Dawmart Corp., an international retail giant, is considering implementing a new business-to-business (B2B) information system for processing purchase orders. The current system costs Dawmart $1,000,000 per month and $40 per order. Dawmart has two options: a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a fixed cost of $5,000,000 per month and a variable cost of $30 per order. The fully automated B2B system will have fixed costs of $10,000,000 per month and variable costs of $20 per order. Based on data from the last two years, Dawmart has determined the following distribution on monthly orders: Monthly Number of Orders…………………….Probability 300,000 ……………………………………………………………0.10 400,000 …………………………………………………………..0.25 500,000 …………………………………………………………..0.40 600,000 ……………………………………………………………0.15 700,000 …………………………………………………………….0.10 Required: 1. Prepare a table showing the cost of each plan for each quantity of monthly orders. 2. What is the expected cost of each plan? 3. In addition to the information systems costs, what other factors should Dawmart consider before deciding to implement a new B2B system?
> Applewood Electronics, a division of Elgin Corporation, manufactures two large-screen television models: the Monarch, which has been produced since 2012 and sells for $1,700, and the Regal, a new model introduced in early 2012, which sells for $2,200. Ba
> Strategy usually includes some formal processes. Required: 1. How can managers choose between different strategies? 2. How is strategy different from an operating decision?
> Ace Bicycle Company produces bicycles. This year’s expected production is 10,000 units. Currently, Ace makes the chains for its bicycles. Ace’s accountant reports the following costs for making the 10,000 bicycle chain
> Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. They use these designs for one year and then move on to the next tr
> Cartwright Ltd. manufactures two models of saddles, the Jordan and the Shenandoah. The Jordan is a more basic model and sells for $900. The Shenandoah is a professional-model saddle and sells for $1,500. At the beginning of the year, the following budget
> Pharmacare Inc. specializes in the distribution of pharmaceutical products. Pharmacare operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. “Mom and Pop” single-
> Radhika’s Radiology Centre (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top radiology centre in the area. RRC has achieved this status because it constantly re-examines its processes and pr
> Family Supermarkets (FS) found that its ABC analysis (see the Pulling It All Together problem in this chapter) provided important insights. FS extends the analysis to cover three more product lines: baked goods, milk and fruit juice, and frozen products.
> Halifax Test Laboratories does heat testing (HT) and stress testing (ST) on materials. Under its current costing system, Halifax aggregates all operating costs of $1,440,000 into a single overhead cost pool. Halifax calculates a rate per test-hour of $18
> Wigan Associates has two classifications of professional staff—partners and managers. Hanley asks his assistant to examine the relative use of partners and managers on the recent Widnes Coal and St. Helen’s cases. The
> Hanley asks his assistant to collect details on those costs included in the $21,000 indirect-cost pool that can be traced to each individual case. After further analysis, Wigan is able to reclassify $14,000 of the $21,000 as direct costs: Hanley decide
> Wigan Associates is a recently formed law partnership. Ellery Hanley, the managing partner of Wigan Associates, has just finished a tense phone call with Martin Offiah, president of Widnes Coal. Offiah complained about the price Wigan charged for some le
> Financial accountants use estimates of financial value differently than either cost or management accountants. Required: 1. Identify two differences in use. 2. Identify a similarity among accountants.
> Naf Radiator Company uses a normal costing system with a single manufacturing overhead (MOH) cost pool and machine-hours (MH) as the cost allocation base. The following data are for 2016: Budgeted manufacturing overhead (MOH) …â
> J. Watson Kalor Ltd. uses a normal job-costing system with two direct cost categories, direct materials and direct labour, and one indirect cost pool. Manufacturing overhead is allocated based on direct labour costs. Any overallocated or underallocated o
> S. Sridhar, adapted Northley Industries is a manufacturer of sailboats. The following partial information for 2016 is available: Additional Information 1. Direct manufacturing labour wage rate was $16 per hour. 2. Manufacturing overhead (MOH) is alloca
> Nicole Limited is a company that produces machinery to customer order. Its job-costing system (using normal costing) has two direct cost categories (direct materials and direct manufacturing labour) and one indirect cost pool (manufacturing overhead, all
> Jack Halpern is the owner and CEO of Aerospace Comfort, a firm specializing in the manufacture of seats for air transport. He has just received a copy of a letter written to the Auditor General of the Canadian government. He believes it is from an ex-emp
> The following information relates to the activities of King Ltd. for the year 2016: The company uses normal costing and applies overhead on the basis of machine-hours (MH). The company had calculated its overhead rate to be $4.25 per MH on the basis of
> Corporation manufactures precision equipment made to order for the semiconductor industry. Glavine uses two manufacturing overhead cost pools—one for the overhead costs incurred in its highly automated Machining Department and another f
> Gaston Ltd. uses a normal job- costing system with two direct cost categories—direct materials and direct manufacturing labour—and one indirect cost category—manufacturing overhead. At the beginning of 2016, Gaston had $236,000 in work-in- process invent
> Keating has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about what factors drive the level of indirect costs. Manag
> Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25 professionals (5 partners and 20 managers) who work directly with its clients. The average budgeted total compensation per professional for 2016 is
> Orillia Equipment sells riding lawn mowers. The average price for a lawn mower is $16,000. Orillia purchases these mowers from the manufacturers at an average cost of $12,200. Orillia’s monthly fixed costs are $28,000 in rent, $45,000 in salaries, $5,600
> Delcour Manufacturing budgeted $325,000 and incurred $337,000 of overhead costs in the past year. During the year, it allocated $302,000 to its production. An extract from the company’s financial records showed the following accountbalances: Allocated M
> Refer to requirement 3 of 3-40. In this problem assume the role of the owner of Walk Rite. Required: 1. Calculate the number of units sold where the operating income under (a) a fixed-salary plan and (b) a lower fixed-salary-and-commission plan (for sal
> The Walk Rite Shoe Company operates a chain of shoe stores. The stores sell ten different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a f
> Prairie Ltd. currently manufactures a single product in its Saskatoon factory. Last year’s results (based on sales volume of 25,000 units) were Required: 1.Using last year’s data, calculate Prairie’
> R.A. Ro and Company, a manufacturer of quality handmade walnut bowls, has experienced a steady growth in sales for the past five years. However, increased competition has led Ro, the president, to believe that an aggressive marketing campaign will be nec
> Teddy Bear Daycare provides daycare for children Mondays through Fridays. Its monthly variable costs per child are Lunch and snacks……………………………………………………..$100 Educational supplies ……………………………………………………...75 Other supplies (paper products, toiletries, etc.
> Carumba Inc.’s 2015 budget includes the following items: Sales ……………………………………………………..80,000 units Production …………………………………………….80,000 units Direct materials used………………………………… $600,000 Direct labour ………………………………………………..400,000 Variable overhead ………………………
> Wildlife Escapes generates average revenue of $9,200 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are Airfare ……………………………………………………….$3,500 Hotel accommodations. …………………………………1,200 Meals …………………………………
> Hoot Washington is the newly elected charismatic leader of the Western Party. He is the darling of the right-wing media. His “take no prisoners” attitude has left many an opponent on a talk show feeling run over by a Mack truck. Media Publishers is negot
> Domestic Engines Company produces the same power generators in two plants, a newly renovated, automated plant in Peona, and an older, less automated plant in Modine. The following data are available for the two plants: All unit fixed costs are calcula
> Diego Motors is a small car dealership. On average it sells a car for $26,000, which it purchases from the manufacturer for $22,000. Each month, Diego Motors pays $60,000 in rent and utilities and $70,000 for salespeople’s salaries. In addition to their
> Ahmed Diba is the controller of the Body Products Division of World Wide Drugs (WWD). It is located in Winnipeg, which is also the headquarters of WWD. Diba is helping develop a proposal for a new product to be called Vital Hair. This product is a cream
> Athabaska Ltd. produces a lens used for webcams. Summary data from its year 2014 statement of comprehensive income are as follows: Revenues …………………………………..$8,000,000 Variable costs ………………………………4,320,000 Fixed costs ……………………………………3,900,000 Operating inco
> David Hutchinson is an internationally known Canadian professor specializing in consumer marketing. In 2015, Hutchinson and United Kingdom Business School (UKBS) agreed to conduct a one-day seminar at UKBS for marketing executives. Each executive would p
> The Windsor Chamber of Commerce is planning its annual event. There are two possible plans: a. Hold the event at a local hotel. The fixed rental cost would be $2,700 and the charge for meals would be $110 per person. b. Hold the event at the University o
> The City of Vancouver makes an $850,000 lump-sum budget appropriation to run a safe injection site for a year. All the appropriation is to be spent. The variable costs average $16 per patient visit. Fixed costs are $500,000 per year. Required: 1. Comput
> Technology of the Past (TOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but TOP expects the market to pick up this year. Last year’s statement of comprehensive income showed Sales revenues ($4 per corkscrew) ………………
> Manitoba Production Corporation (MPC) specializes in the manufacture of one-litre plastic bottles. The plastic moulding machines are capable of producing 100 bottles per hour. The firm estimates that the variable cost of producing a plastic bottle is 25
> (CMA, adapted) Marston Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The statement of comprehensive income for the year ending December 31, 2014, under
> Bonavista Cribs manufactures baby cribs. It currently produces one model, the Surrey crib, and it is priced at $600. Variable manufacturing costs are $210 per unit and variable shipping costs are $60 per unit. Fixed costs are $2,574,000. In 2014, it sold
> Panther Productions is negotiating the next sequel to its Illinois Jones series. This negotiation is proving more difficult than for the original movie. There is a risk that the series may have peaked and the total box office receipts will drop. The budg
> CVP computations. Patel Manufacturing sold 200,000 units of its product for $30 per unit. Variable cost per unit is $25 and total fixed costs are $800,000. Required: 1.Calculate (a) contribution margin and (b) operating income. 2.Patel’s current manufac
> Panther Productions has just finished production of the most recent sequel in its Illinois Jones series. The film cost $22 million to produce. Most production personnel and actors were paid a fixed salary (included in the $22 million); however, the two m
> The Goldman Company retails two products, a standard and a deluxe version of a luggage carrier. The budgeted statement of comprehensive income is as follows: Required: 1.Compute the breakeven point in units, assuming that the planned revenue mix is ma
> (M. Rajan, adapted) Tocchet Company manufactures C B1, a citizens’ band radio that is sold mainly to truck drivers. The company’s plant in Camden has an annual capacity of 75,000 units. Tocchet currently sells 60,000 units at a selling price of $148. It
> Lawnox, a manufacturer of lawn mowers, predicts that it will purchase 240,000 spark plugs next year. Lawnox estimates that 20,000 spark plugs will be required each month. A supplier quotes a price of $9 per spark plug. The supplier also offers a special
> Foxwood Company is a metal- and wood-cutting manufacturer selling products to the home construction market. Consider the following data for the year 2016: Required: 1. Prepare a statement of comprehensive income with a separate supporting schedule of c
> The following items (in millions) pertain to the Chan Corporation: Chan’s manufacturing cost system uses a three-part classification of manufacturing costs. There are two prime costs and one conversion cost: direct materials, direct
> 1. How would the answer to the preceding problem be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. 2. Would the sales manager’s salary (included in market
> The Powell Corporation has the following account balances (in millions): Required: Prepare an statement of comprehensive income and a supporting schedule of cost of goods manufactured for the year ended December 31, 2016. For Specific Date Fo
> Hofstra Plastics Inc.’s selected data for the month of August 2016 are presented below (in millions): Work-in-process inventory, August 1, 2016 ……………………………………$ 200 Direct materials inventory, August 1, 2016 ………………………………………..90 Direct materials purchased
> The following partial information is available. Complete the table by filling in all the blanks. Each case is independent. Contributing Margin Percentage Variable Operating Income Fixed Total Case Revenues Costs Costs Costs $ 4,000 $ 500 $. $1,460 %
> Consider the following account balances (in thousands) for the Canseco Company: Required: 1. Prepare a schedule of cost of goods manufactured for 2016. 2. Revenues in 2016 were $300 million. Prepare the 2016 statement of comprehensive income. Begin
> Assume management predicts that the selling price per unit and variable cost per unit will be the same in 2017 as in 2016. Fixed manufacturing costs and marketing, distribution, and customer-service costs in 2017 are also predicted to be the same as in 2
> Soo Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2016. Costs incurred for 2016 are as follows (V stands for variable; F stands for fixed): Direct materials used costs ……
> Gwen Benson, Ian Blacklaw, and Eduardo Cabrera are sales representatives for Electronic Manufacturing Inc. (EMI). EMI specializes in low-volume production orders for the research groups of major companies. Each sales representative receives a base salary
> Len Lippart is a line worker in the assembly department of Maxart Manufacturing. He normally earns $12 per hour, but gets time and a half ($18 per hour) for overtime, over 40 hours per week. He earns double time if he works holidays even if he has not wo
> Easecom Company is a manufacturer of videoconferencing products. Regular units are manufactured to meet marketing projections, and specialized units are made after an order is received. Maintaining the video-conferencing equipment is an important area of
> Two products are manufactured by the Fraser Corporation: Widgets and Thingamajigs. In July 2015, the controller of Fraser, upon instructions from senior management, had the budgeting department gather the following data in order to prepare budgets for 20
> The University of Toronto 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
> Anderson Construction assembles residential homes. It uses a job-costing system with two direct cost categories (direct materials and direct labour) and one indirect cost pool (assembly support). The allocation base for assembly support costs is direct l
> Michael and Gabitel (MG) is a law firm that specializes in writing wills. Its job-costing system has one direct cost pool, professional labour, and a single indirect cost pool that includes all supporting costs of running the law office. The support cost
> What is the benefit of creating more than one manufacturing overhead cost pool?
> Chirac & Partners is a Quebec based public accounting partnership specializing in audit services. Its job-costing system has a single direct cost category (professional labour) and a single indirect cost pool (audit support, which contains all the costs
> Destin Products uses a job-costing system with two direct cost categories (direct materials and direct manufacturing labour) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labour costs.
> In each of the following situations, determine whether job costing or process costing would be more appropriate. a. A public acccounting firm b. An oil refinery c. A custom furniture manufacturer d. A tire manufacturer e. A textbook publisher f. A pharma
> Angela King is the Las Vegas promoter for professional fighter Randy Couture. King is promoting a new Octagon world championship fight for Couture. The key area of uncertainty is the size of the cable pay-per-view TV market. King will pay Couture a fixed
> Clarke Ltd. is a manufacturer of promotional items. The majority of its revenues is from the production of promotional pens. Clarke imports these pens from China and then imprints them with corporate names. These pens are then distributed to customers, s
> Edible Bouquets (EB) makes and sells flower bouquets. EB is considering opening a new store in the local mall. The mall has several empty shops and EB is unsure of the demand for its product. The mall has offered EB two alternative rental agreements. The
> Zyrcon Ltd. is a computer games manufacturer. It currently has two games on the market: Alien Predators and Vegas Pokermatch. Data regarding the two products are as follows: The fixed costs of Zyrcon are $18,750,000, and the current sales mix is 40% Al
> The Sunrise Group (SG) is an environmentally conscious organization that buys land with the objective of preserving the natural environment. SG receives private contributions and takes no assistance from the government. Fixed costs of operating the organ
> Thomas Inc. is considering three countries for the sole manufacturing site of its new product: India, China, and Canada. The product will be sold to retail outlets in Canada at $47.50 per unit. These retail outlets add their own markup when selling to fi
> The list of representative cost drivers in the right column of this table are randomized with respect to the list of functions in the left column. That is, they do not match. Function ………………………………………………………..Representative Cost Driver 1. Accounting ……………
> Describe sensitivity analysis. How has spreadsheet software affected its use?
> Niagara Inc. manufactures apple products such as apple jelly and applesauce. It makes applesauce by blending Tolman, Golden Delicious, and Ribston apples. Budgeted costs to produce 100,000 kilograms of applesauce in November 2015 are as follows: 45,000
> The Energy Products Company produces a gasoline additive, Gas Gain, that increases engine efficiency and improves gasoline mileage. The actual and budgeted quantities (in litres) of materials required to produce Gas Gain and the budgeted prices of materi
> Suppose the static budget was for 2,500 units of output. Actual output was 2,000 units. The variances are shown in the following report: Required: What are the rate, efficiency, and sales-volume variances for direct materials and direct manufacturing l
> Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-25, including requirement 2. Summarize how these journal entries differ from normal costing entries. Data from Exercise 7-25: Yates Inc. is a p rivately held furnitu
> Yates Inc. is a privately held furniture manufacturer. For August 2015, Yates had the following standards for one of its products, a wicker chair: Standards per Chair Direct materials ………………………2 square metres of input at $5 per square metre Direct manu
> Katharine Stanley is the owner of Better Bikes, a company that produces high-quality mountain bicycles. Better Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle shops. For several years Better
> The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the calculations on the company’s variance analysis calculations for the year ended December 31, 2015. The fo
> Trustex Printers Inc. produces luxury chequebooks with three cheques and stubs per page. Each chequebook is designed for an individual customer and is ordered through the customer’s bank. The company’s operating budget for September 2015 included these d
> Sol Electronics, a fast-growing electronic device producer, uses a standard costing system, with standards set at the beginning of each year. In the second quarter of 2015, Sol faced two challenges: it had to negotiate and sign a new short-term labour ag
> Marron, Inc. produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Marron uses standard costing and carries over no inventory from one month to the
> Why do management accountants need to understand financial accounting?
> Tilda Manufacturing is a manufacturer of electronics components. Income data for one of the products (XT-107) for the month just ended are as follows: Tilda has capacity to produce 250,000 units each month, and its current average sales level is 175,00
> A home pregnancy test is not always accurate. Suppose the probability is 0.015 that the test indicates that a woman is pregnant when she actually is not, and the probability is 0.025 that the test indicates that a woman is not pregnant when she really is
> A manufacturer conducted a survey among 500 randomly selected target market households in the test market for its new disposable diapers. The objective of the survey was to determine the market share for its new brand. If the sample point estimate for ma
> The following exercises use the Purchase Orders database. Use MATCH and/or INDEX functions to find the following:a. The row numbers corresponding to the first and last instance of item number 1369 in column C (be sure column C is sorted by order number).
> Using the data in the Excel file Consumer Transportation Survey, develop a contingency table for Gender and Vehicle Driven; then convert this table into probabilities.a. What is the probability that respondent is female?b. What is the probability that a
> Use the Civilian Labor Force data in the Excel file Census Education Data to find the following:a. P(unemployed and advanced degree)b. P(unemployed ∙ advanced degree)c. P(not a high school grad ∙ unemployed)d. Are the events “unemployed” and “at least a
> The Excel file Concert Sales provides data on sales dollars and the number of radio, TV, and newspaper ads promoting the concerts for a group of cities. Develop simple linear regression models for predicting sales as a function of the number of each type
> A marketing researcher surveyed 92 individuals, asking them if they liked a new product concept or not. The results are shown below:Convert the data into percentages. Then construct a chart of the counts and a chart of the percentages. Discuss what each
> Use Analytic Solver Platform to fit a distribution to the data in the Excel file Computer Repair Times. Try the three different statistical measures for evaluating goodness of fit and see if they result in different best-fitting distributions
> The Excel file Credit Approval Decisions provides information on credit history for a sample of banking customers. Use regression analysis to identify the best model for predicting the credit score as a function of the other numerical variables. For the
> A professional football team is preparing its budget for the next year. One component of the budget is the revenue that they can expect from ticket sales. The home venue, Dylan Stadium, has five different seating zones with different prices. Key informat
