Managerial Accounting 4th Edition Charles E. Davis, Elizabeth Davis - Solutions

How many overhead charges will a cost object have under an activity-based costing system?
Variable overhead variance calculation The following information 6 available for Harrison's Hot Dogs:Actual production
Describe the two components of the static budget variance.
What is a favorable variance? An unfavorable variance?
What is the difference between a normal costing system and a standard costing system?
Rogers Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 2500 kits was prepared for the year. Fixed operating expenses account for 75% of total operating expenses at this level of sales.Sales revenue$250,000Cost of
What is a variable overhead spending variance?
What is a static budget? When is it prepared?
Laura Falk, Bates & Hill Fabricators’ accounts receivable manager, has just received the company’s sales budget for the first quarter (see Exercise 5.8). The company makes all sales on credit. Laura recently reviewed the company’s collection history and found that 72% of the sales are
Joshua Hill, Bates & Hill Fabricators’ production manager, has just received the company’s sales budget for the first quarter. Company policy requires an ending finished goods inventory each month that will meet 20% of the following month’s sales volume. Joshua plans to have
Refer to Problem 4.26. If you have not completed that problem, do so at this time.Data from Problem 4.26:Paladin Parabolics Company produces high-quality microscopes for education and health care uses. The company uses a job order costing system. Because the microscopes’ optics
What managerial behavior does variable costing render ineffective?
In June 2018, Tesla CEO Elon Musk announced that the company was laying off 9% of its staff. The layoff targeted salaried workers rather than production line workers.Requireda. What effect would these cuts have on Tesla’s breakeven point? Explain.b. What effect would these cuts have
Mary Smith sells gourmet chocolate chip cookies. The results of her last month of operations are as follows:Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $58,000Cost of goods sold (all variable) . . . . . . . . . . . 32,000Gross margin . . . . . . . . . . .
What actions can a company take to reduce its breakeven point?
Explain how competitors influence the price under cost-plus pricing.
What is a direct materials quantity variance?
What is a direct labor efficiency variance?
What is a variable overhead efficiency variance?
Refer to the data in Exercise 6.1. Assume that Rogers Sports actually sold 2,200 volleyball kits during the year at a price of $102 per kit.Data from Exercise 6.1:Rogers Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of
In recording variances, is an unfavorable variance recorded as a debit or a credit? Why?
Define the standard quantity allowed.
Give two reasons why actual prices might differ from standard prices, resulting in a direct materials price variance.
Why would a company show a variable overhead efficiency variance?
Refer to the information about Adannes Adventures given in Meth. 8.4. Alerts King those to prepare a static budget based on sales of 1200 canoes. Actual sales were 1,850 maces at a price of $840 each. The company incurred the following costs for the year:Direct material$413,700Direct
Give two reasons why actual materials usage might differ from standard materials usage, resulting in a direct materials quantity variance.
Workers at Banner News were paid a total of $3200 during the month of July. The company's standard wage rote was $12 per hour, and the direct labor rate variance for the month was $1,600 U.RequiredNow many direct labor hours were worked during July?
POD Incasements manufactures protective cases for MP3 players. During November, the company's workers clocked 800 more direct labor hours than the flexible budget amount of 40,000 hours to complete 80,000 cases for the Christmas season. All workers were paid $10.25 per hour, which was $0.25 less
Harker Industries is a leading manufacturer Curer of baseballs. Each baseball requires 5 minutes of direct labor time to complete. Harker used 35,225 direct labor hours in July to produce 420,000 baseballs. Harker's standard labor rate is $15 per direct labor hour, and the actual labor rate in July
Hunter Family Instruments makes cellos. During the past year, the company made 3,500 cellos even though the budget planned for 3,600. The company paid its workers an average of $20 per hour, which was $0.50 higher than the standard labor rate. The production manager budgets 6 direct labor hours
Merchandise planned to produce 40,000 fleece jackets ha its Metairie, Louisiana, factory. Fixed overhead costs for the factory were budgeted to be $520,600. The company actually spent $534,600 on fixed overhead and produced 38,000 jackets.RequiredCalculate the fixed overhead spending variance.
Scott Sykes publishes a pilot training course curriculum kit that he sells to flight schools across the country. He prepared the following static budget for the year based on expected sales of 30,000 curriculum kits.Sales revenue$3,750,000Variable 1161 of goods sold1,500,000Variable selling and
Devaney Foods Company manufactures single-serve mustard packets used in fast-focal restaurants. Al Devaney, the company's CFO, prepared the following standard mat card for a box of mustard packets (100 packets in a box), based on expected production of 50,000 boxes.Direct materials41.37Direct
Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 200,000 board games. The budgeted income statement for the period is as follows.During November, Barnes produced and sold 190,000 board games. Actual results for the month are as
Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 300 cases off the production
Pressure Reducers, Inc. produces and sells lumbar support cushions for office chairs using a special foam that molds to a person's back. Since all products are made to order, the only inventory the company maintains is raw materials. Thus, all costs of production are recognized in the period in
Stratton, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follow.Sandy Robison, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he
The 1 Euro coin has a silver-colored inner core and a yellow outer ring. The center core is made from a copper nickel alloy, while the outer ring is made of nickel brass. The coins are minted through a writs of steps that combine two separate metal disks into the final coin that should weigh 7.5
As discussed in Units 6.2 and 6.3, C&C Sports experienced direct materials and direct labor variances as a result of purchasing lower-quality jacket lining from a new vendor. Review Exhibits 6.10 and 6.13 to refresh your understanding of these variances.RequiredConsider each scenario
Alvarez Enterprises employs three categories of workers: apprentice, machinist I, and machinist II. Olivia McGuirt Alvarez's human resources manager, is currently reviewing last year's payroll information and wonders if it's time to review standard labor rates. She has provided you the
What is an activity? Provide some examples.
What ¡s a value-added activity? Give an example.
What kinds of costs do companies incur in making sales to customers?
Define the following activity types and provide one example of each:a. Unit-level activityb. Batch-level activityc. Product-level activityd. Customer-level activitye. Organization-level activity
How are activity cost pool rates calculated?
What ¡s a non-value-added activity? Give an example.
Why are selling costs pooled and allocated to customers rather than directly traced to customers?
What characteristics of an organization make it a good candidate to implement activity-based costing? When is activity-based costing not likely to benefit an organization?
Give two reasons why actual labor rates might differ from standard labor rates, resulting in a direct labor rate variance.
What is a fixed overhead spending variance?
Refer to the data in Exercise 6.1. Assume that during the year Rogers Sports actually sold 2,200 volleyball kits dining the year at a price of $102 per kit.Data From Exercise 6.1:Rogers Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget
How are variances typically disposed of?
What is a flexible budget? Flow does it differ from a static budget?
In your own words, explain the standard quantity of tires allowed for eight bicycles. Why does your answer not depend on the number of bicycles expected to be produced?
Give two reasons why actual labor hours might differ from standard labor hours, resulting in a direct labor efficiency variance.
What are some possible explanations for the variable and fixed overhead spending variances?
Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 1,000 canoes, 1,500 canoes, and 2,000 canoes. Cairo. sell for $650 each. TM standard variable cost information for a canoe is as follows.Direct
What is the only mason for a fixed overhead volume variance?
How does residual income overcome the shortcomings of ROI as a performance measurement tool?
How does segment margin differ from a segment’s net operating income?
All else held equal, what three actions can a manager take to improve a division’s ROI?
What is EVA? How is it calculated?
As a manager, would you support the use of responsibility accounting? Why or why not?
Why are common allocated fixed costs an issue in evaluating segment performance?
How can using ROI as an evaluation tool lead to suboptimal behavior by managers?
Magellan & Columbus, Ltd. manufactures boats and personal watercraft. The company operates three separate divisions: yachts, sailboats, and jet skis. The company’s latest income statement is presented by product line as follows:Requireda. Prepare a segment margin income statement showing each
What are the three categorizations (centers) of decentralized organizations, and how are managers of those centers evaluated?
Once a cost has been identified as a common allocated fixed cost, can it ever be considered a traceable fixed cost? Why or why not?
Jane Baldwin, Anderson Flooring’s accounting intern, has prepared the following income statement for the month of June.In preparing the income statement, Jane was unsure how to account for $400,000 in corporate fixed expenses that cannot be traced to a particular division. Since these costs were
Paula Boothe, president of the Armange Corporation, has mandated a minimum 10% return on investment for any project undertaken by the company. Given the company’s decentralization, Paula leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return
Browning Design Works generated $600,000 in operating income on sales revenue of $3,000,000. The company had $2,000,000 in assets on January 1 and $3,000,000 in assets on December 31.Requireda. Calculate Browning’s margin.b. Calculate Browning’s asset turnover.c. Calculate Browning’s return
Resilon, Inc., reported the following results for last year.Requireda. Which division generates the highest margin?b. If the divisions are evaluated based on return on investment, which division is doing the best job? Liles Division Marston Division Outland Division $ 150,000 $ 36,000 150,000 Net
Refer to Exercise 10.9.Data From Exercise 10.9:Paula Boothe, president of the Armange Corporation, has mandated a minimum 10% return on investment for any project undertaken by the company. Given the company’s decentralization, Paula leaves all investment decisions to the divisional managers as
Colleen Barry is the general manager of Whitten Industries’ Industrial Products division. The division is treated as an investment center, and Colleen’s performance is measured using residual income. In preparing the forecast for next year, Colleen assumes the division will generate $30 million
Refer to Exercise 10.9. Assume that Armange Corporation’s actual weighted-average cost of capital is 8% and its tax rate is 28%.Data From Exercise 10.9Paula Boothe, president of the Armange Corporation, has mandated a minimum 10% return on investment for any project undertaken by the company.
Isabelle Abiassi operates a popular summer camp for elementary school children. Projections for the current year are as follows:Sales revenue . . . . . . . . . . $8,000,000Operating income . . . . . . . . . . $700,000Average assets . . . . . . . . . .
Martell Corporation makes power tools. The Power division makes a battery that the Small Tools division needs for a new product. The Power division’s variable cost of manufacturing the component is $12 per unit. The component is also available on the open market at a price of $16 per unit. The
The Fabricating division makes a component part that the Assembly division needs for a new product. The Fabricating division’s variable cost of manufacturing the component is $23 per unit. The component is also available on the open market at a price of $41 per unit. The Assembly division needs
Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the joints. The company has two divisions, Sole Inserts and Heel Inserts. A segmented income statement from last month follows.Chris Kelly is Shoe Shock’s sales manager. Although
Marlys Consolidated has several divisions, two of which transfer their products to other divisions. The Mining division refines toldine, which it then transfers to the Metals division. The Metals division processes the toldine into an alloy and sells it to customers at a price of $170 per barrel.
Parkside, Inc. has several divisions that operate as decentralized profit centers. Parkside’s Entertainment division manufactures handheld gaming systems using the products of two of Parkside’s other divisions. The Plastics division manufactures plastic components, one of which is made
After seeing the results of the segment analysis for the Nylon Fibers division, James Cameron wants all three divisions focusing on the correct avenues for improving division performance. Refer to Exhibit 10.4 and the related information on page 10-14 to answer the following questions.Exhibit
Thompson Manufacturing has been in business for over 50 years, making a variety of consumer electronics products. Mary Felix recently joined the business as vice president of the Conley division, one of the company’s newest divisions. During her first week on the job, Mary met with CEO Mitch
“I need you to prepare a projection for me,” Hannah Randall, the Barstow Group’s manager, said as she walked into Isaac Bradley’s office. “As you know, we’ve been considering a new line of hair care products. It looks like we’re going to need a $1 million investment to get it up and
How does the balanced scorecard differ from just having multiple measures of performance?
What is benchmarking?
In a recent annual report, Lexmark, a developer, manufacturer, and supplier of printing and imaging solutions for offices and homes, made the following statement:“One of the most important metrics for Lexmark is our hardware revenue growth because sales of hardware drive our future sales of
Explain why organizations need to monitor both leading and lagging indicators.
What are the four areas of performance measurement included in the balanced scorecard?
How does an organization benefit from benchmarking with an organization outside its industry?
What is a financial measure of performance? What is a non-financial measure of performance? Provide some examples of each.
Why is the use of the balanced scorecard preferable over performance measurement based solely on financial data?
First State Bank offers a wide range of banking services, including checking accounts, certificates of deposit, loans, credit cards, and safety deposit boxes. Bank managers know that customer satisfaction has a direct impact on the bank’s ability to retain customers and to persuade them to add
What are SMART measures?
Why is the balanced scorecard different for different companies?
How are benchmarking partners protected from losing their competitive advantage during the exchange of benchmarking data?
Why does attempting to improve measures such as customer satisfaction and market share not necessarily result in improved financial health for a business?
TechGeek designs and produœs high-tech gadgets that appeal to highly educated men between the ages of 25 and 50. These customers aren’t as concerned about price as they are about innovation and about adopting the newest technologies before their friends do.RequiredIdentify three measures in the
Southwest Airlines is known for high aircraft utilization (an average of just over 5 flights and 11 hours of air time per day in 2017) and quick turnaround time between flights. Southwest’s on-time arrival rate was 78.7% in 2017.RequiredExplain how Southwest’s monthly on-time arrival rate could
Express Copy offers walk-in copying and binding services to small businesses that cannot afford to provide those services in-house. Following is a typical schedule for a 50-copy spiral-bound job:Activity

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Managerial Accounting 4th Edition Charles E. Davis, Elizabeth Davis - Solutions

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