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managerial accounting

Managerial Accounting 6th Edition Wendy M. Tietz - Solutions

Deja runs her own hot dog stand on the U of A campus. The monthly cost of the cart rental and business permit is \($300\). Deja’s contribution margin per unit is \($1.50,\) and her contribution margin ratio is 75%.1. How many hot dogs does Deja need to sell each month to earn a target profit of
Deja runs her own hot dog stand on the U of A campus. The monthly cost of the cart rental and business permit is \($300\). Deja’s contribution margin is \($1.50\) per hot dog sold. She has recently added individual servings of potato chips to her product offering. Each bag of potato chips has a
Deja runs her own hot dog stand on the U of A campus. The monthly cost of the cart rental and business permit is currently \($300\), but she has been given the option of changing the arrangements to \($100\) plus \($0.25\) for every unit of product sold from her stand.1. At what point in sales
Fleet Foot buys hiking socks for \($6\) a pair and sells them for \($10\). Management budgets monthly fixed expenses of \($10,000\) for sales volumes between 0 and 12,000 pairs.Requirements 1. Use the income statement approach and the shortcut unit contribution margin approach to calculate monthly
Fleet Foot buys hiking socks for \($6\) a pair and sells them for \($10.\) Monthly fixed costs are \($10,000\) (for sales volumes between 0 and 12,000 pairs), resulting in a breakeven point of 2,500 units. Assume that Fleet Foot has been selling 8,000 pairs of socks per month.Requiremens:1. What is
In making short-term special decisions, the decision-maker shoulda. focus on total costs.b. focus only on quantitative factors.c. separate variable costs from fixed costs.d. use a traditional absorption costing approach
Which of the following costs is irrelevant to business decisions?a. Costs that differ between alternativesb. Variable costsc. Sunk costsd. Avoidable costs
When deciding whether to sell banana powder as is or to process further to make banana bread mix, managers should ignore which of the following?a. The cost of processing the banana powder further to make banana bread mixb. The costs of processing the banana powder thus farc. The revenue if the
Refer to the Montrose Oil and Lube data in S6-7. Use the high-low method to determine the variable and fixed cost components of Montrose Oil and Lube’s operating costs. Use this information to project the monthly operating costs for a month in which the company performs 3,400 oil changes.Data
Refer to the hotel scatterplot in S6-11.1. Would the high-low method or regression analysis result in a more accurate cost equation for the data pictured in the scatterplot? Explain.2. A regression analysis of the data revealed an R-squared figure of 0.939. Interpret this figure in light of the
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.a. An s-shaped line would represent a .b. The cost equation resulting from using is described as the “line of best fit.”c. is a method for determining
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. Audrey is an accountant for Simply Green Consulting. At a party, she overhears a person talking about
For each of the following situations, identify the independent variable and the dependent variable.a. Carron Corporation is trying to predict its monthly utilities cost. The cost manager has gathered the monthly utilities cost from each of the past 36 months and the machine hours used in each of
Refer to the Farnsworth Drycleaners in E6-23A. Assume that Farnsworth charges customers \($10\) per garment for dry cleaning. Prepare Farnsworth’s projected income statement if 4,260 garments are cleaned in July. First, prepare the income statement using the traditional format; then prepare
Refer to the Broadway Floral data in E6-28A. Use Microsoft Excel to do the following:Requirements:1. Run a regression analysis.2. Determine the company’s cost equation (use the output from the Excel regression).3. Determine the R-squared (use the output from the Excel regression). What does
Refer to the laboratory overhead cost and activity data for Elmhurst Health Center in E6-32A. Use the high-low method to determine the laboratory’s cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,100 lab tests are performed next month.Data
Using the data provided in E6-32A, the laboratory manager performed a regression analysis to predict total laboratory overhead costs. The output generated by Excel is as follows:Requirements:1. Determine the lab’s cost equation (use the output from the Excel regression).2. Determine the R-squared
The manager of the main laboratory facility at Elmhurst Health Center (from E6-32A) collects seven additional months of data after obtaining the regression results in E6-34A.The number of tests performed and the total monthly overhead costs for the lab follow:Use Excel to do the
Royal Industries has one product. Information about the production and sales of that product for the past year follow.The company had no beginning inventory.Requirements:1. Prepare two income statements for the year, one using absorption costing and one using variable costing. Use those statements
Charleston Carriage Company offers guided horse-drawn carriage rides through historic Greenville, South Carolina. The carriage business is highly regulated by the city. Charleston Carriage Company has the following operating costs during April:During April (a month during peak season), Charleston
Hadlock Manufacturing manufactures a single product that it will sell for \($68\) per unit. The company is looking to project its operating income for its first two years of operations.Cost information for the single unit of its product is as follows:• Direct material per unit produced \($30\)•
The annual data that follow pertain to Aqua Goggles, a manufacturer of swimming goggles (the company had no beginning inventory):Requirements:1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Aqua Goggles for the year.2. Which
Refer to the Whitman Drycleaners in E6-46B. Assume that Whitman charges customers \($9\) per garment for dry cleaning. Prepare Whitman’s projected income statement if 4,220 garments are cleaned in March. First, prepare the income statement using the traditional format; then prepare Whitman’s
Tamika Lotta, owner of Fourth Street Floral, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Lotta wants to set the delivery fee based on the distance driven to deliver the flowers. Lotta wants to separate the fixed and variable
Refer to Lotta’s Fourth Street Floral data in E6-51B. Use the high-low method to determine the company’s cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15,500 miles.Data From E6-51B:-Tamika Lotta, owner of Fourth Street Floral, operates a
Refer to the Fourth Street Floral data in E6-51B. Use Microsoft Excel to run a regression analysis, then do the following calculations:Requirements:1. Determine the firm’s cost equation (use the output from the Excel regression).2. Determine the R-squared (use the output from the Excel
The manager of the main laboratory facility at Rosedale Health Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed but that some costs remain the same each month regardless of
Refer to the laboratory overhead cost and activity data for Rosedale Health Center in E6-55B. Use the high-low method to determine the laboratory’s cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 2,700 lab tests are performed next month.Data
Using the data provided in E6-55B, the laboratory manager performed a regression analysis to predict total laboratory overhead costs. The output generated by Excel is as follows:Requirements:1. Determine the lab’s cost equation (use the output from the Excel regression).2. Determine the R-squared
Vintage Carriage Company offers guided horse-drawn carriage rides through historic Camden, South Carolina. The carriage business is highly regulated by the city. Vintage Carriage Company has the following operating costs during April:Requirements:1. Prepare the company’s contribution margin
Squire Manufacturing manufactures a single product that it will sell for \($77\) per unit. The company is looking to project its operating income for its first two years of operations.Cost information for the single unit of its product is as follows:• Direct material per unit produced \($37\)•
The annual data that follow pertain to Aquatic Optics, a manufacturer of swimming goggles (the company has no beginning inventory):Requirements:1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Aquatic Optics for the year.2. Which
Laksmana, Li & Associates, a consulting firm, is interested in predicting its monthly overhead costs. The controller imported its monthly cost data from the past two years into Excel. The monthly data included month, year, billable attorney hours, administrative staff hours, number of client
Akaya Dawson is the Chief Operating Officer at Mercy Hospital in Atlanta, Georgia. She is analyzing the hospital’s overhead costs but is not sure whether nursing hours or the number of patient days would be the best cost driver to use for predicting the hospital’s overhead. She has gathered the
Suravi Uchil is the Chief Operating Officer at Union Hospital in Newark, New Jersey. She is analyzing the hospital’s overhead costs but is not sure whether nursing hours or the number of patient days would be the best cost driver to use for predicting the hospital’s overhead. She has gathered
World Strings produces student-grade violins for beginning violin students. The company produced 2,700 violins in its first month of operations. At month end, 800 finished violins remained unsold. There was no inventory in work in process. Violins were sold for $120.00 each. Total costs from the
Fanfare Products, Inc., is a manufacturer of mobile devices. Keshunn is the plant manager at Fanfare’s Toledo, Ohio, plant. The Toledo plant manufactures a smartphone, the Zoom, which has sold well for the past six months. Keshunn is being considered for promotion to manager of the entire West
Compute the(a) total fixed cost and(b) fixed cost per guest if the hotel has 16,000 guests next month. Compare the fixed cost per guest at the higher occupancy rate to the fixed cost per guest when only 2,000 guests stay during the month.
Assume the local fitness club charges a membership fee of \($30\) per month for unlimited use of the exercise equipment plus an additional fee of \($5\) for every instructor-led exercise class you attend.1. Express the monthly cost of belonging to the fitness club as a cost equation.2. What is your
Sony makes MP3 players and uses both absorption and variable costing. Assume Sony incurred the following manufacturing costs in producing 10,000 MP3 players last month:1. What is the product cost per unit, using absorption costing?2. How will fixed MOH be expensed if absorption costing is used?3.
The previous manager of Fitness-for-Life started the following schedule but left before completing it. The manager wasn’t sure but thought the club’s fixed operating costs were \($10,000\) per month and the variable operating costs were \($1\) per member. The club’s existing facilities could
As the new manager of a local fitness club, Fitness-for-Life, you have been studying the club’s financial data. You would like to determine how the club’s costs behave in order to make accurate predictions for next year. Here is information from the last six months:Requirements:1. By looking at
Kelley Industries makes high-performance swimwear for triathletes. Kelley’s manufacturing costs for the production of 100,000 swimsuits were as follows:Requirements:1. Calculate the product cost per unit using (1) absorption costing and (2) variable costing.2. If inventory increases by 4,000
Consider the Unity Gas proposed entry into the online ordering system in P1-42B.Bronson revises her estimates of the benefits from the new system’s lower labor costs.She now thinks the savings will be only \($936,000\).Requirements:1. Compute the expected benefits of the online ordering system.2.
For several years running, the Over-the-Top Buffet, a Las Vegas Burburr all-you-can-eat attraction, has been voted the best buffet by several publications. The Over-the-Top Buffet offers a seemingly unlimited selection of food. Menu items include fried chicken and waffles, made-to-order fresh
Sheldon Products produces plastic containers through a blow-molding process. The company uses process costing because its products are generally homogeneous and are produced in large batches.Malachi Jackson is the controller at Sheldon Products. It is December 31, 2022, and Jackson is supervising a
What characteristics of the product or manufacturing process would lead a company to use a process costing system? Give two examples of companies that are likely to be using process costing. What characteristics of the product or manufacturing process would lead a company to use a job costing
What are conversion costs? In a job costing system, at least some conversion costs are assigned directly to products. Why do all conversion costs need to be assigned to processing departments in a process costing system?
Dairymaid makes organic yogurt. The only ingredients, milk and bacteria cultures, are added at the very beginning of the fermentation process. At month end, Dairymaid has 100,000 cups of yogurt that are only 25% of the way through the fermentation process. Use the equivalent unit formula to answer
Dairymaid’s yogurt goes through two sequential processes in two departments: Fermenting and Packaging. Assume that in the Packaging Department, Step 4 of the process costing procedure indicated the following costs per equivalent unit (cases of yogurt):a. How much did each case of yogurt cost to
Florida Tile produces ceramic tiles using two sequential production departments: Tile-Forming and Tile-Finishing. The following information was found for Florida Tile’s first production process, the Tile-Forming Department.Requirement:Use the five steps of process costing to calculate the cost
This problem extends the Summary Problem 1 to a second department. During May, Florida Tile Industries reports the following in its Tile-Finishing Department:Requirements:1. Complete the five-step process costing procedure to assign the Tile-Finishing Department’s total costs to account for to
If a company sells one unit above its breakeven sales, then its operating income would be equal toa. the unit selling price.b. the fixed expenses.c. the unit contribution margin.d. zero.
How is the sales volume in dollars necessary to reach a target profit calculated?a. target profit ÷ unit contribution marginb. target profit ÷ contribution margin ratioc. (fixed expenses + target profit) ÷ unit contribution margind. (fixed expenses + target profit) ÷ contribution margin ratio
The number of units to be sold to reach a certain target profit is calculated asa. target profit ÷ unit contribution marginb. target profit ÷ contribution margin ratioc. (fixed expenses + target profit) ÷ unit contribution margind. (fixed expenses + target profit) ÷ contribution margin ratio
The breakeven point on a CVP graph isa. the intersection of the sales revenue line and the total expense line.b. the intersection of the fixed expense line and the total expense line.c. the intersection of the fixed expense line and the sales revenue.d. the intersection of the sales revenue line
A shift in the sales mix from a product with a high contribution margin ratio toward a product with a low contribution margin ratio will cause the breakeven point toa. increase.b. decrease.c. remain the same.d. increase or decrease, but the direction of the change cannot be determined from the
What is the margin of safety?a. The amount of fixed and variable costs that make up a company’s total costsb. The sales level at which operating income is zeroc. The difference between the sales price per unit and the variable cost per unitd. The excess of expected sales over breakeven sales
All of the following would be considered a company with high operating leverage, except a(n)a. airline company.b. t-shirt kiosk in a mall.c. hotel chain.d. amusement park.
When analyzing the impact of various combinations of sales price and volume on profit by using a what-if analysis in Excel, which of the following items would be needed?a. Total fixed expensesb. Sales price per unitc. Variable cost per unitd. All of the listed items are needed for a what-if
The purchasing manager for Rockwell Hall Bags has been able to purchase the material for its signature handbags for \($9\) less per bag than in the prior year. Keeping everything else the same, what effect would this reduction in material cost have on the breakeven point for Rockwell Hall Bags? Now
Suppose a company can replace the packing material it currently uses with a biodegradable packing material. The company believes this move to biodegradable packing materials will be well received by the general public. However, the biodegradable packing materials are more expensive than the current
Explain why departmental overhead rates might be used instead of a single plantwide overhead rate.
Assume a job with one stair climber requires 5 direct labor (DL) hours to produce: 3 DL hours in the Machining Department and 2 DL hours in the Assembly Department. Use the plantwide overhead rate and departmental allocation rates calculated in the chapter example to answer the following: 1. How
Which of the following would you expect to see at a company that espouses lean thinking?1. Larger inventories 2. Smaller batch sizes3. More organized workstations 4. Longer setup times 5. Lower-level small-team problem solving 6. Centralized storage cribs 7. Pull system
Indianapolis Auto Parts (IAP) has a Seat Manufacturing Department that uses ABC. IAP’s activity cost allocation rates include the following:Suppose Ford has asked for a bid on 50,000 built-in baby seats that would be installed as an option on some Ford SUVs. Each seat has 20 parts, and the direct
The CEO of IAP is concerned with the quality of its products and the amount of resources currently spent on customer returns. The CEO would like to analyze the costs incurred in conjunction with the quality of the product.The following information was collected from various departments within the
Gallagher Counter Co. produces quartz countertops in two sequential production departments: Forming and Polishing. The Polishing Department calculated the following costs per equivalent unit (square feet) on its May production cost report:During May, 135,000 square feet were completed and
Refer to the Arctic Springs Filtration Department Data Set.1. Compute the December conversion costs in the Filtration Department.2. If the Filtration Department completely processed 200,000 liters, what would be the average filtration cost per liter?3. Now, assume that the total costs of the
Refer to the Arctic Springs Filtration Department Data Set. At Arctic Springs, water is added at the beginning of the filtration process. Conversion costs are incurred evenly throughout the process, and in December, 160,000 liters have been completed and transferred out of the Filtration Department
Refer to the Arctic Springs Filtration Department Data Set.Complete Steps 3 and 4 of the process costing procedure: Summarize total costs to account for and then compute the cost per equivalent unit for both direct materials and conversion costs.Arctic Springs produces premium bottled water. Arctic
Refer to the Arctic Springs Filtration Department Data Set. Complete Step 5 of the process costing procedure: Assign costs to units completed and to units in ending inventory. Prepare a schedule that answers the following questions.1. What is the cost of the 160,000 liters completed and transferred
Refer to the Arctic Springs Filtration Department Data Set.1. Record the journal entry to transfer the cost of the 160,000 liters completed and transferred out of the Filtration Department and into the Bottling Department.2. Record all of the transactions in the “Work in Process
Refer to the Arctic Springs Bottling Department Data Set.1. Draw a time line.2. Complete the first two steps of the process costing procedure for the Bottling Department: summarize the physical flow of units and then compute the equivalent units of direct materials and conversion costs.Arctic
Refer to the Arctic Springs Bottling Department Data Set and. Complete Steps 3 and 4 of the process costing procedure: Summarize total costs to account for and then compute the cost per equivalent unit for both direct materials and conversion costs.Arctic Springs produces premium bottled water. The
Refer to the Arctic Springs Bottling Department Data Set. Complete Step 5 of the process costing procedure: Assign costs to units completed and to units in ending inventory.Arctic Springs produces premium bottled water. The preceding Short Exercises considered the first process in bottling premium
Refer to the Arctic Springs Bottling Department Data Set 1. Prepare the journal entry to record the cost of units completed and transferred to finished goods.2. Post all transactions to the Work in Process Inventory—Bottling T-account. What is the ending balance?
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). Refer to Exhibit 1-7 for the complete standard.1. At a party, Eric gets carried away with bragging
Golden Sun Bakery mass-produces bread using three sequential processing departments:Mixing, Baking, and Packaging. The following transactions occurred during April:Requirements:1. Post each of these transactions to the company’s inventory T-accounts. You should set up separate T-accounts for the
Patty’s Pumpkin Pies collected the following production information relating to November’s baking operations:Requirements:Complete the first two steps in the process costing procedure:1. Summarize the flow of physical units.2. Compute output in terms of equivalent units.The units in ending work
Refer to the Churning Department information for Woodson Dairy in E5-31A.Requirements:1. What journal entry(s) would have been made during the month to record manufacturing costs? (Use Wages Payable as the credit for the direct labor costs.)2. What journal entry is needed at the end of the month to
Paulson Winery in Albany, New York, has two departments: Fermenting and Packaging.Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Conversion costs are incurred evenly throughout each process. Data from the month of
Alpha Semiconductors experienced the following activity in its Photolithography Department during December. Materials are added at the beginning of the photolithography process.Requirements:1. Summarize flow of physical units and compute total equivalent units for three cost categories:
Early Start Bakery mass-produces bread using three sequential processing departments:Mixing, Baking, and Packaging. The following transactions occurred during February:Requirements:1. Post each of these transactions to the company’s inventory T-accounts. You should set up separate T-accounts for
Refer to E5-47B and E5-48B. Assume the Landon Dairy Forming Department has the following costs per equivalent unit (EU) on its own production cost report for the month of January:Cost per EU transferred in from Churning Department Cost per Direct Materials EU = \($0.10\) Cost per Conversion Costs
Grammer Chicken produces canned chicken a la king. The chicken a la king passes through three departments: (1) Mixing, (2) Retort (sterilization), and (3) Packing. In the Mixing Department, chicken and cream are added at the beginning of the process, the mixture is partly cooked, and chopped green
This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began in Chapter. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.For several years running, the Over-the-Top Buffet, a
Refer to E5-31A and E5-32A. Assume the Woodson Dairy Forming Department has the following costs per equivalent unit (EU) on its own production cost report for the month of January:Cost per EU transferred in from Churning Department (see your answer from E5-31A)Cost per Direct Materials EU =
Match the following concepts to their descriptions:1. Document specifying when jobs will be manufactured.2. Product costing system used by mass manufacturers.3. Bill from supplier.4. Document specifying parts needed to produce a job.5. Product costing system used by manufacturers of unique
Recall that Life Fitness had estimated \($1,000,000\) of MOH for the year and 62,500 DL hours, resulting in a predetermined MOH rate of \($16/DL\) hour. By the end of the year, the company had actually incurred \($975,000\) of MOH costs and used a total of 60,000 DL hours on jobs. By how much had
Cristal Haymeyer, CPA, pays her new staff accountant, Anika, a salary equivalent to \($25\) per hour, while Cristal receives a salary equivalent to \($40\) per hour. The firm’s predetermined indirect cost allocation rate for the year is \($12\) per hour. Haymeyer bills for the firm’s services
E-Z-Boy Furniture makes sofas, loveseats, and recliners. The company allocates manufacturing overhead based on direct labor hours. E-Z-Boy estimated a total of \($2\) million of manufacturing overhead and 40,000 direct labor hours for the year.Job 310 consists of a batch of 10 recliners. The
Fashion Fabrics makes custom handbags and accessories for high-end clothing boutiques.Record summary journal entries for each of the following transactions that took place during the month of January, the first month of the fiscal year.Requirements:1. During January, \($150,000\) of raw materials
Which of the following reasons would indicate that a company should consider using departmental overhead rates rather than using a single plantwide overhead rate?a. Each product is in each department for a different length of time.b. Each department spends different amounts on manufacturing
Which costing system is most likely to produce the least cost distortion?a. Traditional costing systemb. Plantwide overhead ratec. Departmental overhead allocation ratesd. Activity-based costing
Which of the following statements is false?a. Activity-based costing can only be used by manufacturing firms.b. Activity-based costing focuses on allocating indirect costs.c. An activity-based costing system requires more information than a system that uses a single plantwide overhead rate.d. A
Which of the following is not a good reason for a paint manufacturer to use activity-based costing?a. The paint industry is highly competitive.b. The paint manufacturer produces a variety of paint types, with some types much more difficult to produce than other types.c. Most costs are direct;
A window manufacturer has a commitment to lean production. What is not a benefit from adopting a lean production philosophy?a. More space available for productionb. Ability to continue production despite disruptions in deliveries of raw materialsc. Ability to respond more quickly to changes in
The cost of reworking defective products before shipping to customers would be classified as which type of quality costs?a. Prevention costb. Appraisal costc. Internal failure costd. External failure cost
A computer manufacturer’s spending on testing its computers before shipping them to customers helps reduce which of the following costs?a. Prevention costsb. Appraisal costsc. Internal failure costsd. External failure costs

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