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managerial accounting 12th
Managerial Accounting The Cornerstone Of Business Decision Making 9th Edition Maryanne Mowen, Don Hansen, Dan Heitger - Solutions
Gorman Nurseries, Inc., grows poinsettias and fruit trees in a green house/nursery operation.The following information was provided for the coming year:Poinsettias Fruit Trees Sales $970,000 $3,100,000 Variable cost of goods sold 460,000 1,630,000 Direct fixed overhead 160,000 200,000 A sales
Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model IJ5 at a price of $5 each. The new customer is geographically separated from the company’s other customers, and existing sales would not be affected. Harrison normally produces 75,000
Fresh Foods, a large restaurant chain, needs to determine if it would be cheaper to produce 5,000 units of its main food ingredient for use in its restaurants or to purchase them from an outside supplier for $12 each. Cost information on internal production includes the following:Fixed overhead
In the sell-or-process-further decision,a. joint costs are always relevant.b. total costs of joint processing and further processing are relevant.c. all costs incurred prior to the split-off point are relevant.d. the most profitable outcome may be to further process some separately identifiable
In the keep-or-drop decision, the company will find which of the following income statement formats most useful?a. A segmented income statement in the contribution margin formatb. A segmented income statement in the full costing format that is used for financial reportingc. An overall income
8-15 When a company faces a production constraint or scarce resource (e.g., only a certain number of machine hours are available), it is important toa. produce the product with the highest contribution margin in total.b. produce the product with the lowest full manufacturing cost.c. produce the
Jennings Hardware Store marks up its merchandise by 30%. If a part costs $25.00, which of the following is true?a. The price is $7.50.b. The markup is $32.50.c. The price is $32.50.d. The markup is pure profit.e. All of these.
Garrett Company provided the following information:Common fixed cost totaled $46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true?a. Sales will increase by $300,000.b. Overall operating income will
A segment could be which of the following?a. Productb. Customer typec. Geographic regiond. All of these.e. None of these.
8-11 Carroll Company, a manufacturer of vitamins and minerals, has been asked by a large drugstore chain to provide bottles of vitamin E. The bottles would be labeled with the name of the drugstore chain, and the chain would pay Carroll$2.30 per bottle rather than the $3.00 regular price. Which
8-10 Using a complex mathematical algorithm to help identify the optimal make-or-buy decision outcome represents an example of [Refer to Exhibit 2.2 on p. 38]:a. Diagnostic data analyticsb. Prescriptive data analyticsc. Descriptive data analyticsd. Predictive data analyticse. All of the above
8-9 In a make-or-buy decision,a. the company must choose between expanding or dropping a product line.b. the company must choose between accepting or rejecting a special order.c. the company would consider the purchase price of the externally provided good to be relevant.d. the company would
8-8 In a segmented income statement, which of the following statements is true?a. Segment margin is greater than contribution margin.b. Common fixed expenses must be allocated to each segment.c. Contribution margin is equal to sales less all variable and direct fixed expenses of a segment.d.
8-7 Which of the following statements is false?a. Fixed costs are never relevant.b. Variable costs are never relevant.c. Usually, variable costs are irrelevant.d. Step costs are irrelevant when a decision alternative requires moving outside of the existing relevant range.e. All of these.
8-6 Which of the following items could represent a qualitative factor in relevant decisionmaking for a clothing manufacturer?a. The amount of Scope 1 and Scope 2 GHG emissions occurring in production.b. The percentage of recycled materials used in packaging finished goods.c. The number of gallons
8-5 Refer to the information for Sandy. Suppose that the apartment building was within walking distance to campus and the house was five miles away. Sandy does not own a car. How would that affect her decision?Sandy is considering moving from her apartment into a small house with a fenced yard. The
8-4 Refer to the information for Sandy. Which of the following is a qualitative factor?Sandy is considering moving from her apartment into a small house with a fenced yard. The apartment is noisy, and she has difficulty studying. In addition, the fenced yard would be great for her dog. The distance
8-3 Refer to the information for Sandy. Which of the following costs is irrelevant to Sandy’s decision to stay in the apartment or move to the house?Sandy is considering moving from her apartment into a small house with a fenced yard. The apartment is noisy, and she has difficulty studying. In
Costs that cannot be affected by any future action are calleda. differential costs.b. sunk costs.c. inventory costs.d. relevant costs.e. joint costs.
Which of the following represents a step in the short-run decision-making model?a. Defining the problem.b. Identifying alternatives.c. Identifying the costs and benefits of feasible alternatives.d. Assessing qualitative factors.e. All of these.
Two types of gears are produced: A and B. Gear A has a unit contribution margin of $200, and Gear B has a unit contribution margin of $400. Gear A uses 2 hours of grinding time, and Gear B uses 5 hours of grinding time. There are 200 hours of grinding time available per week. This is the only
Pastin Company produces a light-weight travel raincoat with the following unit cost:Direct materials $4.00 Direct labor 1.00 Variable overhead 1.75 Fixed overhead 2.00 Unit cost $8.75 While production capacity is 200,000 units per year, Pastin expects to produce only 170,000 raincoats for the
How to calculate a target cost?
How to calculate price by applying a markup percentage to cost?
How to determine the optimal product mix with one constrained resource and a sales constraint?
How to determine the optimal product mix with one constrained resource?
How to structure the sell-or-process-further decision?
How to structure a keep-or-drop product-line problem with complementary effects?
How to structure a keep-or-drop product-line problem?
How to prepare a segmented income statement?
How to structure a special-order problem?
How to structure a make-or-buy problem?
Consider a situation in which you want to buy something, but it is quite expensive.Suppose the salesperson says that the price of the item is high because the cost to the store is high (i.e., price is related to cost). Suppose, on the other hand, that the salesperson says the price is high because
CoffeeTime manufactures coffee makers and is designing a new model that incorporates numerous innovative features, which CoffeeTime hopes consumers will view as fun and valuable design features. As such, the new coffee maker has a target price of $200. Management requires a 15% profit on new
Elvin Company assembles and installs computers to customer specifications. Elvin has decided to price its jobs at the cost of direct materials and direct labor plus 20%. The job for a local vocational-technical school included the following costs:Direct materials $65,000 Direct labor (assembly and
Audiomatronics, Inc., produces high-end wireless speakers and smartphones in a single factory.The following information was provided for the coming year:A 5% sales commission is paid for each of the product lines. Direct fixed selling and administrative expense was estimated to be $10,000 for the
Presented below is a segmented income statement for Norton Materials, Inc.’s three product lines:The roofing tile line has a contribution margin of $10,000 (sales of $150,000 minus total variable costs of $140,000). All variable costs are relevant. Relevant fixed costs associated with this line
Refer to Norton Materials’ segmented income statement in Example 8.4 (p. 462). Assume that dropping the product line reduces sales of blocks by 10% and sales of bricks by 8%. All other information remains the same.Required:1. If the roofing tile line is dropped, what is the contribution margin
Appletime grows apples and then sorts them into one of three grades, A, B, or C, based on their condition. Appletime must decide whether to sell the Grade B apples at split-off or to process them into apple pie filling. The company normally sells the Grade B apples in 120 five-pound bags at a
Jorgenson Company produces two types of gears, X and Y, with unit contribution margins of $25 and $10, respectively. Each gear must be notched by a special machine. The firm owns eight machines that together provide 40,000 hours of machine time per year. Gear X requires 2 hours of machine time, and
Jorgenson Company produces two types of gears, X and Y, with unit contribution margins of $25 and $10, respectively. Each gear must be notched by a special machine. The firm owns eight machines that together provide 40,000 hours of machine time per year. Gear X requires 2 hours of machine time, and
Case 7-67 Ethics and a Cost-Volume-Profit Application Danna Lumus, the marketing manager for a division that produces a variety of paper products, is considering the divisional manager’s request for a sales forecast for a new line of paper napkins. The divisional manager has been gathering data
Artistic Woodcrafting Inc. began several years ago as a one-person cabinet-making operation.Employees were added as the business expanded. Last year, sales volume totaled $850,000.Volume for the first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for
Problem 7-65 Contribution Margin, Break-Even Sales, Margin of Safety Suppose that Kicker had the following sales and cost experience (in thousands of dollars) for May of the current year and for May of the prior year:In May of the prior year, Kicker started an intensive quality program designed to
Problem 7-64 Break-Even Sales, Operating Leverage, Change in Income Income statements for two different companies in the same industry are as follows:Required:1. Compute the degree of operating leverage for each company.2. Conceptual Connection Compute the break-even point in dollars for each
Problem 7-63 Contribution Margin, Cost-Volume-Profit, Margin of Safety Candyland Inc. produces a particularly rich praline fudge. Each 10-ounce box sells for $5.60.Variable unit costs are as follows:Pecans $0.70 Sugar 0.35 Butter 1.85 Other ingredients 0.34 Box, packing material 0.76 Selling
Problem 7-62 Using the Break-Even Equations to Solve for Price and Variable Cost per Unit Solve the following independent problems.Required:1. Andromeda Company’s break-even point is 2,400 units. Variable cost per unit is $42;total fixed costs are $67,200 per year. What price does Andromeda
Problem 7-61 Cost-Volume-Profit, Margin of Safety Abraham Company had revenues of $830,000 last year with total variable costs of $647,400 and fixed costs of $110,000.Required:1. What is the variable cost ratio for Abraham? What is the contribution margin ratio?2. What is the break-even point in
Problem 7-60 Cost-Volume-Profit, Margin of Safety Victoria Company produces a single product. Last year’s income statement is as follows:Sales (29,000 units) $1,218,000 Total variable cost 812,000 Contribution margin $ 406,000 Total fixed cost 300,000 Operating income $ 106,000 Required:1.
Problem 7-59 Multiple-Product Breakeven Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals $146,000. Each door handle sells for $12 and has variable cost of $9; each trim kit sells for $8 and has variable cost of
Problem 7-58 Multiple Products, Break-Even Analysis, Operating Leverage Carlyle Lighting Products produces two different types of lamps: a floor lamp and a desk lamp.Floor lamps sell for $30, and desk lamps sell for $20. The projected income statement for the coming year follows:Sales $600,000
Problem 7-57 Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows:Sales $460,300 Total variable cost 165,708 Contribution margin $294,592 Total fixed cost 150,000 Operating income
Problem 7-56 Cost-Volume-Profit Equation, Basic Concepts, Solving for Unknowns Elvin Company produces hand cream in plastic jars. Each jar sells for $5.60. The variable cost for each jar (materials, labor, and overhead) totals $3.92. The total fixed cost is $64,200. During the most recent year,
Problem 7-55 Multiple-Product Analysis, Changes in Sales Mix, Sales to Earn Target Operating Income Basu Company produces two types of sleds for playing in the snow: basic sled and aerosled. The projected income for the coming year, segmented by product line, follows:The selling prices are $30 for
Problem 7-54 Contribution Margin, Break-Even Units, Break-Even Sales, Margin of Safety, Degree of Operating Leverage Aldovar Company produces a variety of chemicals. One division makes reagents for laboratories.The division’s projected income statement for the coming year is:Sales (203,000 units
Problem 7-53 Break-Even Units, Operating Income, Margin of Safety Kallard Manufacturing Company produces t-shirts screen-printed with the logos of various sports teams. Each shirt is priced at $13.50 and has a unit variable cost of $9.85. Total fixed cost is $197,600.Required:1. Compute the
Problem 7-52 Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company’s projected profit for the coming year is as follows:Total Per Unit Sales $2,040,000 $24 Total variable cost 1,530,000 18 Contribution margin $ 510,000 $ 6 Total fixed cost 380,400 Operating income $ 129,600
Exercise 7-51 Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.’s projected operating income (based on sales of 450,000 units) for the coming year is as follows:Total Sales $11,700,000 Total variable cost 8,190,000
Exercise 7-50 Multiple-Product Breakeven Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals$30,000. Parker’s accountant has begun to assess the profitability of
Exercise 7-49 Margin of Safety and Operating Leverage Gonzales Company produces a single product. The projected income statement for the coming year is as follows:Sales (46,000 @ $40) $1,840,000 Total variable cost 1,012,000 Contribution margin $ 828,000 Total fixed cost 733,320 Operating income $
Exercise 7-48 Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows:Sales (54,600 units @ $34) $1,856,400 Total variable cost 1,064,700 Contribution margin $ 791,700 Total fixed cost 801,850 Operating income $
Exercise 7-47 Cost-Volume-Profit Graphs Lotts Company produces and sells one product. The selling price is $10, and the unit variable cost is $6. Total fixed cost is $10,000.Required:1. Prepare a CVP graph with “Units Sold” as the horizontal axis and “Dollars” as the vertical axis. Label
Exercise 7-45 Multiple-Product Breakeven, Break-Even Sales Revenue Refer to the information for Andrews Sporting Goods given. Suppose that in the coming year, the company plans to produce an autographed mitt. The company estimates that 6,000 autographed mitts can be sold at a price of $20 and a
Exercise 7-44 Multiple-Product Breakeven Refer to the information for Andrews Sporting Goods given.Andrews Sporting Goods, Inc., produces and sells children’s softball mitts: vinyl mitts and basic leather mitts. Last year, Andrews sold 24,000 vinyl mitts and 12,000 leather mitts.Information on
Exercise 7-43 Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Company’s controller prepared the following budgeted income statement for the coming year:Sales $415,000 Total variable cost 302,950 Contribution margin $112,050 Total fixed cost 64,800 Operating income $
Exercise 7-42 Contribution Margin, Unit Amounts, Break-Even Units Information on four independent companies follows. Calculate the correct amount for each question mark. (Note: Round unit dollar amounts and ratios to two decimal places; round break-even units to the nearest whole unit.) Sales Total
Exercise 7-41 Margin of Safety Ciganda Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.10 per string. The variable costs per string are as follows:Direct materials $2.90 Direct labor 1.70 Variable factory overhead 0.48 Variable selling
Exercise 7-40 Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Belham Company produces and sells disposable foil baking pans to retailers for $3.45 per pan.The variable cost per pan is as follows:Direct materials $0.67 Direct labor 0.86 Variable
Exercise 7-39 Income Statement, Break-Even Units, Units to Earn Target Income Amarok Company sold 18,300 units last year at $16.00 each. Variable cost was $13.70, and total fixed cost was $34,500.Required:1. Prepare an income statement for Amarok for last year.2. Calculate the break-even point in
Exercise 7-38 Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The controller of Jeong Company prepared the following projected income statement:Sales $92,000 Total variable cost 26,680 Contribution margin $65,320 Total fixed cost 42,600 Operating income $22,720 Required:1.
Exercise 7-37 Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required.Required:1. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of$349,600. The
Exercise 7-36 Basic Break-Even Calculations Suppose that Patron Company sells a product for $24. Unit costs are as follows:Direct materials $4.98 Direct labor 2.58 Variable factory overhead 1.00 Variable selling and administrative expense 2.00 Total fixed factory overhead is $30,000 per year, and
Brief Exercise 7-35 Impact of Increased Sales on Operating Income Using the Degree of Operating Leverage Chillmax Company had planned to sell 3,500 pairs of shoes at $60 each in the coming year.Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and
Brief Exercise 7-34 Degree of Operating Leverage Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000
Brief Exercise 7-33 Margin of Safety Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed
Brief Exercise 7-32 Break-Even Sales Dollars for a Multiple-Product Firm Chillmax Company now sells both pairs of shoes and carryalls. Next year, Chillmax expects to produce total revenue of $210,000 and incur total variable cost of $81,375. Total fixed cost is expected to be $91,500.Required:1.
Brief Exercise 7-31 Break-Even Point in Units for a Multiple-Product Firm Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have variable costs of $9 each.
Brief Exercise 7-30 Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and
Brief Exercise 7-29 Units to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes
Brief Exercise 7-28 Break-Even Point in Sales Dollars Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and
Brief Exercise 7-27 Variable Cost Ratio, Contribution Margin Ratio Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead
Brief Exercise 7-26 Break-Even Point in Units Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes
Brief Exercise 7-25 Variable Cost, Fixed Cost, Contribution Margin Income Statement Chillmax Company plans to sell 3,500 pairs of casual shoes at $60 each in the coming year.Product costs include:Direct materials per pair $ 12 Direct labor per pair 4 Variable factory overhead per pair 2 Total fixed
Brief Exercise 7-24 Impact of Increased Sales on Operating Income Using the Degree of Operating Leverage Head-First Company had planned to sell 5,000 bicycle helmets at $75 each in the coming year.Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and
Brief Exercise 7-23 Degree of Operating Leverage Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500
Brief Exercise 7-22 Margin of Safety Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed
Brief Exercise 7-21 Break-Even Sales Dollars for a Multiple-Product Firm Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head-First expects to produce total revenue of $570,000 and incur total variable cost of $388,000.Total fixed cost is expected to be
Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $75 and have variable costs of $45 each. The motorcycle helmets are priced at $220 and have variable costs of $140 each. Total fixed cost for Head-First as a whole equals $58,900
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).Required:1.
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year.Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).Required:1.
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $20,000, and fixed selling and administrative expense is
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include:Direct materials per helmet $ 30 Direct labor per helmet 8 Variable factory overhead per helmet 4 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3 per
7-13 Which of the following is a use of data analytics in cost-volume-profit analysis?a. Developing a cost-volume-profit graph.b. Performing sensitivity analysis on variable costs.c. Performing sensitivity analysis on fixed costs.d. Calculating the break-even point using budgeted, not actual,
7-12 Solemon Company has total fixed cost of $15,000, variable cost per unit of $6, and a price of $8. If Solemon wants to earn a targeted profit of $3,600, how many units must be sold?a. 2,500b. 7,500c. 9,300d. 18,600e. 18,750
7-11 If a company’s total fixed cost decreases by $10,000, which of the following will be true?a. The break-even point will increase.b. The variable cost ratio will increase.c. The break-even point will be unchanged.d. The variable cost ratio will be unchanged.e. The contribution margin ratio
7-10 Refer to the information for Dartmouth. The variable cost ratio and the contribution margin ratio for Dartmouth are Variable cost ratio Contribution margin ratio Dartmouth Company produces a single product with a price of $12, variable cost per unit of $3, and total fixed cost of $7,200.a. 80%
7-9 Refer to the information for Dartmouth. Dartmouth’s break-even point in units Dartmouth Company produces a single product with a price of $12, variable cost per unit of $3, and total fixed cost of $7,200.a. is 600.b. is 480.c. is 1,000.d. is 800.e. cannot be determined from the information
7-8 The contribution margin is thea. amount by which sales exceed total fixed cost.b. difference between sales and total cost.c. difference between sales and operating income.d. difference between sales and total variable cost.e. difference between variable cost and fixed cost.
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