Crew Clothing (CC) sells women’s resort casual clothing to high-end department stores and in its own retail boutiques. CC expects sales for January, February, and March to be $450,000, $510,000, and $530,000, respectively. Twenty percent of CC’s sales are cash, with the remainder collected evenly over two months. During December, CC’s total sales were $760,000. CC is beginning its budget process and has asked for your help in preparing the cash budget. Compute CC’s expected cash receipts from customers for each month.
> Matching Terminology 1. Compounding 2. Discounted cash flow methods 3. Discounting 4. Discount rate 5. Sensitivity analysis 6. Simple rate of return A. How changing underlying assumptions affect decisions. B. The rate at which the current value of future
> An investment manager is currently evaluating three projects: 1. Project 1 requires an initial investment of $10,000, will provide future cash flows of $26,000, and the PV of the future cash flows is $17,000. 2. Project 2 requires an initial investment o
> Tremaine Company is considering two mutually exclusive long-term investment projects. Project ABC would require an investment of $240,000, have a useful life of 4 years, and annual cash flows of $78,000. Project XYZ would require an investment of $230,00
> You plan to retire in 20 years. Calculate whether it is better for you to save $30,000 a year for the last 10 years before retirement or $15,000 for each of the next 20 years. Assume you are able to earn 8 percent interest on your investments.
> Suppose your sister Becky and her three best friends start a small business making beaded bracelets. They plan to purchase the materials, assemble the jewelry themselves, and sell the finished pieces to friends at school. Other than minor color and desig
> As a result of a slowdown in operations, Tradewind Stores is offering employees who have been terminated a severance package of $100,000 cash paid today; $50,000 to be paid in one year; and an annuity of $20,000 to be paid each year for 20 years. What is
> A number of terms and concepts from this chapter and a list of descriptions, definitions, and explanations appear as follows. For each term listed (1 through 9), choose at least one corresponding item (a through k). Note that a single term may have more
> Augusta Corp’s Golf Division has sales of $200,000, cost of goods sold of $105,000, operating expenses of $35,000, average invested assets of $900,000, and a hurdle rate of 12 percent. Calculate the Golf Division’s return on investment and its residual i
> Myrtle Company has sales of $140,000, cost of goods sold of $70,000, operating expenses of $20,000, average invested assets of $400,000, and a hurdle rate of 6 percent. Calculate Myrtle’s return on investment and its residual income.
> Violet Company has sales of $520,000, net operating income of $310,000, average invested assets of $940,000, and a hurdle rate of 10 percent. Calculate Violet’s return on investment and its residual income.
> Choose a company that has an online sales segment; it can be a company that operates entirely online or a brick-and-mortar store with an online site. Assuming a balanced scorecard approach, identify five specific measures that the company could use to me
> Consider the manager of your local Applebee’s restaurant. Using a balanced scorecard approach, identify three measures for each of the four dimensions of the balanced scorecard.
> In each of the following situations, identify which type of responsibility center is appropriate based on the decision-making authority the manager would possess: 1. The manager of the accounting department in Ford’s corporate office. 2. The sales manage
> Responsibility centers can be created in a variety of ways. Give a real-world example of a company whose responsibility centers would likely be created on the basis of each of the following: functional area, product line, and geographic area.
> Lupe Bornes recently graduated from college and received job offers in management from two different companies. The positions are similar in terms of title, salary, and benefits, but the companies vary in organizational structure. Alpha Company is centra
> Manufacturing costs for Davenport Company during 2018 were as follows: Required: 1. Compute direct material used. 2. Compute applied overhead if the company applies overhead at a rate of 0.75 (75 percent) of direct labor cost. 3. Compute total manufactur
> Tuckey Company is considering allowing the managers of its two divisions to negotiate a transfer price for the component that Division A manufactures and sells to Division B. Identify the range of possible transfer prices that could result from the negot
> Medlock Company has two divisions, Wheel and Chassis. The Wheel Division manufactures a wheel assembly that the Chassis Division uses. The variable cost to produce this assembly is $4.00 per unit; full cost is $5.00. The component sells on the open marke
> Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $2.00 per unit; full cost is $2.75. The component sells on the open market for $3.10. Assu
> Assume that your cousin Matilda Flores manages a local glass shop that was recently bought by a company that produces custom picture frames. As a result, Matilda will soon be providing glass to the Frame Division. She has heard upper management mention a
> The Western Division of Claremont Company had net operating income of $135,000 and average invested assets of $560,000. Claremont has a required rate of return of 15 percent. Western has an opportunity to increase operating income by $12,000 with a $108,
> Use the following terms to complete the sentences that follow; terms may be used once, more than once, or not at all: 1. Managers of a(n) center are evaluated based on measures such as ROI and residual income? 2. Suboptimal decisions and duplication of
> Acoma, Inc., has determined a standard direct materials cost per unit of $8 (2 feet × $4 per foot). Last month, Acoma purchased and used 4,200 feet of direct materials for which it paid $15,750. The company produced and sold 2,000 units during the month.
> Kelton Corp. has calculated its direct materials price and quantity variances to be $500 favorable and $800 unfavorable, respectively. Kelton’s production manager believes that these variances indicate that the purchasing department is doing a good job b
> For each of the following independent cases, fill in the missing amounts in the table:
> Dabney Company manufactures widgets and would like to use a standard cost system. Explain how Dabney will determine the standards for direct materials and direct labor to use in its costing system.
> Refer to the information presented in E2–7 for Cambridge Manufacturing Company. Required: 1. Prepare the journal entries to record actual and applied manufacturing overhead. 2. Prepare the journal entry to transfer the overhead balance to Cost of Goods S
> Evanson Company expects to produce 500,000 units of their product during the year. Monthly production is expected to range from 40,000 to 80,000 units. The company has budgeted manufacturing costs per unit to be as follows: Prepare a flexible manufacturi
> When preparing a company’s flexible budget, which manufacturing cost(s) will change as the volume increases or decreases? Which manufacturing cost(s) will not change as the volume changes?
> Consider the grading scale for a university class that has 500 possible points. The possible course grades are A, B, C, D, and F. Create a grading scale for the class that would fall into each of the following categories: an ideal standard, an easily att
> Match each of the terms by inserting the appropriate definition letter in the space provided. Not all definitions will be used. 1. Actual Accounting System 2. Direct Labor Efficiency Variance 3. Direct Labor Rate Variance 4. Direct Materials Price Varian
> Andora Company reported the following information for the month of November. The standard cost of labor for the month was $38,000, but actual wages paid were $37,300. Andora has calculated its direct labor rate and efficiency variances to be $1,500 favor
> During May, Camino Corp. purchased direct materials for 4,400 units at a total cost of $63,800. Camino’s standard direct materials cost is $14 per unit. Prepare the journal entry to record this transaction.
> Refer to M9–12 for Cholla Company. Calculate Cholla’s fixed overhead rate and the fixed overhead volume variance. Data from M9-12: Cholla Company’s standard fixed overhead rate is based on budgeted fixed manufacturing overhead of $10,200 and budgeted pr
> Cholla Company’s standard fixed overhead rate is based on budgeted fixed manufacturing overhead of $10,200 and budgeted production of 30,000 units. Actual results for the month of October reveal that Cholla produced 28,000 units and spent $9,900 on fixed
> Beverly Company has determined a standard variable overhead rate of $2.50 per direct labor hour and expects to incur 0.5 labor hour per unit produced. Last month, Beverly incurred 950 actual direct labor hours in the production of 2,000 units. The compan
> Paradise Corp. has determined a standard labor cost per unit of $12 (0.5 hour × $24 per hour). Last month, Paradise incurred 950 direct labor hours for which it paid $22,325. The company produced and sold 1,950 units during the month. Calculate the direc
> Cambridge Manufacturing Company applies manufacturing overhead on the basis of machine hours. At the beginning of the year, the company estimated its total overhead cost to be $325,000 and machine hours to be 25,000. Actual manufacturing overhead and mac
> Use the following terms to complete the sentences that follow; terms may be used once, more than once, or not at all: Static Flexible Volume Spending Production manager Variable overhead rate Variable overhead efficiency Fixed overhead spending Purchasin
> Refer to the information in M8–8 for Becker Bikes. Each unit requires 3 wheels at a cost of $5 per wheel. Becker requires 20 percent of next month’s material production needs on hand each month. July’s production units is expected to be 450 units. Prepar
> Becker Bikes manufactures tricycles. The company expects to sell 350 units in May and 480 units in June. Beginning and ending finished goods for May is expected to be 95 and 60 units, respectively. June’s ending finished goods is expected to be 70 units.
> Refer to the information in M8–6 for Preston, Inc. Each unit requires 1.75 hours of direct labor, and labor wages average $9 per hour. Prepare Preston’s direct labor budget for July and August. Data from M8-6: Preston, Inc., manufactures wooden shelving
> Preston, Inc., manufactures wooden shelving units for collecting and sorting mail. The company expects to produce 480 units in July and 400 units in August. Each unit requires 10 feet of wood at a cost of $1.50 per foot. Preston wants to always have 300
> Beatrice Company estimates that unit sales of its lawn chairs will be 7,200 in October; 7,400 in November; and 7,100 in December. Prepare Beatrice’s sales budget for the fourth quarter assuming each unit sells for $27.50.
> Classify each of the following budgets as an operating (O) or financial (F) budget: a. Cash budget b. Sales budget c. Direct materials purchases budget d. Selling and administrative expense budget e. Budgeted balance sheet f. Manufacturing overhead budge
> Match each of the terms by inserting the appropriate definition letter in the space provided. Not all definitions will be used. 1. Cash Budget 2. Financial Budgets 3. Short-Term Objective 4. Strategic Plan 5. Budgeted Cost of Goods Sold 6. Budgeted Balan
> Calypso Cal (CC), which manufactures surfboards, has a “Live today, worry about tomorrow later” motto. In keeping with this philosophy, CC has not set any long-term or short-term objectives or budgets for the company. Describe three potential consequence
> Garfield Corp. expects to sell 1,300 units of its pet beds in March and 900 units in April. Each unit sells for $110. Garfield’s ending inventory policy is 30 percent of the following month’s sales. Garfield pays its supplier $40 per unit. Prepare Garfie
> Mulligan Manufacturing Company uses a job order cost system with overhead applied to products at a rate of 150 percent of direct labor cost. Selected manufacturing data follow: Required: Treating each case independently, find the missing amounts for lett
> Lindell Company made direct material purchases of $48,000 and $60,000 in September and October, respectively. The company pays 60 percent of its purchases in the month of purchase and 40 percent is paid in the following month. How much cash was paid for
> Getty Company expects sales for the first three months of next year to be $200,000, $235,000, and $298,000, respectively. Getty expects 35 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows
> Fillmore, Inc., expects sales of its housing for electric motors to be $87,000, $81,000, and $92,000 for January, February, and March, respectively. Its variable selling and administrative expenses are 8 percent of sales, and fixed selling and administra
> Winslow Company expects sales of its financial calculators to be $200,000 in the first quarter and $236,000 in the second quarter. Its variable overhead is approximately 19 percent of sales, and fixed overhead costs are $46,500 per quarter. Prepare Winsl
> Refer to the information in M8–8 for Becker Bikes. The company’s variable overhead is $2.50 per unit produced and its fixed overhead is $3,000 per month. Prepare Becker’s manufacturing overhead budget for May and June. Data from M8-8: Becker Bikes manuf
> Refer to the information in M8–8 for Becker Bikes. Each unit requires 1.5 direct labor hours and Becker’s hourly labor rate is $12 per hour. Prepare Becker’s direct labor budget for May and June. Data from M8-8: Becker Bikes manufactures tricycles. The
> Your boss believes that the three management functions of planning, directing/leading, and controlling are unrelated. He also thinks that managerial accounting has no role in any of the functions. Is your boss correct? Explain why or why not.
> More Parts Liquidators specializes in buying excess parts inventories for resale or to incorporate into other products. They recently purchased parts for $100,000 and they have a buyer willing to pay $120,000. The company can also incorporate these parts
> Blowing Sand Company also has the Blast fan model. It is the company’s top-selling model with sales of 30,000 units per year. This model has a dual fan as well as a thermostat component that causes the fan to cycle on and off depending on the room temper
> Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow: Required: 1. Calculate the predetermined o
> Suppose you have just finished your third year of college and expect to graduate with a bachelor’s degree in accounting after completing two more semesters of coursework. The salary for entry-level positions with an accounting degree i
> Suppose that Blowing Sand Company also produces the Drafty model fan, which currently has a net loss of $43,000 as follows: Eliminating the Drafty product line would eliminate $18,000 of direct fixed costs. The $50,000 of common fixed costs would be redi
> Explain how the analysis and decision in M7–5 would have been affected if Blowing Sand were operating at full capacity. Data from M7-5: Blowing Sand Company has just received a one-time offer to purchase 10,000 units of its Gusty model for a price of $2
> Blowing Sand Company has just received a one-time offer to purchase 10,000 units of its Gusty model for a price of $22 each. The Gusty model normally sells for $30 and costs $26 to produce ($17 in variable costs and $9 of fixed overhead). Because the off
> The local summer baseball league wants to buy new uniforms for its teams. The current uniforms are quite old and will require $400 in repairs before they can be handed out to players next week for the upcoming season. The old uniforms will be replaced as
> Isabella Canton is considering taking a part-time job at a local clothing store. She loves the store and shops there often, but unfortunately, employee discounts are given only to full-time employees. If Isabella takes this job, she would have to withdra
> Listed below are a number of activities managers may perform. Identify which of these activities are steps in management’s decision-making process and place those steps into the order in which they should be executed. Activities listed may be used once,
> Refer to the information presented in M7–11. Suppose that Anne has developed a rectangular, medium-size ceramic pot. It requires four hours of kiln time; however, two medium-size pots can fit in the kiln at once. The medium-size pots wo
> Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne’s creations, only one pot can be fired in the kiln at a time. Information abou
> Your roommate, Joe Thompson, has taken a summer intern position at a local manufacturing company. Because he is a junior majoring in accounting, the company expects him to have a grasp of managerial accounting basics. However, Joe didn’t attend class ver
> A number of terms and concepts from this chapter and a list of descriptions, definitions, and explanations follow. For each term listed on the left, choose at least one corresponding item from the right. Note that a single term may have more than one des
> Refer to the information presented in E2–3 for Joyce Caldwell. Required: Prepare a journal entry to record Joyce’s wages. Data from E2-3: A weekly time ticket for Joyce Caldwell follows:
> Refer to the information presented in M6–8. Suppose that the cost of paper has increased and Laguna’s variable cost per unit increases to $0.015 per hanger. Calculate its new break-even point assuming this increase is not passed along to customers. Data
> Laguna Print makes advertising hangers that are placed on doorknobs. It charges $0.04 and estimates its variable cost to be $0.01 per hanger. Laguna’s total fixed cost is $4,500 per month, which consists primarily of printer depreciation and rent. Calcul
> Refer to the information presented in M6–3. Suppose that Juniper’s fixed costs increase to $7,200. What is the new break-even point? Data from M6-3: Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and each clock sells for $
> Refer to the information presented in M6–3. Suppose that Juniper’s variable costs decrease by $0.50. What is the new break-even point? Data from M6-3: Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and each clock sells for
> Refer to the information presented in M6–3. Suppose that Juniper raises its price by 20 percent, but costs do not change. What is its new break-even point? Data from M6-3: Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and
> Refer to the information presented in M6–3. How many units must Juniper sell to earn a profit of at least $5,400? Data from M6-3: Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and each clock sells for $24. Calculate Junip
> Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and each clock sells for $24. Calculate Juniper’s contribution margin per unit and contribution margin ratio. If the company’s fixed costs total $6,660, determine how many cloc
> Refer to the information in M6–20 regarding Pueblo Company. Determine target sales needed to earn a $25,000 target profit if total fixed costs are $35,000. Data from M6-20: Information for Pueblo Company follows:
> Refer to the information presented for Pueblo Company in M6–20. Determine its break-even sales dollars if total fixed costs are $35,000. Data from M6-20: Information for Pueblo Company follows:
> Information for Pueblo Company follows: Determine Pueblo’s (overall) weighted-average contribution margin ratio.
> A weekly time ticket for Joyce Caldwell follows: Required: 1. Determine how much of the $1,200 that Joyce earned during this week would be charged to Job 271, Job 272, and Job 273. 2. Explain how the time spent doing maintenance work would be recorded.
> Determine the missing amounts in the following table:
> Refer to the information presented in M6–17. Suppose that each product’s sales price increases by 10 percent. Sales mix remains the same and total fixed costs are $230,000. Calculate the new break-even point for Edgewa
> Refer to the information presented in M6–17. Calculate the break-even point if Edgewater’s total fixed costs are $230,000. Data from M6-17: Edgewater Enterprises manufactures two products. Information follows:
> Edgewater Enterprises manufactures two products. Information follows: Calculate Edgewater’s weighted-average contribution margin per unit.
> Complete the following table:
> Seascape Company has two products: Product A has a contribution margin per unit of $4 and Product B has a contribution margin of $6 per unit. Calculate the weighted-average unit contribution margin if Seascape has a 25/75 product mix. Explain how a shift
> Refer to the information in M6–11 for Heather Hudson. Suppose sales increase by 20 percent next month. Calculate the effect that increase will have on her profit. Data from M6-11: Heather Hudson makes stuffed teddy bears. Recent inform
> Refer to the information in M6–11 for Heather Hudson. Determine the degree of operating leverage if she sells 350 bears this month. Data from M6-11: Heather Hudson makes stuffed teddy bears. Recent information for her business follows:
> Refer to the information in M6–11 for Heather Hudson. If she sells 275 bears next month, determine the margin of safety in units, sales dollars, and as a percentage of sales Data from M6-11: Heather Hudson makes stuffed teddy bears. Re
> Heather Hudson makes stuffed teddy bears. Recent information for her business follows: If Heather wants to earn $1,250 in profit next month, how many bears will she have to sell?
> Refer to the information in E2–1 for Oak Creek Furniture Factory. Required: Prepare journal entries to record the materials requisitions, labor costs, and applied overhead. Data from E2-1: Oak Creek Furniture Factory (OCFF), a custom f
> Jasper Company has sales of $185,000 and a break-even sales point of $120,000. Compute Jasper’s margin of safety and its margin of safety ratio.
> Match each of the terms by inserting the appropriate definition letter in the space provided. Not all definitions will be used. 1. Break-even point 2. Break-even analysis 3. Cost-volume-profit analysis 4. Degree of operating leverage 5. Margin of safety
> Sherri’s Tan-O-Rama is a local tanning salon. The following information reflects its number of appointments and total costs for the first half of the year: Prepare a scattergraph by plotting Sherri’s Tan-O-Ramaâ&
> Randy Company produces tennis rackets. If the fixed cost per racket is $15 when 20,000 rackets are produced, what is the fixed cost per racket when 30,000 rackets are produced?
> Castle Inc. has the following information: Indicate whether these costs are variable, fixed, or mixed. Explain your answers.
> Match each of the following terms associated with the least-squares regression method with its appropriate definition: 1. R square 2. Error 3. Intercept 4. Coefficient of the x variable A. Estimate of total fixed cost. B. Vertical distance between the pr
> Indicate whether each of the following statements about the high-low method is true or false: a. The formula for the high-low method is (Highest Cost − Lowest Cost) / (Highest Activity − Lowest Activity) b. The high-low method can be expressed as Change
