Questions and Answers of Management And Cost Accounting 11th

Ironwood Charities is considering an investment in one of its buildings that is expected to return the following cash flows: This schedule includes all cash inflows from the project, which will
A common method of measuring performance in many college and university courses is to combine objective measures (test scores, for example) with subjective measures (class participation measures, for
If the net present value of a project is positive, we should invest in it. If it is negative, we should not. Do you agree?
Mitchell Company is considering an investment in a new machine. Managers at the company are uncertain about the economic life of the machine because of the speed of innovation in the technology. The
St. James Cleaners is considering investing in a new machine. The machine costs $20,000 and has an economic life of five years. The machine will generate cash flows of $5,000 (cash revenues less cash
Hall, Inc. manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons. The metal used in Standard
Pierson Landscape Architects (PLA) develops and sells plans for various types of gardens and outdoor spaces. Customers buy the plans and then install the garden, the water feature, or other
Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized fitting that is not used in any other HMP product. The management of HMP has
Rathbone Industries produces and sells an instrument used in hospital monitoring systems. The instrument uses a specialized sensor that Rathbone currently purchases from Norfolk Electronix. Norfolk
Wing Sporting Goods (WSG) is a small company that makes two models of a metal baseball bat— Sport and Collegiate. Both models are produced on a single machine. The price and costs of the two models
Miles Audio produces and sells car audio systems. It specializes in receivers and currently offers two models. The Growler is a high quality but affordable unit that the company produces for sale in
Lamothe Kitchen and Bath makes products for the home, which it sells through major retailers and remodeling (do-it-yourself, or DIY) outlets. One product that has had varying success is a ceiling fan
Mather, Inc. makes and sells enclosures for external hard drives. Mather management believes that a new model of enclosure made out of a hard plastic would sell well at a price of $17.00. Labor costs
Riverdale Partners wants to introduce a new line of fragrances. Market research indicates that a potential fragrance would sell well in the market priced at $268.80 each. Riverdale requires an
Schweizer Products produces smart thermostats for home heating, ventilation, and air-conditioning (HVAC) systems and markets them to vendors who sell them under their own label. The cost of one of
Dwight Furniture makes desks specially designed for small spaces, such as studio apartments and extended-stay hotels. Each desk sells for $110 (without chair). The cost of each desk follows: The
Skywest Airlines is a regional airline operating in the Western U.S. Several large airlines (Alaska Airlines, for example) outsource some lower-volume routes to Skywest. Skywest flies planes painted
Consider the Business Application item “Outsourcing and the Effect of Corporate Culture.” Would the impact on company culture show up in a differential cost analysis? If so, how? If not, should
Barlum Motors produces and sells a small engine used in lawn tractors. Each engine is priced at $850 and the variable cost for each engine is $725. The annual fixed cost is $1,687,500. Barlum Motors
What are life-cycle product costing and pricing?
Franklin Prepared Foods (FPF) sells three varieties of microwaveable meals with the following prices and costs: The sales mix (in cases) is 50 percent Meat, 35 percent Fish, and 15 percent
Philadelphia Sunglasses sells two models of glasses at its single retail location—The Shore and The Poconos. The Shore model sells for $180 a pair and The Poconos model sells for $400 a pair. The
Muncey Fishing Charters consists of one boat with a capacity of 15 passengers, not including the crew. Muncey offers only one charter package: a one-half day fishing trip off the coast. Because of
Southfield Stylers, with three chairs, offers a no-frills hair style service at a single price. The price of $25 and the variable cost of $5 per customer remain constant regardless of volume. The
Littlefield Partners produce a part sold to agricultural equipment suppliers. For the last year (Year 1), the price, costs, and volume of the part were as follows:Managers at Littlefield believe that
Lappin Community Transit (LCT) is a not-for-profit mostly volunteer organization that provides transportation to seniors. As a not-for-profit, it refers to an excess of revenues over costs as a
Preston Products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics.Preston Products is subject to an income tax rate of
Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Cruse Cleaning is subject to an income tax rate of 22
The following balances are from the accounts of Santa Maria Parts: Direct materials purchased during the quarter amount to $480,000, and the cost of goods sold for the quarter was
The cost accountant for Sunset Fashions has compiled the following information for last quarter’s operations: RequiredPrepare an income statement with a supporting cost of goods sold
Sheffield Advisors offers financial counseling services to self-employed business owners. Sheffield’s operating profits average 22 percent of revenues and its marketing and administrative costs
Tuscola Counseling Services is a small firm that advises job seekers on both employment and education alternatives. Robert Gibson, the founder and president, has collected the following information
The following balances appear on the accounts of Greusel Fabrication:Direct materials used during the month amount to $525,000 and the cost of goods sold for the month was
Consider the Business Application “Components of Cost of Goods Sold for a Retailer.” During the COVID-19 pandemic, Target continued operations at its retail stores, after taking steps to ensure
Why is a value income statement useful to managers?
Does a retailer typically have a Work-in-Process account? Explain.
Before Miller Cereals can introduce the new cereal, the board of directors has to give their approval. The marketing manager really wants to introduce the new product and believes (honestly) that it
Forman’s Services is a small accounting firm that offers payroll and bookkeeping services to small businesses and individuals. A local merchant has approached Will Forman, the owner, about taking
Kendall & Floyd provides landscaping services in Eastvale. Sara Kendall, the owner, is concerned about the recent losses the company has incurred and is considering dropping its yard cleanup
Haverhill Electronics (HE) has offered to supply the county government with one model of its security screening device at “cost plus 20 percent.” HE operates a manufacturing plant that can
Refer to the opening vignette of Adam Mercer and The AM Bakery. Adam has hired you to help him make the decisions he needs to make. RequiredAnswer the four questions in the critical thinking
One of the major activities of the City Art Museum (CAM) is a Neighborhood Outreach Program, which was developed both as a public service and to market the museum and its other programs. One of the
To a manager making a decision, which is likely more important: gross margin or contribution margin? Why?
Swain Athletic Gear (SAG) operates six retail outlets in a large Midwest city. One is in center city on Cornwall Street and the others are scattered around the perimeter of the city. Management at
Lessing Toy and Hobby (LTH) is a chain of hobby and craft stores in the Southeast. LTH operates multiple stores and is organized into two divisions: Northern and Southern. Individual stores are
John Deere Company manufactures farm equipment. Managers at assembly plants must make many decisions, and for this, they use cost accounting information.RequiredFor each of the following managers,
Five Below is a discount retailer. RequiredFor each of the following decisions, indicate whether the decision maker would be more likely to get information from the financial (F) or cost (C)
Marquette Company manufactures and sells kits that homeowners can buy and assemble into office and home furniture. Marquette and one of its customers, Goulburn Furnishings, have a dispute about
Many companies, especially in the travel industry (airlines, hotels, and so on), have socalled loyalty programs offering members benefits that depend on the frequency of purchases, miles traveled,
Goodyear Tire and Rubber Company manufactures a well-known automotive tire. They are produced in Goodyear plants and sold to consumers in many outlets including auto parts retail chains such as Pep
How does cost accounting help determine an organization’s strategy? What problems might arise from a faulty cost accounting system?
As the owner of a wholesale firm that only sells to retailers, should you be interested in the efficiency of your customers (the retailers)? Why?
Explain how cost accounting supports value creation in the organization.
What are the four questions of the critical thinking framework?
Who are the customers of cost accounting?
Salvay Company is a small manufacturer that produces and sells one product for use in medical instruments. Demand is erratic and can vary widely from year to year. The financial managers at Salvay
Distinguish among the value chain, the supply chain, and the distribution chain.
A technology company called Luxe allows customers, through its app, to have valets who will meet the customer, take their car, and park it. Curtis Lee, the founder, was quoted as saying about a
Consider the Business Application “Operating Leverage as a Framework to Describe a Business Model.” From the description of the company in the text (and perhaps based on your experience), would
Bewick Company and Stout, Inc. both earn annual operating profits of $40 million on revenues of $150 million. Bewick Company has an operating leverage of 2.4 and Stout, Inc. has an operating leverage
The manager of Gratiot Flooring estimates operating costs for the year will include $540,000 in fixed costs.Requireda. Find the break-even point in sales dollars with a contribution margin ratio of
Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics.Requireda. What number must Grove Audio sell annually to break
Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics:Requireda. How many cases must Charlevoix sell annually to break even?b. How many
Grandville Fittings earns a quarterly operating profit of $1,500,000 and has an operating leverage of 1.8. Wheeler Works, Inc. earns a quarterly operating profit of $660,000 and has an operating
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the
Northampton City Tours (NCT) offers personalized historical and architectural tours in a large midwestern city and the local suburbs. NCT charges $350 per trip to or from the airport. The variable
Stahelin Valves produces a single component, a valve. The valve sells for $23 per unit. Fixed costs are $1,585,000 annually. Production and sales of 405,000 units annually result in profit before
Braile Gear Works sells a single gear for a price of $55 per unit. The variable costs are $23 per gear and annual fixed costs are $448,000.Requireda. What is the break-even level of annual sales for
Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost, and expected sales volume data for the two models are as follows:RequiredThe total fixed costs for the company are
Annchester Car Service offers limousine service to the local airport. The cost of a trip (one-way) is $95 and the variable costs of a trip are $42, which covers fuel, variable car maintenance, labor,
Rochester Street Taco Shop (RSTS) sells a variety of tacos to go all at a price of $4.50 each. The variable cost of an RSTS taco averages $2.40. RSTS incurs monthly fixed costs of $7,350. RSTS is
Kappa Co. produces Omega, an animal feed made by mixing and heating three ingredients: Alpha, Beta and Gamma. The company uses a standard costing system to monitor its costs.The standard material
Shoe Co., a shoe manufacturer, has developed a new product called ‘Smart Shoe’ for children, which has a built-in tracking device. The shoes are expected to have a life cycle of two years, at
Which of the following BEST describes target costing?(a) Setting a selling price for the company to aim for in the long run(b) Setting a cost for the use in the calculation of variances(c) Setting a
RT plc sells three products.Product R has a contribution to sales ratio of 30%.Product S has a contribution to sales ratio of 20%.Product T has a contribution to sales ratio of 25%.Monthly fixed
CD manufactures and sells a number of products. All of its products have a life cycle of less than one year. CD uses a four-stage life cycle model (Introduction, Growth, Maturity and Decline).CD has
Kinn Co produces a single product. Each finished product requires 3kg of raw materials. The raw material costs $6 per kg. You are given the following information:1. Kinn Co prepares budgets on a
A company’s managers are considering investing in a project that has an expected life of five years. The project is expected to generate a positive net present value of $240,000 when cash flows are
A company has recorded the following variances for a period:Sales volume variance .................................. $10,000 adverseSales price variance ...................................... $5,000
Tabula Ltd manufactures a range of writing desks. One type, the Office Standard, has a standard cost of £95 made up as follows:The standard selling price of the desk is £120. The monthly budget
A company’s operating costs are 60 per cent variable and 40 per cent fixed.Which of the following variances’ values would change if the company switched from standard marginal costing to standard
Product GX consists of a mix of three materials J, K and L. The standards material cost of a unit of GX is as follows:During March, 3,000 units of GX were produced and actual usage was:What was the
A company uses marginal costing. The following variances occurred in the last period when the actual net profit was $40,000.Materials ................................................... $900
PlasBas Co. uses recycled plastic to manufacture shopping baskets for local retailers. The standard price of the recycle plastic is $0.50 per kg and standard usage of recycled plastic is 0.2kg for
Glove Co. makes high quality, handmade gloves which it sells for an average of $180 per pair. The standard cost of labour for each pair is $42 and the standard labour time for each pair is three
The School Uniform Company (SU Co.) manufactures school uniforms. One of its largest contracts is with the Girls’ Private School Trust, which has 35 schools across the country, all with the same
‘In the control of divisional operations within a large company, conflicts often arise between the aims of the organization as a whole and the aspirations of the individual divisions.’What forms
Divisionalized structures are normal in large firms, and occur even when centralized structures would be feasible.Required:(a) Explain and discuss the arguments for divisionalized structures in large
The director of Donny Co. is reviewing the performance of its division.The following information is available for the year ending 31 March 20X9 for its South division.South division operates in the
A company has capital employed of $200,000.It has a cost of capital of 12% per cent per year. Its residual income is $36,000.What is the company’s return on investment?
At the end of 20X1, an investment centre has net assets of $1m and annual operating profits of $190,000. However, the bookkeeper forgot to account for the following:A machine with a net book value of
Sports Co. is a large manufacturing company specializing in the manufacture of a wide range of sports clothing and equipment. The company has two divisions: Clothing (Division C) and Equipment
Jenson, Lewis and Webb (JLW) manufactures tubes of acrylic paint for sale to artists and craft shops in Kayland and Seeland. JLW has two divisions, Domestic division and Export division, both based
A manufacturing company, Man Co., has two divisions: Division L and Division M. Both divisions make a single standardized product. Division L makes component L, which is supplied to both Division M
The One Stop Car Co. (OSC Co.) offers a range of services for car owners at its 55 service centres across the country. The car maintenance business is extremely competitive in all regions across the
Which of the following are suitable measures of performance at strategic level?1 Return on investment2 Market share3 Number of customer complaints(a) 2 and 3(b) 1 and 3(c) 2 only(d) 1 and 2
A government is trying to assess schools by using a range of financial and non-financial factors. One of the chosen methods is the percentage of students passing five exams or more.Which of the three
Victoria-Yeeland Logistics (Victoria) is a logistics support business, which operates a fleet of lorries to deliver packages of goods on behalf of its customers within the country of Yeeland.
A manufacturing company benchmarks the performance of its accounts receivable department with that of a leading credit card company.Which type of benchmarking is the company using?(a) Internal
Helot Co. develops and sells computer games. It is well known for launching innovative and interactive role-playing games and its new releases are always eagerly anticipated by the gaming community.

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