Question: Camino, a leading firm in the sports

> Select Manufacturing Co. produces three joint products and one organic waste byproduct. Assuming the byproduct can be sold to an outside party, what is the correct accounting treatment of the byproduct proceeds received by the firm? a. Apply sale proceed

> Lexota, Inc., an auto manufacturer, reported the following budgeted and actual sales of its vehicles during September, Year 2: The budgeted contribution margin is 20% for both vehicle types. Which of the following statements is true concerning the sales

> The University of Chicago Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of boo

> The actual contribution margin per unit will impact the following sales variance: a. Flexible-budget variance b. Market-size variance c. Market-share variance. d. Sales-quantity variance

> Which of the following statements regarding price elasticity is incorrect? a. A product with a perfectly inelastic demand would have the same demand even as prices change. b. A product with a perfectly inelastic demand would see demand change as prices c

> Canarsie Corporation uses a balanced scorecard to evaluate its digital camera manufacturing operation. Which of the following statements with respect to balanced scorecards is/are correct? I. A balanced scorecard reports management information regarding

> The balanced scorecard describes all of the following except which one? a. The descriptions of critical initiatives for the organization’s performance. b. The strategic goals. c. The related measures associated with strategic and tactical goals. d. The d

> Jacobs Inc. is a relatively new company that has established a position in the highly competitive biotechnology industry. Which of the following statements is correct regarding Jacobs’ profitability? a. Profits will increase when buyers have lower switch

> Ace Cleaning Service is considering expanding into one or more new market areas. Which costs are relevant to Ace’s decision on whether to expand? Sunk Costs Variable Costs Opportunity Costs а. No Yes Yes b. Yes Yes Yes с. No Yes No

> Lees Corp. is deciding whether to keep or drop a small segment of its business. Key information regarding the segment includes: Contribution margin……………. 35,000 Avoidable fixed costs…………..30,000 Unavoidable fixed costs………. 25,000 Given the information ab

> In order to determine whether a special order should be accepted at full capacity, the sales price of the special order must be compared to the per unit: a. Contribution margin of the special order. b. Variable cost and contribution margin of the special

> Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facility to be $5 per unit, then if Chade has: a. Full capa

> Which of the following is not a qualitative factor that Atlas Manufacturing should consider when deciding whether to buy or make a part used in manufacturing their product? a. Quality of the outside producer’s product. b. Potential loss of trade secrets.

> Creative Woodworking uses normal costing and allocates manufacturing overhead to jobs based on a budgeted labor-hour rate and actual direct labor-hours. Under- or overallocated overhead, if immaterial, is written off to Cost of Goods Sold. During 2017, C

> What would be the approximate value of the coefficient of correlation between advertising and sales where a company advertises aggressively as an alternative to temporary worker layoffs and cuts off advertising when incoming jobs are on backorder? a. 1.0

> A regression equation is set up, where the dependent variable is total costs and the independent variable is production. A correlation coefficient of 0.70 implies that: a. The coefficient of determination is negative. b. The level of production explains

> In regression analysis, the coefficient of determination: a. Is used to determine the proportion of the total variation in the dependent variable (y) explained by the independent variable (X). b. Ranges between negative one and positive one. c. Is used t

> A firm uses simple linear regression to forecast the costs for its main product line. If fixed costs are equal to $235,000 and variable costs are $10 per unit, how many units does it need to sell at $15 per unit to make a $300,000 profit? a. 21,400 b. 4

> HL Co. uses the high-low method to derive a total cost formula. Using a range of units produced from 1,500 to 7,500, and a range of total costs from $21,000 to $45,000, producing 2,000 units will cost HL: a. $8,000 b. $12,000 c. $23,000 d. $29,000

> Which of the following statements is not true regarding the use of variable and absorption costing for performance measurement? a. The net income reported under the absorption method is less reliable for use in performance evaluations because the cost of

> The following information relates to Drexler Inc.’s Year 3 financials: Direct labor………………….$. 420,000 Direct materials………………210,000 Variable overhead…………. 205,000 Fixed overhead……………..355,000 Variable SG&A expenses…150,000 Fixed SG&A expenses……. 195,000

> King Tooling has produced and sold the following number of units of their only product during their first two years in business: Production costs per unit have not changed over the two-year period. Under variable costing, what is the amount of cost of s

> Queen Sales, Inc. has just completed its first year of operations. The company has not had any sales to date. Queen has incurred the following costs associated with its production as of December 31, Year 1: Direct materials…………………………..$45,000 Production

> In comparing the absorption and variable cost methods, each of the following statements is true except: a. SG&A fixed expenses are not included in inventory in either method. b. Only the absorption method may be used for external financial reporting. c.

> Capitola Manufacturing produces surfboards. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the company’s production and sales occur in the first an

> Fordham Corporation produces a single product. The standard costs for one unit of its Concourse product are as follows: Direct materials (6 pounds at $0.50 per pound)……………………………$ 3 Direct labor (2 hours at $10 per hour)…………………………………………….20 Variable manuf

> Culpepper Corporation had the following inventories at the beginning and end of the month of January: The following additional manufacturing data was available for the month of January. Direct materials purchased…â€&brvbar

> As part of her annual review of her company’s budgets versus actuals, Mary Gerard isolates unfavorable variances with the hope of getting a better understanding of what caused them and how to avoid them next year. The variable overhead efficiency varianc

> Steed Co. budgets production of 150,000 units in the next year. Steed’s CFO expects that each unit will take 8 hours to produce at an hourly wage rate of $10 per hour. If factory overhead is applied on the basis of direct labor hours at $6 per hour, the

> Each of the following statements is correct regarding overhead variances except: a. Actual overhead greater than applied overhead is unfavorable. b. The efficiency overhead variance ignores the standard variable overhead rate. c. Variable overhead rates

> Wayne Mueller, financial analyst at CELL Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Mueller collects the following data on machine-hours worked and utility costs for the past 8 quarters: Required: 1. Estima

> Assume the same information for Northern Defense as in Exercise 10-33, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-hours. (An 85% learning curve means b = -0.234465.)

> Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow: Required: Calculate the total variable costs of producing 2, 4, and 8 units Home I

> May Blackwell is the new manager of the materials storeroom for Clayton Manufacturing. May has been asked to estimate future monthly purchase costs for part #696, used in two of Clayton’s products. May has purchase cost and quantity dat

> Linda Olson owns a professional character business in a large metropolitan area. She hires local college students to play these characters at children’s parties and other events. Linda provides balloons, cupcakes, and punch. For a stand

> Frontier Partners, a management consulting firm, has the following condensed budget for 2017: Frontier has a single direct-cost category (professional labor) and a single indirect-cost pool (client support). Indirect costs are allocated to jobs on the b

> Relling Corporation manufactures a drink bottle, model CL24. During 2017, Relling produced 210,000 bottles at a total cost of $808,500. Kraff Corporation has offered to supply as many bottles as Relling wants at a cost of $3.75 per bottle. Relling antici

> Dr. Young, of Young and Associates, LLP, is examining how overhead costs behave as a function of monthly physician contact hours billed to patients. The historical data are as follows: Required: 1. Compute the linear cost function, relating total overhe

> Lacy Dallas is examining customer-service costs in the southern region of Camilla Products. Camilla Products has more than 200 separate electrical products that are sold with a 6-month guarantee of full repair or replacement with a new product. When a pr

> Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,0

> Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017. Gower, Inc., produced 75,000 units of product in 2017. Gower’s managem

> Stein Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2018. The following cost and other data were gathered for 2017: Required: 1. Which of the preceding costs is variable? Fixed? Mixe

> Given here are a number of graphs. The horizontal axis of each graph represents the units produced over the year, and the vertical axis represents total cost or revenues. Required: Indicate by number which graph best fits the situation or item describ

> The vertical axes of the graphs below represent total cost, and the horizontal axes represent units produced during a calendar year. In each case, the zero point of dollars and production is at the intersection of the two axes. Select the graph that mat

> The Sunrise Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of one day or less: ■ Contract 1: $45 for the day ■ Contract 2: $25 for the day plus $0.30 per mile travel

> The controller of the Javier Company is preparing the budget for 2018 and needs to estimate a cost function for delivery costs. Information regarding delivery costs incurred in the prior two months are: Required: 1. Estimate the cost function for deliver

> The Matthew Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and tw

> The Garvis Company uses an absorption-costing system based on standard costs. Variable manufacturing cost consists of direct material cost of $4.50 per unit and other variable manufacturing costs of $1.50 per unit. The standard production rate is 20 unit

> The Garvis Company uses an absorption-costing system based on standard costs. Variable manufacturing cost consists of direct material cost of $4.50 per unit and other variable manufacturing costs of $1.50 per unit. The standard production rate is 20 unit

> Thunder Bolt, Inc., is a manufacturer of the very popular G36 motorcycles. The management at Thunder Bolt has recently adopted absorption costing and is debating which denominator level concept to use. The G36 motorcycles sell for an average price of $8,

> Candyland uses standard costing to produce a particularly popular type of candy. Candyland’s president, Jack McCay, was unhappy after reviewing the income statements for the first three years of business. He said, “I w

> Horace Company manufactures a professional-grade vacuum cleaner and began operations in 2017. For 2017, Horace budgeted to produce and sell 25,000 units. The company had no price, spending, or efficiency variances and writes off production-volume varianc

> Miami, Inc., planned and actually manufactured 250,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $19 per unit produced. Variable operating (nonmanufacturing) cost was $13 per unit sold. Planned and

> The Tomlinson Company manufactures trendy, high-quality, moderately priced watches. As Tomlinson’s senior financial analyst, you are asked to recommend a method of inventory costing. The CFO will use your recommendation to prepare Tomlinson’s 2017 income

> The variable manufacturing costs per unit of EntertainMe Corporation are as follows: Required: 1. Prepare income statements for EntertainMe in January, February, and March 2017 under throughput costing. 2. Contrast the results in requirement 1 of this

> EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: The selling price per unit is $3,300. The budgeted level of production used to ca

> Taylor Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2017: Budgeted manufacturing overhead costs………$3,800,000 Budgeted machine-hours…………………………………. 200,0

> The variable manufacturing costs per unit of Nascar Motors are as follows: Required: 1. Prepare income statements for Nascar Motors in April and May 2017 under throughput costing. 2. Contrast the results in requirement 1 with those in requirement 1 of

> Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: The selling price per vehicle is $24,000. The budgeted level of production used to calculate the budgeted fixed manufa

> Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Williams feels that manufacturin

> Tred-America, Inc., manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each independent scenario given, indicate whether each of the manufacturing vari

> Carlyle Capital Company offers financial services to its clients. Recently, Carlyle has experienced rapid growth and has increased both its client base and the variety of services it offers. The company is becoming concerned about its rising costs, howev

> Chart Hills Company makes customized golf shirts for sale to golf courses. Each shirt requires 3 hours to produce because of the customized logo for each golf course. Chart Hills uses direct labor-hours to allocate the overhead cost to production. Fixed

> Pampered Pets, Inc., makes embellished accessories primarily for dogs. For 2017, budgeted variable overhead is $70,000 for 10,000 direct labor-hours. Budgeted total overhead is $100,000 at 8,000 direct labor-hours. The standard costs allocated to the pro

> Meals Made Easy (MME) operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who place orders on MME’s website. MME allocates variable and fixed overhead costs on the basis

> The Brazil division of an American telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data regarding production during June are as follows: Variable manufacturing overhead costs incurred…………………………………

> The Lopez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,000 output units per year, included 6 machine-hours of variable manufacturing overhead at $8

> Atkinson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Direct labor-hours is the allocation base for assembly sup

> ProChem, Inc., produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 2017: Fill in the blanks. Use F for favorable and U for unfavorable: Variable Fixed (1) Spending variance (2) Ef

> The Rotations Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is 2 hours per unit. The following table shows the budgeted amou

> The Sourdough Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2017, fixed manufacturing overhead was budgeted at $3.00 per direct manufacturing labor-hour. Actual fixed

> The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of

> Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2017 are budgeted, $62,400, and actual, $63,916. Required: 1.

> Esquire Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs) and one fixed-cost category (manufacturing overhead

> Why is it important to distinguish between the performance of a manager and the performance of the organization subunit for which the manager is responsible? Give an example.

> What special problems arise when evaluating performance in multinational companies?

> Distinguish between measuring assets based on current cost and historical cost.

> “RI is not identical to ROI, although both measures incorporate income and investment into their computations.” Do you agree? Explain.

> Dakota Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dakota allocates manufacturing overhead costs using direct manufacturing labor costs. Da

> What are the three steps in designing accounting-based performance measures?

> Describe the four levers of control.

> Describe two disclosures required by the SEC with respect to executive compensation.

> Explain the incentive problems that can arise when employees must perform multiple tasks as part of their jobs.

> Explain the role of benchmarking in evaluating managers.

> “Managers should be rewarded only on the basis of their performance measures. They should be paid no salary.” Do you agree? Explain.

> Give examples of financial and nonfinancial performance measures that can be found in each of the four perspectives of the balanced scorecard.

> “Transfer pricing is confined to profit centers.” Do you agree? Explain.

> Name three benefits and two costs of decentralization.

> How should managers consider income tax issues when choosing a transfer-pricing method?

> In each of the following situations, determine whether job costing or process costing would be more appropriate. a. A CPA firm b. An oil refinery c. A custom furniture manufacturer d. A tire manufacturer e. A textbook publisher f. A home builder g.

> “Under the general guideline for transfer pricing, the minimum transfer price will vary depending on whether the supplying division has unused capacity or not.” Do you agree? Explain.

> “Cost and price information play no role in negotiated transfer prices.” Do you agree? Explain.

> Give two reasons why the dual-pricing system of transfer pricing is not widely used.

> What is one potential limitation of full-cost-based transfer prices?

> Under what conditions is a market-based transfer price optimal?

> “Let’s be more practical. DCF is not the gospel. Managers should not become so enchanted with DCF that strategic considerations are overlooked.” Do you agree? Explain.

> “The trouble with discounted cash flow methods is that they ignore depreciation.” Do you agree? Explain.

> Describe the accrual accounting rate-of-return method. What are its main strengths and weaknesses?

> What is the payback method? What are its main strengths and weaknesses?

> “Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree? Explain.