Questions and Answers of Managerial Accounting 12th

Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations:During its first year of operations, Haas produced 60,000
During Durton Company's first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two years are given:The company's $20
Sparn Limited incurs the following costs to produce and sell a single product:During the last year, 30,000 units were produced and 22,500 units were sold. The Finished Goods Inventory account at the
Refer to the data in Exercise 8-1 for Ida Sidha Karya Company. An absorption costing income statement prepared by the company's accountant appears below:Required:1. Determine how much of the ending
"There must be something wrong with these statements!" exclaimed Hugh Richards, president of Ajax Inc. 'They just don't make sense. We sold the same number of units this year as we did last year, yet
As part of the control system, why are budget results compared to actual results?
What are some examples of estimates or assumptions required to prepare the master budget?
Sky Inc provides in-flight meals for a number of major airlines. One of the company's products is stuffed cannelloni with roasted pepper sauce, fresh baby corn, and spring salad. During the most
Johnston Company (JC) sells two types of bicycles with details as follows for 2022:Required:1. Calculate the budgeted contribution margin for each model.2. Calculate the following variances:a. Sales
The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below:During the most recent month, the following activity was recorded:a. 20,000 mi llilitres of
Why is depreciation not included in the cash budget?
For a professional services company such as a law firm, which type of expenses would likely make up the largest proportion of total expenses in their budget? Why?
Symphony Electronics produces wireless speakers for outdoor use on patios, decks, etc. Their most popular model is the All Weather and requires four separate XL12 components per unit. The company is
What is the difference between a forecast and a static budget? What is the primary purpose of a forecast?
Refer to the data in Exercise 10-9. Assume that instead of producing 3,000 bottles of Clean-All during the month, the company produced only 2,000 bottles, using 16,000 millilitres of material. (The
Ryder Company produces a single product, school backpacks made of a sturdy nylon fabric. The production of these bags requires a relatively large amount of labour time. Overhead cost is applied on
The Scottish firm of Cullen and MacNeil produces a single product and uses a standard costing system to help control costs. Manufacturing overhead is applied to production on the basis of standard
Clarissa McWhirter, vice-president of Cyprus Company, was pleased to see a small variance on the income statement after the trouble the company had been having in controlling manufacturing costs. She
The Yardman Company produces electric weed trimmers, among other products. The following standard costs per unit are associated with the trimmers:Normal activity of 60,000 hours was used as the
Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement:In an effort to isolate the
The Components Division manufactures components used in GPS devices. The components can be sold either to the Watch Division of the same company or to outside customers. Last year, the following
Refer to the data in Exercise 11-3. Assume that Vancouver's sales by major market are as follows:Data from in exercise 11-3.Middleton Associates is a consulting firm that specializes in information
When two alternatives are being considered when making a capital budgeting decision, what does it mean to use an incremental-cost approach for calculating the net present value?
Applecross Dental Services is investigating expanding its operations by acquiring additional teeth cleaning equipment. The equipment would cost $150,000 and management has estimated that it would
Jim Pooley operates a hot dog stand in downtown Toronto. He is considering purchasing a new stand that will cost $30,000. The new stand will be more efficient to run and Jim estimates it will save
Books and Java, a book store and coffee shop, has provided the following data to be used in its service department cost allocations:Required:Using the step-down method, allocate the costs of the
What is the difference between a service department and an operating department?
A number of activities that are a part of a company's quality control system are listed below:Required1. Classify the costs associated with each of these activities into one of the following
Affordable Electronics Inc. manufactures medium-quality, reasonably priced wireless speakers for home use. The company uses standards to control its costs. The labour standards that have been set for
Operating at a normal level of 30,000 direct labour-hours, Lasser Company produces 12,000 units of product each year. The direct labour wage rate is $15 per hour. Two and one-half yards of direct
Marvel Parts Inc. manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use
Grand River Manufacturing produces a metal flange that it sells to several local home building supply retailers. The company has set standards as follows for materials and labour:During the past
Camping Supply Company has developed a new camping lamp that runs on solar power. The solar cells charge in the sun all day and then the lamp is ready to run when the sun goes down. The company has a
Rest Easy produces two types of mattresses: Regular and Heavenly. Budgeted and actual data for 2021 were as follows:Market Data for 2022:Expected total market unit sales of mattresses: Regular
What does the term standard hours allowed mean?
Jan Boothe is the CFO of the Laurel wood Sports Medicine Clinic. Boothe is trying to determine whether or not the clinic should move patient files and other items out of a spare room in the clinic
Johnson Limited is contemplating the installation of a new system that would allow for automated handling of customer inquiries about their order status, account balances, etc. Currently all such
Custom Cycles is looking at purchasing a new piece of equipment that would allow them to automate part of their production process now done manually. The equipment will cost $200,000 and would have a
Why is depreciation expense not included in the calculation of a project's payback period?
Sun Coast Tours is considering purchasing a new boat for use in its tour business. Relevant information concerning the boat is as follows:RequiredIgnore income taxes.1. Compute the payback period for
What are some non-financial factors that might be considered when making capital budgeting decisions?
If a post-audit shows that the actual cash inflows for a project are lower than the estimates used to originally determine a project's net present value, does this mean that the manager who prepared
Selected operating data on the two divisions of Prism Company are given below:Required1. Compute the rate of return for each division using the ROI formula stated in terms of margin and turnover.2.
Winthrop Company has an opportunity to manufacture and sell a new product for a five-year period. To pursue this opportunity, the company would need to purchase a piece of equipment for $130,000. The
Should the salvage value on equipment being replaced as part of a new project proposal be included as a cash inflow when calculating net present value and/or the internal rate of return for that
Courtney Limited has capital project opportunities each of which would require an initial investment of $400,000. Details for each opportunity are shown below:The robotic equipment would have a
Information on four potential projects is given below:Required:Ignore income taxes.1. Compute the project profitability index for each project.2. Rank the projects in terms of preference. Investment
FitPlus is a regional chain of health clubs. Each club's manager has the authority to make investments as needed and is evaluated based largely on ROI. FitPlus Club 52 reported the following results
Stephen Scott recently joined the Finance and Planning Division of the Bank of Ontario as an assistant chief financial officer (CFO). The Bank is a publicly owned company. Scott is a Chartered
Electric Scooter Co. makes motorized scooters for city commuters. The scooters can be charged using a regular household plug, and the batteries hold their charge for 24 hours. The manufacturing plant
The manager of the creative design department of a toy manufacturer is interested in purchasing a three-dimensional printer to use in designing prototypes for new toys. The cost is $80,000, but it
At the Kicher Company's current activity level of 8,000 units per month, the costs of producing and selling one unit of the company's only product are as follows:The normal selling price is $26 per
At the end of last year, a group of architects and engineers in Squamish, B.C., decided to join efforts in providing one-stop design and engineering consulting services to the construction industry.
The following are comparative data submitted by three companies in the food services:Required1. What advantages are there to breaking down the ROI computation into two separate elements, margin and
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 60,000 units per year is:The normal selling price is
Financial data for Bridger Inc. for last year are as follows:The company paid dividends of $85,000 last year. The "Investment in Brier Company" on the balance sheet represents an investment in the
Sato Awards has had a request for a special order of 10 silver-plated trophies from the provincial tennis association. The normal selling price of such a trophy is $249.95 and its unit product cost
In a joint processing operation, Nolen Company manufactures three grades of sugar from a common input, sugar cane. Joint processing costs up to the split-off point total $40,000 per year. The company
The contribution format income statement for Smith & Company for its most recent period is given below:The company had average operating assets of $500,000 during the period.Required:1. Compute
Since limited funds are available for investment, Riley & Tanner Limited must ration the funds among four competing projects. Selected information on the four projects follows:The present values
Secure Homes is pondering an opportunity to produce and sell a new smart home monitoring system that can be managed remotely using a smartphone app. The company has gathered the following data on
Longboards Inc. was founded by Riley Thomas to produce a longboard he had designed for cruising. Long boards are catching up to skateboards in popularity because of their speed and durability. Up to
Warner Containers currently uses a recycled plastic to make bottles for the food industry.Current bottle production information:The cost and time standards per batch of 10,000 bottles are as
CVS Health Corporation (NYSE: CVS) and Walgreens Boots Alliance, Inc. (NASDAQ: WBA) are competitors. In this case, we will be looking at the financial positions of both companies to answer the
Walmart Inc. (NYSE: WMT) has a fiscal year end of January 31. To follow are its statements of cash flows for the fiscal years 2019–2021.RequirementsUsing its statements of cash flows, answer the
The following is a sample of a worksheet in Excel.To complete this exercise, download the Excel file from MyLab Accounting. Complete the exercise in Excel.Requirements1. Calculate total sales and put
McKay Merchandise has several warehouses for its inventory located around the United States. McKay’s controller has imported its inventory records into Excel. The following is a sample of the
Classify each of the following as direct costs or indirect costs of operating the Pediatrics ward for children at the Cleveland Clinic:a. Wi-Fi covering the entire hospital campusb. Net cost of
Hale Lighting has several plants located around the United States. The company’s controller has imported its job cost data from the past year into Excel. The following is a sample of the table of
Once raw materials are ordered from vendors for jobs, the purchase order is entered into the accounts payable system. Classify each of the following steps in an accounts payable invoice payment
The Franklin Cereal Corporation produces corn flakes and packages them in four different package sizes: a 10.6-ounce box, a 24-ounce box, a 36-ounce box, and a pack of six 36-ounce boxes. The
Perry Chess Sets makes specialty chess sets. The owner has developed a scenario analysis for evaluating what may happen in the near future.Identify which line items in the projected contribution
Owner Izabella Mason is considering franchising her Noodle Time restaurant concept. She believes people will pay $6.50 for a large bowl of noodles. Variable costs are $1.95 a bowl. Mason estimates
Granville Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $720,000 and a contribution margin of 90% of revenues.Requirements1. Compute Granville
Diamond Walker sells homemade knit scarves for $25 each at local craft shows. Her contribution margin ratio is 60%. Currently, the craft show entrance fees cost Diamond $1,500 per year. The craft
Owner Gabriella Biffle is considering franchising her Oodles of Noodles restaurant concept. She believes people will pay $7.00 for a large bowl of noodles. Variable costs are $2.45 a bowl. Biffle
Which of the following formulas would be used to multiply cell A2 by cell B3 when using Excel?a. =A2^B3b. =A2*B3c. =A2xB3d. =A2/B3
Burburr Resorts & Hotels Corporation owns several resorts throughout the world. Its Las Vegas Burburr location opened in 1960 and includes a hotel and casino. The Las Vegas Burburr includes five
Classify each of the following data types as structured or unstructured.a. Customer invoicesb. Transactions recorded in general ledgerc. Social media commentsd. Employee payroll recordse. Monthly
Classify each of the following data types as discrete, continuous, categorical, or ordinal.a. Monthly sales revenueb. Weight of packages shippedc. Hair or eye colord. Customer satisfaction rating
This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began in Chapter 1. The components of the Burburr serial case can be completed in any order.Burburr has
Crane Manufacturing uses weighted-average process costing. All materials at Crane are added at the beginning of the production process. The equivalent units for materials at Crane would bea. The
Cafferson Industries has one product. Information about the production and sales of that product for the past year follow.The company had no beginning inventory.Requirements1. Prepare two income
In the cost equation y = vx + f, what term represents the total variable cost component ?a. f b. y c. vx d. v
Which of the following costs would most likely be a committed fixed cost for a retailer?a. Cost of a car awarded to the employee with the most sales for the yearb. Cost of sponsoring the local golf
Which method helps managers visualize the relationship between the cost and the total volume of the activity?a. Variance analysisb. Outlierc. Scatterplotd. Account analysis
When choosing the high point for the high-low method, how is the high point selected?a. The point with the highest total cost is chosen.b. The point with the highest volume of activity is chosen.c.
What is the advantage of using regression analysis to determine the cost equation?a. The method is objective.b. All data points are used to calculate the terms for the cost equation.c. Regression
The Heights Hotel in Tampa, Florida, is a luxury hotel that has 414 rooms. The hotel’s controller imported its monthly occupancy data from the past four years into Excel. The data included date,
The Plastic Lumber Corporation wants to predict its manufacturing overhead costs by using machine hours in a simple linear regression. All of the following statements are true except:a. Machine hours
Managers at Eilert Corporation are analyzing a potential investment of $2,400,000 in equipment and the processes needed to manufacture and market HomeBotz, a product line of robots designed to assist
Managers at DeJohn Corporation are analyzing a potential investment of $2,000,000 in equipment and the processes needed to manufacture and market MyHelperBotz, a product line of robots designed to
Managers at Watson Corporation are analyzing a potential investment of $2,200,000 in equipment and the processes needed to manufacture and market HomeBotz, a product line of robots designed to assist
A manufacturer is considering whether to invest in a robotic system that costs $600,000, has a $40,000 residual value, and should lead to cost savings of $150,000 per year for its five-year life. In
When making capital rationing decisions, the size of the initial investment required may differ between alternative investments. The profitability index can be used in combination with which of the
Which of the following methods uses accrual accounting rather than net cash flows as the basis for calculations?a. Paybackb. Accounting rate of returnc. Internal rate of returnd. Net present value
Which of the following is not one of the components of a time series analysis?a. Secular trendsb. Gradient curvesc. Seasonal variationsd. Cyclical fluctuations
Assume that Ernest Corporation has a required hurdle rate of 14% for all new investments. What does this hurdle rate mean?a. All potential investments with an IRR less than 14% will be accepted.b.
McCabe Company reported the following financial statements for 2022 and 2023:Compute the following investing cash flows:a. Purchases of plant assets (all were for cash). There were no sales of plant
You are planning for a very early retirement. You would like to retire at age 40 and have enough money saved to be able to draw $205,000 per year for the next 30 years (based on family history, you

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