Question: A company is considering investing in a

> Tora Co. plans to produce 1,020 units in July. Each unit requires two hours of direct labor. The direct labor rate is $20 per hour. Prepare a direct labor budget for July.

> Zortek Corp. budgets production of 400 units in January and 200 units in February. Each finished unit requires five pounds of raw material Z, which costs $2 per pound. Each month’s ending inventory of raw materials should be 40% of the following month’s

> Liza’s predicts sales of $40,000 for May and $52,000 for June. Assume 60% of Liza’s sales are for cash. The remaining 40% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

> Grace manufactures and sells miniature digital cameras for $250 each. 1,000 units were sold in May, and management forecasts 4% growth in unit sales each month. Determine (a) the number of units of camera sales and (b) the dollar amount of camera sales

> Royal Philips Electronics of the Netherlands reports sales of €25,400 million for a recent year. Assume that the company expects sales growth of 3 percent for the next year. Also assume that selling expenses are typically 20 percent of sales, while gener

> Activity-based budgeting is a budget system based on expected activities. (1) Describe activity-based budgeting, and explain its preparation of budgets. (2) How does activity-based budgeting differ from traditional budgeting?

> Montel Company’s July sales budget calls for sales of $600,000. The store expects to begin July with $50,000 of inventory and to end the month with $40,000 of inventory. Gross margin is typically 40% of sales. Determine the budgeted cost of merchandise p

> Lexi Company forecasts unit sales of 1,040,000 in April, 1,220,000 in May, 980,000 in June, and 1,020,000 in July. Beginning inventory on April 1 is 280,000 units, and the company wants to have 30% of next month’s sales in inventory at the end of each mo

> Prepare a flexible budget performance report title (in proper form) for Spalding Company for the calendar year 2015. Why is a proper title important for this or any report?

> Raider-X Company forecasts sales of 18,000 units for April. Beginning inventory is 3,000 units. The desired ending inventory is 30% higher than the beginning inventory. How many units should Raider-X purchase in April?

> Meyer Co. forecasts merchandise purchases of $15,800 in January, $18,600 in February, and $20,200 in March; 40% of purchases are paid in the month of purchase and 60% are paid in the following month. At December 31 of the prior year, the balance of accou

> Use the following information to prepare a cash budget for the month ended on March 31 for Gado Company. The budget should show expected cash receipts and cash disbursements for the month of March and the balance expected on March 31. a. Beginning cash b

> Messers Company is preparing a cash budget for February. The company has $20,000 cash at the beginning of February and anticipates $75,000 in cash receipts and $100,250 in cash disbursements during February. What amount, if any, must the company borrow d

> Lighthouse Company anticipates total sales for June and July of $420,000 and $398,000, respectively. Cash sales are normally 60% of total sales. Of the credit sales, 20% are collected in the same month as the sale, 70% are collected during the first mont

> Wells Company reports the following sales forecast: September, $55,000; October, $66,000; and November, $80,000. All sales are on account. Collections of credit sales are received as follows: 25% in the month of sale, 60% in the first month after sale, a

> Good management includes good budgeting. (1) Explain why the bottom-up approach to budgeting is considered a more successful management technique than a top-down approach.

> Hockey Pro budgets production of 3,900 hockey pucks during May. The company assigns variable overhead at the rate of $1.50 per unit. Fixed overhead equals $46,000 per month. Prepare a factory overhead budget for May.

> In a job order costing system, what records serve as a subsidiary ledger for Work in Process Inventory? For Finished Goods Inventory?

> Miami Solar budgets production of 5,300 solar panels for August. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Variable factory overhead is budgeted to be 70% of direct labor cost, and fixed factory overhead is $180,000 per month.

> Miami Solar budgets production of 5,000 solar panels in July. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Prepare a direct labor budget for July.

> Miami Solar manufactures solar panels for industrial use. The company budgets production of 5,000 units (solar panels) in July and 5,300 units in August. Each unit requires 3 pounds of direct materials, which cost $6 per pound. The company’s policy is to

> Why is the present value of $100 that you expect to receive one year from today worth less than $100 received today? What is the present value of $100 that you expect to receive one year from today, discounted at 12%?

> Why is an investment more attractive to management if it has a shorter payback period?

> Assume that Samsung manufactures and sells 60,000 units of a product at $11,000 per unit in domestic markets. It costs $6,000 per unit to manufacture ($4,000 variable cost per unit, $2,000 fixed cost per unit). Can you describe a situation under which th

> Identify the incremental costs incurred by Apple for shipping one additional iPod from a warehouse to a retail store along with the store’s normal order of 75 iPods.

> Why does the use of the accelerated depreciation method (instead of straight-line) for income tax reporting increase an investment’s value?

> Suggest a reasonable basis for allocating each of the following indirect expenses to departments: (a) salary of a supervisor who manages several departments, (b) rent, (c) heat, (d) electricity for lighting, (e) janitorial services, (f) advertising,

> Each Apple retail store has several departments. Why is it useful for its management to (a) collect accounting information about each department and (b) treat each department as a profit center?

> Identify the usual changes that a company must make when it adopts a customer orientation.

> Google monitors its fixed overhead. In an analysis of fixed overhead cost variances, what is the volume variance?

> Assume that Samsung is budgeted to operate at 80% of capacity but actually operates at 75% of capacity. What effect will the 5% deviation have on its controllable variance? Its volume variance?

> How can the manager of advertising sales at Google use flexible budgets to enhance performance?

> Samsung monitors its overhead. In an analysis of overhead cost variances, what is the controllable variance and what causes it?

> Assume that Samsung’s consumer electronics division is charged with preparing a master budget. Identify the participants— for example, the sales manager for the sales budget—and describe the information each person provides in preparing the master budget

> Does the manager of a Samsung distribution center participate in long-term budgeting? Explain.

> Samsung is thinking of expanding sales of its most popular smartphone model by 65%. Should we expect its variable and fixed costs for this model to stay within the relevant range? Explain.

> Describe the relations among the income statement, the schedule of cost of goods manufactured, and a detailed listing of factory overhead costs.

> Prepare a proper title for the annual schedule of cost of goods manufactured of Google. Does the date match the balance sheet or income statement? Why?

> The left column lists the titles of documents and accounts used in job order costing. The right column presents short descriptions of the purposes of the documents. Match each document in the left column to its numbered description in the right column. A

> Identify each of the following costs as either a product cost or a period cost. ______ 1. Factory maintenance ______ 2. Sales commissions ______ 3. Depreciation—Factory equipment ______ 4. Depreciation—Office equipment ______ 5. Rent on factory building

> Identify each of the following costs as either direct materials, direct labor, or factory overhead. The company manufactures tennis balls. ______ 1. Rubber used to form the cores ______ 2. Factory maintenance ______ 3. Wages paid to assembly workers ____

> Diez Company produces sporting equipment, including leather footballs. Identify each of the following costs as direct or indirect. The cost object is a football produced by Diez. ______ 1. Electricity used in the production plant. ______ 2. Labor used on

> Refer to the information in QS 17-4. Use that information for Tide Corporation to determine the 2014 and 2015 common-size percents for cost of goods sold using net sales as the base. Data from QS 17-4:

> Use the following information for Tide Corporation to determine the 2014 and 2015 trend percents for net sales using 2014 as the base year. ($ thousands) 2015 2014 Net sales $801,810 $453,000 Cost of goods sold 392,887 134,088

> Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Compute the accounting rate of return for this investment;

> Project A requires a $280,000 initial investment for new machinery with a five-year life and a salvage value of $30,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $20,000 per year for the next five y

> Label each of the following statements as either true (“T”) or false (“F”). ______ 1. Relevant costs are also known as unavoidable costs. ______ 2. Incremental costs are also known as differential costs. ______ 3. An out-of-pocket cost requires a current

> Should Apple use single product or multiproduct break-even analysis? Explain.

> What is the main factor for a company in choosing between the job order costing and process costing systems? Give two likely applications of each system.

> Yokam Company is considering two alternative projects. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. Project 2 requires an initial investment of $4 million and has a present value of cash flows

> Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. What is the investment’s payback period?

> In each blank next to the following terms, place the identifying letter of its best description. ______ 1. Indirect expenses ______ 2. Controllable costs ______ 3. Direct expenses ______ 4. Uncontrollable costs A. Costs not within a manager’s control

> In each blank next to the following terms, place the identifying letter of its best description. ______ 1. Cost center ______ 2. Investment center ______ 3. Departmental accounting system ______ 4. Operating department ______ 5. Profit center ______ 6. R

> Classify each of the performance measures below into the most likely balanced scorecard perspective it relates to. Label your answers using C (customer), P (internal process), I (innovation and growth), or F (financial). ______ 1. Customer wait time ____

> Compute the annual dollar changes and percent changes for each of the following accounts.

> Identify which of the following sets of items are necessary components of the master budget. ______ 1. Operating budgets, historical income statement, and budgeted balance sheet. ______ 2. Prior sales reports, capital expenditures budget, and financial b

> The motivation of employees is one goal of budgeting. Identify three guidelines that organizations should follow if budgeting is to serve effectively as a source of motivation for employees.

> SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Compute the units of product that must be sold to earn pretax income of $200,000. (Round to the nearest whole unit.)

> Google prepares a cash budget. What is a cash budget? Why must operating budgets and the capital expenditures budget be prepared before the cash budget?

> SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin ratio and (2) break-even point in dollars.

> SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. How will the break-even point in units change in response to each of the following independent changes in selling price p

> SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even point in units.

> Compute and interpret the contribution margin ratio using the following data: sales, $5,000; total variable cost, $3,000.

> The following information is available for a company’s maintenance cost over the last seven months. Using the high-low method, estimate both the fixed and variable components of its maintenance cost. Month Maintenance Hours Mainten

> Determine whether each of the following is best described as a fixed, variable, or mixed cost with respect to product units. ______ 1. Rubber used to manufacture athletic shoes. ______ 2. Maintenance of factory machinery. ______ 3. Packaging expense. ___

> Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. Compute the level of sales in units needed to produce a target (pretax) income of $118,000.

> Identify which standard of comparison, (a) intracompany, (b) competitor, (c) industry, or (d) guidelines, is best described by each of the following. ______ 1. Is often viewed as the best standard of comparison. ______ 2. Rules of thumb developed fro

> Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. Determine the break-even point in units.

> Listed here are four series of separate costs measured at various volume levels. Examine each series and identify whether it is best described as a fixed, variable, step-wise, or curvilinear cost. (It can help to graph the cost series.) Volume (Unit

> What two arguments tend to justify classifying all costs as either fixed or variable even though individual costs might not behave exactly as classified?

> Refer to the information in QS 20-10. Prepare the November 30 journal entry to record the transfer of units (and costs) from the assembly department to the painting department. Use the FIFO method. Information from QS 20-10: The Carlberg Company has tw

> For each of the following products and services, indicate whether it is more likely produced in a process operation or a job order operation. ______ 1. Beach toys ______ 2. Concrete swimming pool ______ 3. iPhones ______ 4. Wedding reception ______ 5

> Label each statement below as either true (“T”) or false (“F”). ______ 1. The cost per equivalent unit is computed as the total costs of a process divided by the number of equivalent units passing through that process. ______ 2. Service companies are not

> For each of the following products and services, indicate whether it is more likely produced in a process operation or in a job order operation. ______ 1. Tennis courts ______ 2. Organic juice ______ 3. Audit of financial statements ______ 4. Luxury y

> Refer to the information in QS 20-10. Prepare the November 30 journal entry to record the transfer of units (and costs) from the assembly department to the painting department. Use the weighted-average method. Information from QS 20-10: The Carlberg Co

> Match each concept with its best description by entering its letter in the blank. ______ 1. Just-in-time manufacturing ______ 2. Continuous improvement ______ 3. Customer orientation ______ 4. Total quality management A. Focuses on quality throughout

> At the beginning of a year, a company predicts total direct materials costs of $900,000 and total overhead costs of $1,170,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate

> A company incurred the following manufacturing costs this period: direct labor, $468,000; direct materials, $390,000; and factory overhead, $117,000. Compute its overhead cost as a percent of (1) direct labor and (2) direct materials. Express your answe

> Determine which of the following are most likely to be considered as a job and which as a job lot. ______ 1. Hats imprinted with company logo. ______ 2. Little League trophies. ______ 3. A hand-crafted table. ______ 4. A 90-foot motor yacht. ______ 5.

> If a potential investment’s internal rate of return is above the company’s hurdle rate, should the investment be made?

> Why is it possible for direct labor in process operations to include the labor of employees who do not work directly on products or services?

> What is the average amount invested in a machine during its predicted five-year life if it costs $200,000 and has a $20,000 salvage value? Assume that net income is received evenly throughout each year and straight-line depreciation is used.

> Identify two disadvantages of using the payback period for comparing investments.

> Identify four reasons that capital budgeting decisions by managers are risky.

> Apple is considering expanding a store. Identify three methods management can use to evaluate whether to expand.

> Samsung must confront sunk costs. Why are sunk costs irrelevant in deciding whether to sell a product in its present condition or to make it into a new product through additional processing?

> Google has many types of costs. What is an out-of-pocket cost? What is an opportunity cost? Are opportunity costs recorded in the accounting records?

> Is it possible to evaluate a cost center’s profitability? Explain.

> Can management of a company such as Samsung use cycle time and cycle efficiency as useful measures of performance? Explain.

> Apple delivers its products to locations around the world. List three controllable and three uncontrollable costs for its delivery department.

> Google aims to give its managers timely cost reports. In responsibility accounting, who receives timely cost reports and specific cost information? Explain.

> Companies such as Apple commonly prepare a process cost summary. What purposes does a process cost summary serve?

> Samsung has many departments. How is a department’s contribution to overhead measured?

> What is the purpose of using standard costs?

> What is a selling expense budget? What is a capital expenditures budget?

> Apple regularly uses budgets. What is the difference between a production budget and a manufacturing budget?

> Google produces tablet computers for sale. Identify some of the variable and fixed product costs associated with that production.

> Access Dell’s annual report (10-K) for the fiscal year ended February 1, 2013, at the SEC’s EDGAR database (SEC.gov) or its website (Dell.com). From its financial statement notes, identify the titles and amounts of its inventory components.

> Can management of a company such as Apple use cycle time and cycle efficiency as useful measures of performance? Explain.

> ______ of ______ reflects expected sales in excess of the level of break-even sales.