The company’s master budget appears in the first column of the table.Required:Complete the table by preparing Follett’s flexible budget for 4,000, 6,000, and 7,000 units. Master Budget Flexible Budget (5,000 units) (4,000 units) Flexible Budget (6,000
Cody’s Collar Company makes custom leather pet collars. The company expects each collar to require 1.5 feet of leather and predicts leather will cost \($2.25\) per foot. Suppose Cody’s made 60 collars during February. For these 60 collars, the company actually averaged 1.6 feet of leather per
Rub-a-Dub Dogs is a local pet grooming shop owned by Max Aslett. Max has prepared the following standard cost card for each dog bath given:During the month of July, Max’s employees gave 345 baths. The actual results were 725 ounces of shampoo used (total cost \($87),\) 6,500 gallons of water used
Refer to the information presented in E10-4 regarding Rub-a-Dub Dogs.Required:Prepare journal entries to record Rub-a-Dub’s July direct materials and labor transactions.Data from E10-4Rub-a-Dub Dogs is a local pet grooming shop owned by Max Aslett. Max has prepared the following standard cost
Lucky Charm Company makes handcrafted silver charms that attach to jewelry such as a necklace or bracelet. Each charm is adorned with two crystals of various colors. Standard costs follow:During the month of January, Lucky Charm made 1,500 charms. The company used 350 ounces of silver (total cost
Refer to the information in E10-6 regarding Lucky Charm Company.Required:Prepare journal entries to record Lucky Charm’s January direct materials and labor transactions.Data from E10-6Lucky Charm Company makes handcrafted silver charms that attach to jewelry such as a necklace or bracelet. Each
Easy Roller, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:Easy Roller had the following actual results for the past year.Required:Calculate Easy Roller’s direct materials price and quantity variances. Direct costs Plastic
Refer to the information presented in E10-8 for Easy Roller.Required:Calculate Easy Roller’s direct labor rate and efficiency variances.Data from E10-8Easy Roller, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:Easy Roller
Refer to the information presented in E10-8 for Easy Roller.Required:Calculate Easy Roller’s variable overhead rate and efficiency variances and its over- or underapplied variable overhead.Data from E10-8Easy Roller, Inc., manufactures plastic mats to use with rolling office chairs. Its standard
Refer to the information presented in E10-8 for Easy Roller.Required:Calculate Easy Roller’s fixed overhead spending and volume variances and its over or underapplied fixed overhead.Data from E10-8Easy Roller, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost
Refer to the information presented in E10-8 for Easy Roller.Required:Prepare the journal entry to record the following for Easy Roller:1. Direct materials costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.2. Direct labor
Refer to the information presented in E10-8 for Easy Roller.Required:Prepare the journal entry to record Easy Roller’s fixed manufacturing overhead transactions assuming that overhead is applied using a fixed overhead rate based on budget production.Data from E10-8Easy Roller, Inc., manufactures
Slim Shady Company (SSC) manufactures lampshades. It applies variable overhead on the basis of direct labor hours. Information from SSC’s standard cost card follows:During August, SSC had the following actual resultsRequired:Compute SSC’s variable overhead rate variance, variable overhead
Refer to the information in E10-14 regarding Slim Shady Company.Required:Prepare the journal entry to record SSC’s variable manufacturing overhead transactions for August.Data from E10-14Slim Shady Company (SSC) manufactures lampshades. It applies variable overhead on the basis of direct labor
Slim Shady Company (SSC) in E10-14 calculates a fixed overhead rate based on budgeted fixed overhead of $30,000 and budgeted production of 24,000 units. Actual results were as follows:Required:Calculate the following for SSC:1. Fixed overhead rate based on budgeted production.2. Fixed overhead
Refer to the information in E10-16 regarding Slim Shady Company.Required:Prepare the journal entry to record SSC’s fixed manufacturing overhead transactions for August assuming that overhead is applied using a fixed overhead rate based on budget production.Data from 10-16Slim Shady Company (SSC)
Crystal Ball Company (CBC) bases its fixed overhead rate on practical capacity of 30,000 units per year. Budgeted and actual results for the most recent year follow:Required:Calculate the following for CBC:1. Fixed overhead rate based on practical capacity.2. Fixed overhead spending variance.3.
ClearView Company manufactures clear plastic CD cases. It applies variable overhead based on the number of machine hours used. Information regarding ClearView’s overhead for the month of December follows:During December, ClearView had the following actual results.Required:Compute ClearView’s
Refer to the information in E10-19 regarding ClearView Company.Required:Prepare the journal entry to record ClearView’s variable manufacturing overhead transactions for December.Data from E10-19ClearView Company manufactures clear plastic CD cases. It applies variable overhead based on the number
ClearView Company calculates a fixed overhead rate based on budgeted fixed overhead of \($180,000\) and budgeted production of 600,000 units. Actual results were as follows:Required:Calculate the following for ClearView:1. Fixed overhead rate based on budgeted production.2. Fixed overhead spending
Refer to the information presented in E10-21 regarding ClearView Company.Required:Prepare the journal entry to record ClearView’s fixed overhead transactions for December.Data from E10-21ClearView Company calculates a fixed overhead rate based on budgeted fixed overhead of \($180,000\) and
Crystal Ball Company (CBC) bases its fixed overhead rate on practical capacity of 80,000 units per year. Budgeted and actual results for the most recent year follow:Required:Calculate the following for CBC:1. Fixed overhead rate based on practical capacity.2. Fixed overhead spending variance.3.
Bamboo You, Inc. This company manufactures bamboo picture frames that sell for \($20\) each. Each frame requires 4 linear feet of bamboo, which costs \($1.50\) per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages \($10.00\) per hour.Bamboo You has the following
Refer to the information in PA9-1.Required:Prepare Bamboo You’s budgeted income statement for quarter 2.Data from PA9-1Bamboo You, Inc. This company manufactures bamboo picture frames that sell for \($20\) each. Each frame requires 4 linear feet of bamboo, which costs \($1.50\) per foot. Each
Refer to the information in PA9-1. Bamboo You, Inc., had \($9,800\) cash on hand at April 1. Of its sales, 70 percent is in cash. Of the credit sales, 40 percent is collected during the month of the sale, and 60 percent is collected during the month following the sale.Of direct material purchases,
Black & Decker (B&D) manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following fictitious information about this product line to complete the problem requirements. Each handisaw sells for \($40\). B&D expects the
Refer to the information presented in PA9-4 regarding Black & Decker’s handisaw.Required:Prepare the following for the first quarter:1. Cost of goods sold budget.2. Selling and administrative expense budget.3. Budgeted income statement for the handisaw product.Data from PA9-4Black &
Flying High Company manufactures kites that sell for \($15.00\) each. Each kite requires 2 yards of lightweight canvas, which costs \($0.50\) per yard. Each kite takes approximately 45 minutes to build, and the labor rate averages \($8.00\) per hour.Flying High has the following inventory
Refer to the information in PB9-1.Required:Prepare Flying High’s budgeted income statement for quarter 2.Data from PB9-1Flying High Company manufactures kites that sell for \($15.00\) each. Each kite requires 2 yards of lightweight canvas, which costs \($0.50\) per yard. Each kite takes
Refer to the information in PB9-1. Flying High Company had \($12,200\) cash on hand at April 1. Of its sales, 80 percent is cash. Of the credit sales, 60 percent is collected during the month of the sale and 40 percent is collected during the month following the sale.Of raw material purchases, 70
Black & Decker (B&D) manufactures a wide variety of tools and accessories. One of its more popular craft-related items is the cord free glue gun. Use the following fictitious information about this product to complete the problem requirements. Each glue gun sells for \($25\). B&D
Refer to the information presented in PB9-4 regarding Black & Decker’s glue gun product.Required:Prepare the following for the first quarter:1. Cost of goods sold budget.2. Selling and administrative expense budget.3. Budgeted income statement for the glue gun product.Data from PB9-4Black
Budgets help companiesa. Meet short-term objectives.b. Meet long-term objectives.c. Both a and b.d. None of the above.
Which phases of the management process are impacted by budgeting?a. Planning.c. Control.b. Directing/leading.d. All of the above.
Which of the following statements is true?a. GAAP requires all companies to prepare budgets.b. Only newly formed companies need budgets.c. Most service firms prepare production budgets.d. Most companies would benefit from budgeting.
Shasta Company plans to double its profits in five years. This is an example of aa. Long-term objective.b. Short-term objective.c. Tactic.d. Sales forecast.
Which of the following is not considered a direct benefit of budgeting?a. Better communication.b. Motivating employees.c. Developing new product lines.d. Forcing managers to think ahead.
Which of the following budgets would be prepared earliest in a company’s budgeting process?a. Budgeted income statement.b. Budgeted balance sheet.c. Raw materials purchases budget.d. Production budget.
Which of the following budgets is affected by the sales budget?a. Direct labor budget.b. Cash receipts and disbursements budget.c. Selling and administrative budget.d. All of the above.
ABC Company expects to sell 100,000 units of its primary product in January. Expected beginning and ending finished goods inventory for January are 20,000 and 45,000 units, respectively. How many units should ABC produce?a. 100,000.b. 125,000.c. 75,000.d. 35,000.
Which of the following is not considered an operating budget?a. Cash budget.b. Budgeted income statement.c. Selling and administrative expense budget.d. Raw materials purchases budget.
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