Managerial Accounting 2nd Edition James Jiambalvo - Solutions

EXERCISE 5-7. During the year, Xenoc produces 1 ,000 pairs of speakers and sells 900 pairs. What is variable cost of goods sold?
EXERCISE 5-6. During the year, Xenoc produces 1 ,000 pairs of speakers and sells 900 pairs. What is cost of goods sold using full costing?
EXERCISE 5-5. During the year, Xenoc produces 1,000 pairs of speakers and sells 900 pairs. What is the value of ending inventory using variable costing?
EXERCISE 5-4. During the year, Xenoc produces 1,000 pairs of speakers and sells 900 pairs. What is the value of ending inventory using full costing?
EXERCISE 5-3. Internet Assignment Search the Web using the term variable costing.You will find numerous sites where accounting professors discuss variable and full costing (also called absorption costing). Find a site that discusses the pros and cons of variable costing and compare the discussion
EXERCISE 5-2. Writing Assignment In a normal year, Wilson Industries has$20,000,000 of fixed manufacturing costs and produces 50,000 units. In the current year, demand for its product has decreased and it appears that the company will only be able to sell 40,000 units. Senior managers are
EXERCISE 5-1. Group Assignment relies on incremental analysis.A key idea in this book is that Decision making Required Explain how the use of variable costing can support appropriate decisions using incremental analysis.
5. Explain why the ending inventory balance (assum- ing it is not zero) computed under full costing will always be greater than the ending inventory bal- ance computed under variable costing.
4. Why would the difference between income com- puted under full costing and income computed under variable costing be relatively small if a com- pany used a JIT inventory management system?
3. What are the benefits of variable costing for internal reporting purposes?
2. Explain why income computed under full costing will exceed income computed under variable costing if production exceeds sales.
1. Explain the difference between variable costing and full costing.
10. Assume that Ajax produces 10,000 items and sells 8,000 items. The selling price of Ajax's product is $90 per unit. In this case, the contribution margin on the income statement prepared using variable costing is:a. $350,000.b. $440,000.c. $550,000.d. $700,000.
9. Assume that Ajax produces 10,000 items and sells 8,000 items. In this case, the variable cost of goods sold is:a. $360,000.b. $350,000.c. $300,000.d. $280,000.
8. Assume that Ajax produces 10,000 items and sells 8,000 items. In this case, the full costing value of cost of goods sold is:a. $360,000.b. $350,000.c. $300,000.d. $280,000.
7. Assume that Ajax produces 10,000 items and sells 8,000 items. In this case, the variable costing value of ending inventory is:a. $70,000.b. $90,000.c. $130,000.d. $140,000.
6. Assume that Ajax produces 10,000 items and sells 8,000 items. In this case, the full costing value of ending inventory is:a. $70,000.b. $90,000.c. $130,000.d. $140,000.
5. If units produced is less than units sold:a. Full costing yields a higher income than vari- able costing.b. Full costing yields a lower income than vari- able costing.c. Full costing and variable costing yield the same income. The following information applies to Questions 6-10. Ajax
4. A benefit of variable costing for internal reporting purposes is that it:a. Facilitates C-V-P analysis.b. Limits the ability to inflate income by produc- ing more units than needed for current sales.c. Both a and b are correct.d. Neither a nor b is correct.
3. Use of a just-in-time inventory management sys- tem is likely to:a. Increase the difference between variable and full costing income.b. Decrease the difference between variable and full costing income.c. Have no effect on the difference between vari- able and full costing income.
2. If units produced exceed units sold:a. Full costing yields a higher income than variable costing.b. Full costing yields a lower income than variable costing.c. Full costing and variable costing yield the same income.
1. Full costing differs from variable costing in that:a. Full costing excludes selling costs from consideration.b. Full costing excludes administrative costs from consideration.c. Full costing includes variable manufacturing overhead in inventory.d. Full costing includes fixed manufacturing
PROBLEM 4-15. Regression Analysis (see Appendix), Profit Equation Bob Walker is a vice president of finance for Casper's Seafood, a chain of 12 restaurants on the East coast including five restaurants in Florida. The company is considering a plan whereby customers will be mailed coupons, in the
PROBLEM 4-14. Constraints Pacer Running Shoes produces two models: the Master(a shoe aimed at competitive runners) and the Finisher (a shoe aimed at fitness buffs). Sales and costs for the most recent year are indicated:Master Finisher Sales (pairs) 10,000 60,000 Sales $1,400,000 $5,700,000
PROBLEM 4-13. Value of Loosening a Constraint For the past three years, Xenoc, Inc. has produced the model XI 00 stereo speaker. The model is in high demand, and the company can sell as many pairs as it can produce. The selling price per pair is $800. Variable costs of production are $300 and fixed
PROBLEM 4-12. Operating Leverage Sercon, Inc. and Zercon, Inc. are two companies in the pharmaceutical industry. Sercon has relatively high fixed costs related to research and development. Zercon, on the other hand, does little research and development.Instead, the company pays for the right to
PROBLEM 4-11. Multiproduct, Contribution Margin Ratio RealTimeService offers computer consulting, training, and repair services. For the most recent fiscal year, profit was $230,000 as follows:Consulting Training Repair Total Sales $500,000 $400,000 $300,000 $1,200,000 Less variable costs:Salaries
PROBLEM 4-9. High-Low, Profit Equation Xenoc, Inc. produces stereo speakers.Each unit (a pair of speakers) sells for $800. Below is information on production/sales and costs for 2004.January February March April May June July August September October November December Total Production and
PROBLEM 4-8. The Profit Equation Premier Custom Computers is a small company that assembles PCs to customer specifications. The company buys all of its component parts from TechWarehouse.Com. In the past year, the company had the following before tax profit:Sales $1,250,000 Less:Cost of components
PROBLEM 4-7. Fixed and Variable Costs, The Profit Equation Last year, Cindy Mathers had a booth at the three-day Bellevue Craft Fair where she sold a variety of silver jewelry handcrafted in India. Her before-tax profit was as follows:Sales Cost of jewelry sold Gross margin Registration fee Booth
PROBLEM 4-6. Account Analysis, High-Low, Contribution Margin Information on occupancy and costs at the Regal Hotel for April, May, and June are indicated below:April May June Occupancy 1,500 1,650 1,800 Day manager salary $ 4,000 $ 4,000 $ 4,000 Night manager salary 3,500 3,500 3,500 Cleaning staff
PROBLEM 4-5. Break-Even, "What If" David Peterson is the owner/pilot of Peterson Island Air. The company flies a round trip daily from Seattle's Lake Union to a resort in the Gulf Islands in Canada. In 2005, the company reported an annual income before taxes of $1,760 although that included a
PROBLEM 4-4. Regression Analysis (see Appendix) Rykor Electronics produces a high-end compact disc player that sells for $1,200. Total operating expenses for the past 12 months are as follows:Units Produced and Sold Cost August 125 $107,670 September 145 116,990 October 150 124,500 November 160
PROBLEM 4-3. High-Low, Break-Even Rykor Electronics produces a high-end compact disc player that sells for $1,200. Total operating expenses for the past 12 months are as follows:Units Produced and Sold Cost August 125 $107,670 September 145 116,990 October 150 124,500 November 160 126,500 December
PROBLEM 4-2. Account Analysis Rykor Electronics produces a high-end compact disc player that sells for $1,200. Total operating expenses for July were as follows:Units produced and sold 140 Component cost $ 68,000 Supplies 1,540 Assembly labor 22,800 Rent '2,000 Supervisor salary 5,000 Electricity
PROBLEM 4-1. Cost Behavior Royal Desert Hotel is interested in estimating fixed and variable costs so that the company can make more accurate projections of costs and profit. The hotel is in a resort area that is particularly busy from November through February. In July and August, however, the
EXERCISE 4-21. Constraints Howard Products produces two products:Product A Product B$80 $70«vo Selling price Less variable costs Contribution margin 20$60 40$30 Product A requires 5 labor hours and product B requires 2 labor hours. The company has only 320 available labor hours per week. Further,
EXERCISE 4-20. Operating Leverage Refer to the data in Exercise 19.Requireda. Calculate profit as a percent of sales in the prior year.b. Suppose sales in the current year increase by 20 percent. Calculate profit as a percent of sales for the new level of sales and explain why the percent is
EXERCISE 4-19. Multiproduct, Contribution Margin Ratio Saldina Hardware is organized into three departments. The following sales and cost data are available for the prior year:Department A Department B Department C Total Sales $265,000 $850,000 $900,000 $2,015,000 Less variable costs 106,000
EXERCISE 4-18. Multiproduct, Contribution Margin Ratio National Tennis Racquet Co. produces and sells three models:Smasher Basher Dinker Total Units sold 1,000 2,000 2,000 5,000 Sales $100,000 $120,000 $80,000 $300,000 Less variable costs 50,000 48,000 24,000 122,000 Contribution margin 50,000
EXERCISE 4-17. Multiproduct, Contribution Margin National Tennis Racquet Co. produces and sells three models:Smasher Basher Dinker Total Units sold 1,000 2,000 2,000 5,000 Sales $100,000 $120,000 $80,000 $300,000 Less variable costs 50,000 48,000 24,000 122,000 Contribution margin 50,000 72,000
EXERCISE 4-16. "What If Analysis Xenoc, Inc. produces stereo speakers. The selling price per pair of speakers is $800. The variable cost of production is $300 and the fixed cost per month is $50,000.Required Calculate the expected profit for November assuming the company sells 120 pairs of speakers
EXERCISE 4-15. Margin of Safety Xenoc, Inc. produces stereo speakers. The selling price per pair of speakers is $800. The variable cost of production is $300 and the fixed cost per month are $50,000. For November, the company expects to sell 120 pairs of speakers.Requireda. Calculate expected
EXERCISE 4-14. Contribution Margin Ratio Xenoc, Inc. produces stereo speakers.The selling price per pair of speakers is $800. The variable cost of production is$300 and the fixed cost per month is $50,000.Requireda. Calculate the contribution margin ratio for Xenoc associated with a pair of
EXERCISE 4-13. Contribution Margin Xenoc, Inc. produces stereo speakers. The selling price per pair of speakers is $800. The variable cost of production is $300 and the fixed cost per month is $50,000.Requireda. Calculate the contribution margin associated with a pair of speakers.b. In August, the
EXERCISE 4-12. C-V-P Analysis, Profit Equation Kramer Groceries has estimated that fixed costs per month are $200,000 and variable cost per dollar of sales is $0.80.Requireda. What is the break-even point per month in sales?b. What level of sales is needed for a monthly profit of $60,000?c. For the
EXERCISE 4-11. C-V-P Analysis, Profit Equation Xenoc, Inc. produces stereo speakers. The selling price per pair of speakers is $800. The variable cost of production is $300 and the fixed cost per month is $50,000.Requireda. Calculate the break-even point for a month.b. How many pairs of speakers
EXERCISE 4-10. Account analysis Wilson Manufacturing is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable.Units Produced Cost October
EXERCISE 4-9. Account analysis Brandon Janitorial Services is interested in estimating fixed and variable costs. The following data are available for the month of December.Sales Cost December $28,000 $23,800 Detail of Cost Cleaning supplies $ 800 Employee wages 15,800 Rent 800 Utilities 600
EXERCISE 4-8. Account Analysis Icom.com is interested in estimating the cost involved in hiring new employees. The following information is available regarding the costs of operating the Human Resource department at Icom.com in May when there were 50 new hires.Human Resource Department May 2006
EXERCISE 4-7. Scattergraph Icom.com is interested in estimating the relationship between customer service costs and sales. The following data are available:Customer Month Service Cost Sales May $ 6,000 $100,000 June $ 6,500 $140,000 July $ 7,300 $170,000 August $10,200 $200,000 September $10,800
EXERCISE 4-6. High-Low method Brandon Janitorial Services is interested in estimating fixed and variable costs. The following data are available:Cost Sales January $18,000 $20,000 February 21,200 22,000 March 21,500 24,000 April 23,400 21,000 May 21,500 26,000 June 23,400 27,000 July 21,500 24,000
EXERCISE 4-5. High-Low Method The Newton Manufacturing Company wants to predict machine repair expense at different levels of activity. The following data have been gathered:Machine Month Repair Expense May $ 8,000 June $12,000 4,000 July $20,000 8,000 August $16,000 6,000 September $10,000 3,000
EXERCISE 4-4. Cost Behavior Information for three costs incurred at Newton Manufacturing in the first quarter follows:Depreciation Direct labor Telecommunications Month Amount Units Produced January $500,000 3,000 February $500,000 4,500 March $500,000 6,000 January $120,000 3,000 February $180,000
EXERCISE 4-3. Internet Assignment Go to the Web site for Men's Wearhouse(http://www.menswearhouse.com). From there, go to Investor Relations and locate the company's annual report. Examine the line item "Gross Margin" on the company income statement. Explain why the Gross margin divided by Net
EXERCISE 4-2. Writing Assignment During the 1990s, profits at Microsoft grew by an average of 47.5 percent per year, far faster than the 38.1 percent average annual growth in sales. Since profit growth drives stock prices, its not surprising that the huge increases in the bottom line translated
EXERCISE 4-1. Group Assignment Paul Drayton is planning on opening a 3,000 square foot restaurant in the Westlake Mall. As a small business owner, Paul is concerned about controlling his mix of fixed and variable costs. As Paul noted, "If I have too much fixed cost and sales don't take off right
17. In a situation where there is a production constraint, which product should be produced: the one with the highest contribution margin, or the one with the highest contribution margin per unit of constraint?
16. Which company would have higher operating leverage: a software company that makes large investments in research and development, or a manufacturing company that uses expensive materials and relies on highly skilled manual labor rather than automation?
15. What are the assumptions in C-V-P analysis?
14. In a multiproduct setting, when would it not be appropriate to focus on a weighted average contribution per unit?
13. What is the profit equation?
12. What is the difference between the contribution margin and the contribution margin ratio?
11. Explain the concept of a relevant range.
10. In fitting a straight line using the high-low method, should you use the highest and lowest costs or the highest and lowest activity levels?
9. Explain how one uses account analysis to estimate fixed and variable costs.
8. In a scattergraph of production and costs, what would be the horizontal axis; cost or production?
7. Explain why telecom cost is likely to be a mixed cost.
6. Explain why total compensation paid to the sales force is likely to be a mixed cost.
5. Provide two examples of costs that are likely to be fixed costs.
4. Provide two examples of costs that are likely to be variable costs.
3. Distinguish between discretionary and committed fixed costs.
2. Define the term mixed cost and provide an example of such a cost.
1. Distinguish between variable and fixed costs.
10. Product A has a contribution margin per unit of$500 and requires 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machine time. How much- of each product should be produced given there are 100 hours of available machine time?a. 50 units of
9. If a firm has relatively high operating leverage, it has:a. Relatively high variable costs.b. Relatively high fixed costs.c. Relatively low operating expenses.d. Relatively high operating expenses.
8. Consider the sales and variable cost information in Question 7. Assuming that total fixed costs at Olson Drug are $30,000 per month, what is the break-even level of sales in dollars?a. $86,326b. $45,876c. $72,284d. $64,286
7. Consider the sales and variable cost information for the three departments at Olson Drug in May: Drugs Cosmetics Housewares Sales $80,000 $40,000 $30,000 Variable cost 40,000 15,000 25,000 Contribution margin $40,000 $25,000 $ 5,000 Based on this information, estimate the increase in profit for
6. At Wendell Corporation, the selling price per unit is $800 and variable cost per unit is $500. Fixed costs are $1,000,000 per year. In this case, the break-even point is approximately:a. 3,333 units.b. 6,667 units.c. 5,500 units.d. None of the above.
5. Using the following production/cost data, estimate variable cost per unit using the high-low method Month Production Cost January 2,000 $20,000 February 2,500 $21,000 March 3,000 $23,000 April 1,900 $18,500a. $4.00.b. $3.70c. $4.20d. $4.09
4. In March, Olympus Company had the following costs related to producing 10,000 units:Direct materials $60,000 Direct labor 20,000 Rent 5,000 Depreciation 4,000 Estimate variable cost per unit analysis.a. $8.90c. $2.90b. $2.00-d. $8.00 •
3. The contribution margin ratio measures:a. Profit per unit.b. Contribution margin per dollar of sales. «c. Profit per dollar of sales.d. The ratio of variable to fixed costs.
2. At Wendell Corporation, the selling price per unit is $800 and variable cost per unit is $500. Fixed costs are $1,000,000 per year. Assuming sales of$3,000,000, profit will be:a. $125,000 -b. $680,000c. $750,000d. None of the above.
1. At Wendell Corporation, the selling price per unit is $800 and variable cost per unit is $500. Fixed costs are $1,000,000 per year. In this case, the contribution margin per unit is:a. $300 •b. $0,375c. 2,500 units.d. None of the above.
PROBLEM 3-10. Comprehensive Problem, Two Departments Carnival Caramel Company makes a high-quality caramel candy. The manufacturing process involves mixing ingredients (Mixing Department) and shaping the processed mixture into onepound balls (Shaping Department), which are sold to retail outlets.
PROBLEM 3-9. Comprehensive Problem, Two Departments Oral Care Toothpaste is manufactured in two departments: Mixing and Packing. Once the toothpaste mixture is completed in the Mixing Department it is sent to Packaging where a tube filling machine fills and seals individual tubes which are then
PROBLEM 3-8. Production Cost Report, Missing Information Marion Chemicals produces a chemical used as a base in paints. In the manufacturing process, all materials are added at the start of the process, whereas labor and overhead are added evenly throughout production.Required Fill in the missing
PROBLEM 3-7. Production Cost Report, Missing Data Classic 50s Flooring produces linoleum flooring. Below is a partial production cost report for the Mixing Department.In the report, a unit is a gallon of linoleum cement (a mixture of linseed oil, pine resin, and wood flour).Required Fill in the
PROBLEM 3-6. Journal Entries in Process Costing Wilmont Box Company produces a single box used by AirSpeed, an express shipping company. Wilmont uses a just-in-time system and has almost no inventories of material, work in process, or finished goods. Indeed, the balances are so small that the
PROBLEM 3-5. Journal Entries in Process Costing Lakeland Solvent produces a single product in two departments. The following costs relate to April:Department 1 Department 2 WIP, March 3 1$ 26,000 $ 46,000 Costs added during April Direct material 80,000 20,000 Direct labor 45,000 55,000
PROBLEM 3-4. Production Cost Report Aussie Yarn Co. is a U.S. producer of woolen yarn made from wool imported from Australia. Raw wool is processed, spun, and finished before being shipped out to knitting and weaving companies. Material is added in the beginning of processing and conversion costs
PROBLEM 3-3. Production Cost Report Olympic Laminators, Inc. is a specialized producer of laminated wood flooring. Their production process involves highly skilled workers and top quality hardwood veneers. Work in Process is relatively large because each 8' x 10' sheet of flooring is in process for
PROBLEM 3-1. Comprehensive Problem, One Department Regal Polish manufactures a single product in one department and uses a process costing system. At the start of May, there were 5,000 units in process that were 100 percent complete with respect to direct material and 50 percent complete with
EXERCISE 3-12. Costing Units Completed and Ending Work in Process At the start of October, Helbert Pure Extract had Work in Process Inventory consisting of 2,000 units that were 90 percent complete with respect to materials and 50 percent complete with respect to conversion costs. The cost of the
EXERCISE 3-11. Costing Units Completed and Ending Work In Process Howell Super Server produces a single model, the HM24, in a continuous production process.Eighty percent of materials are added at the beginning of production and the other 20 percent are added immediately before transfer to the
EXERCISE 3-10. Costing Units Completed and Ending Work in Process For the month of September, Wilber Pickle Company had cost per equivalent unit of $0.50 for materials (pickles, vinegar, spices, etc.) and $.90 for conversion costs (labor and overhead).At Wilber Pickle Company units are measured in
EXERCISE 3-9. Reconciliation of Units and Costs At the start of July, Classic Car Wax Company had beginning Work in Process of 1,000 units that were 90 percent complete with respect to material and 45 percent complete with respect to conversion costs. The cost of the units was $7,200 ($5,400 of
EXERCISE 3-8. Calculation of Equivalent Units Sarsawa Tire Company produces tires used on small trailers. The month of April ended with 500 tires in-process, 80 percent complete as to direct materials and 50 percent complete as to conversion costs; 2,700 tires were transferred to finished goods
EXERCISE 3-7. Cost Reconciliation During December, Western Solvent completed 30,000 units and at the end of December, there were 10,000 units in ending Work in Process that were 20 percent complete with respect to labor and overhead and 100 percent complete with respect to material.During the month
EXERCISE 3-6. Cost per Equivalent Unit The balance in beginning Work in Process at Franz Silicon Compound Co. for direct labor was $120,000. During the month of May, an additional $500,000 of direct labor was incurred, and 10,000 pounds of compound were produced. At the end of May, 2,000 pounds of

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Managerial Accounting 2nd Edition James Jiambalvo - Solutions

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