Questions and Answers of Managerial Accounting The Cornerstone Of Business Decision Making

Davis Company provided the following partial comparative balance sheets and the income statement for 20X2.Required:Compute operating cash flows using the indirect method. Davis Company Comparative
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:Also, assume that the price per common share for Somerville is $8.10.Required:1. Compute
When a company participates in a stock buyback program, it means that the company is buying shares of its own stock and taking them off the market. With this simple definition in mind, how would a
During the year, Davis Company sold equipment with a book value of $280,000 for $380,000 (original purchase cost of $480,000). New equipment was purchased. Davis provided the following comparative
Davis Company earned net income of $900,000 in 20X2. Davis provided the following information:Required:Compute the financing cash flows for the current year. Davis Company Comparative Balance
During 20X1, Sanchez Company had the following transactions:a. Sold $450,000 of 10-year bonds issued by Makenzie Inc.b. Acquired land valued at $135,000 in exchange for machinery.c. Sold equipment
Refer to the information provided in Brief Exercises 14-28, 14-29, and 14-30.Required:1. Prepare a statement of cash flows for Davis Company for 20X2.2. What is the relationship between the statement
Using a historic series of operating cash flows to forecast cash flows for future periods is an example of which of the following data analytic types? a. Descriptiveb. Normativec. Prescriptived.
Mizukawa Company provided the following information for the years 20X1 and 20X2:Required:1. Calculate the change in cash flows that serves as the control figure for the statement of cash flows.2.
The income statement for Piura Merchandising Corporation is as follows:Other information is as follows:a. Accounts payable decreased by $20,000 during the year.b. Accounts receivable increased by
Azita Company provided the following income statements for its first 3 years of operation:Required:Prepare common-size income statements by using Year 1 as the base period. Net sales Less: Cost of
Which of the following is a financing activity?a. Increase in inventoriesb. Purchase of landc. Increase in accounts receivabled. Issuance of a mortgagee. All of these
Briefly explain how the data generally used in financial statement analyses discussed in this chapter differ from the data generally used in various management accounting decision analyses, such as
Scherer Company provided the following income statements for its first 3 years of operation:Required:Prepare common-size income statements by using net sales as the base. Net sales Less: Cost of
The following financial statements were provided by Roberts Company:At the end of 20X2, Roberts purchased some additional equipment for $20,000.Required:Calculate operating cash flows using the
Alisha Incorporated manufactures medical stents for use in heart bypass surgery. Based on past experience, Alisha has found that its total maintenance costs can be represented by the following
At the beginning of March, Aranda Company had two jobs in process, Job 86 and Job 87, with the following accumulated cost information:During March, two more jobs (88 and 89) were started. The
Noguchi Company manufactures cooling systems. Noguchi produces all the parts necessary for its product except for one electronic component, which is purchased from two local suppliers: Manzer Inc.
Echeverria Company has a JIT system in place. Each manufacturing cell is dedicated to the production of a single product or major subassembly. One cell, dedicated to the production of telescopes, has
Elvin Company produces hand cream in plastic jars. Each jar sells for $5.60. The variable cost for each jar (materials, labor, and overhead) totals $3.92. The total fixed cost is $64,200. During the
Lee Advertising, Inc. is considering an investment in a new information system. The new system requires an investment of $2,520,000 and either has (a) Even cash flows of $1,050,000 per year
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.a. Colby Hepworth has just invested $400,000 in a book and video store. She expects to receive a
Solpoder Corporation has the following comparative financial statements:Dividends of $17,100 were paid. No equipment was purchased or retired during the current year.Required:Prepare a statement of
Davis Company provided the following information:Required:1. Calculate the change in cash.2. Explain the role of the change in cash flow in the statement of cash flows. Cash Davis Company Comparative
Cannon Company invested $11,200,000 in a new product line. The life cycle of the product is projected to be 8 years with the following net income stream: $280,000, $280,000, $420,000, $980,000,
Lemming Company showed $283,500 in prepaid rent on December 31, 20X1. On December 31, 20X2, the balance in the prepaid rent account was $343,200. Rent expense for 20X2 was $708,750.Required:1. What
Identify two data analytic objectives served by the Statement of Cash Flows.
Azita Company provided the following income statements for its first 3 years of operation:Required:Prepare common-size income statements by using net sales as the base. Net sales Less: Cost of goods
Chantelle Company has current assets equal to $1,000,000. Of these, $500,000 is cash, $200,000 is accounts receivable, $175,000 is inventory, and the remainder is marketable securities. Current
Last year, Esmeralda Company had net sales of $400,000,000 and cost of goods sold of $300,000,000. Esmeralda’s had the following balances:
Cuneo Company’s income statements for the last 3 years are as follows:Required:1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue.2.
Last year, Esmeralda Company had net sales of $400,000,000 and cost of goods sold of $300,000,000. Esmeralda’s had the following balances:Required:1. Calculate the average inventory.2. Calculate
Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been
Elsa’s Makeup Manufacturers provided the following income statement for last year:Required:Calculate the times-interest-earned ratio. Sales Cost of goods sold Gross margin Operating
Kate Company has current assets equal to $120,500,000. Of these, $42,000,000 is cash, $28,000,000 is accounts receivable, $15,500,000 is marketable securities, and the remainder is inventories.
What are liquidity ratios? Leverage ratios? Profitability ratios?
Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been
Ernst Company’s balance sheet shows total liabilities of $32,500,000, total stockholders’ equity of $8,125,000, and total assets of $40,625,000.Required:1. Calculate the debt ratio.2. Calculate
Khumalo Company’s balance sheet shows total liabilities of $25,000,000, total stockholders’ equity of $50,000,000, and total assets of $75,000,000.Required:1. Calculate the debt ratio.2.
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:Required:Calculate the return on sales. Somerville Company Income Statement For the Year
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:The income statement, statement of retained earnings, and balance sheet for Somerville
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:Required:1. Calculate the average total assets.2. Calculate the return on assets.
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:Required:1. Compute the number of common shares.2. Compute earnings per share. Somerville
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:Required:Compute the price-earnings ratio. (Note: Round the answer to two decimal
Tsao Company provided the following income statement for last year:Required:Calculate the times-interest-earned ratio. Sales Cost of goods sold Gross margin Operating expenses Operating
Barkley Company provided the following information:Required:1. Compute the current ratio.2. Compute the quick (acid-test) ratio. Current assets: Cash Accounts receivable Inventories Total current
Brunello Company had net sales of $34,000,000. Brunello had the following balances:Required:1. Calculate the average accounts receivable.2. Calculate the accounts receivable turnover ratio.3.
What are two key components of data analytics for capital investment decision making?
Tatsumi Inc. has just completed development of a new printer. The new product is expected to produce annual revenues of $4,050,000. Producing the printer requires an investment in new equipment
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows.a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits
Bella Cardenas, owner of Golding Company, was approached by a local dealer of air conditioning units. The dealer proposed replacing Golding’s old cooling system with a modern, more efficient
Muskogee Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. Aftertax cash
Dr. Claudia Gomez, a plastic surgeon, had just returned from a conference in which she learned of a new surgical procedure for removing wrinkles around eyes, reducing the time to perform the normal
Woodard Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $460,800. The NC equipment
The NPV is the same as the profit of a project expressed in present dollars. Do you agree? Explain.
Refer to Exhibit 2.2 for a review of data analytic types. Assume there are two competing projects, A and B. Project A has an NPV of $6,000 and Project B has an NPV of $8,000. The calculation of NPV
Kalani’s Fish Taco Hut is a small start-up restaurant in Hanalei. Kalani recently completed an online risk management course and has identified food safety as his restaurant’s top risk.
Rocket Motors manufactures sterndrive engines for pleasure craft boats. Rocket’s management is concerned about increasing competition in its industry, resulting from a very large international boat
Cruz Company had total sales of $3,600,000 for fiscal 20X1. The costs of quality-related activities are given below.Required:1. Prepare a quality cost report, classifying costs by category and
Matrimon, Inc., had the following quality costs for the years ended December 31, 20X1 and 20X2:At the end of 20X1, management decided to increase its investment in control costs by 40% for each
Briefly explain one challenge to employing data analytics within an enterprise risk management setting.
Bronco Company’s management accounting team uses the results from particular data analytics to select its optimal risk response to key risks. What analytic type does this behavior represent? [Refer
On March 1, Tres Hermanos Import-Export Company purchased merchandise costing 80,000 Mexican pesos. Payment was due, in pesos, on June 1. The exchange rates of pesos for $1 were as follows:March 1 $1
On March 1, Tres Hermanos Import-Export Company sells merchandise costing 95,000 Mexican pesos. Payment will be made in pesos, on June 1. The exchange rates of pesos for $1 were as follows:March 1 $1
Briefly explain one challenge to employing data analytics within a business sustainability setting.
Castledale Company reported sales of $7,000,000 in 20X1. At the end of the fiscal year (September 30, 20X1), the following quality costs were reported:Vendor
The controller of Ephraim, Inc. has computed quality costs as a percentage of sales for the past 5 years (20X1 was the first year the company implemented a quality improvement program). This
Discuss the value of data visualization for quality cost reporting
Liston, Inc., owns a factory located close to, but not inside, a foreign trade zone. The plant imports volatile chemicals that are used in the manufacture of chemical reagents for laboratories. Each
A value stream has three activities and two products. The units produced and shipped per week are 50 of the limited model (Model K), characterized by special additional features, and 150 of the
Liston, Inc., owns a factory located close to, but not inside, a foreign trade zone. The plant imports volatile chemicals that are used in the manufacture of chemical reagents for laboratories. Each
Define forensic accounting.
Define the fraud triangle.
Alger Inc. manufactures six models of leaf blowers and weed eaters. Alger’s budgeting team is finalizing the sales budget for the coming year. Sales in units and dollars for last year follow:In
Paul Golding and his wife, Nancy, established Crunchy Chips in 1960. Since its inception, the company has established distribution channels in 11 western states, with production facilities in Utah,
Sabrosa Company produces chocolate. Each pound of chocolate requires 400 cocoa beans (the unit quantity standard) and 0.12 labor hour (the unit labor standard). During the year, 700,000 pounds of
Cinturon Corporation produces high-quality leather belts. The company’s plant in Boise uses a standard costing system and has set the following standards for materials and labor:Leather (3 strips @
Pat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price,
Joven Inc. produces plastic bottles. Production of 16-ounce bottles has a standard unit quantity of 0.50 ounce of plastic per bottle. During the month of June, 360,000 bottles were produced using
Joven Inc. produces plastic bottles. Production of 16-ounce bottles has a standard unit quantity of 0.50 ounce of plastic per bottle. During the month of June, 360,000 bottles were produced using
Cinturon Corporation produces high-quality leather belts. The company’s plant in Boise uses a standard costing system and has set the following standards for materials and labor:Leather (3 strips @
Cinturon Corporation produces high-quality leather belts. The company’s plant in Boise uses a standard costing system and has set the following standards for materials and labor:Leather (3 strips @
The standard cost per unit is an example of the following data analytics type:a. Preliminary.b. Diagnostic.c. Predictive.d. Descriptive.e. Prescriptive.
Lata Inc. produces aluminum cans. Each can has a standard labor requirement of 0.04 hour. During the month of May, 500,000 cans were produced using 19,000 labor hours @ $15.50. The standard wage rate
Lata Inc. produces aluminum cans. Each can has a standard labor requirement of 0.04 hour. During the month of May, 500,000 cans were produced using 19,000 labor hours @ $15.50. The standard wage rate
Jugo Company produces apple juice sold in gallons. Recently, the company adopted the following material standard for 1 gallon of its apple juice:Direct materials 128 oz. @ $0.04 = $5.12During the
Hashimoto Company showed the following information for the year:Required:1. Calculate the standard direct labor hours for actual production.2. Calculate the applied variable overhead.3. Calculate the
Movil Company manufactures a plastic toy cell phone. The following standards have been established for the toy’s materials and labor inputs:During the first week of July, the company had the
Rueda Company produces wheels for bicycles. During the year, 1,100,000 wheels were produced. The actual labor used was 540,000 hours at $15.50 per hour. Rueda has the following unit labor standard:
Plasta Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The following standards for producing one case of bottles have been established:During December, 68,000
Bulger Company provided the following data:Standard fixed overhead rate (SFOR) $8 per direct labor hour. Actual fixed overhead costs $985,300. Standard hours allowed per unit 6
Divertido Company produces single-colored T-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next
Divertido Company produces single-colored T-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next
Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its
Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its
East Mullett Manufacturing earned operating income last year as shown in the following income statement:Sales ................................................................$3,750,000Cost of goods
Barnard Manufacturing earned operating income last year as shown in the following income statement:Sales ............................................................$4,000,000Cost of goods
The division manager of HFD Inc., was debating the merits of a new product—a toy drone with a flying radius of 25 feet. The budgeted income of the division was $849,200 with operating assets of
Nakamura Company provided the following income statement for the last year:At the beginning of last year, the company had $24,200,000 in operating assets. At the end of the year, the company had
What is decentralization?

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