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managerial accounting
Managerial Accounting 6th Edition Wendy M. Tietz - Solutions
Consider how Wolf Valley, a popular ski resort, could use capital budgeting to decide whether the \($8\) million Brook Park Lodge expansion would be a good investment.Requirements:1. Compute the average annual net cash inflow from the expansion.2. Compute the average annual operating income from
Refer to the Wolf Valley Data Set in E12-35A.Requirements:1. What is the project’s NPV? Is the investment attractive? Why or why not?2. Assume that the expansion has no residual value. What is the project’s NPV? Is the investment still attractive? Why or why not?Data From Wolf Valley expansion
A variety of robots have been featured at the National Restaurant Show that can be used for a variety of tasks in restaurants. These robots were introduced at the same time that an ongoing debate ensued in the United States about the merits of a national minimum wage of \($15\) per hour for every
Congratulations! You’ve won a state lotto! The state lottery offers you the following (aftertax)payout options:Requirements:Assuming that you can earn 10% on your funds, which option would you prefer? Option 1: $12,000,000 six years from now Option 2: $2,200,000 at the end of each year for the
Refer to McKnight Products in E12-51B. Compute the IRR of each project and use this information to identify the better investment.Data From E12-51B:-Use the NPV method to determine whether McKnight Products should invest in the following projects:• Project A costs \($265,000\) and offers seven
Consider how Soar Mountain, a popular ski resort, could use capital budgeting to decide whether the \($9.5\) million State Park Lodge expansion would be a good investment.Requirements:1. Compute the average annual net cash inflow from the expansion.2. Compute the average annual operating income
Refer to the Soar Mountain Data Set in E12-56B.Requirements:1. What is the project’s NPV? Is the investment attractive? Why or why not?2. Assume the expansion has no residual value. What is the project’s NPV? Is the investment still attractive? Why or why not?Data From E12-56B:-Consider how
A variety of robots have been featured at the National Restaurant Show that can be used for a variety of tasks in restaurants. These robots were introduced at the same time that an ongoing debate ensued in the United States about the merits of a national minimum wage of \($15\) per hour for every
1. Charlie just hit the jackpot in Las Vegas and won \($30,000\)! If he invests it now, at a 14% interest rate, how much will it be worth fifteen years from now?2. Roderick would like to have \($3,000,000\) saved by the time he retires in 40 years. How much does he need to invest now at a 10%
This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began.1. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.The Las Vegas Burburr made headlines when it undertook a
For years, it has been cheaper to manufacture many products overseas (China and other countries) than in the United States. Labor is still less expensive overseas than in the United States, but the cost difference has been decreasing. In addition, the supply chain shortcomings that became evident
The Habbertone Company is considering investing in a wind turbine to generate its own power. Any unused power will be sold back to the local utility company. Between cost savings and new revenues, the company expects to generate net cash inflows of \($750,000\) per year from the turbine. The
The Habbertone Company is considering investing in a wind turbine to generate its own power. Any unused power will be sold back to the local utility company. Between cost savings and new revenues, the company expects to generate \($750,000\) per year in net cash inflows from the turbine. The
The Habbertone Company is considering investing in a wind turbine to generate its own power. Any unused power will be sold back to the local utility company. Between cost savings and new revenues, the company expects to generate \($750,000\) per year in net cash inflows from the turbine. The
The Habbertone Company is considering investing in a wind turbine to generate its own power. Any unused power will be sold back to the local utility company. Between cost savings and new revenues, the company expects to generate \($750,000\) per year in net cash inflows from the turbine. The
Sonoma is considering investing in solar paneling for the roof of its large distribution facility.The investment will cost $9 million and have a six-year useful life and no residual value.Because of rising utility costs, the company expects the yearly utility savings to increase over time as
Sonoma is considering investing in solar paneling for the roof of its large distribution facility. The investment will cost \($9\) million and have a six-year useful life and no residual value. Because of rising utility costs, the company expects the yearly utility savings to increase over time as
The statement of cash flows is designed to showa. the revenues the company has earned during the period.b. how profits were generated during the period.c. the inflow and outflow of cash during the time period.d. the expenses the company incurred during the period.
The cash proceeds from the sale of a plant asset would appear on the statement of cash flows as a(n)a. increase in the financing section.b. decrease in the financing section.c. increase in the investing section.d. decrease in the investing section.
Dividends paid to a company’s stockholders would appear on the statement of cash flows as a(n)a. increase in the financing section.b. decrease in the financing section.c. increase in the investing section.d. decrease in the investing section.
Which of the following would be classified as a decrease in the financing section of the statement of cash flows?a. Purchase of new equipmentb. Issuance of common stockc. Payoff of a long-term mortgage loand. Sale of a building
When preparing the cash provided by operations section of the statement of cash flows using the indirect method, which of the following would provide cash?a. An increase in accounts receivableb. A decrease in long-term investmentsc. A decrease in salaries payabled. An increase in accounts payable
An increase in the Taxes Payable account from the beginning of the year to the end of year would be what type of adjustment to “net cash provided by operations” if the company uses the indirect method when preparing its statement of cash flows?a. An increase to “net cash provided by
When preparing the cash provided by operations section of the statement of cash flows using the indirect method, which of the following would be shown as a use of cash?a. An increase in salaries payableb. A decrease in property, plant, and equipmentc. A decrease in prepaid insuranced. An increase
Which of the following sections will be prepared differently if the direct method is used to prepare the statement of cash flows instead of the indirect method?a. Operating activitiesb. Investing activitiesc. Financing activitiesd. All of the sections will be different
Describe at least four needs for cash within a business.
Define an “operating activity.” List two examples of an operating activity on the statement of cash flows that would increase cash. List two examples of an operating activity that would decrease cash.
Define an “investing activity.” List two examples of an investing activity on the statement of cash flows that would increase cash. List two examples of an investing activity that would decrease cash.
Define a “financing activity.” List two examples of a financing activity on the statement of cash flows that would increase cash. List two examples of a financing activity that would decrease cash.
Define a “noncash investing or financing” activity. Describe an activity that would need to be disclosed as a noncash investing or financing activity.
Describe the difference between the direct and the indirect methods of preparing the operating section of the statement of cash flows.
Describe the process for reconciling net income to the cash basis. What items are added to net income? What items are subtracted from net income?
When preparing a statement of cash flows using the indirect method, what information is needed? What documents or statements would be used?
Provide an example of an operating cash inflow that could result from sustainability activities. Also provide an example of an operating cash outflow that would support sustainability.
Think of a company with which you are familiar. Describe an investing activity related to a company’s sustainability efforts that would be classified as a use of cash on a company’s statement of cash flows. Describe a financing activity related to a company’s sustainability efforts that would
Classify each of the following transactions as an operating, investing, or financing activity.1. Selling inventory 2. Issuing stock 3. Paying dividends 4. Paying employee salaries 5. Buying a new fleet of vehicles with cash
Assume you are in charge of preparing the operating activities section of the statement of cash flows using the indirect method. In order to reconcile the company’s net income back to the cash basis, would you (1) add or (2) subtract each of the following?1. An increase in accounts receivable 2.
Classify each of the following transactions as an operating, investing, or financing activity or a noncash investing and financing activity.1. Payment of salaries 2. Purchase of land with cash 3. Issuance of stock 4. Repayment of long-term notes 5. Payment of rent 6. Collection of sales
Urban Togs is a regional retailer of trend-setting clothing that is made with socially and environmentally friendly practices. The company’s income statement and comparative balance sheets are presented below. In addition, the following information was gathered from the company’s
Daniel Corporation uses the indirect method to prepare its statement of cash flows. Data related to cash activities for last year are as follows:Answer the following questions:1. What was the net cash flow from operating activities for the year?2. What was the cash flow from (or used for) investing
For each of the situations listed, identify the primary standard from the IMA Statement of Ethical Professional Practice that is violated (competence, confidentiality, integrity, or credibility).a. Dana uses the indirect method to prepare the statement of cash flows, even though their company has
Using the data given in E13-15A, prepare the statement of cash flows (indirect method)for Coastal Travel Services, Inc., for 2023.Data From E13-15A:-The comparative balance sheet for Coastal Travel Services, Inc., for December 31, 2023 and 2022, is as follows:The following information is taken from
Using the data from E13-21A, prepare the statement of cash flows using the direct method.Data From E13-21A:-Middleton Spas provides the following data for the year just ended on December 31.Requirement:Prepare the operating activities section of Middleton Spas’ statement of cash flows for the
Using the data given in E13-27B, prepare the statement of cash flows (indirect method)for Seaway Travel Services, Inc., for 2023.Data From E13-27B:-The comparative balance sheet for Seaway Travel Services, Inc., for December 31, 2023 and 2022, is as follows:The following information is taken from
Using the data for E13-33B, prepare the statement of cash flows using the direct method.Data From E13-33B:-Comfort Spas provides the following data for the year just ended December 31. Payment of long-term note payable. $ 4,500 Payments to employees. $ 63,000 Depreciation expense $ 4,800 Proceeds
The Plastic Lumber Company, Inc. (PLC) is a manufacturer that takes in post-consumer plastics (e.g., empty milk jugs) and recycles those plastics into a “plastic lumber” that can be used to build furniture, decking, and a variety of other items. Because Plastic Lumber has a strong focus on
Riverview Marine Company makes a variety of boating supplies. The controller is preparing its statement of cash flows for the most recent calendar year. A sample of the pivot table the controller prepared using Excel with the company’s general ledger data follows.This pivot table lists each
The Minnesota Scooter Company produces several types of scooters. The controller has created an Excel file from the company’s general ledger data for the past fiscal year.A sample of that Excel general ledger data file follows.Net income for the past fiscal year was \($1,615,000\), while
The Green Giraffe Restaurant Group has 21 restaurants scattered across the Midwestern portion of the United States. Green Giraffe is not publicly held but is owned by a small group of investors.For years, the company has used the indirect method in preparing its statement of cash flows. Recently,
Suppose a company is implementing lean accounting throughout the organization.Why might standard costing not be beneficial for that company?
What advantages might a company experience if it adopts ideal standards for its direct material standards and direct labor standards? What advantages are there to using practical standards? As an employee, which would you prefer and why? Does your answer change if you are the manager in charge of
Select a product with which you are familiar. Describe what type of standards (direct material and direct labor) might be in effect for that product wherever it is produced.For each of these standards, discuss how those standards may become outdated.How frequently would you think the company would
Suppose a company that makes and sells spaghetti sauce in plastic jars makes a change to its bottle that allows it to use significantly less plastic in each bottle.Describe at least four ways this change could help the company and its sustainability efforts.
Think of a company that manufactures a product. What type of standards do you think that company might have regarding its sustainability efforts? Do you think sustainability standards would be beneficial for the company? Why or why not?
Kelsey owns a fruit smoothie shop at the local mall. Each smoothie requires ¼ pound of mixed berries, which are expected to cost \($4\) per pound during the summer months. Shop employees are paid \($15\) per hour. Variable overhead consists of utilities and supplies. The variable overhead rate is
Kelsey owns a fruit smoothie shop at the local mall. Each smoothie requires ¼ pound of mixed berries, which are expected to cost \($4\) per pound during the summer months. During the month of June, Kelsey purchased and used 1,300 pounds of mixed berries at a cost of\($3.75\) per pound. Kelsey’s
Kelsey owns a fruit smoothie shop at the local mall. The budgeted monthly fixed overhead costs consist of the store lease payment (\($1,000),\) advertising (\($250)\), equipment depreciation(\($125)\), and store Wi-Fi (\($80).\) Actual fixed overhead expenses for June were \($1,600\).When
Memoirs, Inc., produces several different styles and sizes of picture frames. The collage frame consists of 12 interconnected matted picture slots, each surrounded by a wood frame. Engineering studies indicate that each collage frame will require the following direct materials and direct labor:The
Memoirs, Inc., produces several different styles and sizes of picture frames. The following activity describes Memoirs’ overhead costs during March:Requirements:1. Calculate the variable overhead rate and efficiency variances for the month of March.2. Calculate the fixed overhead budget and
Which of the following affects the present value of an investment?a. The interest rateb. The number of time periods for the investmentc. Whether the investment proceeds will be paid in one lump sum or in equal payments over timed. All of the above
Which of the following is true regarding capital rationing decisions?a. Companies should always choose the investment with the shortest payback period.b. Companies should always choose the investment with the highest NPV.c. Companies should always choose the investment with the highest ARR.d. None
The internal rate of return isa. the same as the accounting rate of return.b. the firm’s hurdle rate.c. the interest rate at which the net present value of the investment is zero.d. none of the above.
Which of the following methods does not consider the investment’s profitability?a. Paybackb. Accounting rate of returnc. Internal rate of returnd. Net present value
Which of the following is the most reliable method for making capital budgeting decisions?a. Paybackb. Accounting rate of returnc. Internal rate of returnd. Net present value
Define capital investment. List at least three examples of capital investments other than the examples provided in the chapter.
“As the required rate of return increases, the net present value of a project also increases.” Explain why you agree or disagree with this statement.
Summarize the net present value method for evaluating a capital investment opportunity. Describe the circumstances that create a positive net present value.Describe the circumstances that may cause the net present value of a project to be negative. Describe the advantages and disadvantages of the
Net cash inflows and net cash outflows are used in the net present value method and in the internal rate of return method. Explain why accounting net income is not used instead of cash flows.
Suppose you are a manager and you have three potential capital investment projects from which to choose. Funds are limited, so you can only choose one of the three projects. Describe at least three methods you can use to select the one project in which to invest.
The net present value method assumes that future cash inflows are immediately reinvested at the required rate of return, while the internal rate of return method assumes that future cash inflows are immediately invested at the internal rate of return rate. Which assumption is better? Explain your
The decision rule for NPV analysis states that the project with the highest NPV should be selected. Describe at least two situations when the project with the highest NPV may not necessarily be the best project to select.
List and describe the advantages and disadvantages of the internal rate of return method.
Each of the following managers has been given certain decision-making authority. Classify each manager according to the type of responsibility center he or she manages.a. Managers of various corporate-owned Grand Hyatt locationsb. Manager of the complimentary breakfast buffet at the Hyatt Place in
For each of the situations listed, identify the primary standard from the IMA Statement of Ethical Professional Practice that is violated (competence, confidentiality, integrity, or credibility).1. In casual conversation with friends on a Friday night, Benjamin talks about how transfer prices are
Each of the following situations describes an organizational unit. Identify which type of responsibility center each underlined item is (cost, revenue, profit, or investment center). Organization a. Sherwin-Williams Store #1933 is located in Copley, Ohio. The store sells paints, wallpapers, and
Montgomery Ceramics, a division of Watson Corporation, has an operating income of\($63,000\) and total assets of \($360,000\). The required rate of return for the company is 9%.The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of
Each of the following situations describes an organizational unit. Identify which type of responsibility center each underlined item is (cost, revenue, profit, or investment center). Organization a. The 3M Company manufactures and distributes products under the Post-it Note, Scotch Tape, Nexcare,
Jubilee Company segments its company into four distinct divisions. The net revenues, operating profit, and total assets for these divisions are disclosed in the footnotes to Jubilee Company’s consolidated financial statements and the following presented information:Corporate includes the costs of
Refer to the Popping Bubbles’ data in P10-56B. The company sold 70,000 bubble kits during March and its actual operating income was as follows:Requirements:1. Prepare an income statement performance report for October.2. What accounts for most of the difference between actual operating income and
BOGO Company segments its company into four distinctive divisions. The net revenues, operating profit, and total assets for these divisions are disclosed in the footnotes to BOGO Company’s consolidated financial statements and presented here.Corporate includes the costs of corporate headquarters,
This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.Burburr Resorts & Hotels Corporation reports several types of
The Procter & Gamble Company (P&G), a global consumer goods company, was one of the top 50 manufacturers in the world based on 2021 revenues.7 Its products include Bounty paper towels, Head & Shoulders shampoo, Tide laundry detergent, Gillette razors, and Pampers disposable diapers. In its annual
Describe at least two specific actions that a company could take to improve its ROI.
Compare and contrast a comprehensive budget and a flexible budget.
Contrast lag indicators with lead indicators. Provide an example of each type of indicator.
Quaker Foods North America is another one of PepsiCo’s divisions. The division had assets of \($1,021\) million, operating income of \($669\) million, and sales revenue of\($2,742\) million.1. Compute Quaker’s ROI, sales margin, and capital turnover.2. Compute Quaker’s residual income,
Sam operates his own summer lawn-mowing business using a truck and equipment used solely for business purposes. Sam budgets \($10\) per job for variable expenses (gas for his truck and equipment) and \($500\) per month for fixed expenses (insurance and lease payments). Sam expected to have 100
Sam operates his own summer lawn-mowing company using a truck and equipment dedicated solely to business operations.Complete the flexible budget performance report below to answer the following questions:1. What is the volume variance for total operating expenses? Favorable or unfavorable?2. What
The following table contains actual segment data for two of PepsiCo’s geographic divisions:(1) Latin America and (2) Europe.Requirements:1. Compute each division’s ROI.2. Compute each division’s sales margin.3. Compute each division’s capital turnover.4. Comment on the results of the
1. Each of the following describes a key performance indicator. Determine which of the balanced scorecard perspectives is being addressed (financial, customer, internal business, or learning and growth).a. Employee turnoverb. Earnings per sharec. Percentage of on-time deliveriesd. Revenue growth
Dakota Taylor, a production line worker at Yani Yogurt, spilled an entire vat of milk.The milk must be discarded rather than used in yogurt.Which variance is directly impacted?a. Direct materials price varianceb. Direct materials quantity variancec. Direct labor rate varianced. Direct labor
What two variances make up the direct labor variance?a. Rate variance and price varianceb. Rate variance and efficiency variancec. Price variance and usage varianced. Price variance and efficiency variance
The variable overhead rate variance may be caused by variances in the following production inputs excepta. indirect materials.b. indirect labor.c. direct materials.d. None of the above impacts the variable overhead rate variance.
What type of variance results when the budgeted fixed overhead costs incurred are greater than the actual fixed overhead costs?a. Favorable fixed overhead budget varianceb. Unfavorable fixed overhead budget variancec. Favorable fixed overhead volume varianced. Unfavorable fixed overhead volume
The entry to allocate manufacturing overhead costs to production involves which of the following?a. Debit to work in process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual outputb. Debit to work in process inventory for the actual
A Cadbury Creme Egg is an egg-shaped chocolate candy that weighs about 35 grams, or a little more than 1.2 ounces. It is filled with a white fondant and a smaller amount of yellow fondant, meant to mimic an actual egg. (Fondant is a type of sugar syrup.) In the United States, Cadbury Creme Eggs are
For each of the situations listed, identify the primary standard from the IMA Statement of Ethical Professional Practice that is violated (competence, confidentiality, integrity, or credibility).1. Hayden is the chief accountant at Appleville Industries. Each month, Hayden prepares variance reports
Match the term on the left with the definition on the right. Term 1. Direct labor rate variance 2. Fixed overhead budget variance 3. Standard cost 4. Variable overhead efficiency variance 5. Direct materials quantity variance 6. Direct labor efficiency variance 7. Variable overhead rate variance 8.
Complete the following statements with one of the terms listed here. You may use a term more than once, and some terms may not be used at all.Anomaly detection Data mining Association Fraud detection Classification Regression Clustering Variance analysis 1. The recommendations in the “Frequently
The Plated Elf Company produces meal kits. Each week, it ships thousands of meal kits.Each meal kit includes a variety of foods (direct materials).Company managers have the following investigation rules for direct materials price variances:• Variances greater than 15% are a high priority for
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