Question: How do direct labor costs flow through

> Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the followin

> Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $15 per hour. During the year, the company started and completed only two jobs—Jo

> Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a job-order costing system. The capacity of the plant is determined by the capacity of its constraint, which is time on the automated bandsaw t

> Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm’s direct labor includes salaries of consultants that work a

> Braverman Company has two manufacturing departments—Finishing and Fabrication. The predetermined overhead rates in Finishing and Fabrication are $18.00 per direct labor-hour and 110% of direct materials cost, respectively. The company’s direct labor wage

> Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $16.00 per direct labor-hour and $12.00 per direct labor-hour, respectively. The company’s direct

> Mickley Company’s plantwide predetermined overhead rate is $14.00 per direct labor-hour and its direct labor wage rate is $17.00 per hour. The following information pertains to Job A-500: Direct materials...........................................$231 Di

> Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production.........

> Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period’s estimated level of production. The

> Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year: During the year, the company had no beginning or end

> Yancey Productions is a film studio that uses a job-order costing system. The company’s direct materials consist of items such as costumes and props. Its direct labor includes each film’s actors, directors, and extras. The company’s overhead costs includ

> Warner Corporation purchased a machine 7 years ago for $319,000 when it launched product P50. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 300 machine costing $313,000 or by a new model

> The.Alpine.House,.Inc.,.is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount Sales...................................................................................$150,000 Selling.pr

> Java Source, Inc., (JSI) buys coffee beans from around the world and roasts, blends, and packages them for resale. Some of JSI’s coffees are very popular and sell in large volumes, while a few of the newer blends sell in very low volume

> Munchak Company’s relevant range of production is 9,000–11,000 units. Last month the company produced 10,000 units. Its total manufacturing cost per unit produced was $70. At this level of activity the companyâ&#

> The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 8,000 batteries at a cost of $80 per battery. It withdrew 7,600 batteries from the storeroom during the month. Of these, 100 were used to

> Refer to the data given in Exercise 1–7. Answer all questions independently. Data from Exercise 1-7: The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 8,000 batteries at a cost of $80 pe

> Refer to the data given in Exercise 3. Answer all questions independently. Data from Exercise 3: Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:

> Refer to the data given in Exercise 3. Answer all questions independently. Data given in Exercise 3: Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as foll

> Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials …………………………………………………………………… $7.00 Direct labor……………

> Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold……………………………………………………………………………. 20,000 Selling price per unit…………………………………………………………………………………. $30 Variable selling expense per unit………………………………………………………………

> Miller Company’s contribution format income statement for the most recent month is shown below: Required: 1. What is the revised net operating income if unit sales increase by 15%? 2. What is the revised net operating income if the sel

> Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Fixed expenses total $183,750 per month. Required: 1. Prepare a

> Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since intr

> Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation: “Wes, I’m not sure how to go about answering the questions that came up at the meetin

> “Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $2,000. It seems we’re either too high to get the job or

> “Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $2,000. It seems we’re either too high to get the job or

> The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 2,000 sets per year. Annual cost data at full capacity follow: Direct labo

> The Excel worksheet form that appears below is to be used to recreate portions of the Review Problem relating to Voltar Company. Download the workbook containing this form from Connect, where you will also receive instructions about how to use this works

> This exercise relates to the Double Diamond Skis’ Shaping and Milling Department that was discussed earlier in the chapter.The Excel worksheet form that appears below consolidates data from Exhibits 4–5 and 4â&#1

> The Excel worksheet form that appears below is to be used to recreate part of the example relating to Turbo Crafters that appears earlier in the chapter. Download the workbook containing this form You should proceed to the requirements below only after

> This Excel worksheet relates to the Dickson Company example that is summarized in Exhibit 2–5. Download the workbook containing this form from Connect, where you will also find instructions about how to use this worksheet form. Exhibit

> This Excel worksheet form is to be used to recreate Exhibit 1–7. Download the workbook containing this form from Connect, where you will also receive instructions. Required: 1. Check your worksheet by changing the variable selling cost

> The Ramon Company is a manufacturer that is interested in developing a cost formula to estimate the variable and fixed components of its monthly manufacturing overhead costs. The company wishes to use machine-ho The company leases all of its manufacturi

> Mercury, Inc., produces cell phones at its plant in Texas. In recent years, the company’s market share has been eroded by stiff competition from overseas. Price and product quality are the two key areas in which companies compete in thi

> Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of goods sold .................

> The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correl

> Archer Company is a wholesaler of custom-built air-conditioning units for commercial buildings. It gathered the following monthly data relating to units shipped and total shipping expense: Required: 1. Prepare a scattergraph using the data given above.

> Refer to the data for Highlands Company. Assume that the company uses the FIFO method in its process costing system. Required: 1. Compute the number of tons of pulp completed and transferred out during June. 2. Compute the equivalent units of production

> Refer to the data for Pureform, Inc., in Exercise 4–9. Exercise 4–9: Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data

> Refer to the data for Alaskan Fisheries, Inc., in Exercise 4–10. Exercise 4–10: Alaskan Fisheries, Inc., processes salmon for various distributors and it uses the weighted-average method in its process costing system.

> MediSecure, Inc., uses the FIFO method in its process costing system. It produces clear plastic containers for pharmacies in a process that starts in the Molding Department. Data concerning that department’s operations in the most recent period appear be

> Brooks Corporation uses a job-order costing system to apply manufacturing costs to jobs. The company closes its underapplied or overapplied overhead to cost of goods sold. Its balance sheet on March 1 is as follows: During March the company completed th

> What is the meaning of margin of safety?

> Star Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1 are given below. Because the videos differ in length and in complexity of production, the company uses a

> What is the meaning of break-even point?

> What is the meaning of operating leverage?

> What is the meaning of contribution margin ratio? How is this ratio useful in planning business operations?

> Assume that a company has two processing departments—Mixing followed by Firing. Explain what costs might be added to the Firing Department’s Work in Process account during a period.

> How do you compute the unadjusted cost of goods sold?

> How do you compute the cost of goods manufactured?

> How do you compute the total manufacturing costs within a schedule of cost of goods manufactured?

> How do you compute the raw materials used in production?

> What is underapplied overhead? Overapplied overhead?

> Stillicum Corporation makes ultra-light weight backpacking tents. Data concerning the company’s two product lines appear below: The company has a traditional costing system in which manufacturing overhead is applied to units based on di

> A number of terms relating to the cost of quality and quality management are listed below: Appraisal costs ……………………………………………………………… Quality circles Quality cost report …………………………………………………………… Prevention costs Quality of conformance ………………………………………………………

> Describe the terms (a) “control premium” and (b) “illiquidity discount” when discussing possible external or outside buyers of a venture.

> What is an employee stock option plan (ESOP)? How is an ESOP used to buy out a venture?

> What is foreclosure?

> What is meant by loan default? Also, describe (a) an acceleration provision and (b) a cross-default provision.

> What is the purpose of the U.S. Bankruptcy Code? What are some of the characteristics of ventures that use instead of private liquidation?

> Describe a venture bankruptcy. Also, indicate the difference between (a) a voluntary bankruptcy petition and (b) an involuntary bankruptcy petition.

> What is bankruptcy and how is it used by ventures?

> What are the steps or stages in a “typical” execution and time line schedule used in planning and executing an IPO?

> Describe the absolute priority rule.

> What is a private liquidation? What does the process of assignment mean?

> What is a private workout? Also, describe some of the characteristics of ventures that are likely to engage in private workouts.

> What is a systematic liquidation of a venture? What are some of the advantages and disadvantages of a systematic liquidation?

> What is meant by initial public offering (IPO) underpricing?

> Describe the two following terms that may be involved in underwriting a new securities issue: (a) green shoe and (b) lockup provision.

> When an investment banking firm decides whether to underwrite or market a securities issue, what is meant by a firm commitment and best efforts?

> What is meant by due diligence? How does a traditional registration differ from a shelf registration?

> An insolvent venture is one where equity is negative and/or the cash flow of the firm is unable to meet debt obligations.

> Define asset restructuring and describe how it can be implemented to escape from financial distress.

> Define operations restructuring and describe how it can be implemented to escape financial distress.

> What do we mean when we say a venture is insolvent?

> Use the concept of cash flow insolvency over time and describe what would happen if the problem is temporary rather than permanent.

> Describe what is meant by (a) a leveraged buyout (LBO), and (b) a management buyout (MBO).

> Describe how the relative value method is used to value a firm’s equity.

> Describe an outright sale of a venture. What are the four categories of possible buyers?

> What are the three types or methods of restructuring available when trying to turn around financially troubled ventures?

> What is meant by financial distress?

> What evidence exists as to whether entrepreneurs think about and/or develop exit strategies?

> What is the meaning of harvesting a venture?

> Brian Motley founded the MiniDiscs Corporation at the end of 2011. After nearly one year of development, the venture produced an optical storage disk about the size of a silver dollar that could store more than 500 megabytes of data along with a mechani

> Endco is a wireless solutions provider that facilitates wireless Internet access through small remote devices that connect to portable computers. During the past several years, Endco was lavished with an abundance of equity financial capital from a vari

> EnCal is a small West Coast-based power company specializing in power generation methods that use clean burning fuels and renewable natural resources. However, due to complex and confusing power pricing structure, EnCal is reeling from the aftereffects

> Following are the financial statements for the Chenhai Manufacturing Corporation for 2015 and 2016. The venture is in financial distress and hopes to turn around its financial performance in the near future. CHENHAI MANUFACTURING CORPORATION *Note a ta

> It was shown earlier in the chapter that Eastland Industries was suffering from cash flow insolvency. Let’s assume that scenario 1 projects that year 3 and following years will be like the results incurred for year 2 where profitability is low and conti

> What are unicorns? How might their exit values be impacted when they go public?

> It was shown earlier in the chapter that Westland Industries was suffering from cash flow insolvency in terms of its earnings before interest, taxes, and depreciation (EBITDA). Two scenarios are possible for Westland in year 3. Scenario 1 suggests that

> It was shown earlier in the chapter that Northland Industries was suffering from balance sheet insolvency. Two scenarios are possible for Northland in year 3. In scenario 1, year 3 for Northland is expected to result in an additional $150,000 operating

> New information for the Gamma Systems Manufacturing Corporation has been brought to the management’s attention. Use the financial statement information in Problem 5 and take into consideration that sales will grow at a 15 percent rate in 2017 and a 10 p

> Assume that some of the information relating to the Gamma Systems Manufacturing Corporation has changed. Using the financial statement data, answer the following questions. A. How would your valuation estimate change if the sales growth rate had been 6

> The Gamma Systems Manufacturing Corporation has reached its maturity stage and its net sales are expected to grow at a 6 percent compound rate for the foreseeable future. Management believes that as a mature venture the appropriate equity discount rate

> Benito Gonzalez, founded and grew the BioSystems Manufacturing Corporation over a several year period. However, Benito has decided to exit BioSystems as of the end of 2016 with the intention of starting a new entrepreneurial venture. The Fuji Electron

> Describe the business model turnaround Necton undertook. Comment on what you think would have been the challenges and your perceptions about the likelihood the new business model will succeed.

> Briefly define the following terms: cram down procedure, debtor-in-possession financing, and prepackaged bankruptcy.

> Comment on Tesla’s trip from incorporating in 2003 to its IPO in 2010. What impact do you think the IPO had on competitors in the electric car market?

> Briefly describe the common pool and holdout problems that often make it necessary for a venture to enter into a court-supervised reorganization.