ISE Managerial Accounting 17th Edition Ray H. Garrison, Eric Noreen, Peter C. Brewer - Solutions

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Selected Financial Measures for Assessing Liquidity LO16–2 Norsk Optronics, ALS, of Bergen, Norway, had a current ratio of 2.5 on June 30 of the current year. On that date, the company’s assets were:Cash
Financial Ratios for Assessing Profitability and Managing Debt LO16–4, LO16–5 Selected financial data from the June 30 year-end statements of Safford Company are given below:Total assets
Financial Ratios for Assessing Market Performance LO16–6 Refer to the financial statements for Castile Products, Inc., in Exercise 16-8. In addition to the data in these statements, assume that Castile Products, Inc., paid dividends of $2.10 per share during the year. Also assume that the
Financial Ratios for Assessing Profitability and Managing Debt LO16–4, LO16–5 Refer to the financial statements for Castile Products, Inc., in Exercise 16-8. Assets at the beginning of the year totaled $280,000, and the stockholders’ equity totaled $161,600.Required:Compute the following:1.
Selected Financial Ratios LO16–2, LO16–3, LO16–4 The financial statements for Castile Products, Inc., are given below:Castile Products, Inc.Balance Sheet December 31 Assets Current assets:Cash
Trend Percentages LO16–1 Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:Year 1 Year 2 Year 3 Year
Financial Ratios for Assessing Market Performance LO16–6 Refer to the data in Exercise 16-2 for Weller Corporation.Required:Compute the following financial data for this year:1. Earnings per share.2. Price-earnings ratio.3. Dividend payout ratio.4. Dividend yield ratio.5. Book value per share.
Financial Ratios for Assessing Profitability LO16–5 Refer to the data in Exercise 16-2 for Weller Corporation.Required:Compute the following financial data for this year:1. Gross margin percentage.2. Net profit margin percentage.3. Return on total assets.4. Return on equity.
Financial Ratios for Debt Management LO16–4 Refer to the data in Exercise 16-2 for Weller Corporation.Required:Compute the following financial ratios for this year:1. Times interest earned ratio.2. Debt-to-equity ratio.3. Equity multiplier.
Financial Ratios for Asset Management LO16–3 Refer to the data in Exercise 16-2 for Weller Corporation.Required:Compute the following financial data for this year:1. Accounts receivable turnover. (Assume that all sales are on account.)2. Average collection period.3. Inventory turnover.4. Average
Financial Ratios for Assessing Liquidity LO16–2 Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 800,000 shares of common stock were
Common-Size Income Statement LO16–1 A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:McKenzie Sales, Ltd.Comparative Income Statement This Year Last Year Sales
Understanding a Statement of Cash Flows LO15–1, LO15–2 Brock Company is a merchandiser that prepared the statement of cash flows and income statement provided below:Brock Company Statement of Cash Flows—Indirect Method Operating Activities Net income
Classification of Transactions LO15–1 Below are several transactions that took place in Seneca Company last year:a. Paid suppliers for inventory purchases.b. Bought equipment for cash.c. Paid cash to repurchase its own stock.d. Collected cash from customers.e. Paid wages to employees.f. Equipment
Prepare a Statement of Cash Flows LO15–1, LO15–2 Comparative financial statements for Weaver Company follow:Weaver Company Comparative Balance Sheet at December 31 This Year Last Year Assets Cash and cash equivalents
Prepare a Statement of Cash Flows; Free Cash Flow LO15–1, LO15–2, LO15–3 Comparative financial statement data for Carmono Company follow:This Year Last Year Assets Cash and cash equivalents �� $ 3 $
Net Cash Provided by Operating Activities LO15–2 Changes in various accounts and gains and losses on the sale of assets during the year for Argon Company are given below:Required:Prepare an answer sheet using the following column headings:Item Amount Add Subtract For each item, place an X in the
Prepare a Statement of Cash Flows LO15–1, LO15–2 The following changes took place last year in Pavolik Company’s balance sheet accounts:Asset and Contra-Asset Accounts Liabilities and Stockholders’ Equity Accounts Cash and cash equivalents �� $5 D
Calculating Free Cash Flow LO15–3 Apex Company prepared the statement of cash flows for the current year that is shown below:Apex Company Statement of Cash Flows—Indirect Method Operating activities Net income
Net Cash Provided by Operating Activities LO15–2 For the year just completed, Hanna Company had net income of $35,000. Balances in the company’s current asset and current liability accounts at the beginning and end of the year were as follows:December 31 End of Year Beginning of Year Current
Classifying Transactions LO15–1 Below are certain events that took place at Hazzard, Inc., last year:a. Collected cash from customers.b. Paid cash to repurchase its own stock.c. Borrowed money from a creditor.d. Paid suppliers for inventory purchases.e. Repaid the principal amount of a debt.f.
Internal Rate of Return and Net Present Value LO14–2, LO14–3 Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $137,320, including freight and installation. Henrie’s estimated the new machine would increase the
Comparison of Projects Using Net Present Value LO14–2 Labeau Products, Ltd., of Perth, Australia, has $35,000 to invest. The company is trying to decide between two alternative uses for the funds as follows:Invest in Project X Invest in Project Y Investment required
Payback Period and Simple Rate of Return Computations LO14–1, LO14–6 A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow:Purchase cost of the
Uncertain Cash Flows LO14–4 The Cambro Foundation, a nonprofit organization, is planning to invest $104,950 in a project that will last for three years. The project will produce net cash inflows as follows:Year 1
Preference Ranking of Investment Projects LO14–5 Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows:Project Investment Required Present Value of Cash Inflows Life of the Project
Net Present Value Analysis LO14–2 Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $13,000 for 200 shares of Malti Company’s common stock. She received a $420 cash dividend on
Net Present Value Analysis and Simple Rate of Return LO14–2, LO14–6 Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is
Payback Period and Simple Rate of Return LO14–1, LO14-6 Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $300,000, have an eight-year useful life, and have a total salvage value of $20,000. The company
Net Present Value Analysis of Two Alternatives LO14–2 Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:Project A Project B Cost of equipment required
Simple Rate of Return Method LO14–6 The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would cost $12,000 per year to operate.
Preference Ranking LO14–5 Information on four investment proposals is given below:Investment Proposal A B C D Investment required �� $ (90,000) $ (100,000) $ (70,000) $ (120,000)Present value of cash inflows
Uncertain Future Cash Flows LO14–4 Lukow Products is investigating the purchase of a piece of automated equipment that will save$400,000 each year in direct labor and inventory carrying costs. This equipment costs $2,500,000 and is expected to have a 15-year useful life with no salvage value. The
Internal Rate of Return LO14–3 Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine.The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the
Net Present Value Analysis LO14–2 The management of Kunkel Company is considering the purchase of a $27,000 machine that would reduce operating costs by $7,000 per year. At the end of the machine’s five-year useful life, it will have zero salvage value. The company’s required rate of return
Payback Method LO14–1 The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:Year Investment Cash Inflow 1
Dropping or Retaining a Segment LO13–2 Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows:Department Total Hardware Linens Sales
Identification of Relevant Costs LO13–1 Bill has just returned from a duck hunting trip. He brought home eight ducks. Bill’s friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John presented him with the following cost estimate per duck:Camper and
Dropping or Retaining a Segment LO13–2 Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line
Identification of Relevant Costs LO13–1 Kristen Lu purchased a used automobile for $8,000 at the beginning of last year and incurred the following operating costs:Depreciation ($8,000 ÷ 5 years) �� $1,600 Insurance
Sell or Process Further Decision LO13–7 Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral.Material and processing costs total $60,000 per ton, one-fourth of which is allocated to product X15. Seven thousand units of product X15 are produced from each ton of
Volume Trade-Off Decisions LO13–5 Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):Product A B C Selling price
Make or Buy Decision LO13–3 Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is:Direct materials
Make or Buy Decision LO13–3 Futura Company purchases the 40,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $8.40 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than
Special Order Decision LO13–4 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:Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volume Trade-Off Decisions LO13–5, LO13–6 Barlow Company manufactures three products—A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:Product A B C Selling price . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 180 $ 270 $ 240
Sell or Process Further Decisions LO13–7 Dorsey Company manufactures three products from a common input in a joint processing operation.Joint processing costs up to the split-off point total $350,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint
Managing a Constrained Resource LO13–6 Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials.The demand for the company’s products far exceeds its manufacturing capacity. The bottleneck(or constraint) in the production process is upholstery labor-hours.
Volume Trade-Off Decisions LO13–5 Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.Ski Guard Golf Guard Fishing Guard Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Order Decision LO13–4 Imperial Jewelers manufactures and sells a gold bracelet for $189.95. The company’s accounting system says that the unit product cost for this bracelet is $149.00 as shown below:Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $ 84.00 Direct labor .
Make or Buy Decision LO13–3 Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors.An outside supplier has offered to sell one type of carburetor to Troy
Dropping or Retaining a Segment LO13–2 The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:Total Dirt Bikes Mountain Bikes Racing Bikes Sales . . . . . . . . . . . . . . . . . . . .
Identifying Relevant Costs LO13–1 Svahn, AB, is a Swedish manufacturer of sailing yachts. The company has assembled the information shown below that pertains to two independent decision-making contexts called Case A and Case B:Case A:The company chronically has no idle capacity and the old Model
Using If-Then Hypothesis Statements to Connect Balanced Scorecard Performance Measures LO12–4 The table shown below contains three performance measures for each of the four perspectives of the balanced scorecard.Learning and Growth: Internal Business Process:Percent of employees that strongly
Internal Business Process Measures and Customer Value Propositions LO12–1 The table shown below contains a variety of performance measures that companies might use as internal business process measures in their balanced scorecards. Each measure is accompanied by a + or − to indicate whether the
Balanced Scorecard Performance Measures LO12–1, LO12–4 The table shown below contains four performance measures for four different companies. Each set of performance measures contains one measure for each of the four perspectives of the balanced scorecard.Company A: Company B:Average years of
Cost of Quality LO12-2 Walton Company has measured its quality costs for the past two years. After the company gathers its quality cost data, it summarizes those costs using the four categories shown below:Last Year This Year Prevention costs
If-Then Hypothesis Statements LO12–4 The table shown below contains five measures under the column heading If and five measures under the column heading Then.If Then Employee turnover percentage Number of warranty claims Customer defection rate Sales growth rate Number of new products designed
Defining Balanced Scorecard Measures LO12–1, LO12–4 Askew Company is interested in adopting the balanced scorecard. As a first step, the company just completed a brainstorming activity to define areas where it needs to improve with respect to learning and growth, internal business process
Overall Equipment Effectiveness LO12–3 Jefferson Company’s demand for its only product exceeds its manufacturing capacity.The company provided the following information for the machine whose limited capacity is prohibiting the company from producing and selling additional units.Actual run time
Building a Balanced Scorecard LO12–4 Lost Peak ski resort was for many years a small, family-owned resort serving day skiers from nearby towns. Lost Peak was recently acquired by Western Resorts, a major ski resort operator.The new owners have plans to upgrade the resort into a destination resort
Measures of Internal Business Process Performance LO12–3 Management of Mittel Company would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were
Classification of Quality Costs LO12–2 A number of activities that are part of a company’s quality control system are listed below:a. Product testing.b. Product recalls.c. Rework labor and overhead.d. Quality circles.e. Downtime caused by defects.f. Cost of field servicing.g. Inspection of
Examples of Balanced Scorecard Performance Measures LO12–1 Reid Company would like to implement a balanced scorecard performance measurement system.Its senior management team has assembled the measures shown below for possible inclusion in its scorecard.Required:For each measure, indicate by
Effects of Changes in Sales, Expenses, and Assets on ROI LO11–1 CommercialServices.com Corporation provides business-to-business services on the Internet.Data concerning the most recent year appear below:Sales
Service Department Charges LO11–4 Korvanis Corporation operates a Medical Services Department for its employees. Charges to the company’s operating departments for the variable costs of the Medical Services Department are based on the actual number of employees in each department. Charges for
Evaluating New Investments Using Return on Investment (ROI) and Residual Income LO11–1, LO11–2 Selected sales and operating data for three divisions of different structural engineering firms are given as follows:Division A Division B Division C Sales
Transfer Pricing Situations LO11–3 In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits.Case A
Effects of Changes in Profits and Assets on Return on Investment (ROI) LO11–1 Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI).The company’s Springfield
Cost-Volume-Profit Analysis and Return on Investment (ROI) LO11–1 Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and fixed expenses of $150,000 per year. With this level of operating assets and fixed expenses, the company can
Sales Dollars as an Allocation Base for Fixed Costs LO11–4 Konig Enterprises, Ltd., owns and operates three restaurants in Vancouver, B.C. The company allocates its fixed administrative expenses to the three restaurants on the basis of sales dollars.Last year the fixed administrative expenses
Return on Investment (ROI) and Residual Income Relations LO11–1, LO11–2 A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below:Company A B C Sales .
Computing and Interpreting Return on Investment (ROI) LO11–1 Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below:Division Queensland New South Wales Sales
Transfer Pricing from the Viewpoint of the Entire Company LO11–3 Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:Selling price per circuit board
Contrasting Return on Investment (ROI) and Residual Income LO11–1, LO11–2 Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama.Selected data on the two divisions follow:Division Osaka Yokohama Sales .
Return on Investment (ROI) LO11–1 Provide the missing data in the following table for a distributor of martial arts products:Division Alpha Bravo Charlie Sales
Service Department Charges LO11–4 Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company’s mine to its two steel mills—the Northern Plant and the Southern Plant.Budgeted costs for the Transport Services Department total $350,000 per year,
Transfer Pricing Basics LO11–3 Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:Selling price per unit on the intermediate market ��
Residual Income LO11–2 Juniper Design Ltd. of Manchester, England, provides design services to residential developers.Last year, the company had net operating income of $600,000 on sales of $3,000,000. The company’s average operating assets for the year were $2,800,000 and its minimum required
Compute the Return on Investment (ROI) LO11–1 Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:Sales
Direct Materials and Direct Labor Variances LO10–1, LO10–2 Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy:Direct materials: 6 microns per toy at $1.50
Direct Materials Variances LO10–1 Refer to the data in Exhibit 10–6. Assume that instead of producing 4,000 units during the month, the company produced only 3,000 units, using 14,750 pounds of material. (The rest of the material purchased remained in raw materials inventory.)Required:Compute
Direct Materials and Direct Labor Variances LO10–1, LO10–2 Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials .
Working Backwards from Labor Variances LO10–2 Quality Motor Company is an auto repair shop that uses standards to control its labor time and labor cost. The standard labor cost for a motor tune-up is given below:Standard Hours Standard Rate Standard Cost Motor tune-up . . . . . . . . . . . . 2.5
Direct Labor and Variable Manufacturing Overhead Variances LO10–2, LO10–3 Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:Standard Hours
Variable Overhead Variances LO10–3 Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which
Direct Labor Variances LO10–2 SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon with new potatoes and mixed vegetables. During the most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The
Direct Materials Variances LO10–1 Bandar Industries manufactures sporting equipment. One of the company’s products is a football helmet that requires special plastic. During the quarter ending June 30, the company manufactured 35,000 helmets, using 22,500 kilograms of plastic. The plastic cost
Flexible Budget Performance Report LO9–1, LO9–2, LO9–3, LO9–4 AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:Fixed Component per Month Variable Component per Job Actual
Flexible Budgets and Revenue and Spending Variances LO9–1, LO9–3 Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June:Fixed Element per Month Variable Element per Liter Actual Total for June Revenue
Flexible Budget Performance Report in a Cost Center LO9–1, LO9–2, LO9–3, LO9–4 Packaging Solutions Corporation manufactures and sells a wide variety of packaging products.Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production
Prepare a Flexible Budget Performance Report LO9–4 Refer to the data for Lavage Rapide in Exercises 9–9 and 9–12.Required:Using Exhibit 9-8 as your guide, prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August.
Revenue and Spending Variances LO9–3 Refer to the data for Lavage Rapide in Exercise 9–9. Also assume that the company’s actual operating results for August are as follows:Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed
Activity Variances LO9–2 Refer to the data for Lavage Rapide in Exercise 9–9. The company actually washed 8,800 cars in August.Required:Calculate the company’s activity variances for August. (Hint: Refer to Exhibit 9-6.)
Flexible Budget LO9–1 Refer to the data for Lavage Rapide in Exercise 9–9. The company actually washed 8,800 cars in August.Required:Using Exhibit 9–5 as your guide, prepare the company’s flexible budget for August.
Planning Budget LO9–1 Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company’s costs:Fixed Cost per Month Cost per Car Washed Cleaning supplies
Planning Budget LO9–1 Wyckam Manufacturing Inc. has provided the following estimates concerning its manufacturing costs:Fixed Cost per Month Cost per Machine-Hour Direct materials
Flexible Budgets and Activity Variances LO9–1, LO9–2 Jake’s Roof Repair has provided the following data concerning its costs:Fixed Cost per Month Cost per Repair-Hour Wages and salaries
Working with More Than One Cost Driver LO9–2, LO9–3, LO9–5, LO9–6 The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students.
Prepare a Flexible Budget with More Than One Cost Driver LO9–5 Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and

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ISE Managerial Accounting 17th Edition Ray H. Garrison, Eric Noreen, Peter C. Brewer - Solutions

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