Question: Central Plains Power Company is considering an

> Which of the three methods of inventory costing—FIFO, LIFO, or weighted average cost—will in general yield an inventory cost most nearly approximating current replacement cost?

> Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $132,000 with a $16,000 residual value and a 10-year life. The equipment will replace one employee who has an average wage of $

> Both Austin Company and Hill Company had the same unit sales, total costs, and income from operations for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. Explain the reason for this difference in break-even po

> Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desi

> Magnolia Candle Inc. projected sales of 75,000 candles for 20Y4. The estimated January 1, 20Y4, inventory is 3,500 units, and the desired December 31, 20Y4, inventory is 2,700 units. What is the budgeted production (in units) for 20Y4?

> Daybook Inc. projected sales of 400,000 personal journals for 20Y6. The estimated January 1, 20Y6, inventory is 20,000 units, and the desired December 31, 20Y6, inventory is 23,500 units. What is the budgeted production (in units) for 20Y6?

> The director of marketing for Starr Computer Co., Megan Hewitt, had the following discussion with the company controller, Cam Morley, on July 26 of the current year: Megan: Cam, it looks like I’m going to spend much less than indicated on my July budget

> Domino’s Pizza L.L.C. operates pizza delivery and carry-out restaurants. The annual report describes its business as follows: We offer a focused menu of high-quality, value-priced pizza with three types of crust (Hand- Tossed, Thin Crust, and Deep Dish)

> A bank manager of City Savings Bank Inc. uses the managerial accounting system to track the costs of operating the various departments within the bank. The departments include Cash Management, Trust, Commercial Loans, Mortgage Loans, Operations, Credit C

> Children’s Hospital of the King’s Daughters Health System in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital’s annual plan to be updated for changes in operating plans. For example, if the budget was based on 400 patient-da

> Timbuk 3 Company has the following information for March: Cost of direct materials used in production…………$21,000 Direct labor…………………………………………………….... 54,250 Factory overhead…………………………………………….…35,000 Work in process inventory, March 18……………………. 7,500 Wor

> The city of Milton has an annual budget cycle that begins on July 1 and ends on June 30. At the beginning of each budget year, an annual budget is established for each depart- ment. The annual budget is divided by 12 months to pr

> If the unit cost of direct materials is decreased, what effect will this change have on the break-even point?

> Hit-n-Run Food Trucks, Inc. owns and operates food trucks (mobile kitchens) throughout the West Coast. The company’s employees have varying wage levels depending on their experience and length of time with the company. Employees work eight-hour shifts an

> Welcome Inn Hotels is considering the construction of a new hotel for $90 million. The expected life of the hotel is 30 years, with no residual value. The hotel is expected to earn revenues of $26 million per year. Total expenses, including depreciation,

> Cash payback period for a service company OBJ. 2 Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $200,000 and each with an eight-year life and expected total net cash flows of

> Dip N’ Dunk Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: a. Determine the present value index for each proposal. b. Which location does your analysis sup

> Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon .com uses its e-commerce services, features, and technologies to sell its products through the Internet. Recent balance sheet inventory disclosures for Target a

> Dash Riprock is a cost analyst with Safe Insurance Company. Safe is applying standards to its claims payment operation. Claims payment is a repetitive operation that could be evaluated with standards. Dash used time and motion studies to identify an idea

> How does using the return on investment facilitate comparability between divisions of decentralized companies?

> Vanadium Audio Inc. is a small manufacturer of electronic musical instruments. The plant manager received the following variable factory overhead report for the period: The plant manager is not pleased with the $12,320 unfavorable variable factory overh

> You have been asked to investigate some cost problems in the Assembly Department of Ruthenium Electronics Co., a consumer electronics company. To begin your investigation, you have obtained the following budget performance report for the department for t

> If fixed costs increase, what would be the impact on the (a) contribution margin? (b) income from operations?

> The senior management of Tungston Company has proposed the following three performance measures for the company: 1. Net income as a percent of stockholders’ equity 2. Revenue growth 3. Employee satisfaction Management believes that these three measure

> One of the operations in the United States Postal Service is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of 1.5 letters per second. The letter is mechanically sorted from a three-digit code input by an operator

> The following items were selected from among the transactions completed by O’Donnel Co. during the current year: Jan. 10. Purchased merchandise on account from Laine Co., $240,000, terms n/30. Feb. 9. Issued a 30-day, 4% note for $240,000 to Laine Co.,

> The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year: The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December: Dec. 2. Issued Ch

> The following data for Throwback Industries Inc. relate to the payroll for the week ended December 9, 20Y8: Employees Mantle and Williams are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1Â&frac1

> Glenville Company has the following information for April: Cost of direct materials used in production ………. $280,000 Direct labor ………………………………………………………. 324,000 Factory overhead ………………………………………………. 188,900 Work in process inventory, April 1 …………………………7

> The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Instructions 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following en

> In a payroll system, what types of input data are referred to as (a) constants and (b) variables?

> Indicate with a Yes or No whether or not each of the following accounts normally re- quires an adjusting entry: e. Nancy Palmer, Capital f. Prepaid Insurance a. Building c Wages Expense d. Miscellaneous Expense b. Cash

> Describe how total fixed costs and unit fixed costs behave with changes in the level of activity.

> For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or cre

> For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate wh

> For the year ending August 31, Mammalia Medical Co. mistakenly omitted adjusting entries for (1) depreciation of $5,800, (2) fees earned that were not billed of $44,500, and (3) accrued wages of $7,300. Indicate the effect of the errors on (a) revenu

> For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) $1,400 of supplies that were used, (2) unearned revenue of $6,600 that was earned, and (3) insurance of $9,000 that expired. Indicate the effect of

> The estimated amount of depreciation on equipment for the current year is $6,880. Journalize the adjusting entry (include an explanation) to record the depreciation.

> AutoSource Inc. designs and manufactures tires for automobiles. The company’s strategy is to design products that incorporate the full environmental impact of the product over its life cycle. This includes designing tires for fuel effic

> The estimated amount of depreciation on equipment for the current year is $7,700. Journalize the adjusting entry (include an explanation) to record the depreciation

> The supplies account had a beginning balance of $3,375 and was debited for $6,450 for supplies purchased during the year. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is

> The prepaid insurance account had a beginning balance of $4,500 and was debited for $16,600 of premiums paid during the year. Journalize the adjusting entry (include an ex- planation) required at the end of the year, assuming the amount of unexpired ins

> The balance in the unearned fees account, before adjustment at the end of the year, is $272,500. Journalize the adjusting entry (include an explanation) required if the amount of unearned fees at the end of the year is $189,750

> How would the following costs be classified (variable or fixed) if units produced was the activity base? a. Direct materials costs b. Electricity costs of $0.35 per kilowatt-hour

> On June 1, 2019, Herbal Co. received $18,900 for the rent of land for 12 months. Journalize the adjusting entry (include an explanation) required for unearned rent on December 31, 2019.

> We-Sell Realty Co. pays weekly salaries of $11,800 on Friday for a five-day workweek ending on that day. Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period ends on Wednesday.

> Prospect Realty Co. pays weekly salaries of $27,600 for a six-day workweek (Monday thru Saturday). Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period ends on Friday.

> At the end of the current year, $23,570 of fees have been earned but have not been billed to clients. Journalize the adjusting entry (include an explanation) to record the accrued fees.

> Greeson Clothes Company produced 25,000 units during June of the current year. The Cutting Department used 6,380 direct labor hours at an actual rate of $10.90 per hour. The Sewing Department used 9,875 direct labor hours at an actual rate of $11.12 per

> At the end of the current year, $17,555 of fees have been earned but have not been billed to clients. Journalize the adjusting entry (include an explanation) to record the accrued fees

> Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: a. Cash received for services not yet rendered. b. Insurance paid for the next year. c. Interest revenue eamed but not receiv

> Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: a. Cash received for use of land next month. c. Wages owed but not yet paid. d. Supplies on hand. b. Fees earned but not rece

> Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. Accumulated Depreciation b. Frank Kent, Drawing C Land d. Salaries Payable e. Supplies f. Unearned Rent

> During August, Rothchild Company accumulated 3,500 hours of direct labor costs on Job 40 and 4,200 hours on Job 42. The total direct labor was incurred at a rate of $25.00 per direct labor hour for Job 40 and $23.50 per direct labor hour f

> Beck Inc. and Bryant Inc. have the following operating data: a. Compute the operating leverage for Beck Inc. and Bryant Inc. b. How much would income from operations increase for each company if the sales of each increased by 20%? c. Why is there a di

> a. If Canace Company, with a break-even point at $960,000 of sales, has actual sales of $1,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? b. If the margin of safety for Canace Company was 20%, fixed co

> Zero Turbulence Airline provides air transportation services between Los Angeles, California; and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics: Fuel ……………………………………………………………………. $7,000 Flight crew sal

> Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $620,000, and the sales mix is 40% bats and 60% gloves. The unit selling price and the unit variable cost for each product are as follows: a.

> Daisy’s Creamery Inc. is considering one of two investment options. Option 1 is a $75,000 investment in new blending equipment that is expected to produce equal annual cash flows of $19,000 for each of seven years. Option 2 is a $90,000

> Name the following chart and identify the items represented by the letters (a) through (f): $200,000 $150,000 $100,000 $50,000 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Units of Sales Sales and Costs

> La Barte Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Quantity of direct labor used ………………………………5,050 hrs. Actual rate for direct labor ……………………………$16.80 per hr. Bicycles

> Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for a magazine publisher: a. Staples used to bind magazines b. Wages of printing machine employees c. Maintenance on printing machines d. Paper used i

> Using the data for Loudermilk Inc. in Exercise 21-17, Data from Exercise 21-17: For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the releva

> For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000. a. Construct a cost-volume-profit chart. b. Estimate th

> Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.5 million direct subscribers (accounts) that generated revenue of $35,345 million. Costs and expenses for the year were

> Describe how total variable costs and unit variable costs behave with changes in the level of activity.

> Media outlets such as ESPN and Fox Sports often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary. These we

> The Junior League of Yadkinville, California, collected recipes from members and published a cookbook entitled Food for Everyone . The book will sell for $18 per copy. The chairwoman of the cookbook development committee esti

> Currently, the unit selling price of a product is $1,500, the unit variable cost is $1,200, and the total fixed costs are $4,500,000. A proposal is being evaluated to increase the unit selling price to $1,600. a. Compute the current break-even sales (un

> Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions): In addition, assume that Anheuser-Busch InBev sold 400 million barrels of beer during the year. Assume that variable costs were 75% of t

> For the current year ended October 31, Yentling Company expects fixed costs of $14,000,000, a unit variable cost of $200, and a unit selling price of $300. a. Compute the anticipated break-even sales (units). b. Compute the sales (units) required to re

> The following data relate to labor cost for production of 22,000 cellular telephones: Actual: 4,220 hrs. at $44.50 Standard: 4,160 hrs. at $46.00 a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost varian

> Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, t

> a. What is (1) overapplied factory overhead and (2) underapplied factory overhead? b. If the factory overhead account has a debit balance, was factory overhead underapplied or overapplied?

> Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks ® and TurboTax ®. Classify each of the following costs and expenses for this company as either variable or fixed to the number o

> Southeastern Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified t

> On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: a. Prepare an absorption costing income statement. b. Reconcile the variable costing income fr

> Product K has a unit contribution margin of $120. Product L has a unit contribution mar - gin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the most profitable product, assuming that the furnace is

> Product A has a unit contribution margin of $24. Product B has a unit contribution mar - gin of $30. Product A requires four testing hours, while Product B requires six testing hours. Determine the most profitable product, assuming that the testing is a

> Green Thumb Garden Tools Inc. produces and sells home and garden tools and equipment. A lawn mower has a total cost of $230 per unit, of which $160 is product cost and $70 is selling and administrative expenses. In addition, the total cost of $230 is mad

> Light Force Inc. produces and sells lighting fixtures. An entry light has a total cost of $180 per unit, of which $100 is product cost and $80 is selling and administrative expenses. In addition, the total cost of $180 is made up of $110 variable cost an

> Portable Power Company expects to operate at 80% of productive capacity during July. The total manufacturing costs for July for the production of 25,000 batteries are budgeted as follows: Direct materials …………………………………………………. $162,500 Direct labor………………

> H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (3,128 pounds) has the following standards: The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual

> a. How is a predetermined factory overhead rate calculated? b. Name three common bases used in calculating the rate.

> BriteLite Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated activity costs and activity bases are as follows: Corporate records were obtained to estima

> Artscape Inc. is considering the purchase of automated machinery that is expected to have a useful life of five years and no residual value. The average rate of return on the average investment has been computed to be 20%, and the cash payback period was

> CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the

> Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it can make. The production process includes an autoclave

> Instant Image Inc. manufactures color laser printers. Model J20 presently sells for $460 and has a product cost of $230, as follows: Direct materials …………………. $175 Direct labor……………………………. 40 Factory overhead……………………. 15 Total…………………………………. $230 It is e

> Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry’s total unit cost for the upc

> Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows: Smart Stream wants a profit equal to a 30% rate of return on invested assets

> La Femme Accessories Inc. produces women’s handbags. The cost of producing 800 handbags is as follows: Direct materials ……………………………………. $18,000 Direct labor……………………………………………. 8,500 Factory overhead. ……………………………………. 5,500 Total manufacturing cost …………………

> What is the difference between a clock card and time ticket?

> Keystone Healthcare Corp. is proposing to spend $260,820 on an eight-year project that has estimated net cash flows of $42,000 for each of the eight years. a. Compute the net present value, using a rate of return of 10%. Use the present value of an annu

> Under what circumstances is a static budget appropriate?

> The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.20 per pound, and raw sugar can be sold without further processing for $1.40 per pound. Raw sugar is produc

> Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays and leisure customers during the week- end. However, the leisure customers on weekends occupy fewer rooms than do b

> Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone is evaluating a special order from a European automob

> Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current yea

> Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,000 pounds. The standard quantity of materials required in the process is 6,000 pounds, which cost $5.50 per pound. Columbian coffee can be sold without further processing for $9.22 p