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managerial accounting

Managerial Accounting 11th Canadian Edition Ray H Garrison, Alan Webb, Theresa Libby - Solutions

How is the IRR used to determine whether a project is acceptable or not?
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:If the
What is the weighted average cost of capital and how should it be used in capital budgeting decisions?.
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:What is
The CFO of The Fun Factory is investigating the possibility of investing in a three dimensional printer that would cost $20,000. The printer would eliminate the need to have prototypes of new toys be produced by a third party. The cost of having the prototypes manufactured by the third party is
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:What is
Rosman Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Rosman estimated the following costs and revenues for the project:The new piece of equipment mentioned above has a useful life of five years and zero salvage value. The old
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:What is
What is the main criticism of the simple rate of return method?
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:What is
Darnell Limited has capital project opportunities each of which would require an initial investment of $250,000. Details for each opportunity are shown below:The robotic equipment would have a salvage value of $25,000 in 15 years. The equipment would be depreciated over 15 years. At the end of 15
Jannsen Limited is contemplating investing in solar panels to reduce its need to purchase electricity from its local hydro company. The panels are estimated to cost $2,000,000 and will have a 15-year useful life with no salvage value. The electricity cost savings are expected to be about $200,000
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:What is
What is meant by the term net present value?
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:What are
Claire Jackson (CEO) of Easy Learning (EL) is considering discontinuing operations in South America, which are based in Argentina. For a variety of reasons it has been a challenge for EL to grow the business in this region and costs continue to rise because of high inflation. Results from the most
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows:Required:Which
Drums, bins, boxes, and other containers that are used in the petroleum industry are sold by Holden Inc. One of the company's products is a heavy-duty, environmentally friendly, corrosion-resistant metal drum, called the STR drum, used to store toxic wastes. Production is constrained by the
Double Duty, a combination fertilizer-weed killer, is Alanco's only product. It is sold nationwide through normal marketing channels to retail nurseries and garden stores.Taylor Nursery plans to sell a similar fertilizer-weed killer compound through its regional nursery chain under its own private
Clean and Shine Corporation produces several types of industrial and household cleaning compounds and solutions. While most of its products are processed independently a few are related, such as the company's Clean 236 and its Sparkle silver polish.Clean 236 is a coarse cleaning powder with many
The Scottie Sweater Company produces sweaters under the "Scottie" label. The company buys raw wool and processes it into wool yarn from which the sweaters are woven. One spindle of wool yarn is required to produce one sweater. The costs and revenues associated with the sweaters are given
Royal Company manufactures 10,000 units of Part R-3 each year. At this level of activity, the cost per unit for Part R-3 follows:An outside supplier has offered to sell 10,000 units of Part R-3 each year to Royal Company for $54 per part. If Royal Company accepts this offer, the facilities now
At the Kicher Company's current activity level of 8,000 units per month, the costs of producing and selling one unit of the company's only product are as follows:The normal selling price is $26 per unit. An order has been received from a potential customer overseas for 4,000 units at a price of
Cumberland County Senior Services is a non-profit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniors-home nursing, Meals on Wheels, and housekeeping. In the home nursing program,
At the beginning of this year, a group of lawyers and accountants in Calgary decided to join efforts in providing one stop legal and accounting consulting services to industry and the government. The group established a consulting company, rented office space, and hired both professional and
Airflow Inc. produces ceiling fans for home and industrial use. The parts for the different styles of fans are produced and sold by the Parts Division to the Assembly Division of Airflow Inc. The cost to the arts Division is $12 per fan. The Assembly Division assembles the purchased parts into
Wallen Products Inc. has just purchased a small company that specializes in the manufacture of electronic tuners that are used as a component part of LCD TVs. Wallen Products is a decentralized company, and it will treat the newly acquired company as an autonomous division with full profit
What are the four groups of performance measures typically included in a balanced scorecard?
Okanagan College has provided the following data to be used in its service department cost allocations:RequiredUsing the direct method, allocate the costs of the service departments to the two operating departments. Allocate the costs of the Administration Department based on student credit hours
What is meant by the term residual income?
Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows:The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost
How do the direct and step down methods of service department cost allocation differ?
What are interdepartmental services?
How are service department costs assigned to products?
Quality cost reports typically break down types of quality costs into four broad groups. What are these four groups, and how do they differ?
Over the past several years, Claire Jackson, CEO and founder of Easy Learning (EL), has been working to expand operations outside of Canada. In particular, she has placed two longtime, trusted managers in Paris and Buenos Aires in order to develop the European and South American markets.
You have recently accepted a position with Sea-Jewels Inc., the manufacturer of a popular consumer product. When trying to open your variance analysis files, you find some of them have become corrupted. All you can retrieve is shown below:Manufacturing overhead cost is applied to production on the
Grosch! Company has had great difficulty in controlling manufacturing overhead costs. At a recent convention, the president heard about a control device for overhead costs known as a flexible budget, and he has hired you to implement this budgeting program in Grosch! Company. After some effort, you
Ryder Company produces a single product, school backpacks made of a sturdy nylon fabric. The production of these bags requires a relatively large amount of labour time. Overhead cost is applied on the basis of standard direct labour-hours. The company's condensed flexible budget for
Comfort Company produces leather office chairs. The standard cost per chair is as follows:During 2017, Comfort Company produced and sold 12,000 office chairs. Management believes that the denominator level of activity represents 75% of theoretical capacity and 80% of practical capacity.Required:1.
You became acquainted with the concept of under or over applied overhead. The under or over applied overhead can be broken down into what four variances?
The cheque-clearing office of Pay Loans Company is responsible for processing all cheques that come to the company for payment. Managers at the company believe that variable overhead costs are essentially proportional to the number of labour-hours worked in the office, so labour-hours are used as
Oxford Concrete Inc. (OCI processes and distributes various types of cement. The company buys quarried local rock, limestone, and clay from around the world and mixes, blends, and packages the processed cement for resale. OCI offers a large variety of cement types that it sells in one-kilogram bags
Onassis Catering is a Greek company that provides passenger and crew meals to airlines operating out of two international airports in Athens and Corfu. The operations at the two airports are managed separately, and top management believes that there may be benefits to greater sharing of information
AnimPix Inc. is a small company that creates computer-generated animations for films and television. Much of the company's work consists of short commercials for television, but the company also does realistic computer animations for special effects in movies.The young founders of the company have
Quick Supply distributes office supplies to small to medium sized offices throughout the Region of Waterloo, Ontario. Quick Supply sets its prices by marking up its cost of goods sold by 5%. For example, if Quick Supply paid $100 to buy supplies from manufacturers, Quick Supply would charge
Ace Mining Tools Ltd. of Calgary makes specialty tools used in the mining industry. The company uses an ABC system for internal decision making. The company has four activity cost pools, as listed below:The managing director of the company would like information concerning the cost of a recently
Various activities at Husang Corporation, a claims processing centre that provides service to several large insurance companies, are listed below:Activitya. Employees check claims against computer records to determine eligible expenses.b. Computer systems to make claim processing more
Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standard model for the most recent iPhone as well as a deluxe model. Management has designed an ABC system with the following activity cost pools and activity rates for these
Larner Corporation manufactures two types of light fixtures for industrial use, the J78 and the W52. The company's ABC system contains the following six activity cost pools and activity rates:Activity data have been supplied for the following products:RequiredDetermine the total overhead cost that
Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 10%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect.There were no finished goods
Refer to the data for Rachel's Real Root Beer in Case 6-19. Assume the company uses the FIFO method. Required:Take on the role of Switzer and prepare the report for Archer. Be sure to provide all details, including a full production report, to help Archer understand how costs were
United Claim Processors provides claims processing services for major insurance companies. The Winnipeg location processes all health benefit claims for various insurance benefit providers. Claims are received electronically or by mail in the Initial Review Department. Employees in this department
Ainsley Industries uses the weighted-average method in its process costing system. Data for the Assembly Department for May appear below:RequiredCompute the cost per equivalent unit for materials, for labour, for overhead, and in total. Materials Labour Overhead Work in process, May 1 Cost added
Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. The company uses a job-order costing system with a plant wide predetermined overhead rate based on direct labour hours. On December JO, 2015, the company's controller made a preliminary estimate of the
Companies typically base their predetermined overhead rates on the estimated, or budgeted, amount of the allocation base for the upcoming period. This is the method that is used in the chapter, but it is a practice that has recently come under severe criticism. An example will be very helpful in
Companies typically base their predetermined overhead rates on the estimated, or budgeted, amount of the allocation base for the upcoming period. This is the method that is used in the chapter, but it is a practice that has recently come under severe criticism. An example will be very helpful in
Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During January, the company had two jobs in process. Job A was an order for 1,200 stamped parts and was started in December. Job A had $12,000 of manufacturing costs already accumulated
Calgary Injection Moulding operates a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. In computing an overhead rate for the year, the company's estimates were as follows: manufacturing overhead cost, $248,000, and machine-hours, 40,000. The company has
Gordon Company is highly automated and uses computerized controllers in manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of the time recorded to complete each job by the computerized controllers attached to each
Under what conditions is it appropriate to use a process costing system?
What is the second-stage allocation in ABC?
While many Easy Learning (EL) customers develop their own educational content to use with the EL online learning platforms. some prefer to hire EL to develop content for them. Custom online content is produced by the EL Educational Consulting Department. This department is made up of education
Coverall Inc. produces and sells a unique type of case for a standard size tablet computer that is guaranteed waterproof but still allows for regular functionality of the tablet. The company has just opened a new plant to manufacture these cases, and the following cost and revenue data have been
Give an example of how preparing a budget can lead to the coordination of activities between different functional areas in an organization.
What is the starting point when preparing a budget for a not-for-profit organization?
Auto Lavage is a Canadian company that owns and operates a large automatic car wash facility near Quebec. The following table provides data concerning the company's costs:The company expects to charge customers an average of $5.90 per car washed.Required:Using Exhibit 9-3 as your guide, prepare a
Refer to the data in Exercise 9-8. Auto Lavage's actual level of activity was 8,100 cars. The actual revenues and expenses for October are given belowRequired1. Prepare a flexible budget performance report for October using Exhibit 9-4 as your guide.2. Prepare a comprehensive performance report for
What is a stretch budget? What is a challenging but attainable budget?
Air Assurance Corporation provides on site air quality testing services. The company has provided the following data concerning its operations:The company uses the number of jobs as its measure of activity. For example, mobile lab selling and administrative expenses should be $4,900 plus $29 per
Crydon Inc. manufactures an advanced swim fin for scuba divers. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in preparing the budget:a. The Marketing Department has estimated sales as follows for
Which budget schedule replaces the production budget for merchandising companies?
How might the volume variance be measured other than in dollars?
You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company's operations:a. The cash balance on December 1 is $40,000.b. Actual sales for October and November and expected sales for December
Springfield Corporation operates on a calendar-year basis. It begins the annual budgeting process in late August, when the president establishes targets for total sales dollars and net operating income before taxes for the next year. The sales target is given to the Marketing Department, where the
What are some possible causes of an unfavourable flexible budget variance for direct labour?
Franklin Products Limited manufactures and distributes a number of products to retailers. One of these products, SuperStick, requires four kilograms of material 0236 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter-July, August, and September.
What are the three approaches to improving ROI?
The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:In addition, 6,000 grams of raw materials inventory is on hand at the start of the 1st quarter and the be-ginning accounts payable for the 1st quarter is
The Bakery Department of Culbert Dessert Corporation has submitted the following forecast of fruit pies to be produced by quarter for the upcoming fiscal year.Each unit requires 0.30 direct labour-hours, and direct labour hour workers are paid $10.50 per hour. In addition, the variable
Colerain Corporation is a merchandising company that is preparing a budget for the third quarter of the calendar year. The company's balance sheet as of June 30 is shown belowColerain's managers have made the following additional assumptions and estimates:a. Estimated sales for July, August,
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below:The company is in the process of preparing a budget for May and has assembled the following data:a. Sales are budgeted at $200,000 for May. Of these sales, $60,000
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods, as of March 31:a. The gross margin is 25% of sales.b. Actual and budgeted sales data are as follows:c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following
Refer to the data for Scott Products Inc. in Problem 9-21. The company's president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:1.
The Western Division of Keltic Company manufactures a vital component that is used in one of Keltic's major product lines. The Western Division has been experiencing some difficulty in coordinating activities among its various departments, which has resulted in some shortages of the component at
TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below:After several
Garneau Manufacturing Ltd. produces and distributes a special type of chemical compound called Compound WX. The information below about Garneau's operations has been assembled to assist budget preparation. The company is preparing its master budget for the first quarter of 2019. The budget will
Specialty Chemicals Ltd. makes a special powder coating for metal surfaces sold in envelope-style pouches. The main ingredient of this powder coating is a chemical known as X43. Information concerning the purchase and use of X43 follows: Purchase of X43: The raw material X43 is purchased in
Davis Division uses two raw materials-X33 and Z42-to produce its product called Base 23, a chemical base for interior house paint. The materials are mixed in the following standard proportions to yield 100 liters of Base 23It requires 5 hours of direct labour at SIS per hour to produce 100 litres
If employees are consistently unable to meet a standard, what effect would you expect this to have on their productivity?
Topline Surf Boards manufactures a single product. The standard cost of one unit of this product is as follows:During October, 6,000 units were produced. Selected data relating to the month's production follow:There was no beginning inventory of raw materials. The variable and fixed manufacturing
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows:The company planned to produce and sell 25,000 units in March. However, during March the company actually produced and
Johnston Company (JC) sells two types of bicycles with details as follows for 2019:Required:1. Calculate the budgeted contribution margin for each model.2. Calculate the following variances:a. Sales price.b. Market volume.c. Market share.d. Sales mix.e. Sales
Rest Easy produces two types of mattresses: Regular and Heavenly. Budgeted and actual data for 2018 were as follows:Market Data for 2019:Expected total market unit sales of mattresses: Regular 300,000; Heavenly 200,000 Actual total market sales of beds: Regular 444,444; Heavenly 222,223Required:1.
Affordable Electronics Inc. manufactures medium-quality, reasonably priced wireless speakers for home use. The company uses standards to control its costs. The labour standards that have been set for one speaker are as followsDuring July, 3,400 hours of direct labour time were recorded to make
Worldwide Credit Card Inc. uses standards to control the labour time involved in opening mail from cardholders and recording the enclosed remittances. Incoming mail is gathered into batches, and a standard time is set for opening and recording each batch. The labour standards relating to one batch
The standard cost card for the single product manufactured by Princess Company is given below:Last year, the company produced 6,800 units of product and worked 5,225 actual direct labour-hours. Manufacturing overhead cost is applied to production on the basis of direct labour-hours. Selected data
Kenworth Company uses a job-order costing system. Only three jobs-Job 105, Job 106, and Job 107- were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company's operating year. Data from the job
Gold Nest Company of Hong Kong is a family-owned enterprise that makes souvenirs for the tourist market. The company sells through an extensive network of trading companies that receive commissions on their sales. Transactions occur in Hong Kong dollars($).The company uses a job-order costing
Grange Company has two departments. Stamping and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Stamping Department bases its rate on machine-hours, and the Assembly Department bases its rate on direct labour cost. At the

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