Vodafone AL 12:58 PM 19% Done Assignment 1_Chapter 1.docx Solve: 1) Snuggle Toys, Inc. had the following summarized results for the month ending July 31: Actual Budget Revenues 560,000 $52.000 $3,600 45,600 Operating profits 6,400 S 6,400 Costs As the cost accountant, which single statement related to the above financial results is most appropriate in the report to management? A) The departmental manager is performing to expectations because budgeted profits equals actual profits. B) Revenues are above budget and a bonus based on this increase should be considered. C) Costs as a percentage of revenues are above budget and a further scrutiny of the results might be appropriate. D) Costs are 17.5% above budget and the department manager's position should be critically evaluated by senior management. 2) Geno's Body Shop had sales revenues and operating costs in 2020 of S650,000 and $525.000, respectively. In 2021, Geno plans to expand the services it provides to customers to include detailing services. Revenues are expected to increase by $85,000 and operating costs by $50,000 as a result of this expansion Assuming that there are no changes to the existing body shop business, operating profits would be expected to increase during 2021 by: A) $125,000 B) S85,000. C) S160,000. D) $35,000. 3) San Juan, Inc. is considering two alternatives: A and B. The costs associated with the alternatives are listed below: Altentative Alternative Material costs $ 35,000 57.000 Processing costs 36,000 57.000 Building costs 12.000 28,000 Equipment rental 19.000 19,000 If only the differential costs of the two decisions are considered, the total differential costs of Alternative B is: 19% VodafoneAL 12:58 PM Done Assignment 1_Chapter 1.docx 3) San Juan, Inc. is considering two alternatives: A and B. The costs associated with the alternatives are listed below: Alternative A Almative Material costs $ 35,000 57.000 Processing costs 57.000 Building costs 12.000 20.000 Equipment rental 19.000 19.000 16.000 If only the differential costs of the two decisions are considered. the total differential costs of Alternative B is: A) $161,000. B) S131.500 C) $59,000. D) $102,000 4) Travon's Limo Service provides transportation services in and around Bentonville. Its profits have been declining, and management is planning to add a package delivery service that is expected to increase revenue by $275,000 per year. The total cost to lease additional delivery vehicles from the local dealer is $60,000 per year. The present manager will continue to supervise all services. However, labor and utilities costs will increase by 40% and rent and other costs will increase by 15% when the package delivery service is added. Trance Limo Serve Amal Income Statement Before Expan 5960,000 Sales Reve Costu Vehicles 5400,000 290,000 50,000 100,000 60,000 120,000 Ra Other Costs Manager's Salary Total Costs Opening Profit Low) 1,020,000 5660.0001 a. Prepare a report of the differential costs and revenues if the delivery service is added. b. Should management start up the delivery service? Explain your answer. 5) Morris Inc. is a management consulting firm that specializes in management training programs. Tackle Manufacturing Inc. has approached Morris to contract for management training for a one-year period. Last year's income statement for Morris is as follows: Sales Revenue $360,000 VodafoneAL 12:58 PM 19% Done Assignment 1_Chapter 1.docx 5) Morris Inc. is a management consulting firm that specializes in management training programs. Tackle Manufacturing Inc. has approached Morris to contract for management training for a one-year period. Last year's income statement for Morris is as follows: Sales Rece $360,000 Costs Labor 5120,000 Equipment Lease 12.000 Rent 24,000 Utilities 2,400 Supplies 23.000 Other Costs Manager's Salary 0.000 Total Costs 22.400 Operating Profit Loss) S 77.600 To satisfy the Tackle contract, another part-time trainer will need to be hired at $42,000. Supplies will increase by 12% and other costs will increase by 15%. In addition, new equipment will need to be leased at a cost of $2,500. a. What are the differential costs that would be incurred if the Tackle contract is signed? b. If Tackle will pay $55,000 for one year, should Morris accept the contract? Explain your answer. 6) Old-Fashion Flavors is a local ice cream shop. The company currently is showing an operating loss, as evidenced by the income statement below: Sales $75,000 Costs Food supplies 20,000 Labor 16,000 4.000 Rent 12.000 Other 4.000 Manager's salary 25.000 Total Costs 81,000 Operating profits Losses $16.000) The President of the company is considering adding sandwiches to the menu. Sales will be expected to increase by $60,000. The cost of sandwich supplies would be $30,000. Labor costs would increase 40% and other costs 10%. The current manager will continue to manage the operation. a. Prepare a quantitative analysis of the decision to add andwichan to 19% Vodafone AL 12:58 PM Done Assignment 1_Chapter 1.docx a. Prepare a quantitative analysis of the decision to add sandwiches to the menu. b. What qualitative considerations should the company consider in this decision? 7) Megan Kris, the Vice-President for Human Resources in Learning, Inc. was concerned about a recent memo she had recently received from the CEO's office regarding the possibility of outsourcing the payroll function to Salary Experts, a growing provider of a variety of human resource services. She was shocked that the CEO's office had discussed this matter with the Board of Directors but failed to consult her. Megan was preparing for a meeting with the CEO. In reading the memo and its attachments, Megan observed the following comparison of costs in a report prepared by the controller's office: Payroll department expenses Salaries of employees $210,000 Share of utilities 75.000 Share of building rent 39.350 Manager's salary 49.000 Computers and supplies 26.000 Other department expenses Total al expenses S439.350 20.000 Megan also noted that Salary Experts quoted a fixed fee of $125,000 and variable processing costs of $7.50 per employee transaction. She did not believe that the company will actually save money by outsourcing the payroll function. For one, she did not think that the company will actually save all of the above-mentioned amounts. She knew that the payroll department manager could not be removed from the company because he had to oversee the payroll function and serve as a liaison with the outside company. However, all other employees in the department would likely not be required. a. Assume Learning Inc. has 14,000 employees on its payroll. Can the company save money by outsourcing the payroll function? b. What are the pros and cons of outsourcing the payroll function? 8) Carley Inc. incurs many types of costs in its operations. Place the number of the appropriate stage in the value chain in Column 2 in the blank next to cach cost in column 1