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managerial accounting
Accounting concepts and applications 11th Edition Albrecht Stice, Stice Swain - Solutions
Neil Brown is the proprietor of a small company. The results of operations for last year are shown, along with selected balance sheet data. From the information provided, determine the amount of net cash flows provided from operations, using the directmethod.
Given the data in E 13-25, show how the amount of net cash flows from operating activities would be calculated using the indirect method.
The following information was taken from the comparative financial statements of Imperial Corporation for the years ended December 31, 2011 and 2012:Use the direct method to compute cash flows provided by operating activities in 2012.
Given the data in E 13-27, show how the amount of cash provided by operations for 2012 is computed using the indirect method.
The following information was taken from the comparative financial statements of Dougal Industries, Inc., for the years ended December 31, 2011 and 2012:Use the direct method to compute cash flows provided by operating activities in 2012.
Given the data in E 13-29, show how the amount of cash flows provided by operations for 2012 is computed using the indirect method.
Given the following selected data for Milton Corporation and using the indirect method to report cash flows from operating activities, determine the net increase (decrease) in cash for the year ended December 31, 2012.Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Based on the following information, determine the net increase (decrease) in cash for Luther Corp. for the year ended December 31, 2012. Use the direct method to report cash flows from operating activities.Cash received from interest revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Western Company provides the following financial information. Prepare a statement of cash flows for 2012, using the indirect method to report cash flows from operatingactivities.
By analyzing the information in E 13-33, prepare a statement of cash flows. Use the direct method to report cash flows from operating activities.
Below are recent financial statement data for the following companies:€¢ Omniture€¢ Coca-Cola€¢ ExxonMobil€¢ MicrosoftUse the financial statement data to match each company with its numbers. All numbers are in millions.Consider the following information as
Study the comparative cash flow statements for Wal-Mart in Appendix A. What observations do you have about Wal-Mart’s cash flow position? From a liquidity standpoint, is the trend over the last few years positive or negative? Explain.
Klein Corporation reports the following summary data for the current year:a. Sales revenue totaled $125,750.b. Interest revenue for the period was $1,100.c. Interest expense for the period was $400.d. Cost of goods sold for the period was $78,000.e. Operating expenses, all paid in cash (except for
The following information, in T-account format, is provided for Mars Company for the year 2012:Additional information:a. Sales revenue for the period was $164,000. Accounts receivable (net) decreased $4,000 during the period.b. Net purchases of $48,000 were made during 2012, all on account.
The following information was provided by the treasurer of Surety, Inc., for the year 2012:a. Cash sales for the year were $50,000; sales on account totaled $60,000.b. Cost of goods sold was 50% of total sales.c. All inventory is purchased on account.d. Depreciation on equipment was $31,000 for the
Gardner Enterprises reported a net loss of $55,000 for the year just ended. Relevant data for the company follow.Required:1. Using the indirect method, determine the net cash flows provided by (used in) operating activities for Gardner.2. Interpretive Question: Explain how Gardner can pay cash
Saturday Shoppers, Inc., shows the following information in its accounting records at year-end: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $740,000Interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The following combined income and retained earnings statement, along with selected balance sheet data, are provided for McDuffi e Company:Required:1. Using the indirect method, compute the net cash flows from operations for McDuffi e for 2012.2. Using the direct method, compute the net cash flows
The following partially completed work sheet is provided for ATM Corporation, which uses the direct method in computing net cash flows from operations:Key:1. Decrease in Accounts Receivable (net), $7,0002. Loss on sale of equipment, $3,0003. Increase in Inventory, $15,0004. Increase in Accounts
Parker Corporation computed the amount of cash flows from operations using both the direct and indirect methods, as follows:Direct method:Collections from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 525,000Payments to suppliers . . . . . . . . . . . .
JEM Company's comparative balance sheets for 2011 and 2012 are provided.The following additional information is available:a. Net income for the year 2012 (as reported on the income statement) was $70,000.b. Dividends of $40,000 were declared and paid.c. Equipment that cost $24,000 and had a book
Financial statement data for Bankhead, Inc., are provided. (All numbers are shown rounded to the nearest thousand, with 000's omitted.)Required:1. Compute the net cash flows from operations using the direct method.2. Interpretive Question: Comment on the difference between net income and net cash
1. Using the data from P 13-46, prepare a statement of cash flows. Use the indirect method to report cash flows from operating activities.2. Interpretive Question: What are the main differences between a statement of cash flows prepared using the indirect method and one prepared using the
Jonathan Beecher is the manager and one of three brothers who own the Mile High Sporting Goods Company in Denver, Colorado. Jonathan is pleased that sales were up last year and that his new, small company has been able to expand and open a second store in Denver. After reviewing the balance sheet,
Save More, Inc., a discount department store, has applied to its bankers for a loan. Although the company has been profitable, it is short of cash. The loan application includes the following information about current assets, current liabilities, net income, depreciation expense, and dividends for
Paula Dalton is a security analyst for DJM, Inc. She claims that she can tell a great deal about companies by analyzing their cash flow patterns. Specifically, she looks at the negative or positive cash flow trends in the three categories on cash flow statements. Paula thinks this information is
Which method is better at reporting information on the statement of cash flows—the indirect or direct method? Your finance professor said that the indirect method is a better way to prepare the statement of cash flows because it starts with a known number—net income. However, in your accounting
Ignoring all other factors, will a company that is generating negative cash flows from operating activities be a good or bad investment? When evaluating a company, you notice the following on its cash flow statement: negative cash flow from operating activities, negative cash from investing
Locate the 2009 Form 10-K for Wal-Mart in Appendix A and consider the following questions:1. Does Wal-Mart present the three cash flow statement categories—operating, investing, and financing—in the same order as that illustrated in the chapter?2. In fiscal year 2009, Wal-Mart subtracted $101
Use the 2008 statement of cash flows for The Coca-Cola Company on the next page to answer the following questions:1. Compute Coca-Cola's "Net cash provided by operations after reinvestment." This amount is computed by subtracting "Net cash from investing activities" from "Net cash from operating
GlaxoSmithKline, a British company, is one of the largest pharmaceutical firms in the world. Refer to GlaxoSmithKline's 2008 statement of cash flows and answer the following questions.1. International accounting standards treat interest paid and interest received differently than those items are
Assume that you are the paymaster in charge of all U.S. Department of Defense (DOD) payroll matters. The total amount that you disburse in payroll checks in any given week is in excess of $1 billion.Assume also that tax receipts have been lower than expected and that a federal budget deficit, not a
How can management accounting information help companies to be competitive and profitable?
What did Donaldson Brown, the chief financial officer for DuPont, develop, and why was it so revolutionary?
The focus of management accounting is to create information to fill a competitive need. Explain how management accounting can provide a competitive edge in business.
Managers need not be concerned about external financial statements. Do you agree or disagree with this statement? Explain.
Identify the three management functions relating to the decision-making process. Briefly define each function.
How is strategic planning related to capital budgeting?
How do variable costs and fixed costs differ? Give an example of each.
Analyze your personal expenses on a variable and fixed basis. What are some of your personal fixed costs and variable costs? What would cause them to change?
What is C-V-P analysis used for? What does it mean to “break even”?
Explain the difference between a product cost and a period cost.
What are the three components of manufacturing costs? Briefly describe them.
How do nonmanufacturing costs and indirect costs differ?
What classification determines whether materials used in the production of a product are direct materials or indirect materials? What are some examples of direct materials and indirect materials used in the production of a chair?
What is the difference between a direct cost and an indirect cost? Give an example of each in the context of teaching an accounting class at your school.
What is the difference between sunk costs and differential costs? Give an example of each.
How can out-of-pocket costs and opportunity costs be applied to your personal financial decisions?
Management accounting and financial accounting provide different information for different purposes. Explain what this means and provide an example that illustrates the differences between management and financial accounting.
Why is GAAP so important for external financial reporting but not for internal management reporting?
Which one of the following statements best describes the reason DuPont developed return on investment (ROI) into an important management technique?a. A bankruptcy court trustee required DuPont to improve its management practices.b. Antitrust legislation passed at the turn of the twentieth century
Which one of the following is correct?a. Management accounting reports are usually available to the public.b. Management accounting is legislated and governed by regulatory agencies.c. Financial accounting focuses primarily on qualitative company data.d. Financial accounting exists to serve the
Which one of the following is incorrect?a. Management accounting is not as important as financial accounting for the competitive success of a company.b. Governments do not require a company to implement a good management accounting system.c. Management accounting systems evolve over time to adapt
The three primary management functions are:a. Planning, surveying, and competing.b. Planning, evaluating, and aerating.c. Planning, controlling, and evaluating.d. Planning, controlling, and competing.e. Planning, competing, and evaluating.
Which one of the following is correct?a. Short-run planning includes capital budgeting and operational budgeting.b. Long-run planning includes production and process prioritizing.c. Long-run planning includes strategic planning and capital budgeting.d. Short-run planning includes strategic
Which one of the following correctly describes “controlling” in a management accounting context?a. Deciding on the acquisition of long-term assetsb. The real-time, day-to-day decision making in a company’s business processesc. Identifying a company’s mission and the goals flowing from that
Which of the following is not an example of evaluating?a. Comparing actual costs and budgeted costsb. Budgeting costs between various departmentsc. Assessing the performance of products and servicesd. Analyzing profitability of different productse. Identifying problems in the production process
Which of the following is an example of a variable cost?a. Insurance premium for fire insurance on the factory buildingb. The salary of the company presidentc. Wood used to make custom tablesd. Rent for use of a storage warehousee. Depreciation on the factory building
Which one of the following is an example of a product cost for a manufacturing company?a. Office supplies at corporate headquartersb. Wages paid to office staffc. Fire insurance premium on office buildingd. Wages paid to factory workerse. Commissions paid to salespeople
Which one of the following statements is incorrect?a. Manufacturing overhead includes all direct material and direct labor costs.b. Indirect materials include those materials that become part of the product but cannot be traced to specific products.c. Direct labor includes the wages paid to factory
Beesley Company manufactures filing cabinets. The company’s costs are as follows:Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37.22 per unitDirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Which one of the following statements best explains why companies want to distinguish between direct and indirect costs?a. To evaluate business segments on the basis of only those costs directly traceable to each segmentb. To better determine whether a company is a large organization or a small
Which one of the following statements is incorrect?a. Sunk costs should be irrelevant in decision making.b. Differential costs are the costs a company should consider when making decisions.c. Differential costs cannot be reasonably avoided by a company.d. Sunk costs are costs made in the past or
Which one of the following is an example of an opportunity cost?a. Revenue lost from sale of cakes by deciding to sell only cookiesb. Wages paid to construction workersc. Materials used to assemble computersd. Ordering costs related to a customer’s special order of guitar stringse. Rent paid for
Which one of the following statements is correct?a. The Institute of Management Accountants has implemented a perfect set of rules to resolve every conflict.b. The top accountant in most large organizations is usually called the controller.c. Upon discovering an ethical dilemma in an organization,
You are at the student union having lunch with a friend who is attending law school. In the course of your conversation, you tell your friend that, in contrast to financial accounting or tax accounting, management accounting has “competitive value” and is highly proprietary. Further, management
Indicate whether each of the following is characteristic of financial accounting reports, management accounting reports, or both.1. They are used primarily by creditors and investors.2. They aid management in identifying problems.3. They are based on generally accepted accounting principles.4. They
A friend who is thinking about majoring in accounting has asked you to distinguish between the work of financial accounting and management accounting. What is your response?
Balls, Hoops, and Bats, Inc., a producer of sports equipment, incurs the following types of costs:a. Depreciation on the production plantb. Depreciation on the corporate officesc. Wages of production-line employeesd. Paper, toner, and miscellaneous supplies for the office copy machinese. Raw
Jordan Industries is a manufacturing company that produces solid oak office furniture. During the year, the following costs were incurred. The building depreciation and the utilities are allocated three-fourths to production and one-fourth to administration. The cost of furniture parts can be
The Benson Manufacturing Company produces rides for amusement parks. Parts for the rides are purchased from other suppliers. Rides are then assembled in various company plants.Recently, Benson Manufacturing hired two new employees. One will be working in an assembly plant, and the other will be
The president of Radkline Corporation, Karen Pinkus, has asked you, the company’s controller, to advise her on whether Radkline should develop a new inventory management system. Is the decision facing Karen Pinkus an example of a strategic planning decision, a capital budgeting decision, a
The following are costs associated with manufacturing firms, merchandising firms, or service firms:a. Miscellaneous materials used in productionb. Salesperson’s commission in a real estate firmc. Administrators’ salaries for a furniture wholesalerd. Administrators’ salaries for a furniture
The following are costs associated with manufacturing firms, merchandising firms, or service firms:a. Legal services for an accounting firmb. Car leases for company managementc. Oil used to service manufacturing equipmentd. Office supplies for a grocery storee. Entertainment expense for clientsf.
Muffin, Inc., located in Nauvoo, Illinois, manufactures high-end trumpets. The firm’s cost accountant, Lisa, has been assigned by the CEO to determine how many trumpets Muffin, Inc., needs to make and sell in order to break even. She is given the following data:Trumpet sales price . . . . . . . .
The Dallas Mavericks basketball team has hired you as its new accountant. On your first day on the job, Mavericks’ owner, Mark Cuban, comes to you and asks, “How many tickets must we sell to pay for Dirk Nowitzki’s salary?” He then hands you a sheet of paper with the following
The total manufacturing cost data on Miro Company’s specialty paint product line are provided below.Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50.00 per gallonDirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BatsRUs, Inc., has created a unique line of aluminum baseball bats that, while illegal for league use, are designed to nearly double the average length of a batted ball. They are a great "hit" in the personal and family use market. Recently, a new competitor, Awesome Bats, Inc., has introduced a
Wakefield, Inc., offers a CPA review course in cities throughout the eastern United States. Wakefield hires local CPAs to do the teaching. Each instructor is paid $115 an hour to teach the course; a course consists of 12 weeks of instruction with sessions taking place four evenings a week for two
You are the accountant for the largest manufacturer of sheet steel. The company€™s hottest product is the RX-6, which provides most of the firm€™s revenue. Management is considering dropping the RX-5 product line, which hasn€™t turned a profit for two consecutive
Clark is employed by a company that currently pays him $90,000 per year. He owns a new car that he bought for cash of $39,000. Clark is thinking about returning to school to obtain a law degree. Tuition for the school he wants to attend is $29,000 per year, books cost an average $1,400 per year,
Assume that sales of KevlarR at DuPont have dropped significantly. DuPont reported the following results for this product line for the past month and expects this sales pattern to continue into the future.Operating Statements KevlarSales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
The DuPont story detailed at the beginning of this chapter provides key insights into the development of management accounting. In particular, we see how the structure of a business affects the kinds of information required for planning, controlling, and evaluating purposes. Consider the decision
International Business Machines Corporation (IBM), the company that originally created and dominated the personal computer (PC) market, has faced a lot of challenges due to increased competition and increasing costs. As the home PC market began to emerge, IBM announced a new division to enter that
When allocating costs, should you take time to figure out if the costs relate to materials or labor, or should you allocate all the costs as manufacturing overhead?It is your first day on the job at a bicycle manufacturing company. Your first job is to determine the cost of a new line of bikes.
Should sunk costs be considered in a planning decision or ignored? You currently work part time at a flower shop. You split your time between keeping the books and making deliveries. The van you use to make these deliveries has been in and out of the repair shop over the past two months. In
Wal-Mart is the world’s retailer, employing more than 2 million associates worldwide, including more than 1.4 million in the United States. Wal-Mart has more than 7,870 stores, including about 890 discount stores, 2,970 combination discount and grocery stores (Wal-Mart Supercenters), and 600
As described in the chapter, the challenge facing DuPont in the early twentieth century was how to manage the diverse set of businesses operating under the control of the DuPont management team.This diversity still exists today. In its 2008 annual report, DuPont notes that its strategic business
Toyota Motor Corporation was started in 1918 by Sakichi Toyoda and by 1995, was the third-largest motor vehicle producer in the world. Despite a difficult world economy since 2000, Toyota has continued to prosper. In 2008, Toyota reported its consolidated net income at 1.72 trillion yen ($17.15
Professor Mary Allen is sitting in her office one day when Mark Sullivan, an accounting graduate from five years ago, knocks on her door. Mark had been an exceptionally good student and had started with the CPA firm Peat & Price upon graduation. After three years with that firm, he joined MiniCare
Why do managers need accurate product cost information?
For financial reporting, which costs are usually included as product costs in a manufacturing company?
Why should a firm know how much it costs to produce its goods and services?
Describe some possible resources that organizations can use to help improve quality while also reducing product costs.
Why is it difficult to track the costs of manufactured products?
What is the difference in the accounting treatment for direct materials and indirect materials?
Why are actual manufacturing overhead costs not assigned directly to products as they are incurred?
What is the normal flow of costs in a job order cost accounting system?
What are some examples of allocation bases that could be used to apply manufacturing overhead costs to products?
Why might Manufacturing Overhead be referred to as a “clearing account”?
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