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managerial accounting 8th
Managerial Accounting For Managers 6th Edition Eric Noreen, Peter Brewer, Ray Garrison - Solutions
Variable and Absorption Costing Unit Product Costs and Income Statements LO 4–1, LO 4–2, LO 4–3 Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:Variable costs per unit:Manufacturing:Direct materials
Deducing Changes in Inventories LO 4–3 Parker Products, Inc., is a manufacturer whose absorption costing income statement reported sales of $123 million and a net operating loss of $18 million. According to a CVP analysis prepared for management, the company’s break-even point is $115 million
Segmented Income Statement LO 4–4 Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are $500,000, 46%, and$10,000, respectively. The North Division’s contribution margin and
Variable and Absorption Costing Unit Product Costs and Income Statements LO 4–1, LO 4–2 Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations:Variable costs per unit:Manufacturing:Direct materials . $6 Direct
Companywide and Segment Break-Even Analysis LO 4–5 Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown below:Total Company North South Sales . $ 600,000 $ 400,000 $ 200,000 Variable expenses .
Basic Segmented Income Statement LO 4–4 Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow.Revenue and cost information relating to the products follow:Product Weedban Greengrow Selling price per unit . $6.00 $7.50 Variable expenses per unit . $2.40 $5.25
Reconciliation of Absorption and Variable Costing Net Operating Incomes LO 4–3 Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities.The company uses variable costing for internal management reports and absorption costing for external reports to
Variable Costing Income Statement; Explanation of Difference in Net Operating Income LO 4–2 Refer to the data in Exercise 4–1 for Ida Company. The absorption costing income statement prepared by the company’s accountant for last year appears as shown:Sales . $ 191,250 Cost of goods sold .
Variable and Absorption Costing Unit Product Costs LO 4–1 Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone.The gamelans are sold for $850. Selected data for the company’s operations last year follow:Units in beginning inventory 0 Units
Plantwide and Departmental Predetermined Overhead Rates; Job Costs LO 3–1, LO 3–2, LO 3–3, LO 3–4 Delph Company uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 50,000 machinehours
Job-Order Costing for a Service Company LO 3–1, LO 3–2, LO 3–3 Yancey Productions is a film studio that uses a job-order costing system. The company’s direct materials consist of items such as costumes and props. Its direct labor includes each film’s actors, directors, and extras. The
Departmental Predetermined Overhead Rates LO 3–1, LO 3–2, LO 3–4 White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the
Computing Predetermined Overhead Rates and Job Costs LO 3–1, LO 3–2, LO 3–3 Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:Machine-hours required to
Varying Plantwide Predetermined Overhead Rates LO 3–1, LO 3–2, LO 3–3 Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis
Applying Overhead Cost to a Job LO 3–2 Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was started and completed during the current period, shows charges of $5,000 for direct materials,$8,000 for direct labor, and $6,000 for overhead on its job cost
Applying Overhead; Calculating Ending Inventories and Cost of Goods Sold LO 3–2, LO 3–5 Heritage Company uses a job-order costing system to assign costs to jobs. It had no work in process or finished goods inventories on hand at the beginning of May. The table below provides data concerning the
Job-Order Costing and Decision Making LO 3–1, LO 3–2, LO 3–3 Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours.At the beginning of the year, the
Applying Overhead Cost; Computing Unit Product Cost LO 3–2, LO 3–3 Newhard Company assigns overhead cost to jobs on the basis of 125% of direct labor cost. The job cost sheet for Job 313 includes $10,000 in direct materials cost and $12,000 in direct labor cost.A total of 1,000 units were
Job-Order Costing; Working Backwards LO 3–1, LO 3–2, LO 3–3 Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $15 per hour. During the year, the company started and
Job-Order Costing for a Service Company LO 3–1, LO 3–2, LO 3–3 Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software it purchases and installs on behalf of its clients. The firm’s direct labor includes salaries of
Computing Total Job Costs and Unit Product Costs Using Multiple Predetermined Overhead Rates LO 3–4 Braverman Company has two manufacturing departments—Finishing and Fabrication. The predetermined overhead rates in Finishing and Fabrication are $18.00 per direct labor-hour and 110% of direct
Calculating Ending Inventories and Cost of Goods Sold LO 3–5 Morrow Corporation had only one job in process during May—Job X32Z—and had no finished goods inventory on May 1. Job X32Z was started in April and finished during May. Data concerning that job appear below:Job X32Z Beginning balance
Computing Total Job Costs and Unit Product Costs Using Multiple Predetermined Overhead Rates LO 3–4 Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $16.00 per direct laborhour and $12.00
Computing Total Job Costs and Unit Product Costs Using a Plantwide Predetermined Overhead Rate LO 3–3 Mickley Company’s plantwide predetermined overhead rate is $14.00 per direct labor-hour and its direct labor wage rate is $17.00 per hour. The following information pertains to Job
Apply Overhead Cost to Jobs LO 3–2 Luthan Company uses a plantwide predetermined overhead rate of $23.40 per direct labor-hour.This predetermined rate was based on a cost formula that estimated $257,400 of total manufacturing overhead cost for an estimated activity level of 11,000 direct
Compute a Predetermined Overhead Rate LO 3–1 Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production.
Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio LO2–1, LO2–3, LO2–5, LO2–6, LO2–7 Menlo Company distributes a single product. The company’s sales and expenses for last month follow:Sales . $450,000 $30 Variable expenses 180,000 12 Contribution margin . 270,000 $18
Break-Even and Target Profit Analysis LO2–4, LO2–5, LO2–6 Outback Outfitters sells recreational equipment. One of the company’s products, a small camp stove, sells for $50 per unit. Variable expenses are $32 per stove, and fixed expenses associated with the stove total $108,000 per
Break-Even Analysis and CVP Graphing LO2–2, LO2–4, LO2–5 The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee assembled the following expected costs for the event:Dinner (per person) $18 Favors and program (per person) $2 Band . $2,800 Rental of ballroom
Operating Leverage LO2–1, LO2–8 Magic Realm, Inc., developed a new fantasy board game and sold 15,000 units last year at a selling price of $20 per game. Fixed expenses associated with the game are $182,000 per year, and variable expenses are $6 per game. Production of the game was outsourced
Break-Even and Target Profit Analysis LO2–3, LO2–4, LO2–5, LO2–6 Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company’s fixed expenses are $180,000 per year. The company plans to sell 16,000 units this
Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs LO2–1, LO2–4 Miller Company’s contribution format income statement for the most recent month is shown below:Total Per Unit Sales (20,000 units) . $ 300,000 $ 15.00 Variable expenses . 180,000 9.00
Multiproduct Break-Even Analysis LO2–9 Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot.Monthly sales and the contribution margin ratios for the two products follow:Product Flight Dynamic Sure Shot Total Sales . $150,000 $250,000 $400,000 CM ratio .
Missing Data; Basic CVP Concepts LO2–1, LO2–9 Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known
Multiproduct Break-Even Analysis LO2–9 Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:Claimjumper Makeover Total Sales . $ 30,000 $ 70,000 $ 100,000 Variable expenses 20,000 50,000
Compute and Use the Degree of Operating Leverage LO2–8 Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:Amount Percent of Sales Sales . $ 80,000 100%Variable expenses 32,000 40%Contribution margin . 48,000 60%Fixed
Compute the Margin of Safety LO2–7 Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month’s budget appear below:Selling price per unit . $30 Variable expense per unit $20 Fixed expense per month . $7,500 Unit sales per month 1,000
Target Profit Analysis LO2–6 Lin Corporation has a single product whose selling price is $120 per unit and whose variable expense is $80 per unit. The company’s monthly fixed expense is $50,000.Required:1. Calculate the unit sales needed to attain a target profit of $10,000.2. Calculate the
Break-Even Analysis LO2–5 Mauro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,200.Required:1. Calculate the company’s break-even point in unit sales.2. Calculate
Changes in Variable Costs, Fixed Costs, Selling Price, and Volume LO2–4 Data for Hermann Corporation are shown below:Per Unit Percent of Sales Selling price $ 90 100%Variable expenses . 63 70 Contribution margin . $ 27 30%Fixed expenses are $30,000 per month and the company is selling 2,000 units
Computing and Using the CM Ratio LO2–3 Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000.Required:1. What is the company’s contribution margin (CM) ratio?2. What is the estimated change
Prepare a Profit Graph LO2–2 Jaffre Enterprises distributes a single product whose selling price is $16 per unit and whose variable expense is $11 per unit. The company’s fixed expense is $16,000 per month.Required:1. Prepare a profit graph for the company up to a sales volume of 4,000 units.2.
Prepare a Cost-Volume-Profit (CVP) Graph LO2–2 Karlik Enterprises distributes a single product whose selling price is $24 per unit and whose variable expense is $18 per unit. The company’s monthly fixed expense is $24,000.Required:1. Prepare a cost-volume-profit graph for the company up to a
The Effect of Changes in Sales Volume on Net Operating Income LO2–1 Whirly Corporation’s contribution format income statement for the most recent month is shown below:Exercises Total Per Unit Sales (10,000 units) . $ 350,000 $ 35.00 Variable expenses . 200,000 20.00 Contribution margin .
Classifying Variable and Fixed Costs and Product and Period Costs LO1–3, LO1–4 Below are listed various costs that are found in organizations.1. Hamburger buns in a Wendy’s restaurant.2. Advertising by a dental office.3. Apples processed and canned by Del Monte.4. Shipping canned apples from
Cost Classifications for Decision Making LO1–5 Warner Corporation purchased a machine seven years ago for $319,000 when it launched product P50. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 300 machine costing $313,000 or by a
Traditional and Contribution Format Income Statements LO1–6 The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:Amount Sales. $150,000 Selling price per pair of skis. $750 Variable selling expense per pair of
Cost Classification LO1–2, LO1–3, LO1–4, LO1–5 Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building 10 years ago.For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter’s lease will
Variable and Fixed Cost Behavior LO1–4 Munchak Company’s relevant range of production is between 9,000 and 11,000 units. Last month the company produced 10,000 units. Its total manufacturing cost per unit produced was $70.At this level of activity, the company’s variable manufacturing costs
Product and Period Cost Flows LO1–3 The Devon Motor Company produces automobiles. On April 1st, the company had no beginning inventories, and it purchased 8,000 batteries at a cost of $80 per battery. It withdrew 7,600 batteries from the storeroom during the month. Of these, 100 were used to
Cost Behavior; Contribution Format Income Statement LO1–4, LO1–6 Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total costs and costs per unit over the relevant range of 30,000 to 50,000 units is given below:Units Produced and Sold
Differential Costs and Sunk Costs LO1–5 Refer to the data given in Exercise 1–7. Answer all questions independently.Required:1. What is the incremental manufacturing cost incurred if the company increases production from 20,000 to 20,001 units?2. What is the incremental cost incurred if the
Fixed, Variable, and Mixed Costs LO1–4 Refer to the data given in Exercise 1–7. Answer all questions independently.Required:1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold?2. If 22,000 units are produced and sold, what is the variable cost per unit
Product Costs and Period Costs; Variable and Fixed Costs LO1–3, LO1–4 Refer to the data given in Exercise 1–7. Answer all questions independently.Required:1. For financial accounting purposes, what is the total amount of product costs incurred to make 20,000 units?2. For financial accounting
Direct and Indirect Costs LO1–1 Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:Average Cost per Unit Direct materials. $7.00 Direct labor. $4.00 Variable manufacturing overhead. $1.50
Traditional and Contribution Format Income Statements LO1–6 Cherokee Inc. is a merchandiser that provided the following information:Number of units sold. 20,000 Selling price per unit. $30 Variable selling expense per unit . $4 Variable administrative expense per unit. $2 Total fixed selling
Differential, Sunk, and Opportunity Costs LO1–5 Northeast Hospital’s Radiology Department is considering replacing an old inefficient X-ray machine with a state-of-the-art digital X-ray machine. The new machine would provide higher quality X-rays in less time and at a lower cost per X-ray. It
Fixed and Variable Cost Behavior LO1–4 Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22.Required:1. Fill in the following table with your estimates of
Classifying Costs as Product or Period Costs LO1–3 Suppose you have a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to
Classifying Manufacturing Costs LO1–2 The PC Works assembles custom computers from components supplied by various manufacturers.The company is very small, and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some
Identifying Direct and Indirect Costs LO1–1 Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics.Required:For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an
What is the Global Reporting Initiative?
Why do companies measure their corporate social responsibility performance?
Why should companies link their balanced scorecard measures to their employee reward systems?
Why does the balanced scorecard include financial performance measures as well as measures of how well internal business processes are doing?
Why should the measures included in a balanced scorecard be linked together in the form of if-then hypothesis statements?
Why do the measures used in a balanced scorecard differ from company to company?
What does a manufacturing cycle efficiency (MCE) of less than 1 mean? How would you interpret an MCE of 0.40?
What is the difference between delivery cycle time and throughput time? What four elements make up throughput time? What elements of throughput time are value-added and what elements are non-value-added?
What are the four types of costs summarized in a quality cost report? How do companies generally seek to lower their cost of quality?
What are the four categories of measures in a balanced scorecard?
Why is using sales dollars as an allocation base usually a poor choice for allocating fixed costs to operating departments?
Why should a service department’s budgeted costs, rather than its actual costs, be charged to operating departments?
What does suboptimization mean?
What is a transfer price?
In what way can the use of ROI as a performance measure for investment centers lead to bad decisions? How does the residual income approach overcome this problem?
What is meant by residual income?
What is meant by the terms margin and turnover in ROI calculations?
Distinguish between a cost center, a profit center, and an investment center.
What benefits result from decentralization?
What is meant by the term decentralization?
Why can undue emphasis on labor efficiency variances lead to excess work in process inventories?
If variable manufacturing overhead is applied to production on the basis of direct labor-hours and the direct labor efficiency variance is unfavorable, will the variable overhead efficiency variance be favorable or unfavorable, or could it be either? Explain.
What effect, if any, would you expect poor-quality materials to have on direct labor variances?
“Our workers are all under labor contracts; therefore, our labor rate variance is bound to be zero.” Discuss.
Should standards be used to identify who to blame for problems?
If the materials price variance is favorable, but the materials quantity variance is unfavorable, what might this indicate?
The materials price variance can be computed at what two different points in time?Which point is better? Why?
Who is generally responsible for the materials price variance? The materials quantity variance? The labor efficiency variance?
Why are separate price and quantity variances computed?
What is a quantity standard? What is a price standard?
How does a flexible budget based on two cost drivers differ from a flexible budget based on one cost driver?
What does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do?
What is a spending variance, and what does it mean?
What is a revenue variance, and what does it mean?
If the actual level of activity is greater than the planned level of activity, would you expect the activity variances for variable expenses to be favorable, unfavorable, or a combination of the two?
What is an activity variance, and what does it mean?
Why is it difficult to interpret a difference between how much expense was budgeted and how much was actually spent?
What are some of the possible reasons that actual results may differ from what had been budgeted at the beginning of a period?
What is a flexible budget and how does it differ from a static planning budget?
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