Questions and Answers of Financial Managerial Accounting

Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows:The division of costs between variable and
Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 60 million direct subscribers (accounts) that generated
Media outlets such as ESPN and FOX Sports often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to
The Parents for Better Schools of Fresno, California, collected recipes from members and published a cookbook entitled Food for Everyone. The book will sell for $20 per copy. The chairwoman of the
Currently, the unit selling price of a product is $7,520, the unit variable cost is $4,400, and the total fixed costs are $23,400,000. A proposal is being evaluated to increase the unit selling price
Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year (in millions):Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the current year ended March 31, Cosgrove Company expects fixed costs of $27,600,000, a unit variable cost of $805, and a unit selling price of $1,150.a. Compute the anticipated break-even sales
For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in
Continental Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by
Child Play Inc. manufactures electronic toys within a relevant range of 20,000 to 150,000 toys per year. Within this range, the following partially completed manufacturing cost schedule has been
Jorgensen Company has sales of $380,000,000, and the break-even point in sales dollars is $323,000,000. Determine Jorgensen Company’s margin of safety as a percent of current sales.
Haywood Co. reports the following data:Sales..............................................................................$ 6,160,000Variable
Conley Company has fixed costs of $17,802,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow:The sales mix for products
Beard Company sells a product for $15 per unit. The variable cost is $10 per unit, and fixed costs are $1,750,000. Determine (a) The break-even point in sales units and (b) The sales units
Freese Inc. sells a product for $650 per unit. The variable cost is $455 per unit, while fixed costs are $4,290,000. Determine (a) The break-even point in sales units and (b) The break-even
Waite Company sells 250,000 units at $120 per unit. Variable costs are $78 per unit, and fixed costs are $8,175,000. Determine (a) The contribution margin ratio, (b) The unit contribution
The manufacturing costs of Rosenthal Industries for the first three months of the year follow:Using the high-low method, determine (a) The variable cost per unit and (b) The total fixed
How does the sales mix affect the computation of the break-even point?
If fixed costs increase, what would be the impact on the (a) Contribution margin? (b) Operating income?
In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost estimated?
Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in 1,000-gallon drums for $2,000. Processing costs are $3,000 to process the 1,000 gallons of Duo into 800
Breegle Company produces three products (B-40, J-60, and H-102) from a single process. Breegle uses the physical volume method to allocate joint costs of $22,500 per batch to the products. Based on
Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year:If Adam uses the step-down (sequential) method, beginning with
Logo Inc. has two data services departments (Systems and Facilities) that provide support to the company’s three production departments (Machining, Assembly, and Finishing). The overhead costs of
Timpanogos Clinical Laboratories Inc. manufactures two products: Mackalite and Jemmerite. These two products go through a joint production process costing $260,000 in materials, labor, and overhead.
Quetzal Inc. is a manufacturer of after-market parts for automobiles. The company has 23 support departments that provide services for 55 production departments. Quetzal management is looking to
Gigabody, Inc., a nutritional supplement manufacturer, produces five lines of protein supplements. Each product line is managed separately by a senior-level product engineer who is evaluated, in
William’s Ball & Jersey Shop is a small athletic products company currently trying to determine cost allocations. Accurate costing numbers are important but not crucial; no employee bonuses
Joyous Julius, Inc., is a large retail chain that has grown quickly thanks to its successful leveraging of homemade-style orange julius. The company would like to narrow down the number of flavors it
Horsepower Hookup, Inc., is a large automobile company that specializes in the production of high-powered trucks. The company is determining cost allocations for purposes of performance evaluation. A
Milkrageous, Inc., a large, private dairy products company, is determining cost allocations for performance evaluation purposes. Company bonuses are based on cost containment, so accurate costing
Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red
McKenzie’s Soap Sensations, Inc., produces hand soaps with three different scents: morning glory, snowflake sparkle, and sea breeze. The soap is produced through a joint production process that
Kizzle’s Crepes Co. produces world famous crepes. The company’s crepes are produced via its Mixing and Cooking activities, which both rely on the Janitorial and Maintenance activities. Kizzle’s
Hooligan Adventure Supply produces and sells various outdoor equipment. The Molding and Assembly production departments are supported by the Personnel and Maintenance departments. Personnel costs are
Florissa’s Flowers jointly produces three varieties of flowers in the same garden: tulips, lilies, and daisies. The flowers are all watered via the same irrigation system and all receive the same
Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of $250 per batch. At the split-off point, one batch
Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and
Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial
Lily’s Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of $30 per batch. One batch produces
Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint
Gordon’s Smoothie Stand makes three types of smoothies: blueberry lemon, orange swirl, and triple berry. Before all flavors are added, the smoothies go through a joint mixing process that costs a
Big Al’s Inc. produces and sells various cuts of steak, including sirloin, ribeye, and T-bone. The cuts of steak are produced jointly until Big Al’s cattle are butchered. Big Al estimates that,
Nature’s Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces
Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for $0.20 per pound, while granulated and caster sugar
Carving Creations jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Carving Creations accounts
Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed
Refer to your answers to Exercises 7–9. Compare the total support department costs allocated to each production department under each cost allocation method. Which production department is
Refer to the information provided for Becker Tabletops in Exercise 7. Allocate the support department costs to the production departments using the reciprocal services method.Data from Exercise
Refer to the information provided for Becker Tabletops in Exercise 7. Allocate the support department costs to the production departments using the sequential method. Allocate the support department
Becker Tabletops has two support departments ( Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows:Allocate the
Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the
Crystal Scarves & Co. produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and
Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production
Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security
Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on
Yo-Down Inc. produces yogurt. Information related to the company’s yogurt production follows:Support Department 1’s costs total $142,000. Using the direct method of support department cost
Man O’Fort Inc. produces two different styles of door handles, standard and curved. The door handles go through a joint production molding process costing $29,000 per batch and producing 2,000
Gary’s Grooves Co. produces two types of carving knives, one with a handle made of a polymer that looks like walnut wood and another with a handle made with a polymer that looks like red oak. The
Blake’s Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 30 12-gauge shotguns and 20
Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs
Bucknum Boys, Inc., produces hunting gear for buck hunting. The company’s main production departments are Molding and Finishing. Production of the hunting gear cannot be accomplished without the
Charlie’s Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support
How can support department and joint cost allocation affect production employee performance evaluations?
What are the two most often used ways of accounting for revenue from by-products?
When would management most likely use the net realizable value method of joint cost allocation?
What is the main difference between the physical units and weighted average methods of joint cost allocation?
Are large or small companies more likely to use the reciprocal services method to allocate support department costs to production departments? Why?
How does management determine the order in which support department costs are allocated under the sequential method?
Why is the direct method of support department cost allocation less accurate than the sequential and reciprocal services methods?
What are some drawbacks of applying support department costs using a single plantwide rate?
Why does support department cost allocation matter to service businesses (such as colleges and universities)?
Why are support department costs difficult to apply to products?
Cynthia Rogers, the cost accountant for Sanford Manufacturing, is preparing a management report that must include an allocation of overhead. The budgeted overhead for each department and the data for
Young Company is beginning operations and is considering three alternatives to allocate manufacturing overhead to individual units produced. Young can use a plantwide rate, departmental rates, or
The Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the profitability of a product line by comparing revenues to the cost of goods sold. However, Barry White, the
Pelder Products Company manufactures two types of engineering diagnostic equipment used in construction. The two products are based upon different technologies, X-ray and ultrasound, but are
Life Force Fitness, Inc., assembles and sells treadmills. Activity-based product information for each treadmill is as follows:All of the activity costs are related to labor. Management must remove
The management of Gwinnett County Chrome Company, described in Problem 1A, now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with
Gwinnett County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and
Bounce Back Insurance Company carries three major lines of insurance: auto, workers’ compensation, and homeowners. The company has prepared the following report:Management is concerned that the
Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer
Handbrain Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department
Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity
Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several
Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $250,000 and 50,000 sales orders are estimated to be
Comfort Foods Inc. uses activity-based costing to determine product costs. For each activity listed in the left column, match an appropriate activity base from the right column. You may use items in
The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in
Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company
Handy Leather, Inc., produces three sizes of sports gloves: small, medium, and large. A glove pattern is first stenciled onto leather in the Pattern Department. The stenciled patterns are then sent
Isaac Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Isaac Engines has a very simple production process and product line and uses a single
Scrumptious Snacks Inc. manufactures three types of snack foods: tortilla chips, potato chips, and pretzels. The company has budgeted the following costs for the upcoming period:Factory
Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is $2,948,125. Overhead is allocated to the three products on the basis of
Kennedy Appliance Inc.’s Machining Department incurred $450,000 of factory overhead cost in producing hoses and valves. The two products consumed a total of 9,000 direct machine hours. Of that
A company is using process costing with the first-in, first-out (FIFO) method, and all costs are added evenly throughout the manufacturing process. If there are 5,000 units in beginning work in
Jones Corporation uses a first-in, first-out (FIFO) process cost system. Jones has the following unit information for the month of August: The equivalent units of production for conversion costs
During December, Krause Chemical Company had the following selected data concerning the manufacture of Xyzine, an industrial cleaner:All materials are added at the beginning of processing in this
The following categories represent typical process manufacturing industries:▪ Beverages▪ Chemicals▪ Food▪ Forest and paper products▪ Metals▪ Petroleum refining▪ Pharmaceuticals▪ Soap
Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process for making the plastic
The Converting Department of Tender Soft Tissue Company uses the weighted average method and had 1,900 units in work in process that were 60% complete at the beginning of the period. During the

Showing 500 - 600 of 1062