Questions and Answers of Financial Managerial Accounting

Get Hitched Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company’s current sales revenue is $1.5 million. Currently,
1. Label each element of the balanced scorecard.2. Describe in words the relationships illustrated by the scorecard’s strategy map.3. Describe in words the relationships illustrated by the
Sunny Nights Inc. is completely powered by the city power grid, but management is considering switching fuel sources in an effort to improve the public’s perception of the company’s corporate
Two departments within Cougar Gear Inc. are Production and Sales. Each department has a unique scorecard, as follows:The Production Department scorecard focuses on the learning and growth and
Silver Lining Inc. has a balanced scorecard with a strategy map that shows that delivery time and the number of erroneous shipments are expected to affect the company’s ability to satisfy the
Rizzo Goal Inc. produces and sells hockey equipment, often custom made for online orders. The company has the following performance metrics on its balanced scorecard: days from ordered to delivered,
Coulson and Company is a large retail business that has a firm-wide balanced scorecard. Recently, management has discussed the need for the balanced scorecard to be more relevant to each individual
Grand Grocery developed a balanced scorecard with six strategic objectives under the standard four performance perspectives, as follows:a. Draw a strategy map that shows how these strategic
The following is the balanced scorecard for Smith Company:a. Label each element of the balanced scorecard.b. Identify the company’s overall strategic objective (i.e., the strategic objective that
Apples & Oranges Inc. is trying to become more efficient in shipping goods. It is experimenting with two new shipping procedure initiatives aimed at achieving this strategic objective. The
Buffalo BBQ Restaurant is trying to become more efficient in training its chefs. It is experimenting with two training programs aimed at this objective. Both programs have basic and advanced training
Eat-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican
Henry’s Cafe is a local restaurant that is growing quickly. While the company does not yet have a balanced scorecard, Henry has mentioned that being efficient in producing meals is a high priority
Lonnie’s Shipping Co. is considering switching to an all-electric fleet to minimize emissions. Lonnie wants to gradually implement this change over the next 10 years. The company currently has a
Gary’s Gumbo is a locally owned restaurant in Houston, Texas, with eight locations. The owner recently developed a new recipe for the restaurant’s signature gumbo dish. The owner decided to try
Moses Moonrocks Inc. has developed a balanced scorecard with a measure map that suggests that the number of erroneous shipments has a direct effect on operating profit. The company estimates that
Bluetiful Inc. has the following strategic objectives on its balanced scorecard but is unsure how to measure them:• Increase profits• Obtain new customers• Improve production efficiency•
72 Inc. has developed a balanced scorecard with the following performance metrics:• Total sales• Employee turnover• Market share• Number of shipping errors• Median training hours per
How can the balanced scorecard be used to address CSR objectives?
How is sustainability distinguishable from corporate social responsibility?
Why is the common measures bias especially prevalent in companies that use scorecard cascading?
What are some of the dangerous tendencies of people who fall prey to the bias of motivated reasoning?
What is the purpose of scorecard cascading?
What do strategy maps show, and how do they add value to the balanced scorecard?
How are strategic objectives and strategic initiatives different? How are they related?
What is the purpose of the performance perspectives of a balanced scorecard?
What is the difference between a leading indicator and a lagging indicator?
How does a strategic performance measurement system improve upon an ordinary performance measurement system?
External failure costs include all of the following costs except those related to:a. Lost sales and lost customers.b. Warranty obligations.c. Product liability suits.d. Product field testing.
In measuring the cost of quality, which one of the following is considered an appraisal cost?a. Rework costb. Product testing costc. Warranty claims costd. Equipment maintenance cost
When measuring the cost of quality, the cost of inspecting incoming raw materials is a(n):a. Prevention cost.b. Appraisal cost.c. Internal failure cost.d. External failure cost.
Leese Inc. has the following quality financial data for its most recent fiscal year.Rework costs...............................................................................$110,000Warranty repair
In August, Lannister Company introduced a new performance measurement system in manufacturing operations. One of the new performance measures is lead time, which is determined by tagging a random
Northern Highlands Hospital is evaluating its admissions process by measuring the time elapsed between patient check-in and arrival in the clinical area. The present process involves a patient
J. Burns Motorcycle Company manufactures a variety of motorcycles. J. Burns’s purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This
The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab
Bright Night, Inc., manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This is because the Purchasing
Eon Technologies has recently implemented a lean manufacturing approach. A production manager has approached the controller with the following comments:I am very upset with our accounting system now
The management of Daddy-O’s fast-food franchise wants to provide hamburgers quickly to customers. It has been using a process by which precooked hamburgers are prepared and placed under hot lamps.
Jackson Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through two processes: milling and finishing. Parts are
Vernon Inc. has analyzed the setup time on its computer-controlled lathe. The setup requires changing the type of fixture that holds a part. The average setup time has been 140 minutes, consisting of
Furry Friends Inc. manufactures toy stuffed animals. The direct labor time required to cut, sew, and stuff a toy is 10 minutes per unit. The company makes two types of stuffed toys—a lion and a
Rag Swag Inc. manufactures various styles of men’s casual wear. Shirts are cut and assembled by a workforce that is paid by piece rate. This means that they are paid according to the amount of work
Based on Ziegler Inc.’s data in Exercise 17, assume that a transfer price of $1,200 has been established and that 75,000 units of materials are transferred, with no reduction in the Components
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $1,350 per unit. However, the same materials are available from the Components
Data are presented in the following table of returns on investment and residual incomes:Determine the missing items, identifying each item by the appropriate letter. Minimum Acceptable Operating
The Walt Disney Company (DIS) has four business segments, described as follows:• Media Networks: Television and radio• Parks and Resorts: Resorts, including Disneyland• Studio Entertainment:
The American textile industry has moved much of its operations offshore in the pursuit of lower labor costs. Textile imports have risen from under 5% of all textile production in the early 1960s to
The chief executive officer (CEO) of Cobalt Inc. just read an article written by a business professor at Harvard University describing the benefits of the lean philosophy. The CEO issued the
The annual budgeted conversion costs for a lean cell are $180,000 for 1,000 production hours. Each unit produced by the cell requires 20 minutes of cell process time. During the month, 600 units are
Blues Inc. manufactures jeans in the cutting and sewing process. Jeans are manufactured in 40-jean batch sizes. The cutting time is 5 minutes per jean. The sewing time is 20 minutes per jean. It
Why is a product-oriented layout preferred by lean manufacturers over a process-oriented layout?
Foster Manufacturing is analyzing a capital investment project that is forecast to produce the following cash flows and net income:The payback period of this project will be:a. 2.5 years.b. 2.6
Allstar Company invests in a project with expected cash inflows of $9,000 per year for four years. All cash flows occur at year-end. The required return on investment is 9%. If the project generates
Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of $150,000 and will operate for five years. The cash flows associated with these projects are as
Foster Manufacturing is analyzing a capital investment project that is forecasted to produce the following cash flows and net income:Using the present value tables provided in Appendix A, the
MGM Holdings (MGMB) operates Metro-Goldwyn-Mayer Studios Inc. and is a major producer and distributor of movie and television filmed entertainment. Regarding movies (films), MGM states, “Our
Assume Home Garden Inc. in MAD 26-5 assigns the following probabilities to the estimated construction cost of the warehouse and annual net cash flows:a. Compute the expected value of the construction
Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to service its east coast stores based on the following estimates:Construction cost of
Assume Boulder Creek Industries in MAD 26-3 assigns the following probabilities to the estimated annual net cash flows:a. Compute the expected value of the annual net cash flows.b. Determine the
Boulder Creek Industries is considering an investment in equipment based on the following estimates:Cost of equipment........................................$3,000,000Residual
Assume San Lucas Corporation in MAD 26-1 assigns the following probabilities to the estimated annual net cash flows:a. Compute the expected value of the annual net cash flows.b. Determine the
San Lucas Corporation is considering investment in robotic machinery based upon the following estimates:Cost of robotic machinery $4,000,000Residual value 300,000Useful life 10 yearsa. Determine the
Daisy’s Creamery Inc. is considering one of two investment options. Option 1 is a $75,000 investment in new blending equipment that is expected to produce equal annual cash flows of $19,000 for
Vail Resorts, Inc. (MTN), announced a $415 million expansion of lodging properties, ski lifts, and terrain in Park City, Utah. Assume that this investment is estimated to produce $99 million in equal
The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $113,550 and annual net cash flows of $30,000
Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows:a. Determine the present value index for each
Carnival (CCL) has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Breeze, can hold up to 3,600 passengers, which can cost $750 million to
Jones Excavation Company is planning an investment of $125,000 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for five years. Customers will be charged $90 per hour
Amenity Hotels Inc. is considering the construction of a new hotel for $50 million. The expected life of the hotel is 25 years, with no residual value. The hotel is expected to earn revenues of $30
Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for $70,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of
Jane’s Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $975,000 and each with a seven-year life and expected total net cash flows
Natural Foods Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 5,000 units at $18 each. The
Hana Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 10,000 units at $300 per unit. The
Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $125,000 with a $15,000 residual value and an eight-year life. The
The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals:Determine the expected average rate of return for each project. Project Z Project A
A project is estimated to cost $463,565 and provide annual net cash flows of $115,000 for nine years. Determine the internal rate of return for this project, using the present value of an annuity
A project has estimated annual net cash flows of $42,500. It is estimated to cost $374,000. Determine the cash payback period. Round to one decimal place.
Determine the average rate of return for a project that is estimated to yield total income of $936,000 over eight years, has a cost of $1,200,000, and has a $100,000 residual value.
Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring $250,000 of joint costs. Oakes allocates joint costs based on the physical
Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each month for use in production. The facilities now being used to produce Part 730 have fixed monthly
Johnson Company manufactures a variety of shoes and has received a special one-time-only order directly from a wholesaler. Johnson has sufficient idle capacity to accept the special order to
In differential cost analysis, which one of the following best fits the description of a sunk cost?a. Direct materials required in the manufacture of a tableb. Purchasing department costs incurred in
If you are not familiar with Priceline.com Inc. (PCLN), check out its website. Assume that an individual “names a price” of $85 on Priceline.com for a room in Nashville, Tennessee, on August 22.
The following conversation took place between Juanita Jackson, Vice President of Marketing, and Les Miles, Controller of Diamond Computer Company:Juanita: I am really excited about our new computer
Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Each flight has a capacity of 150 seats, with an average of 125 seats
Instant Image Inc. manufactures color laser printers. Model J20 presently sells for $460 and has a product cost of $230, as follows:Direct
Toyota Motor Corporation (TM) uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000.
Box Elder Power Company expects to operate at 85% of productive capacity during May. The total manufacturing costs for May for the production of 40,000 batteries are budgeted as follows: Direct
Dakota Coffee Company produces Columbian coffee in batches of 7,500 pounds. The standard quantity of materials required in the process is 7,500 pounds, which cost $6.00 per pound. Columbian coffee
Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,000, the accumulated
A company is considering replacing an old piece of machinery, which cost $400,000 and has $175,000 of accumulated depreciation to date, with a new machine that has a purchase price of $550,000. The
Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $24 per unit. The company, which is currently operating below full capacity, charges
On the basis of the following data, the general manager of Hawkeye Shoes Inc. decided to discontinue Children’s Shoes because it reduced operating income by $30,000. What is the flaw in this
Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business
The condensed product-line income statement for Rhinebeck Company for the month of October is as follows:Fixed costs are 20% of the cost of goods sold and 30% of the selling and administrative
A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past
McDonald’s Corporation (MCD) operates company-owned and franchised restaurants in over 100 countries. The company operates primarily as a franchisor with approximately 85% of its current
Papa John’s International, Inc. (PZZA), operates over 5,000 restaurants in the United States and 45 countries. The company operates primarily as a franchisor with 4,353 franchised restaurants and
Panera Bread Company (PNRA) operates over 2,000 bakery-cafe locations throughout the United States and Canada and serves over 9 million customers per week. Panera’s operations are divided into the

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