Questions and Answers of Introduction To Accounting

Is an R square of 0.9 good? Why or why not?
Explain how to use the output of linear regression analysis to define the cost (or revenue) line.
Explain how to calculate before-tax profit by using after-tax profit.
Crow, Inc., a not-for-profit company, has a product contribution margin of $40. The fixed costs are $800,000. Crow, Inc., has set a target profit of $35,000 per year.A. What is the breakeven point in
Explain each of the following: contribution margin per unit and contribution margin ratio.
Meeker Company is developing a new product. The selling price has not yet been determined, nor are the variable costs per unit known. The fixed costs are $600,000. Management plans to set the selling
Weber, Inc., sells its one product for $120 per unit. The variable cost per unit is $30. The fixed cost per year is $900,000.A. What is the contribution margin per unit?B. What is the breakeven point
In the 1980s, Ford Motor Company was taken to court to defend its safety practices concerning the Pinto in the 1970s. Apparently, the Pinto could burst into flames in crashes at 30 miles per hour if
Examine the following graph. Identify each of the items listed.A. _______B. _______C. _______D. _______E. _______F. _______G. _______ A B C E LL F
How is activity defined in cost-volume-profit analysis?
Refer to E3.21. These data were entered into a regression program, resulting in the following output. What is Batchelor’s revenue formula according to the regression analysis?Data from
Explain how short-term operating decisions differ from other decisions made by managers.
Use the following information to determine the profit equation: Selling price per unit ........................... $65Variable cost per
Long pre Company distributes insect repellent. Each can of repellent sells for $4.00. The variable cost per can of repellent is $0.75. The fixed selling and distribution costs are $80,000. The
Buchanan Enterprises has projected its income before taxes as follows:Required:A. What is the selling price per unit?B. What is the variable cost per unit?C. What is the contribution margin per
Explain the difference between product and nonproduct costs.
Discuss the basic assumptions of CVP analysis. Without using any numbers, prepare a graph that illustrates the first four assumptions.
What strategic decisions regarding operations must be made prior to planning operating activities? Be sure to consider strategic decisions related to the revenue process, the conversion process, and
Quinton Corporation produces and sells two types of chili: 1-Alarm and 5-Alarm. Operating performance for the most recent quarter is:Management is puzzled by these results because they spent $120,000
Roberts Shirts is a producer of men’s, women’s, and children’s shirts. Roberts expects to incur the following production costs. Determine whether each of the costs is direct materials, direct
What are the two attributes of a relevant variable?
Refer to E4.10. Classify each of the costs as unit-related, batch-related, product sustaining, or facility-sustaining. Use U for unit-related, B for batch-related, P for product sustaining, and F for
Explain the concept of sunk cost. Are sunk costs ever relevant in short-term operating decisions? Why or why not?
Explain the concept of opportunity cost. Are opportunity costs ever relevant in short-term operating decisions? Why or why not?
Explain the term incremental. How are incremental revenues, costs, and profits used in short-term operating decisions?
What are the steps in a relevant variable analysis?
What factors other than relevant costs and revenues must be considered when making a special order decision?
Refer to E4.17. Assume the contractor has changed its offer. It now proposes to supply all the tablecloths needed at a price of $9.50 per tablecloth. If Roccabruna accepts this offer, it will use the
What is a make-or-buy decision? What are the relevant variables in a make-or-buy decision?
How are opportunity costs incorporated into make-or-buy decisions?
What factors other than costs must be considered before making a make-or-buy decision?
What is a keep-or-drop decision? What are the relevant variables in a keep-or-drop decision?
What factors other than costs and revenues must be considered when making a keep-or drop decision?
Describe the four influences on selling price and how each is related to the balanced scorecard.
Refer to Walt Disney Company (www.disney.com). Based on your knowledge of this company, answer the following questions:A. Describe its customers, competitors, and legal/social environment.B. Do you
Write a paper comparing and contrasting the EOQ and JIT inventory methods. Make sure you compare and contrast.
During the financial crisis of 2008, Congress was particularly upset by the high salaries paid to CEOs of financial institutions that were losing money. Members of Congress argued that CEO
Clark has determined its economic order quantity to be 1,500 units. Demand for the year is 54,000. Five days elapse between the time an order is placed until it is received. Clark conducts business
Refer to PepsiCo (www.pepsico.com). Based on your knowledge of this company, answer the following questions:A. Describe its customers, competitors, and legal/social environment.B. Do you believe
Large companies such as Walmart have been accused in the past of predatory pricing. The accusers argue that a company such as Walmart comes into a smaller community and because of its buying power
What is price fixing?
Refer to Dell Computer (www.dell.com). Based on your knowledge of this company, answer the followingquestions:A. Describe its customers, competitors, and legal/social environment.B. Do you believe
JIT has gained in popularity throughout the business world. Yet we also see companies such as Amazon.com building huge warehouses. Conduct Internet research on the topic of JIT and write a four- to
If a company wishes to use JIT successfully, it must make a lot of demands on its suppliers for more frequent deliveries of smaller batches. This, in turn, increases distribution costs for the
Rossetter, Inc., has 10 employees. Jan and Fred are each paid a salary of $4,000 per month. Joe, Betty, Frankie, and Donita are paid $10 per hour. Abby, Norman, Bill, and Erika arepaid on a
What is price gouging?
Describe how markup pricing is done.
Compare and contrast penetration pricing and predatory pricing.
Refer to E5.6. If Ward, Inc., operates 300 days per year and its lead time is 2 days, what is the reorder point?Data from E5.6Ward, Inc., needs 180,000 units each year to meet its production
Grauberger Company has provided the following budgeting information for you to determine its expected bonus payments and cash outflows. Grauberger’s bonus rate is 15 percent and its tax rate is 30
Refer to P5.7. Assume Grauberger changes the bonus rate to 10 percent.Required:A. If Grauberger’s bonus base is income before bonus or taxes, what is the expected bonus amount?B. If Grauberger’s
Nelson operates 300 days per year. In the past, demand for its product has been fairly steady at 50 units per day. Recently however, customer orders have been inconsistent, ranging from 25 to 150
Praeuner Company has surveyed the market and set a target selling price of $2,000 per unit for its product. Praeuner believes it can sell 100,000 units of this product over its two-year life.
Engelhaupt Company is considering a switch to JIT. It has gathered the following data:In addition, Engelhaupt estimates that its relationship with its customers will improve by 10 percent. Because it
Discuss reasons to hold inventory.
Describe the anticipated cost increases when adopting JIT. Describe the anticipated cost decreases when adopting JIT. How should a company determine whether to adopt JIT?
Discuss reasons to not hold inventory.
What is a stockout cost and why is it important?
Refer to E5.12. Assuming Leithead remits the taxes to the proper authorities during the same period as the employees are paid, what is the expected cash outflow for Leithead (ignore employer
What is the difference between short-run and long-run ordering costs?
McQuary Enterprises plans to pay its managers a bonus to encourage performance. The bonus rate is 12 percent and the bonus base is net income before bonus or taxes. McQuary’s expected income before
What is the difference between short-run and long-run carrying costs?
Refer to E5.14. Determine the amount of the expected cash outflow assuming that taxes and bonus are paid in the budgeting period. Determine the net income expected.Data from E5.14McQuary Enterprises
What type of company would use an EOQ system?
Ebzery Company plans to pay its managers a bonus to encourage performance. The bonus rate is 15 percent and the bonus base is net income after bonus but before taxes. Ebzery’s expected income
What type of company would use a JIT system?
Refer to E5.16. What is the expected cash outflow for bonus and taxes if the bonus and the taxes are paid in the budgeting period? What is the expected net income?Data from E5.16Ebzery Company plans
When the EOQ formula is solved, what does the result indicate?
How do you determine the reorder point in an EOQ system?
Refer to E5.18. What is the expected cash outflow for bonus and taxes if the bonus and the taxes are paid in the budgeting period? What is the expected net income?Data from E5.18Downs, Inc., plans to
What are the goals of a JIT system?
How does the adoption of a JIT system impact the company/supplier relationship?
Murphy Enterprises has set its selling price at $400. At this price, its selling margin is $300. What is Murphy’s cost per unit? What is its selling margin percentage?
How does the adoption of a JIT system impact the company/employee relationship?
Roester, Inc., set its selling price at $120. Its markup percentage is 60 percent. What is Roester’s cost per unit? What is its selling margin? What is its selling margin percentage?
How does the adoption of a JIT system impact the company/customer relationship?
How does a kanban system work?
What is the difference between voluntary and involuntary withholdings?
Why do companies provide health and life insurance for employees?
Define the following terms:(a) Bonus,(b) Bonus rate,(c) Bonus base.
What is the purpose of budgeting?
You have recently been hired by a large firm and after a major promotion have just completed your first sales budget by yourself. You and your best friend set a date to go out and celebrate on
Describe the benefits of budgeting.
Many of the issues involved in budgetary slack, and so on, are caused because performance is measured against the budget. Given what you have learned about the balanced scorecard, discuss the
Describe the costs of budgeting.
Refer to E6.2. Assume that each unit of Dynamo costs O’Connell $4 while each unit of Craylon cost $2. Further assume that O’Connell wants and ending inventory equal to 5 percent of next month’s
Describe budgetary slack.
Refer to E6.10. Prepare a marketing and distribution budget by month for the quarter for McKown.Data from E6.10McKown plans to sell 5,000 units of Herbal Wash in the first month, 4,500 units in the
What is the relationship between the accounts receivable schedule and the sales budget?
Refer to PepsiCo, Inc. (www.pepsico.com). Based on your knowledge of this company, answer the following.A. What budgeting strategy do you think it uses?B. What budgeting approach do you think it
What is the relationship between the cash receipts schedule and the accounts receivable schedule?
Refer to E6.8. Prepare an accounts receivable schedule for January through March.Data from E6.8Amadio, Inc., has a beginning accounts receivable balance of $20,000. It expects the following sales for
What is the relationship between the sales budget and the cash receipts schedule?
Appendix Shumway Enterprises has the following production planned for the first six months of next year:January ................... 50,000.February ................
Refer to E6.6. What is the expected ending balance of accounts receivable?Data from E6.6Soderlund Company has a balance in its accounts receivable of $35,000 at the beginning of the year. Credit
What is the difference between an ideal and a normal standard?
Craven Company plans to sell 20,000; 22,000; 30,000; and 34,000, respectively, units per month for the next four months. The desired ending finished goods inventory is 5 percent of the expected sales
To aid in preparing its budget for March 2018, Gotfredson Company has provided the following information: Amount owed by customers, March 1, 2018 $ 400,000 Estimated sales for March 2018 1,400,000
Refer to Walt Disney Company (www.disney.com). Based on your knowledge of this company, answer the following:A. What budgeting strategy do you think it uses?B. What budgeting approach do you think it
What is the relationship between the marketing and distribution budget and the sales budget?

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