Question: Hankuk Electronics started production on a

> Northampton plc, a British-based company, makes superbikes for the U.S. and British markets. For the current year, it estimates fixed costs of £10 million. Its variable costs are £3,000 per motorcycle, and it expects to both produce and sell 25,000 units

> The management of ProDry is considering use of the cost-plus approach rather than the target-cost approach used in 14-35. Refer to the information in 14-35. Required 1. Do you think that it’s a good idea for ProDry to use the cost-plus approach to price

> ProDry is entering the professional hair dryer market. Research shows that their customers wish to pay $310 or less for each dryer. Cost accountants at the manufacturer have collected the following information: Required 1. What is the estimated cost per

> Europa Airways is about to introduce a daily round-trip flight from Madrid, Spain, to Cairo, Egypt, and is determining how to price its round-trip tickets. The market research group at Europa Airways segments the market into business and pleasure travele

> Life Cycle Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Life Cycle at no cost. Life Cycle intends to extract scrap m

> Quick Test Laboratories evaluates the re- action of materials to extreme increases in temperature. Much of the company’s early growth was attribut- able to government contracts, but recent growth has come from expansion into commercial

> Florida Temps, a large labor contractor, supplies contract labor to construction companies. For 2020, Florida Temps has budgeted to supply 82,000 hours of contract labor. Its variable costs are $11 per hour, and its fixed costs are $328,000. Roger Mason,

> A & L Mechanical sells and services plumbing, heating, and air-conditioning systems. A & L’s cost accounting system tracks two cost categories: direct labor and direct materials. A & L uses a time-and-materials pricing syste

> Zoom-o-licious makes candy bars for vending ma- chines and sells them to vendors in cases of 30 bars. Although Zoom-o-licious makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Zoom-o-licious has

> Refer to the data for Problem 13-43. Assume the fabric costs $4.40 per yard in 2020 and $4.55 per yard in 2019. Required 1. Compute Goldstein Company’s total factor productivity (TFP) for 2020. 2. Compare TFP for 2020 with a benchmark TFP for 2019 input

> Goldstein Company manufactures wallets from fabric. In 2019, Goldstein made 2,700,000 wallets using 1,875,000 yards of fabric. In 2019, Goldstein has capacity to make 3,600,000 wallets and incurs a cost of $10,800,000 for this capacity. In 2020, Goldstei

> The Swift Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $456,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $9.50. The average cost of f

> While many reports do recognize the advantage of an out- comes focus in government, often public bodies concentrate on individual outputs. Many agencies are still working on short-term or annual planning and budgeting cycles, and in some cases confusing

> Highland State Company provides cable and Internet services in Barcelona. There are many competitors that provide similar services. Highland State believes that the key to financial success is to offer a quality service at the lowest cost. Highland State

> Monza Pharma (Monza) is a developer and manufacturer of medical drugs, based in Beeland but selling its products all over the world. As a listed company, the overall objective of the company is to maximize the return to shareholders, and it has used retu

> Vic Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers on the market are comparable in terms of features and

> Unearth, Inc., refines petrol and sells it through its own Unearth gas stations. On the basis of market research, Unearth determines that 60% of the overall petrol market consists of “service-oriented customers,” mediu

> Refer to the information for XBlast in Problem 13-34. Required 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2020 based on actual production and actual nu

> Suppose that during 2020, the market for hoverboards increased by 25%. All increases in market share (that is, sales increases greater than 25%) and decreases in the selling price of HOV-X are the result of XBlast’s strategic actions. Required Calculate

> XBlast manufactures an entry-level hoverboard, HOV-X. Pursuing a cost-leadership strategy, the company has tried to improve quality and reduce costs. As a result of the actions taken over the last year, quality has significantly improved in 2020 while re

> The R and J Company manufactures a robotic vacuum called the Baxter. The company sells the vacuum to discount stores throughout the country. The Baxter is a basic robotic vacuum with a remote and is significantly less expensive than the robotic vacuum th

> Susan Smith manages the Wexford plant of Sanchez Manufacturing. A representative of Darnell Engineering approaches Smith about replacing a large piece of manufacturing equipment that Sanchez uses in its process with a more efficient model. While the repr

> Sonix Electronics is a dealer of industrial refrigerator. Its average sell- ing price of an industrial refrigerator is $5,000, which it purchases from the manufacturer for $4,200. Each month, Sonix Electronics pays $52,800 in rent and other office expend

> Mechum River Anglers, a division of Old Dominion Travel, offers two types of guided fishing tours, Basic and Deluxe. Operating income for each tour type in 2020 is as follows: The equipment has a disposal value of zero. Guide wages, supplies, and vehicle

> Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2020 follows: Further analysis of costs reveals the following percentages of variable costs in each division: Closing down any division would resul

> Talking Toys (TT) produces dolls in two processes: molding and assembly. TT is currently producing two models: Chatty Chelsey and Talking Tanya. Production in the molding department is limited by the amount of materials available. Production in the assem

> Rush Industries manufactures electronic testing equipment. Rush also installs the equipment at customers’ sites and ensures that it functions smoothly. Additional information on the manufacturing and installation departments is as follo

> Gormley Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting tool, and EX4, a high precision cutting tool. A6 is manufactured on a regular machine, but EX4 must be manufactured on both the re

> The Allen Company produces chairs. This year’s expected production is 30,000 units. Currently, Allen makes the upholstery for the chairs in its factory. Allen’s management accountant reports the following costs for the

> Sandy’s Paint Shop paints exterior surfaces for commercial and residential customers. It charges $175 per hour for a crew of painters. For March 2020, Sandy expects the crew to operate at 80% of capacity, 160 hours of the 200 hours avai

> Mitch McCalister, the general manager of Time Sprint, must decide when to release the new version of Time Sprint’s fitness watch, TS-12. Development of TS-12 is complete, but the product has not yet been produced. The product can be shi

> Cuddly Critters, Inc., manufactures plush toys in a facility in Queensland, Brisbane. Recently, the company designed a group of collectible resin figurines to go with the plush toy line. Management is trying to decide whether to manufacture the figurines

> Jersey Acres Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Friesian cows raised on a special corn-based diet. One kilogram of soft cheese, which has a contribution margin of $8, requires 4 liters of milk. A well-known gourmet

> The Unique Toys Company manufactures and sells toys. Currently, 300,000 units are sold per year at $12.50 per unit. Fixed costs are $880,000 per year. Variable costs are $7.00 per unit. (Consider each case separately.) Required 1. a. What is the current

> Julie Bolts Ltd manufactures mechanical bolts for different vehicle engines. The company has been approached to submit a quote for supply of some 3-D Bolts. The company’s inventory and production records show the following: Materials: T

> Model thresholds and payoff matrices, sensitivity analysis (continuation of 11-39). Assume the same information for Spruce Bank as in Problem 11-39. David believes that within the pool of borrowers he invests in, the timing of when borrowers ultimately d

> David Porter is the management accountant at Spruce Bank, where the data science department is leading an initiative to predict whether loans will default or repay. The default rate in the training set is 15%. After building a model on the training set t

> It is June, and the manager of the retail chain Stapleton wants to increase revenues during the back-to-school period. To do that, he plans to attract more customers in August whose children are entering school for the first time. By marketing to househo

> Assume the same information for Turcotte as in Problem 11-36. Working brake pads yield a profit of $25. If defective brake pads are identified before they are shipped, they can be fixed and sold as working brake pads. However, the process of inspecting a

> Sarah Letourneau is the management accountant at Turcotte Manufacturing, an auto supplier that produces brake pads. Turcotte’s customers have high safety standards, and managers at Turcotte believe they can gain a competitive advantage

> Assume the same information for Keebler-Olson as in Problems 11-31, 11-32, 11-33, and 11-34. James plans to invest $100 in each of the 1,000 loans he is examining. If he decides not to invest in a loan, he will invest the $100 in an alternative investmen

> Assume the same information for Keebler-Olson as in Problems 11-31, 11-32, and 11-33. While James is presenting his work to the president and his team, someone asks whether he had calculated the overall likelihood value for the trees. Wanting to make sur

> Assume the same information for Keebler- Olson as in Problems 11-31 and 11-32. Required 1. Prune the tree at depth 3. Using the pruned tree, classify each loan in the validation sample as repay or default (if the probability of default is greater than 0

> Assume the same information for Keebler-Olson as in Problem 11-31. James Silva and the data scientist on his team work together to develop the following decision tree: The data science team tests the model on the following validation set: Required 1. Wr

> The Patisserie Hartog owns and operates 10 puff pastry outlets in and around Amsterdam. You are given the following corporate budget data for next year: Variable costs change based on the number of puff pastries sold. Compute the budgeted operating incom

> James Silva is a management accountant at Keebler-Olson, where he is in charge of their investment portfolio. In 2015, James worked with a data scientist to develop a model that predicts how a given loan will perform in the future based on the characteri

> Barry Lee decides that the simple regression analysis used in Problem 10-47 could be extended to a multiple regression analysis. He finds the following results for two multiple regression analyses: Regression 4: PDC = a + (b1 * No. of POs) + (b2 * No. of

> Designer Wear operates a chain of 10 retail department stores. Each department store makes its own purchasing decisions. Barry Lee, assistant to the president of Designer Wear, is interested in better understanding the drivers of purchasing department co

> Inbee is concerned that she still does not understand the relationship between output and labor consumption. She consults with Jim Park, the head of engineering, and shares the results of her regression estimation. Jim indicates that the production of ne

> The Blue Seas Company, which is under contract to the Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the first of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It req

> Unicorn Freightways is a leader in transporting agricultural products in the western provinces of Italy. Rita Bonnie, a financial analyst at Unicorn Freightways, is studying the behavior of transportation costs for budgeting purposes. Transportation cost

> Parker Manufacturing has been using activity-based costing to determine the cost of product X-678. One of the activities, “Inspection”, occurs just before the product is finished. Fitzgerald inspects every 10th unit an

> Anna Schaub, the financial manager at the Mangiamo restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She obtains the following data for the past 10 months: She estimates the fo

> Farm Fresh, a cooperative of organic family- owned farms outside of New South Wales, Australia, has recently started a fresh produce club to provide support to the group’s member farms and to promote the benefits of eating organic, loca

> Brilliant Travel Agency specializes in flights between Toronto and Vishakhapatnam. It books passengers on EastWest Air. Brilliant’s fixed costs are $36,000 per month. EastWest Air charges passengers $1,300 per round-trip ticket. Calculate the number of t

> Which of the following statements does not accurately describe the flow of costs in a job costing system? a. Direct materials used and direct manufacturing labor can be easily traced to jobs. b. Direct materials and direct manufacturing labor become part

> Rollalong Inc. produces wheelchairs that are sold primarily to hospitals. Rollalong’s three plant managers’ bonuses are based on operating income that is produced using absorption costing. The company suspects that the cur- rent buildup of inventory is a

> JetStar produces jet bridges for many domestic and international airports. Cost information for JetStar’s jet bridges is as follows: Additional information for the first three quarters of 2020 for JetStar are shown below: JetStarâ

> In 2021, only 740,000 TopStuff meals were produced and sold to the hospitals. Smith suspects that hospital controllers had systematically inflated their 2021 meal estimates. Required 1. Recall that TopStuff uses the master-budget capacity utilization to

> Top Catering operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, TopStuff, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,025,000 meals a year. In 2020, based on estimates fr

> The Beta Company started business on January 1, 2020. Beta manufactures a specialty honey soda, which it sells directly to state-owned distributors in Abu Dhabi. Honey soda is produced and sold in six-packs, and in 2020, Beta produced more six-packs than

> If Kappa sells all 350,000 CFLs produced, what would be the effect on operating income of using each type of capacity as a basis for calculating manufacturing cost per unit? 2. Compare the results of operating income at different capacity levels when 275

> Kappa Electricals, a producer of energy-efficient compact fluorescent lamps (CFLs), expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, Kappa has decided to evaluate its financial perform

> Gostkowski Company is about to enter the highly competitive personal electronics market with a new optical reader. In anticipation of future growth, the company has leased a large manufacturing facility and has purchased several expensive pieces of equip

> Whistler, Inc., manufactures a specialized snowboard made for the advanced snowboarder. Whistler began 2020 with an inventory of 240 snow- boards. During the year, it produced 900 boards and sold 995 for $750 each. Fixed production costs were $280,000, a

> Donaldson Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2020: There are no price, spending, or efficiency variances. Actual operating costs equal budgeted oper

> Simplex Inc. sells its product at $80 per unit with a contribution margin of 40%. During 2016, Simplex sold 540,000 units of its product; its total fixed costs are $2,100,000. Required 1. Calculate the (a) contribution margin, (b) variable costs, and

> Zing Lager has just purchased the Chicago Brewery. The brewery is 2 years old and uses absorption costing. It will “sell” its product to Zing Lager at $44 per barrel. Peter Bryant, Zing Lager’s contro

> Horizon Press produces textbooks for college courses. The company recently hired a new editor, Billie White, to handle production and sales of books for an introduction to accounting course. Billie’s compensation depends on the gross ma

> Gammaro Company uses standard costing. Tim St. Germaine, the new president of Gammaro Company, is presented with the following data for 2020: Required 1. At what percentage of denominator level was the plant operating during 2020? 2. How much fixed manu

> Johnson Stores produce and sell face powder called the ‘Success’ in cases. Each case is sold for £80. The following information relates to the product in the autumn and summer of 2020: Other related inform

> BlueBox Company uses standard costing. The company has two manufacturing plants, one in Shanghai and the other in Shenzhen. For the Shanghai plant, BlueBox has budgeted annual output of 2,000,000 units. Standard labor-hours per unit are 0.50, and the var

> The Delta Company started business on January 1, 2020. The company adopted a standard absorption costing system to produce ergonomic backpacks. Delta chose direct labor as the application base for overhead and decided to use the proration method to accou

> NWI is a service provider that offers computing resources measured in RAM (random-access memory)-hours to handle enterprise-wide applications. Information about variable overhead costs for March 2020 are as follows: Information about fixed overhead costs

> The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct m

> Ronaldo’s Ice Cream produces summer ice creams for school pupils in Alaska. The company has identified three significant activities and established three standard rates to allocate variable manufacturing overhead instead of one rate bas

> Johns Manufacturing Company manufactures and sells rolling suitcases. After several years of increased sales, Johns experiences a drop in sales in 2020 from increased competition. Johns uses machine-hours as the cost-allocation base for variable and fixe

> Fill in the blanks for each of the following independent cases.

> Omega’s Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping department records both variable direct batch-level cost

> Grant Manufacturing uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DMLH). Grant develops its manufacturing overhead rate from the current annual

> Consider the following two situations—cases A and B—independently. Data refer to operations for April 2020. For each situation, assume standard costing. Also assume the use of a flexible budget for control of variable

> Delta Rubber Plastic Company Ltd manufactures rubber chairs and tables. The company’s accountant, has prepared the overhead budget shown below: The company had a great year with the actual sales of 125,000 units. However, the overhead b

> Bruno Limited manufactures padlocks for which they have established unit standard costs as shown below: During July, 400 padlocks were manufactured at the costs shown below. There was no opening stock. The flexible budget for this company required 1,400

> Chef Whiz manufactures premium food processors. The following are some manufacturing overhead data for Chef Whiz for the year ended December 31, 2020: Budgeted number of output units: 588 Planned allocation rate: 3 machine-hours per unit Actual number of

> Sunto Scientific manufactures GPS devices for a chain of retail stores. Its most popular model, the Magellan XS, is assembled in a dedicated facility in Savannah, Georgia. Sunto is keenly aware of the competitive threat from smartphones that use Google M

> Cathy Jeffries operates Relaxing Day, a day spa with 15 employees. Jim Ryan has recently been hired by Jeffries as a controller. Relaxing Day’s previous accountant had done very little in the area of variance analysis, but Ryan believes

> The Shirt Company produces cotton/polyester blend T-shirts to supply a custom T-shirt customer. The company experienced a computer failure and some of the data were lost and could not be recovered. The data the company were able to recover are shown belo

> Trevor Joseph employs two workers in his guitar-making business. The first worker, George, has been making guitars for 20 years and is paid $30 per hour. The second worker, Earl, is less experienced and is paid $20 per hour. One guitar requires, on avera

> Futuremart is an international retail store. They are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Futuremart $2,500,000 per month and $62 per order. Futuremart h

> You are a new junior ac- countant at Clearvision Corporation, maker of lenses for eyeglasses. Your company sells generic-quality lenses for a moderate price. Your boss, the controller, has given you the latest month’s report for the len

> Zanella’s Smart Shawls, Inc., is a small business that Zanella developed while in college. She began hand-knitting shawls for her dorm friends to wear while studying. As demand grew, she hired some workers and began to manage the operation. Zanella’s sha

> On May 1, 2020, Lowell Company began the manufacture of a new paging machine known as Qwik. The company in- stalled a standard costing system to account for manufacturing costs. The standard costs for a unit of Qwik follow: The following data were obtain

> GoodFoods produces snack mixes for the gourmet and natural foods market. Its most popular product is Tempting Trail Mix, a mixture of peanuts, dried cranberries, and chocolate pieces. For each batch, the budgeted quantities, budgeted prices, and budgeted

> Young Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $223 per board. This includes 40 pounds of direct materials, at the budgeted price of $2 per pound, and 10 hours of direct ma

> You have been invited to interview for an internship with an international food manufacturing company. When you arrive for the interview, you are given the following information related to a fictitious Belgian chocolatier for June 2020. The chocolatier m

> Andrew Scheid Ltd manufactures kitchen cabinets. The company’s budget for fixed costs per month is $7,500 and budgeted variable costs per cabinet are: The company had budgeted to make and sell 1,000 cabinets per month at a selling price

> Marcus McQueen has run In-A-Flash Car Detailing for the past 10 years. His static budget and actual results for June 2020 are provided next. Marcus has one employee who has been with him for all 10 years that he has been in business. In addition, at any

> Milan Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2020: Standard quantities, standard prices, and

> Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2021 and has estimated sales based o

> Roma Skincare manufactures and sells a face cream to small specialty stores in Victoria, Australia. It presents the monthly operating income statement shown here to Jacob Scott, a potential investor in the business. Help Mr. Scott understand Roma Skincar