Principles Of Accounting Volume 2 Chapters 12-25 1st Edition Robert Libby, Patricia Libby, Fred Phillips, Stacey Whitecotton - Solutions

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CP25-2 Researching the Use of the Balanced Scorecard in Business This chapter discussed the use of the balanced scorecard for evaluating managerial and organizational performance. Many companies have adopted this performance measurement in recent years. Required: Do an Internet search to find an
CP25-1 Researching the Effect of Transfer Prices on Taxes The problems surrounding transfer pricing are not limited to internal decisions. Companies’ transfer prices can have huge implications well beyond departmental profits including significant tax implications. In September 2006, the
PB25-4 Identifying Minimum, Maximum, and Mutually Beneficial Transfer Prices H2-Oh! produces bottled water. The company recently purchased PlastiCo., a manufacturer of plastic bottles. In the past, H2-Oh! has purchased plastic bottles on the open market at $0.25 each. Financial information for the
PB25-3 Identifying Minimum, Maximum, and Mutually Beneficial Transfer Prices Snuggle Up Company produces outdoor gear. ZipIt is a division of Snuggle that manufactures unbreakable zippers used in Snuggle’s gear and sold to other manufacturers. Cost information per zipper follows. Variable cost
PB25-2 Calculating Unknowns and Predicting the Relationship among Return on Investment, Residual Income, and Hurdle Rates The following is partial information for Xavier Company’s most recent year of operation. Xavier manufactures children’s shoes and categorizes its operations into two
B25-1 Calculating Return on Investment and Residual Income and Determining the Effect of Changes in Sales, Expenses, Invested Assets, and the Hurdle Rate on Each Pascall Company has the following information available for the past year.Eastern Division Western Division Segment sales $2,200,000
PA25-4 Identifying Minimum, Maximum, and Mutually Beneficial Transfer Prices Travel Well, Inc., manufactures a variety of luggage for use by airline passengers. The company has several luggage production divisions as well as a wholly owned subsidiary, SecureLock, that manufactures small padlocks
PA25-3 Identifying Minimum, Maximum, and Mutually Beneficial Transfer Prices Rideaway Corp. is a high-end bicycle manufacturing company that produces mountain bikes. SoftSaddle, Inc. is a division of Rideaway that manufactures bicycle seats. SoftSaddle’s seats are used in Rideaway’s bikes and
PA25-2 Calculating Unknowns and Predicting the Relationship among Return on Investment, Residual Income, and Hurdle Rates The following is partial information for Dupre Company’s most recent year of operation. Dupre manufactures pet toys and categorizes its operations into two divisions, Cat and
PA25-1 Calculating Return on Investment and Residual Income and Determining the Effect of Changes in Sales, Expenses, Invested Assets, and the Hurdle Rate on Each Longview Company has the following information available for past year. Northern Division Southern Division Sales $1,200,000 $1,800,000
E25-9 Identifying Minimum and Maximum Transfer Prices and Determining the Effect on Each Division’s Profit Womack Company is made up of two divisions, A and B. Division A produces a widget that Division B uses in the production of its product. Variable cost per widget is $0.50; full cost is
E25-8 Determining Minimum, Maximum, and Negotiated Transfer Prices Coleman Company is a lumber company that also manufactures custom cabinetry. It is made up of two divisions, Lumber and Cabinetry. Division L is responsible for harvesting and preparing lumber for use; Division C produces
E25-7 Describing the Objectives and Perspectives of a Balanced Scorecard Your brother-in-law, Fred Miles, has just taken a new position as the plant manager of a local production facility. He has been told that the company uses a balanced scorecard approach to evaluate its managers. Fred is not
E25-6 Evaluating Managerial Performance Using Return on Investment and Residual Income Francis Corp. has two divisions, Eastern and Western. The following information for the past year is for each division. Eastern Division Western Division Sales $ 600,000 $ 900,000 Cost of goods sold and operating
E25-5 Calculating Return on Investment and Residual Income and Determining the Effect of Changes in Sales, Expenses, Invested Assets, and the Hurdle Rate on Each Mancell Company has sales of $500,000, cost of goods sold of $370,000, other operating expenses of $50,000, invested assets of
E25-4 Finding Unknowns Using Return on Investment, Profit Margin, and Investment Turnover Norshon Company recently had a computer malfunction and lost a portion of its accounting records. The company has reconstructed some of its financial performance measurements including components of the return
E25-3 Finding Unknowns Using Return on Investment, Profit Margin, and Investment Turnover Tuttle Company recently had a computer malfunction and lost a portion of its accounting records. The company has reconstructed some of its financial performance measurements including components of the return
E25-2 Identifying Types of Responsibility Centers Required: Match the most likely type of responsibility center classification to each of the following positions. You may use a classification once, more than once, or not at all. Employment Positions Possible Responsibility Center Classification
E25-1 Explaining the Relationships among Decentralization, Responsibility Accounting, Controllability, and the Balanced Scorecard Assume you are the vice president of operations for a local company. Your company is in the process of converting from a small, centralized company in which its
M25-9 Calculating a Cost-Plus Transfer Price Bellows Company has two divisions, X and Y. Division X manufactures a wheel assembly that Division Y uses. The variable cost to produce this assembly is $4.00 per unit; full cost is $5.00. The component sells on the open market for $9.00. What will the
M25-8 Identifying Minimum and Maximum Transfer Prices Lancaster Company has two divisions, A and B. Division A manufactures a component that Division B uses. The variable cost to produce this component is $1.50 per unit; full cost is $2.00. The component sells on the open market for $5.00. Assuming
M25-7 Describing the Implications of Transfer Pricing Assume that your cousin Matilda Flores, manages a local glass shop that was recently bought by a company that produces custom picture frames. As a result, Matilda will soon be providing glass to the Frame Division. She has heard upper management
M25-6 Calculating Return on Investment and Residual Income Rally Corp’s Eastern Division has sales of $190,000, cost of goods sold of $110,000, operating expenses of $35,000, average invested assets of $900,000, and a hurdle rate of 12 percent. What are the Eastern Division’s return on
M25-5 Calculating Return on Investment and Residual Income Lowry Company has sales of $125,000, cost of goods sold of $70,000, operating expenses of $20,000, average invested assets of $400,000, and a hurdle rate of 8 percent. What are Lowry’s return on investment and its residual income?
M25-4 Calculating Return on Investment and Residual Income Kettle Company has sales of $450,000, operating income of $250,000, average invested assets of $800,000, and a hurdle rate of 10 percent. What are Kettle’s return on investment and its residual income?
M25-3 Applying the Balanced Scorecard to a Real-World Company Consider the manager of your local Applebee’s restaurant. Using a balanced scorecard approach, identify five measures on which upper management could evaluate the manager’s performance. At least three of the items listed should be
M25-2 Describing How Real-World Organizations’ Responsibility Centers Are Structured Responsibility centers can be created in a variety of ways. Give a real-world example of a company whose responsibility centers would likely be created on the basis of each of the following: functional area,
M25-1 Describing the Difference in Centralized and Decentralized Organizations Lupe Bornes recently graduated from college and received job offers in management from two different companies. The positions are similar in terms of title, salary, and benefits, but the companies vary in organizational
10. Transfer price could be based on:a. Variable costs.b. Full cost .c. Market price .d. Any of the above
9. Which of the following is not a component of the balanced scorecard method of measuring performance?a. Customer perspective.b. Management perspective.c. Learning and growth perspective.d. Internal business processes.e. Financial perspective.
8. Which of the following statements is true?a. Return on investment considers a company’s hurdle rate for investments.b. Residual income considers a company’s hurdle rate for investments.c. Projects may be declined based on return on investment even though they produce positive residual
7. Raymond Calvin is an investment center manager for XYZ Corp. and is evaluated solely on the return on investment for his division. Which of the following will improve Raymond’s evaluation?a. Increasing the amount invested in assets while keeping operating income the same.b. Increasing the
6. Return on investment can be separated intoa. Investment turnover and profit margin.b. Profit margin and residual income.c. Investment turnover and residual income.d. Profit margin and operating income.
5. Return on investment and residual income are useful in evaluatinga. Cost center managers.b. Revenue center managers.c. Profit center managers.d. Investment center managers.
4. Which of the following is most likely to be classified as a cost center manager?a. Accounting manager.b. Sales manager.c. Regional manager.d. All of these are cost center managers.
3. Which of the following statements is true?a. A profit center manager is responsible for investment of company assets.b. A cost center manager should be evaluated based on sales revenue.c. A profit center manager should be evaluated based on return on investment.d. An investment center manager is
2. Responsibility centers includea. Cost centers.d. Investment centers.b. Revenue centers.e. All of these.c. Profit centers.
1. Sally Thorne is a profit center manager for ABC Company’s Phoenix district. Last year, her performance evaluation was based on the operating performance of ABC’s entire Southwest region. This is a violation ofa. The hurdle rate principle.b. The controllability principle.c. The balanced
19. What are negotiated transfer prices? Explain two possible disadvantages of allowing managers to negotiate a transfer price.
18. Describe the cost-based method of transfer pricing.
17. What does the term excess capacity mean? How does excess capacity affect a transfer price?
16. What is the market-price method of transfer pricing?
15. Explain the minimum and maximum transfer prices and identify whether each would be determined by the buyer or the seller.
14. What is a transfer price?
13. What are the four perspective areas of a balanced scorecard? What does each perspective represent?
12. Explain the balanced scorecard approach to performance evaluation. What advantages does this approach have over using only financial measurements?
11. What are the primary limitations of financial measures of performance?
10. What benefit does residual income offer in comparison to return on investment when evaluating performance?
9. How is residual income calculated?
8. Explain how reliance on return on investment for performance evaluation of investment center managers could lead to goal incongruence.
7. Return on investment may be separated into two components. Name them and describe what each of these components can tell you.
6. What role do return on investment and residual income play in responsibility accounting?
5. Why are profit center managers evaluated on segment margin instead of overall company income?
4. Name the four types of responsibility centers and describe the managers’ responsibilities and authority in each.
3. What is the controllability principle and why is it crucial to responsibility accounting?
2. How does decentralization create the need for responsibility accounting in an organization?
1. Explain how centralized and decentralized companies differ. What are the advantages and disadvantages of each?
CP24-1: Evaluating Managerial Performance by Comparing Actual to Budgeted Results Suppose Acore Pharmaceuticals has four sales representatives assigned to the State of Arizona. These sales reps are responsible for visiting physicians in their assigned area, introducing the company’s current or
PB24-6 Preparing Journal Entries to Record Direct Materials, Direct Labor, Variable Manufacturing Overhead, and Fixed Manufacturing Overhead Costs and Variances (Supplement) Refer to the information in PB24-5 for Easy Roller. Prepare journal entries to record its manufacturing costs for the past
PB24-5 Calculating Direct Material, Direct Labor, Variable Manufacturing Overhead, and Fixed Manufacturing Overhead Variances Easy Roller, Inc., manufactures plastic mats for use with rolling office chairs. Its standard cost information for last year follows. Standard Quantity Standard Price (Rate)
PB24-4 Preparing Journal Entries to Record Direct Materials, Direct Labor, Variable Manufacturing Overhead, and Fixed Manufacturing Overhead Costs and Variances (Supplement) Refer to the information in PB24-3 for Gotta Cotta. Prepare journal entries to record its manufacturing costs for the past
PB24-3 Calculating Direct Materials, Direct Labor, Variable Manufacturing Overhead, and Fixed Manufacturing Overhead Variances Gotta Cotta, Inc., manufactures basic terra cotta planters. Its standard cost information for the past year follows. Standard Quantity Standard Price (Rate) Standard Unit
PB24-2 Preparing Journal Entries to Record Direct Material, Direct Labor, Variable Manufacturing Overhead, and Fixed Manufacturing Overhead Costs and Variances (Supplement) Refer to the information in PB24-1 for CandleGlow. Prepare journal entries to record its manufacturing costs for February.
PB24-1 Calculating Direct Material, Direct Labor, Variable Manufacturing Overhead, and Fixed Manufacturing Overhead Variances CandleGlow, Inc., manufactures scented pillar candles. Its standard cost information for the month of February follows. Standard Quantity Standard Price (Rate) Standard Unit
CP23-3 Researching Online Budget Tools. Numerous personal financial planning or budgeting tools are available on the Internet, many of them free. Choose at least two different online budgeting calculators and input information for a typical person of your age. ( Note: You may either create a
CP23-2 Interviewing and Writing a Report on a Real-World Budget Process. Budgets can be used in almost any type of organization including large corporations, small businesses, government organizations, universities, churches, and student clubs. Required: Choose any organization and interview two
CP23-1 Evaluating the Impact of Corporate Culture and Pressure to Meet the Numbers in the Accounting Reporting Environment In 1995, BusinessWeek ran a cover story entitled “Blind Ambition: How the Pursuit of Results Got Out of Hand at Bausch and Lomb.” The two-part article details a number of
PB23-4 Preparing the Components of the Operating Budget Black & Decker (B&D) manufactures a wide variety of tools and accessories. One of its more popular craft-related items is the Cord Free Glue Gun. Use the following fictitious information about this product to complete the problem requirements.
PB23-3 Preparing a Cash Budget Refer to the information in PB23-1. Flying High Company had $12,200 cash on hand at April 1. Eighty percent of sales are cash. Of the credit sales, 60 percent is collected during the month of the sale and 40 percent is collected during the month following the sale.
PB23-2 Preparing a Budgeted Income Statement Refer to the information in PB23-1. Required: Prepare Flying High’s budgeted income statement for Quarter 2.
PB23-1 Preparing the Components of the Operating Budget Required: Prepare the following for Flying High for the second quarter. Include each month (April–June) as well as the quarter 2 total in your budgets. 1. Sales budget. 2. Production budget. 3. Raw materials purchases budget.4. Direct labor
PA23-4 Preparing the Components of the Operating Budget Black & Decker (B&D) manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power Handisaw. Use the following fictitious information about this product line to complete the problem requirements. Each
PA23-3 Preparing a Cash Budget Refer to the information in PA23-1. Bamboo You, Inc., had $9,800 cash on hand at April 1. Seventy percent of sales are cash. Of the credit sales, 40 percent is collected during the month of the sale and 60 percent is collected during the month following the sale.
PA23-2 Preparing a Budgeted Income Statement Refer to the information in PA23-1. Required: Prepare Bamboo You’s budgeted income statement for Quarter 2.
PA23-1 Preparing the Components of the Operating Budget Required: Prepare the following for Bamboo You, Inc., for the second quarter. Include each month (April–June) as well as the quarter 2 total in your budgets. 1. Sales budget. 2. Production budget. 3. Raw materials purchases budget. 4. Direct
E23-8 Calculating Cash Receipts For Wright Company, 75 percent of sales are cash. Credit sales are collected as follows: 65 percent in the month of the sale and 35 percent in the month following the sale. Wright’s budgeted sales for upcoming months are: June $22,500 July 25,000 August 23,000
E23-7 Preparing a Cash Budget Garcia Company has the following information for the month of March. Cash balance, March 1 $15,575 Collections from customers 34,650 Paid to suppliers 22,300 Manufacturing overhead 6,100 Direct labor 8,250 Selling and administrative expenses 4,200 Wages are paid in the
E23-6 Preparing a Selling and Administrative Expense Budget The following information is available for Revelle Company. • Sales price per unit is $80. • In November and December, sales were 3,100 and 3,550 units, respectively. • Variable costs are 11 percent of sales (6 percent commission, 2
E23-5 Calculating Cash Receipts Refer to information in E23-3 and E23-4 for Rainwater Corp. It expects the following unit sales for the third quarter. July 525 August 490 September 450 Sixty percent of Rainwater’s sales are cash. Of the credit sales, one-half is collected in the month of the
E23-4 Preparing the Raw Materials Purchases and Manufacturing Overhead Cost Budgets Refer to the information in E23-3 for Rainwater Corp. Assume its production budget calls for production of 605 umbrellas in May and 530 umbrellas in June. Each umbrella requires an opening mechanism that the company
E23-3 Calculating the Sales and Production Budgets Rainwater Corp. expects to sell 600 umbrellas in January and 400 umbrellas in February. Each umbrella sells for $15. Rainwater’s beginning and ending finished goods inventories for January are 75 and 50 units, respectively. Ending finished goods
E23-2 Calculating Unknowns Based on Production, Sales, and Beginning and Ending Inventory Values Complete the following table. Production Sales NUMBER OF UNITS Ending Inventory Beginning Inventory 75 - 500 100 800 ? 90 750 675 125 80 900 1,200 100 665 ? 225 160 845 795 305 ?
E23-1 Classifying and Ordering the Components of the Master Budget Organize the following budgets in order of preparation by placing the number before it and indicate how each would be affected by a sales forecast that is understated. Cash receipts and disbursements budget. Selling and
M23-9 Preparing a Selling and Administrative Expense Budget Affleck, Inc., expects sales of its housing for electric motors to be $83,000, $79,000 and $88,000 for January, February, and March, respectively. Its variable selling and administrative expenses are 9 percent of sales, and fixed selling
M23-8 Preparing a Manufacturing Overhead Cost Budget Damon Company expects sales of its headphones to be $200,000 in the first quarter and $236,000 in the second quarter. Its variable overhead is approximately 17 percent of sales, and fixed overhead costs are $52,000 per quarter. Prepare Damon’s
M23-7 Preparing a Direct Labor Budget Refer to the information in M23-6 for CubbyHole, Inc. Each unit requires 1.5 hours of direct labor, and labor wages average $9 per hour. Prepare CubbyHole’s direct labor budget for July and August.
M23-6 Preparing a Raw Materials Purchases Budget CubbyHole, Inc., manufactures wooden shelving units for collecting and sorting mail. The company expects to produce 310 units in July and 400 units in August. Each unit requires 10 feet of wood at a cost of $1.20 per foot. CubbyHole wants to always
M23-5 Preparing a Purchases Budget Pascall Corp. expects to sell 1,300 units of its camera bags in March and 900 units in April. Each unit sells for $110. Pascall’s ending inventory policy is 40 percent of the following month’s sales. Pascall pays its supplier $50 per unit. Prepare Pascall’s
M23-4 Preparing a Sales Budget Ranger Company estimates that unit sales of its weather radios will be 8,000 in October; 8,200 in November; and 9,350 in December. Prepare Ranger’s sales budget for the fourth quarter assuming each unit sells for $27.50.
M23-3 Classifying and Ordering the Components of the Master Budget Indicate whether each of the following budgets is an operating (O) or financing (F) budget and the order in which they would be prepared. Order of O or F Preparation Cash receipts and disbursements budget Sales budget Raw materials
M23-2 Describing the Advantages of Budgetary Planning Calypso Cal (CC) has a “Live today, worry about tomorrow later” motto. In keeping with this philosophy, CC has not set any long-term or short-term objectives or budgets for the company, which manufactures surfboards. Describe three potential
M23-1 Explaining the Role of Managerial Accounting in the Planning and Control Cycle Your boss believes that the three management functions of planning, directing/leading, and control are unrelated. He also thinks that managerial accounting has no role in any of the functions. Is your boss correct?
10. Raya Company is calculating its expected cash receipts for the month of June. This should not includea. Cash sales made during June.b. Credit sales made during May.c. Credit sales made during June.d. Credit sales made during July.
9. Which of the following is not considered an operating budget?a. Cash budget.b. Budgeted income statement.c. Selling and administrative expense budget.d. Raw materials purchases budget.
8. ABC Company expects to sell 100,000 units of its primary product in January. Expected beginning and ending finished goods inventory for January are 20,000 and 45,000 units, respectively. How many units should ABC produce?a. 100,000.c. 75,000.b. 125,000.d. 35,000.
7. Which of the following budgets does the sales budget impact?a. Direct labor budget.b. Cash receipts and disbursements budget.c. Selling and administrative budget.d. All of the above.
6. Which of the following budgets would be prepared earliest in a company’s budgeting process?a. Budgeted income statement.b. Budgeted balance sheet.c. Raw materials purchases budget.d. Production budget.
4. Shasta Company plans to double profits in five years. This is an example of aa. Long-term objective.c. Tactic.b. Short-term objective.d. Sales forecast. 5. Which of the following is not considered a direct benefit of budgeting?a. Better communication.b. Motivating employees.c. Developing new
3. Which of the following statements is true?a. GAAP requires all companies to prepare budgets.b. Only newly formed companies need budgets.c. Budgets are used by all companies.d. Most companies would benefit from budgeting.
2. Which phases of the management process does budgeting impact?a. Planning.c. Control.b. Directing/leading.d. All of the above.

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Principles Of Accounting Volume 2 Chapters 12-25 1st Edition Robert Libby, Patricia Libby, Fred Phillips, Stacey Whitecotton - Solutions

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