Distinguish between a receiving report and a materials requisition.
> Quary Co. is considering an investment in machinery with the following information. Compute the investment’s (a) annual income and annual net cash flow and (b) payback period.
> Refer to the information in Exercise 26-12. Create an Excel spreadsheet to compute the internal rate of return for each of the projects.
> Refer to the information in Exercise 26-10. (a) Create an Excel spreadsheet to compute the internal rate of return for each of the projects. (b) Based on internal rate of return, determine whether the company should accept either of the two projects.
> Refer to the information in Exercise 26-17. Create an Excel spreadsheet to compute the internal rate of return for the proposed investment.
> Refer to the information in Exercise 26-2. The company’s required rate of return is 12%. a. Compute the investment’s net present value. b. Using the answer from part a, is the investment’s internal rate of return higher or lower than 12%? Hint: It is not
> Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $228,000 and would yield the following annual net cash flows. a. The company requires a 12% return from its investments. Compute net present values us
> Sofia Luz Eckrich’s company Teysha makes hand-made boots, shoes, and home goods. Required 1. How can Teysha use departmental (product line) income statements to assist in understanding and controlling operations? 2. Are departmental income statements al
> OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $4 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $500,000 per year in
> Lopez Co. is considering three alternative investment projects below. Which project is preferred if management makes its decision based on, (a) Payback period, (b) Net present value, (c) Internal rate of return?
> GTO Inc. is considering an investment costing $214,170 that results in net cash flows of $30,000 annually for 11 years. (a) What is the internal rate of return of this investment? (b) The hurdle rate is 9.5%. Should the company invest in this project on
> Refer to the information in Exercise 26-1. Project 1 has a seven-year useful life, and Project 2 has a five-year useful life. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment.
> Refer to the information in Exercise 26-6. B2B Co. requires at least an 8% return on this investment. (a) Compute the net present value of this investment. (b) Should the investment be accepted on the basis of net present value.
> Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $135,000. Project 2 requires an initial investment of $98,000. Compute (a) annual net cash flow and (b) payback period for each
> The following information is available for ADT Company, which produces special-order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of 70% of direct labor cost. 1. Set up a Raw Materials Inv
> The following information is available for a custom manufacturer. 1. Compute the ending balances of Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory. Hint: Set up T-accounts for each of these three inventory accounts. 2.
> Refer to information in Exercises 19-6 and 19-7. Set up T-accounts for each of the following accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Overhead, an
> Refer to information in Exercise 19-6. Prepare journal entries to record the transactions reflected in items a through g.
> True Fit, as discussed in the chapter opener, uses a costing system with standard costs for direct labor and overhead costs. Two comments frequently are mentioned in relation to standard costing and variance analysis: “Variances are not explanations” and
> Information on Kwon Mfg.’s activities for its first month of operations follows. a. Purchased $100,000 of raw materials on credit. b. Materials requisitions show the following materials used for the month. c. Time tickets show the follo
> A manufacturer’s Raw Materials Inventory account appears as follows. All raw materials purchases are made on credit. Prepare journal entries to record the: 1. Purchase of raw materials. 2. Direct materials used. 3. Indirect materials us
> Bell Co. produces stainless steel drink tumblers, its only product. These tumblers are stamped with company logos and used as promotional items. Following are simplified job cost sheets for two separate job lots. Job 1 was for 250 units and Job 2 was for
> Diaz and Associates incurred the following direct labor costs in completing tax services job for a client. Diaz applies overhead at 50% of direct labor cost. 1. Determine the total cost of this tax services job. 2. If Diaz charged $20,000 for this tax se
> Hansel Company has requested bids from several architects to design its new corporate headquarters. Frey Architects is bidding on the job. Frey estimates that the job will require the following direct labor. Frey applies overhead to jobs at 175% of direc
> Doctors Moby, Oak, and Chug have been in a group practice for several years. Moby and Oak are family practice physicians, and Chug is a general surgeon. Chug receives many referrals for surgery from his family practice partners. Upon the partnership’s o
> Erica Gray, CPA, is a sole practitioner. She has been practicing as an auditor for 10 years. Recently a long-standing audit client asked Gray to design and implement an integrated computer-based accounting information system. The fees associated with thi
> Management requires purchases above $5,000 to be submitted with cash flow projections for capital budget approval. As systems manager, you want to upgrade your computers at a $25,000 cost. You consider submitting several orders, each under $5,000 to avoi
> Assume that your company sells portable housing to both general contractors and the government. It sells jobs to contractors on a bid basis. A contractor asks for three bids from different manufacturers. The combination of low bid and high quality wins t
> You are the managerial accountant at Info store, a manufacturer of hard drives. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of poor cash flow managem
> Setting standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to offer a quality product at a prof
> Chris Gray, Bryson Alf, and Nick Pirelli are founding partners of their company, Schally. Assume that Chris, Bryson, and Nick decide to expand their business with the help of general partners. Required 1. What details should Chris, Bryson, Nick, and th
> Refer to the chapter’s opening feature about Aaron, Dylan, Jeff, and Sam and their company, Box. Their company deals with the cloud storage needs of numerous suppliers and customers. Required 1. Identify the special journals that Box
> Review this chapter’s opening feature involving Emily and Betsy and Sword & Plough. Required 1. Assume that Sword & Plough sells a $300 gift certificate to a customer, collecting the $300 cash in advance. Prepare the journal entry for (a) collection of
> Eye Symmetry’s founder Max Stewart makes surfboards in different lengths. He must decide on the best sales mix. Assume Max has a capacity of 240 hours of direct labor time available each month, and he makes two types of boards: Short an
> Refer to the chapter opener regarding Mark Wallace and his company, Wallace Detroit Guitars. All successful businesses track their costs, and it is especially important for start-up businesses to monitor and control costs. Required 1. Assume that Mark
> Tianna Bass of Sweet Tea Cosmetics understands and controls merchandising costs. Required 1. How does a merchandiser such as Sweet Tea Cosmetics compute cost of goods sold? Provide examples of costs Tianna must monitor and control. 2. What are four goa
> Assume that Carla Harris of Morgan Stanley (MorganStanley.com) has impressed you with the company’s success and its commitment to ethical behavior. You learn of a staff opening at Morgan Stanley and decide to apply for it. Your resume i
> A company’s normal selling price is $100 per unit. Describe a situation in which the company would accept a special offer at a selling price of $80 per unit.
> Apple is considering eliminating one of its stores in a large U.S. city. What are some factors that it should consider in making this decision?
> What is time and materials pricing?
> Assume the following data for each company for a recent week. 1. Compute yield for the current week for both Apple and Samsung. Which company’s process manufacturing system is more efficient? 2. Compute yield for the prior week for Sams
> Explain how a price-setter differs from a price-taker.
> Samsung is planning to invest in a new companywide computerized inventory tracking system. What makes this potential investment risky?
> Google is planning to acquire new equipment to manufacture tablet computers.
> What is the combined amount (in percent) of the employee and employer Social Security tax rate? (Assume wages do not exceed $137,700 per year.)
> (a) The voucher system of control establishes procedures for what two processes? (b) When is the voucher initially prepared?
> Why would companies invest their idle cash in cash equivalents?
> Cash receipts from customers are received by the company with regular mail. The record keeper opens these letters and deposits the cash received each day. (a) Identify any internal control problem(s) in this arrangement. (b) What changes to its internal
> Recommend an internal control procedure for each situation: (a) A concession company has one employee who sells towels, coolers, and sunglasses at the beach. Each day, the employee is given enough towels, coolers, and sunglasses to last through the day
> Franco Co.’s record keeper left town after the manager discovered that a large sum of money had been stolen. The record keeper had written and signed several checks made payable to her fiancé and then recorded the checks as salaries expense. The fiancé,
> Fitbit division makes fitness trackers. Assume the following data from Google. 1. Compute cost per unit for (a) a non custom (standard) fitness tracker and (b) a custom tracker with a company logo. 2. Assume Google marks up its fitness trackers by 40%. C
> What journal entry is recorded when a materials manager receives a materials requisition and then issues direct materials for use in the factory? What journal entry is recorded for requisitions of indirect materials?
> How do the balances in the Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold general ledger accounts link to job cost sheets?
> Many companies use direct labor cost to apply factory overhead to jobs. Identify another activity base a company might use to apply overhead costs.
> Read the Statement of Ethical Professional Practice posted at IMAnet.org. (Under “Career Resources,” select “Ethics Center,” and then select “IMA Statement of Ethical Professional Practice.”) What four overarching ethical principles underlie the IMA’s st
> The triple bottom line includes what three main dimensions?
> Define and describe two measures to assess raw materials inventory management.
> List the four components of a schedule of cost of goods manufactured and provide specific examples of each for Apple
> What are the goals of the lean business model?
> List several examples of nonmanufacturing costs.
> Assume that a company purchases land for $1,000,000, paying $400,000 cash and borrowing the remainder with a long-term notes payable. How should this transaction be reported on a statement of cash flows?
> Allows customers to select different cases for the watches it produces and sells. Assume the following data for the newest Apple Watch. 1. Compute cost per unit for an Apple watch with either an (a) aluminum case or (b) titanium case. 2. In setting price
> Identify the three classes of debt investments and the three classes of equity investments.
> If a stock investment with insignificant influence costs $10,000 and is sold for $12,000, how should the difference between these two amounts be recorded?
> Explain the concept of accrued interest on bonds at the end of an accounting period.
> Who is responsible for overseeing corporate activities?
> Allocation of partnership income among the partners appears on what financial statement?
> Assume that the Barnes and Ardmore partnership agreement provides for a two-third/one-third sharing of income but says nothing about losses. The first year of partnership operation resulted in a loss, and Barnes argues that the loss should be shared equa
> Assume that Amy and Lacey are partners. Lacey dies, and her son claims the right to take his mother’s place in the partnership. Does he have this right? Why or why not?
> Can partners limit the right of a partner to commit their partnership to contracts? Would such an agreement be binding (a) on the partners and (b) on outsiders?
> How does a general partnership differ from a limited partnership?
> Apple began as a partnership. What does the term mutual agency mean when applied to a partnership?
> Samsung offers sales price discounts on some products. Samsung can use sales variance analysis to assess the effects of these sales discounts. Assumed data for one model of a Samsung television follow. Required 1. Compute the sales price and sales volum
> If a partnership contract does not state the period of time the partnership is to exist, when does the partnership end?
> Assume a partner withdraws from a partnership and receives assets of greater value than the book value of his equity. Should the remaining partners share the resulting reduction in their equities in the ratio of their relative capital balances or accordi
> After all partnership assets have been converted to cash and all liabilities paid, the remaining cash should equal the sum of the balances of the partners’ capital accounts. Why?
> Kay, Kat, and Kim are partners. In a liquidation, Kay’s share of partnership losses exceeds her capital account balance. Moreover, she is unable to meet the deficit from her personal assets, and her partners share the excess losses. Does this relieve Kay
> George, Burton, and Dill man have been partners for three years. The partnership is being dissolved. George is leaving the firm, but Burton and Dill man plan to carry on the business. In the final settlement, George places a $75,000 salary claim against
> What does the term unlimited liability mean when it is applied to partnership members?
> What amount of income tax is withheld from the salary of an employee who is single with two withholding allowances and earns $725 per week? What if the employee earns $625 and has no withholding allowances? (Use Exhibit 11A.6.)
> List four ways managers can use process cost information.
> What are the two main inventory methods used in computing equivalent units of production? Which method combines production activity across two periods in computing equivalent units? Which is generally considered more precise?
> Define equivalent units of production (EUP). Why is it necessary to use EUP in process costing?
> Apple and Google use historical sales growth rates in estimating future sales. Data below are for one product segment for each company (Apple: iPhone; and Google: Apps, Hardware, and Cloud services). Required 1. Compute the sales growth rate for each co
> Which costing system, job order or process, typically uses more Work in Process Inventory accounts?
> Under what conditions is a market-based transfer price most likely to be used?
> What is a transfer price? What are the three main approaches to setting transfer prices?
> How is a department’s contribution to overhead measured?
> How is the performance of profit center managers evaluated?
> How are decisions made in decentralized organizations?
> In responsibility accounting, why are reports to higher-level managers usually less detailed?
> How is the performance of cost center managers evaluated?
> List at least two positive and two negative features of standard costing systems.
> Can a retail store like Apple use variances in analyzing its operating performance? Explain.
> Apple offers sales price discounts to college students. Apple can use sales variance analysis to assess the effects of these sales discounts. Assumed data for a local college follow. Required 1. Compute the sales price and sales volume variances and ide
> Information for Google follows. Required 1. Compute Google’s cash conversion cycle for both the current and prior years. 2. Did Google become more effective at managing cash in the current year?
> If you were the owner of the company, how would you choose the right coffee-shop managers?
> What organizational changes are going to be necessary in order for you to continue to grow and select the right managers?
> Select a company where you would like to work one day. Using online research, determine if the company has a functional, divisional, matrix, international, team, virtual, or learning organization. Explain how you arrived at this conclusion. Do you believ
> What do the solid lines in an organization chart represent?
> Audit and assess the basic management skills of a local manager or business owner. Note technical, human relations, conceptual, decision-making and time management skills. How important are these skills to them? What areas require development?
