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Financial And Managerial Accounting 15th Edition Carl S. Warren, Jefferson P. Jones, William B. Tayler - Solutions
Three products result from a joint production process. There are 50 units of product B158, 100 units of product B159, and 50 units of product B160. Using the physical units method, what percent of the joint costs will be allocated to product B159?a. 50%b. 25%c. 75%d. 33%
Guybrush Enterprises produces two types of particle board: high and low density. Both types of wood go through a joint production process where wood chips are milled and mixed with resin, wax, water, and glue. The joint process costs a total of $150 per batch. After the split-off point,
O&W Metal Company makes designer emblems for luxury vehicles. Each emblem is handcrafted out of titanium to the customer’s design specifications. O&W’s artisans are paid an hourly wage and work between 30 and 60 hours a week. O&W uses the straight-line method of depreciation. To
Based on the data presented in Question 4, and using the sequential method, what percent of Support Department 2 costs will be allocated to Production Department 2 (assume Support Department 1 costs are allocated first)?a. 38%b. 62%c. 90%d. 10%
Which of the following describes variable costs?a. Costs that vary on a per-unit basis as the level of activity changesb. Costs that vary in total in direct proportion to changes in the level of activityc. Costs that remain the same in total dollar amount as the level of activity changesd. Costs
Toussant Company sells 20,000 units at $120 per unit. Variable costs are $90 per unit, and fixed costs are $250,000.a. Prepare an income statement for Toussant in contribution margin format.b. Determine Toussant’s (1) contribution margin ratio and (2) unit contribution margin.c. How much would
Based on the following operating data, what is the operating leverage?a. 0.8b. 1.2c. 1.8d. 4.0 Sales...... Variable costs Contribution margin..... Fixed costs..... Operating income.. $ 600,000 (240,000) $360,000 (160,000) $ 200,000
If sales are $500,000, variable costs are $200,000, and fixed costs are $240,000, what is the contribution margin ratio?a. 40%b. 48%c. 52%d. 60%
Blueberry Inc., a consumer electronics company, manufactures and sells two products, smartphones and tablet computers. The unit selling price, unit variable cost, and sales mix for each product are as follows:The company’s fixed costs are $4,200,000.a. How many units of each product would be sold
DeHan Company, a sporting goods manufacturer, sells binoculars for $140 per unit. The variable cost is $100 per unit, while the fixed costs are $1,200,000.a. Compute:1.The anticipated break-even sales (units) for binoculars.2.The sales (units) for binoculars required to realize target operating
If the unit selling price is $16, the unit variable cost is $12, and fixed costs are $160,000, what is the break-even sales (units)?a. 5,714 unitsb. 10,000 unitsc. 13,333 unitsd. 40,000 units
Third Street Manufacturing Company has no beginning inventory, and sales are estimated to be 30,000 units at $100 per unit. Third Street’s management is evaluating whether to manufacture 30,000 units (Proposal 1) or 40,000 units (Proposal 2). Sales will not change if more than 30,000 units are
Based on the data presented in Question 3, how many units of sales would be required to realize operating income of $20,000?a. 11,250 unitsb. 5,000 unitsc. 40,000 unitsd. 45,000 units
Walsh Company manufactured 30,000 units during July. There were no units in inventory on July 1. Costs and expenses for July were as follows:If the company sells 25,000 units at $75 (units manufactured exceed units sold), prepare an income statement for July using:a. Absorption costingb. Variable
Vintage Apparel Company manufactures and sells two styles of baseball jerseys, the Retro and the New Age.These jerseys are sold in two regions, East and West. Information about the two jerseys and sales in the two regions is as follows:Prepare a contribution margin by sales territory report.
Sales were $750,000, the variable cost of goods sold was $400,000, the variable selling and administrative expenses were $90,000, and fixed costs were $200,000. The contribution margin was:a. $60,000.b. $260,000.c. $350,000.d. none of the above.Variable Costing for Management Analysis
During the year in which the number of units manufactured exceeded the number of units sold, the operating income reported under the absorption costing concept would be:a. larger than the operating income reported under the variable costing concept.b. smaller than the operating income reported
During a year in which the number of units manufactured is less than the number of units sold, the operating income reported under the variable costing concept would be:a. larger than the operating income reported under the absorption costing concept.b. smaller than the operating income reported
The beginning inventory consists of 6,000 units, all of which are sold during the period. The beginning inventory fixed costs are $20 per unit, and the variable costs per unit are $90 per unit. Assuming no ending inventory, what is the difference in operating income between variable and absorption
O-wen Snowboard Company designs and manufactures snowboards. The boards are assembled in the company’s Assembly Department in Colorado. Information for the Assembly Department is as follows:Prepare a flexible budget for the Assembly Department for 3,000, 4,000, and 5,000 boards in August 20Y1.
Variable costs are $70 per unit and fixed costs are $150,000. Sales are estimated to be 10,000 units. How much would absorption costing operating income differ between a plan to produce 10,000 units and 12,000 units?a. $150,000 greater for 12,000 unitsb. $150,000 less for 12,000 unitsc. $25,000
Cooperstown Retros makes replica major league baseball jerseys that match those worn in the 1950s. The company budgeted production of 15,000 jerseys in 20Y1. Each jersey requires 1.5 square yards of wool fabric.Wool fabric costs $14 per square yard. Each jersey requires cutting and assembly. Assume
A tight budget may create:a. budgetary slack.b. discouragement.c. a flexible budget.d. a “spend it or lose it” mentality.
Quincy Company has both cash and credit customers. The company expects that 40% of total monthly sales will be collected in cash in the month of sale, and the remaining 60% will be collected in the month following the month of sale. The Accounts Receivable balance on January 1 is $97,500, all of
The first step of the budget process is to:a. plan.b. direct.c. control.d. analyze feedback.
Static budgets are often used by:a. production departments.b. administrative departments.c. responsibility centers.d. capital projects.
The actual and standard factory overhead costs for producing a specified quantity of product are as follows:If 1,000 hours were unused, the fixed factory overhead volume variance would be:a. $1,500 favorable.b. $2,000 unfavorable.c. $4,000 unfavorable.d. $6,000 unfavorable. Actual: Variable
The total estimated sales for the coming year is 250,000 units. The estimated inventory at the beginning of the year is 22,500 units, and the desired inventory at the end of the year is 30,000 units. The total production indicated in the production budget is:a. 242,500 units.b. 257,500 units.c.
Menounos Manufacturing Co. uses standard costs. Standard costs and actual costs for direct materials and direct labor for the manufacture of 3,000 units during 20Y6 were as follows:Each unit requires 2.5 hours of direct labor.a. Compute the direct materials price variance, direct materials quantity
Menounos Manufacturing Co. uses standard costs. Standard costs and actual costs for direct labor and factory overhead for the manufacture of 3,000 units during 20Y6 were as follows:Each unit requires 2.5 hours of direct labor.Compute the:a. variable factory overhead controllable variance.b. fixed
Dixon Company expects $650,000 of credit sales in March and $800,000 of credit sales in April. Dixon historically collects 70% of its sales in the month of sale and 30% in the following month. How much cash does Dixon expect to collect in April?a. $800,000b. $560,000c. $755,000d. $1,015,000
The actual and standard direct materials costs for producing a specified quantity of product are as follows:The direct materials price variance is:a. $50 unfavorable.b. $2,500 unfavorable.c. $2,550 unfavorable.d. $7,550 unfavorable. Actual: Standard: 51,000 lbs. at $5.05 50,000 lbs. at $5.00
Bower Company produced 4,000 units of product. Each unit requires 0.5 standard hour. The standard labor rate is $12 per hour. Actual direct labor for the period was $22,000 (2,200 hrs. × $10 per hr.). The direct labor time variance is:a. 200 hours unfavorable.b. $2,000 unfavorable.c. $4,000
Twitchell Industries produces three products. All of the products use a furnace operation, which is a production bottleneck. The following data are available:Which product is most profitable and should be emphasized in June’s advertising campaign?a. Product 1b. Product 2c. Product 3d. The
Ramathan Company produced 6,000 units of Product Y, which is 80% of capacity. Each unit required 0.25 standard machine hour for production. The standard variable factory overhead rate is $5 per machine hour. The actual variable factory overhead incurred during the period was $8,000. The variable
Delinco Tech Inc. manufactures corrosion-resistant water pumps and fluid meters. Its Commercial Products Division is organized as a cost center. The division’s budget for the month ended July 31 is as follows(in thousands):During July, actual costs incurred in the Commercial Products Division
Applegate Company has a normal budgeted capacity of 200 machine hours. Applegate produced 600 units. Each unit requires a standard 0.2 machine hour to complete. The standard fixed factory overhead is $12 per hour, determined at normal capacity. The fixed factory overhead volume variance
Johnson Company has two divisions, East and West, that operate as profit centers. Sales, cost of goods sold, and selling expenses for the two divisions for the year ended December 31 are as follows:In addition, the company has two support departments, Legal and Tech Support.The support department
When the manager has the responsibility and authority to make decisions that affect costs and revenues but no responsibility for or authority over assets invested in the department, the department is called a(n):a. cost center.b. profit center.c. investment center.d. support department.
The Accounts Payable Department has expenses of $600,000 and makes 150,000 payments to the various vendors who provide products and services to the divisions. Division A has operating income of $900,000 before support department allocations and requires 60,000 payments to vendors. If the Accounts
Yummy Foods Company is a diversified company with three divisions organized as investment centers.Condensed data taken from the records of the three divisions for the year ended December 31 are as follows:a. Using the DuPont formula, for return on investment compute the profit margin, investment
Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600,000. What is the return on investment for Division A?a. 20%b. 25%c. 33%d. 40%
The materials used by the South Division of Eagle Company are currently purchased from outside suppliers at $30 per unit. These same materials are produced by Eagle’s North Division. Operating income assuming no transfers between divisions is $1,200,000 for the North Division and $1,360,000 for
Division L of Liddy Co. has a return on investment of 24% and an investment turnover of 1.6. What is the profit margin?a. 6%b. 15%c. 24%d. 38%
Which approach to transfer pricing uses the price at which the product or service transferred could be sold to outside buyers?a. Cost price approachb. Negotiated price approachc. Market price approachd. Standard cost approach
For the three cases that follow, prepare a differential analysis.Case A (Discontinue a Product): Product K has revenue of $65,000, variable cost of goods sold of $50,000, variable selling expenses of $12,000, and fixed costs of $25,000, creating a loss from operations of
SMB Company recently began production of a new product, Q, which required an investment of $2,500,000 in assets. The costs of producing and selling 100,000 units of Product Q are estimated as follows:Using the cost-plus approach to product pricing, a 12% return on invested assets is required.a.
Johnston Company is considering discontinuing a product. The costs of the product consist of $20,000 fixed costs and $15,000 variable costs. The variable operating expenses related to the product total $4,000. What is the differential cost of discontinuing the
Madden Company is considering disposing of equipment that was originally purchased for $200,000 and has $150,000 accumulated depreciation to date. The same equipment would cost $310,000 to replace. What is the sunk cost?a. $50,000b. $150,000c. $200,000d. $310,000
Tyme Manufacturing Inc. is evaluating a capital investment proposal for a new machine. The new machine has a cost of $230,000, an expected useful life of six years, and a residual value of $20,000. Information on expected annual revenues and expenses associated with the machine is as follows:All
Which method of setting normal product selling prices includes administrative and selling expenses in the markup that is added to the cost amount?a. Target costing methodb. Demand-based methodc. Product cost methodd. Competition-based method
The management of Broncial Industries Inc. is considering a capital investment project. The net cash flows expected from the project are $50,000 a year for seven years. The project requires an investment of $243,400, and no residual value is expected.Determine:a. The net present value for the
Methods of evaluating capital investment proposals that ignore present value include:a. average rate of return.b. cash payback.c. both a and b.d. neither a nor b.
Management is considering a $100,000 investment in a project with a five-year life and no residual value. If the total income from the project is expected to be $60,000 and straight-line depreciation is used, the average rate of return is:a. 12%.b. 24%.c. 60%.d. 75%.
Acme Company is evaluating two projects with unequal lives. Project 1 requires an original investment of$50,000. The project will yield cash flows of $12,000 per year for five years. Project 1 could be sold at the end of five years for a price of $30,000. Project 2 has a net present value of $8,900
The expected period of time that will elapse between the date of a capital investment and the complete recovery of the amount of cash invested is called the:a. average rate of return period.b. cash payback period.c. net present value period.d. internal rate of return period.
A project that will cost $120,000 is estimated to generate cash flows of $25,000 per year for eight years. What is the net present value of the project, assuming an 11% required rate of return? a. $(38,214)b. $8,653c. $55,180d. $75,000
I. Lean Concepts Match the following lean concepts with the appropriate description.II. Lead Time Analysis The Helping Hands Company manufactures designer gloves. Gloves are manufactured in 50-glove batch sizes, and cut and assembled by the company’s workforce. The cutting time is 4 minutes per
A project is estimated to generate cash flows of $40,000 per year for 10 years. The cost of the project is $226,009. What is the internal rate of return for this project?a. 8%b. 10%c. 12%d. 14%
Which of the following is not a characteristic of the lean manufacturing philosophy?a. Product-oriented layoutb. Push manufacturing (make to stock)c. Short lead timesd. Reducing setup time as a critical improvement priority
The budgeted conversion costs for a lean cell are $142,500 for 1,900 production hours. Each unit produced by the cell requires 10 minutes of cell process time. During the month, 1,050 units are manufactured in the cell. The estimated materials cost is $46 per unit. Journalize entries for the
A quality control activity analysis indicated the following four activity costs of an administrative department:Sales are $2,000,000. Prepare a cost of quality report. Verifying the accuracy of a form Responding to customer complaints Correcting errors in forms Redesigning forms to reduce errors
Accounting for lean manufacturing is best described as:a. more complex.b. focused on direct labor.c. providing detailed variance reports.d. providing less transaction control.
A product cell for Dynah Company has budgeted conversion costs of $420,000 for the year.The cell is planned to be available 2,100 hours for production. Each unit requires $12.50 of materials cost. The cell started and completed 700 units. The cell process time for the product is 15 minutes per
In-process inspection activities are an example of what type of quality cost?a. Preventionb. Appraisalc. Internal failured. External failure
A Pareto chart is used to display:a. a ranking of attribute totals, by category, in the form of a bar chart.b. important trends in the form of a line chart.c. percentage information in the form of a pie chart.d. a listing of attribute totals, by category, in a table.
Cameron Tools Inc. has developed a balanced scorecard with six objectives under the four standard performance perspectives. In the learning and growth perspective, the company has strategic objectives to (1) promote employees from within the company and (2) recruit quality recent graduates. In the
Which of the following is not an example of a metric that companies are likely to use to measure some aspect of performance?a. Operating incomeb. CEO salaryc. Cash flowsd. Average employee tenure
Building on the Cameron Tools Inc. balanced scorecard example, assume that the company has the following performance metrics for each strategic objective:▪ Promote from within: Percentage of new managers promoted from within the company▪ Recruit quality recent graduates: Number of entry-level
Which of the following are elements of the balanced scorecard?i. Performance targets ii. Strategy maps iii. Performance forecasts iv. Strategic initiativesa. i onlyb. iii and ivc. i, ii, and ivd. i, ii, iii, and iv
Which of the following statements is true regarding the balanced scorecard?a. Strategic objectives are the same as the overall mission statement of a company.b. All effective performance metrics of a balanced scorecard are financial measures.c. Strategic initiatives are brainstormed ideas about
Which of the following statements most accurately describes the difference between a strategy map and a measure map?a. Strategy maps show which performance metrics are leading or lagging indicators of performance, while measure maps show the expected relationships among performance metrics.b.
Which of the following best describes one of the main reasons why most Fortune 500 companies now issue CSR reports?a. Investors and consumers are increasingly rewarding companies that are engaged in CSR activities.b. CSR reports are required of public companies by the SEC.c. The Global Reporting
Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables: June 2. Received $1,200 from Melissa Crone and wrote off the remainder owed of $4,000 as uncollectible. Oct. 9. Reinstated the account of Melissa Crone and received $4,000 cash in
At the end of the fiscal year, before the accounts are adjusted, Accounts Receivable has a balance of $200,000 and Allowance for Doubtful Accounts has a credit balance of $2,500.If the estimate of uncollectible accounts determined by aging the receivables is $8,500, the amount of bad debt expense
Journalize the following transactions, using the allowance method of accounting for uncollectible receivables: June 2. Received $1,200 from Melissa Crone and wrote off the remainder owed of $4,000 as uncollectible. Oct. 9. Reinstated the account of Melissa Crone and received $4,000 cash in full
At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and Allowance for Doubtful Accounts has a balance of $7,000. The expected net realizable value of the accounts receivable is:a. $7,000b. $93,000c. $100,000d. $107,000
Icebreaker Company receives a 120-day, 6% note for $40,000, dated May 14, in settlement of a $40,000 account that is past due.a. Determine the due date of the note.b. Determine the maturity value of the note.c. Prepare the journal entries to record the (1) receipt of the note and (2) collection at
What is the maturity value of a 90-day, 12% note for $10,000?a. $8,800b. $10,000c. $10,300d. $11,200
What is the due date of a $12,000, 90-day, 8% note receivable dated August 5?a. October 31b. November 2c. November 3d. November 4
Chiro-Solutions Company reported the following for two recent years:a. Determine the accounts receivable turnover for 20Y2 and 20Y1. Round answers to one decimal place.b. Determine the days’ sales in receivables for 20Y2 and 20Y1. Use 365 days and round all calculations to one decimal place.c.
When a note receivable is dishonored, Accounts Receivable is debited for what amount?a. The face value of the noteb. The maturity value of the notec. The maturity value of the note less accrued interestd. The maturity value of the note plus accrued interest
Which of the following expenditures incurred in connection with acquiring machinery is a proper charge to the asset account?a. Freightb. Installation costsc. Both (a) and (b)d. Neither (a) nor (b)
McCollum Company, a furniture wholesaler, acquired new equipment at a cost of $150,000 at the beginning of the fiscal year. The equipment has an estimated life of five years and an estimated residual value of $12,000. Ellen McCollum, the president, has requested information regarding alternative
On the first day of the year, Firefall Company acquired equipment for use in operations at a cost of$340,000. The equipment was expected to have a useful life of four years or 1,000 hours, and a residual value of $20,000. The equipment was used for 280 hours during the first year, 260 hours during
What is the amount of depreciation, using the double-declining-balance method for the second year of use for equipment costing $9,000, with an estimated residual value of$600 and an estimated life of three years?a. $6,000b. $3,000c. $2,000d. $400
On the first day of the year, Firefall Company purchased equipment at a cost of $340,000. The equipment was expected to have a useful life of four years, a residual value of $20,000, and is depreciated at a straightline rate of 25%. Firefall sold the equipment at the beginning of the fourth year
An example of an accelerated depreciation method is:a. straight-line.b. double-declining-balance.c. units-of-activity.d. depletion.
Caldwell Mining Co. acquired mineral rights for $126,000,000. The mineral deposit is estimated at 42,000,000 tons.During the current year, 3,800,000 tons were mined and sold.a. What is the depletion rate per ton?b. Determine the amount of depletion expense for the current year.c. Journalize the
Equipment purchased on January 3 for $80,000 was depreciated using the straight-line method based upon a five-year life and $7,500 residual value. The equipment was sold three years later on December 31 for $40,000. What is the gain on the sale of the
Hollis Company acquired patents for $125,000 on July 1 of the current year. The technology supported by these patents was expected to have a 10-year life. In addition, goodwill from acquiring Logan Company in a prior year was impaired by $30,000 due to new competitive technologies.a. Journalize the
Which of the following is an example of an intangible asset?a. Patentsb. Goodwillc. Copyrightsd. All of these
Select financial statement data for two recent years for DePuy Company are as follows:a. Determine the fixed asset turnover ratio for 20Y7 and 20Y8.b. Does the change in the fixed asset turnover ratio from 20Y7 to 20Y8 indicate a favorable or an unfavorable change? Sales Fixed assets: Beginning of
On October 3, Bering Industries Inc. is considering two alternatives for a short-term loan from Community Bank: (1) issue a $60,000, 60-day, 5% note or (2) issue a $60,000, 60-day note that the bank discounts at 5%.a. Journalize the entries to record the issuance and repayment of the note, assuming
Selected transactions of Taylor Company, completed during the fiscal year ended December 31, are as follows:InstructionsJournalize the preceding transactions. Mar. 1. Apr. 10. June 9. Aug. 1. Oct. 30. Dec. 27. Purchased merchandise on account from Kelvin Co., $20,000. Issued a 60-day, 12% note for
A business issued a $5,000, 60-day, 12% note to the bank. The amount due at maturity is:a. $4,900b. $5,000c. $5,100d. $5,600
Wildcat Company had gross wages of $180,000 for the week ended March 20. All $180,000 of wages are subject to social security and Medicare taxes, while $30,000 of wages are subject to federal and state unemployment taxes. Tax rates are as follows:The total amount withheld from employee wages for
A business issued a $5,000, 60-day note to a supplier, which discounted the note at 12%.The proceeds are:a. $4,400b. $4,900c. $5,000d. $5,100
A petty cash fund is:a. used to pay relatively small amounts.b. established by estimating the amount of cash needed for disbursements of relatively small amounts during a specified period.c. reimbursed when the amount of money in the fund is reduced to a predetermined minimum amount.d. all of the
Innovative Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent Expense, Advertising Expense, Utilities Expense, Miscellaneous Expense.Journalize the following
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