Questions and Answers of Managerial Accounting Decision Making

The Summit Surfboard produces two surfboards. One is a recreational model made from polyurethane foam covered with fiberglass cloth and epoxy resin. The other is a high performance competition board
Tilden Financial Services has two divisions, Financial Planning and Business Consulting. The firm’s accountants are in the process of selecting an allocation base to allocate centrally provided
Snowcap Electronics is a manufacturer of data storage devices. Snowcap consists of two service departments (maintenance and computing) and two production departments (assembly and testing).
Major Supplies supplies parts for laundry and kitchen appliances. Customer orders are placed over the Internet and are generally filled in one or two days using express mail services. Angela
The president of Classic Windows wants to switch to an activity-based approach in the upcoming year. Production line setups are a major activity at Classic. Next year Classic expects to perform 1,500
The Apex Company’s copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the
When would activity-based costing give more relevant costs than traditional costing systems?
Why might noncontrollable costs be allocated to a department?
Why is it generally a good idea to allocate budgeted, rather than actual, service department costs?
If a company is allocating cafeteria costs to all departments within the company, what allocation base might result in a causeand-effect relationship?
Assume the role of Jennifer and prepare an income statement for 2020 using variable costing. Then use information on that statement as a basis for estimating the annual impact on profit of sales to
a. Recast the full costing income statement for 2020 into a variable costing format. Does it appear, as Sanjay Patel contends, that the more the company sells, the more it loses? b. Based on the
The following information relates to Axar Products for calendar year 2020, the company’s first year of operation: Units
The following information relates to Jorgensen Manufacturing for calendar year 2020, the company’s first year of operation: Units
The following information relates to Dorian Industrial for fiscal 2020, the company’s first year of operation: Units
The following information relates to Porter Manufacturing for fiscal 2020, the company’s first year of operation: Selling price per
The following information relates to Sinclair Industries for fiscal 2020, the company’s first year of operation: Units produced.......................................500,000 Units
The following information relates to Jarden Industries for fiscal 2020, the company’s first year of operation: Units produced...........................................150,000 Units
Hawthorne Golf, the maker of a sought-after set of golf clubs, was formed in 2015. The selling price for each golf club set is $1,700, variable production costs are $900 per unit, fixed production
The Renton Tractor Company was formed at the start of 2018 and produces a small garden tractor. The selling price is $4,800, variable production costs are $2,000 per unit, fixed production costs are
Below is a variable costing income statement for Trio Office Supplies, a company well known for its quality high-volume automatic staplers. For the coming year, the company is considering hiring
n Below is a variable costing income statement for the Wilner Glass Company, a maker of bottles for the beverage industry. For the coming year, the company is considering hiring two additional sales
The Octavius Company produces a 10-inch chef knife used by commercial chefs. The knives sell for $200 each. In 2020, the company produced 10,000 units and sold 8,000 units. There was no beginning
Miller Heating is a small manufacturer of auxiliary heaters. The units sell for $300 each. In 2020, the company produced 1,000 units and sold 800 units. There was no beginning inventory. Below are
The following information is available for Dunworth Canoes, a company that builds inexpensive aluminum canoes: In its first year of operation, the company produced 21,000 units but was able to
The following information is available for Skipper Pools, a manufacturer of above-ground swimming pool kits: In its first year of operation, the company produced 12,000 units but was able to
Sampson Steel produces high-quality worktables. The company has been in operation for three years, and sales have declined each year due to increased competition. The following information is
Firemaster BBQ produces stainless steel propane gas grills. The company has been in operation for three years, and sales have declined each year due to increased competition. The following
Hamilton Stage Supplies is a manufacturer of a specialized type of light used in theaters. Information on the first three years of business is as follows: Required a. Calculate profit and
Spencer Electronics produces a wireless home lighting device that allows consumers to turn on home lights from their cars and light a safe path into and through their homes. Information on the first
Explain the difference between variable costing and full costing.
a. Mr. Krog is not convinced by Peter’s analysis and has turned to you, an outside consultant, to provide a preliminary estimate of lost profit. Using the limited information contained in the
a. Prepare an analysis of the financial impact of the exhibition on the Rothmueller Museum, assuming attendance is 10,000. Does offering the exhibition appear to be a good decision from a financial
ComputerGuard offers computer consulting, training, and repair services. For the most recent fiscal year, profit was $328,100, as follows: Required a. Linda O’Flaherty, the owner of
Crux, Inc., produces amplifiers. Each unit sells for $900. Below is information on production/sales and costs for 2020: Required a. Use the high-low method to identify the fixed and
Michael Bordellet is the owner/pilot of Bordellet Air Service. The company flies a daily round trip from Seattle’s Lake Union to a resort in Canada. In 2020, the company reported an annual income
Lancer Audio produces a high-end 7.2 channel AV receiver that sells for $1,300. Total operating expenses for July were as follows: Units produced and
Lake Stevens Marina has estimated that fixed costs per month are $350,000 and variable cost per dollar of sales is $0.30. Required a. What is the break-even point per month in sales
In a multiproduct setting, when would it not be appropriate to focus on a weighted average contribution margin per unit?
What is the difference between the contribution margin and the contribution margin ratio?
Explain the concept of a relevant range.
Explain why total compensation paid to the sales force is likely to be a mixed cost.
Provide two examples of costs that are likely to be fixed costs.
Provide two examples of costs that are likely to be variable costs.
Distinguish between discretionary and committed fixed cost.
Bob estimates that to sell 15,000,000 feet of pipe in the current market, the company would have to lower its price to $0.35 per foot, which is even lower than its current cost per foot of $0.40.
The Plastic Glow Company makes glow sticks. It uses a process costing system and has had a just-in-time inventory policy. The plant has the capacity to produce 500,000,000 units a year but currently
Aussie Yarn is a U.S. producer of woollen yarn made from wool imported from Australia. Material is added in the beginning of processing, and conversion costs are added evenly throughout processing.
Woodinville Cement uses a process costing system. In 2020, the company produced and sold 100,000 bags of cement and incurred the following costs: The current selling price is $4 per unit, and
The Gandera Glass Company manufactures glass for sliding glass doors. At the start of August, 2,000 units were in process. During August, 15,000 units were complete and 3,000 units were in process at
The Sacramento plant of Montero Food Corporation produces a gourmet cheese. The following data pertain to the year ended December 31, 2020: During the year, the company started 200,000 pounds of
At the start of November, Penco Refinery had Work in Process inventory consisting of 4,000 units that were 90 percent complete with respect to materials and 50 percent complete with respect to
Magi-Clean produces an industrial cleaner in a continuous production process. Materials are added at the beginning of production. Conversion costs are assumed to be added evenly throughout the
What are the four cost items that may enter a processing department?
What are the three steps involved in the preparation of a production cost report?
What is accomplished by preparing a reconciliation of the physical units as a part of the production cost report?
What items of production cost make up the “costs to account for” in a production cost report?
Why are units often in a different stage of completion with respect to raw materials and conversion costs?
What is meant by the term transferred-in cost?
What is meant by the term conversion costs?
Explain the concept of an “equivalent unit,” including how it is calculated.
a. Calculate the expected full cost of the Surenex engagement, including an allocation of overhead. b. What is the lowest amount that Connie can bill on this engagement without hurting company
Are the proposed actions of Ed and Robin ethical? What is the likely effect of their actions on shareholder value?Brixton Surgical Devices, a public company with sales of over $900,000,000, is one of
Wolf Manufacturing expects the following overhead costs in the current year: Indirect material..............................................$ 45,000 Indirect
Vulcan Molding produces molded rubber components. At the start of the year, the company estimated that it would incur $4,000,000 of direct labor cost and $9,000,000 of manufacturing overhead.
Terra Cotta Designs manufactures custom tiles. The following information relates to the fiscal year ending December 31, 2020: Beginning balance in Raw Material Inventory......................$
The following information is available for Satterfield’s Custom Glass for the fiscal year ending December 31, 2020: Beginning balance in Work in Process Inventory................$
Smith and Baker Legal Services employs five full-time attorneys and nine paraprofessionals. Budgeted salaries are $300,000 for each attorney and $100,000 for each paraprofessional. Budgeted indirect
Webber Fabricating estimated the following annual hours and costs: Expected annual direct labor hours..................20,000 Expected annual direct labor cost................$
Place Y (yes) beside the general ledger inventory accounts used in a job-order cost system and N (no) by those that are not.______ a. Raw Materials Inventory ______ b. Administrative
a. List examples of costs at the Riverside Hotel that are variable, fixed, and sunk. Provide an example of an opportunity cost. b. What is the source of conflict between labor and management?
What is the goal of managerial accounting?
Molton Waste Removal now only collects garbage from private residences (houses) because it does not own trucks with the capability of lifting and emptying garbage dumpsters used by apartment
Easton Taylor & Beckett LLC (ETB), an enterprise risk management (ERM) firm, offers IT and security consulting services including network and IT security risk assessment, computer forensic
Zipp Cards buys baseball cards in bulk from the companies that produce them. Zipp buys sheets of 48 cards, then cuts the sheets into individual cards, and sorts and packages them, usually by team.
The Fox Mug Company is an old-line maker of ceramic coffee mugs. It imprints company logos and other sayings on mugs for both commercial and wholesale markets. The firm has the capacity to produce 50
In its 2015 statement of cash flows, what amount did Apple report for net cash (a) Provided by operating activities, (b) Used for investing activities, and (c) Used for financing activities?
Data for Stiever Corporation€™s maintenance costs is shown below.Compute the variable- and fixed-cost elements using regression analysis. Present your solution in the form of a cost
Vern Thoms is puzzled. His company had a profit margin of 10% in 2020. He feels that this is an indication that the company is doing well. Tina Amos, his accountant, says that more information is
a. If Erin Company had net income of $300,000 in 2019 and it experienced a 24.5% increase in net income for 2020, what is its net income for 2020?b. If 6 cents of every dollar of Erin’s revenue is
Hogan Inc. reported 2019 earnings per share of $3.26 and had no discontinued operations. In 2020, earnings per share on income from continuing operations was $2.99, and earnings per share on net
During 2020, Doubleday Company converted $1,700,000 of its total $2,000,000 of bonds payable into common stock. Indicate how the transaction would be reported on a statement of cash flows, if at all.
What is a post-audit? What are the potential benefits of a postaudit?
For the year ending December 31, 2020, Cobb Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin—$700,000 budget, $710,000
Torres Company accumulates the following summary data for the year ending December 31, 2020, for its Water Division, which it operates as a profit center: sales—$2,000,000 budget, $2,080,000
In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were as follows.All costs are controllable by the department manager.
Data for Gundy Company are given in BE10.4. In March 2020, the company incurs the following costs in producing 100,000 units: direct materials $520,000, direct labor $596,000, and variable overhead
Gundy Company expects to produce 1,200,000 units of Product XX in 2020. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are direct
The Rockies Division operates as a profit center. It reports the following for the year ending December 31, 2020.Prepare a responsibility report for the Rockies Division at December 31, 2020. Actual
In Rooney Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2020, direct labor totaling $206,000 is incurred in working 10,400
For the quarter ended March 31, 2020, Croix Company accumulates the following sales data for its newest guitar, The Edge: $315,000 budget; $305,000 actual. Prepare a static budget report for the
Emeric and Ellie’s Painting Service estimates that it will paint 10 small homes, 5 medium homes, and 2 large homes during the month of June 2020. The company estimates its direct labor needs as 40
The controller of Trenshaw Company wants to improve the company’s control system by preparing a month-by-month cash budget. The following information is for the month ending July 31, 2020.June 30,
Deitz Corporation is projecting a cash balance of $30,000 in its December 31, 2019, balance sheet. Deitz’s schedule of expected collections from customers for the first quarter of 2020 shows total
Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.Collections from customers: January $85,000,
Fultz Company has accumulated the following budget data for the year 2020.1. Sales: 30,000 units, unit selling price $85.2. Cost of one unit of finished goods: direct materials 1 pound at $5 per
Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available.1. Sales: 20,000
Atlanta Company is preparing its manufacturing overhead budget for 2020. Relevant data consist of the following. Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: time
Lowell Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2020.Lowell has a labor
Rodriguez, Inc., is preparing its direct labor budget for 2020 from the following production budget based on a calendar year.Each unit requires 1.5 hours of direct labor.InstructionsPrepare a direct

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