If the end-of-period balance for Cost of Goods Sold is $90,000 and underapplied overhead is $10,000, what is the ending balance in the Cost of Goods Sold account after adjusting for the underapplied overhead?
> Ian Walsh has just been hired as a management accountant for a large manufacturing firm near his hometown of Canton, Ohio. The firm manufactures a wide variety of plastic products for the automobile industry, the packaging industry, and other customers.
> A consulting firm offering a broad range of services will soon visit your college to recruit graduates. This firm has more than 20,000 professional staff in 275 offices of 11 different countries. Most of its clients are large corporations in a variety of
> A large U.S.–based commercial bank with global operations recently initiated a new program for recruiting recent college graduates into the financial function of the bank. These new hires will initially be involved in a variety of financial functions, in
> Johnson Industrial Controls, Inc. (JIC), is a large manufacturer of specialized instruments used in automated manufacturing plants. JIC has grown steadily over the past several years on the strength of technological innovation in its key product lines. T
> Tim Johnson is a news reporter and feature writer for The Wall Street Review, an important daily newspaper for financial managers. Tim’s assignment is to develop a feature article on target costing, including interviews with chief financial officers and
> Stackhouse Computing produces high performance desktop computers. Labor cost data show that the company spent $1,000,000 for 5,000 computers produced, and each computer requires 2 technician hours and 5 hours of direct labor. Direct labor is paid $10 per
> Jane Englehard is a feature writer for National Business Weekly . Her assignment is to develop a feature article on enterprise risk management. Her editor has asked her to research the available literature, including the Institute of Management Accountan
> The Yee-Haw Pickle Company in Park City, Utah has grown in four years to supply 600 retailers nationally. The products include pickles and pickled green beans. Yee-Haw's products are unique for their unusual ingredients, such as wildflower honey. The own
> As a management accountant in a small real estate services firm, you have become aware of a strategic initiative in your firm to promote its services to a new class of customers. Currently, most of your firm’s customers lease space in large office buildi
> Following is a list of costs from Oakland Company, a furniture manufacturer: 1. Wood used in chairs 2. Salaries of inspectors 3. Lubricant used in machinery 4. Factory rent 5. Wages of assembly workers 6. Workers’ compensation insurance 7. Sandpaper 8.
> The following costs were taken from the accounting records of the Barnwell Manufacturing Company: 1. State income taxes 2. Insurance on the manufacturing facilities 3. Supplies used in manufacturing 4. Wages for employees in the assembly department 5.
> The following are the costs incurred by a printing company. 1. Print machine setup costs 2. Cost of complexity due to the number and variety of products 3. Costs to train new printing staff in the use and safety features of the equipment 4. Ink 5. Custo
> In the mid-1990s, a large consumer goods manufacturer moved its customer-based department and specialty stores to mass merchandising in a a variety of retail stores, large and small. The strategic change required it to increased significantly the complex
> Navigating the various Web sites for low fares, avoiding fees for checked bags and priority seating, and finding the right flight schedule can be a real challenge for the average airline passenger. The complexity of options and sources for purchasing a t
> Required: The following is a list of websites for a number of companies. Briefly describe each company and indicate whether it is more likely to use job costing or process costing. Explain why in each case. Also explain why you think each company (a) is
> Required: The following is a list of websites for a number of companies. Briefly describe each company and indicate whether it is more likely to use job costing or process costing. Explain why in each case. Also explain why you think each company (a) is
> Williams Performance Co. manufactures sports cars. After making a sale, the salesperson sends the car to be detailed before the customer takes it home. Detailing the car takes 30 minutes at a cost of $15 per hour for direct labor and $5 per car for mater
> Hakara Company has been using direct labor costs as the basis for assigning overhead to its products. Under this allocation system product A has been assigned overhead of $10.80 per unit while produce B has been assigned $3.60 per unit. Management feels
> Fleet Street Inc., a manufacturer of high fashion clothing for women, is located in South London. Its product line consists of trousers (45%), skirts (35%), dresses (15%), and other (5%). Fleet Street has been using a volume-based rate to assign overhead
> Steve's Slop Shop, a small hamburger shop, has identified the resources used in its operations: (assume each customer’s order is a batch for this example): a. Bread b. Hourly workers that cook hamburgers c. Store rent d. Ground beef e. Catsup f. Advertis
> Shroeder Machine Shop has the following activities: a. Machine operation b. Machine setup c. Production scheduling d. Materials receiving e. Research and development f. Machine maintenance g. Product design h. Parts administration i. Final inspection of
> Laurent Products is a manufacturer of plastic packaging products with plants located throughout Europe and customers worldwide. During the past ten years Laurent Products has successfully developed a line of packaging materials and a unique bagging syste
> Using the information in Exercise 20-38 for Yum! Brands, determine the estimated valuation of the company at the end of 2019 using each of the following three methods (round answers to the nearest whole dollar). Assume earnings and cash flows for the com
> Consider the following balance sheet and income statement for Yum! Brands Inc. (the company that operates Kentucky Fried Chicken and Pizza Hut), in condensed form, including some information from the cash flow statement: Required: 1. Calculate the fol
> Consider the following balance sheet and income statement for Metro Eagle Outfitters, in condensed form, including some information from the cash flow statement: Required: Calculate the following liquidity ratios for Metro Eagle in 2021 and 2022: 1. In
> Five different analysts have submitted valuations for a private technology firm that is the subject of a possible acquisition. The valuations are as follows: Analyst ……………………….. Valuation 1 ……………………………. $ 26,331,000 2 ……….……….……………. 38,803,000 3 ………..……
> Refer to the information in Exercise 20-34. Required: 1. Calculate free cash flow at Williams Company for each of the two years. 2. Develop a business valuation for Williams Company for 2022 using the following methods: (1) book value of equity, (2) m
> Orange Inc. grows and ships cabbage. It costs Orange $5 to put together each package for shipment and $0.10 to clean and process each cabbage. How much more does it cost to produce an order for 60 heads of cabbage than an order of 50 heads?
> Williams Company is a manufacturer of auto parts having the following financial statements for 2021–2022. Required: Calculate and interpret the financial ratios (see Exhibit 20.9) for Williams for both years. Because the calculation
> The executive compensation programs of the largest public companies often include the types of equity-based compensation such as stock options and performance shares described in this chapter. Smaller nonpublic companies often have the same types of stra
> Bill George, a Harvard Business School professor, notes the increasing lack of trust many now have for the executive compensation plans in place in many corporations. He suggests six policies that, if followed by regulators and the compensation committee
> There are three components to a bonus plan: the base of the bonus compensation (earnings, revenues, etc.), the bonus pool (firm- or unit-based), and the payment options (cash, stock options). It is common in many industries, including the financial servi
> Ben Johnson is the manager of the jewelry department of a large chain of department stores. The department store has succeeded on the basis of customer service and quality of merchandise. As a manager, Ben is compensated with a salary of $200,000 and a b
> Heartwood Furniture Corporation has a line of sofas marketed under the name NightTime Sleepers. Heartwood management is considering several compensation packages for Amy Johnson, NightTime’s general manager. Amy’s duties include making all investing and
> Jill Lewis is the office manager of PureBreds Inc. Her office has 30 employees whose collective job is to process applications by dog owners who want to register their pets with the firm. There is never a shortage of applications waiting to be processed,
> ADM Inc., an electronics manufacturer, uses growth in earnings per share (EPS) as a guideline for evaluating executive performance. ADM executives receive a bonus of $5,000 for every penny increase in EPS for the year. This bonus is paid in addition to f
> Anne-Marie Fox is the manager of a boat dealership. She has decided to reevaluate the compensation plan offered to her sales representatives to determine whether the plan encourages the dealership’s success. The representatives are paid no salary, but th
> Jackson Supply Company is a publicly owned firm that serves the medical supply needs of hospitals and large medical practices in six southeastern states. The firm has grown significantly in recent years as the areas it serves have grown. Jackson has focu
> When overhead is overapplied, is the balance of Cost of Goods Sold, before adjustment, too low or too high? Why?
> Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers. The manufacturing subsidiary has total manufacturing costs of $1,500,000, plus general and administrative expenses of $350,000. The ma
> Using the facts from Exercise 19-32, assume that division B can sell 10,000 units outside the company for $215 per unit with variable marketing costs of $10. Required: Should division B sell outside or to division A? Explain. Exercise 19-32: Truball In
> Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials because division B plans to increase its selling price for the same materials to $200. Informati
> Scottsdale Manufacturing is organized into two divisions: Fabrication and Assembly. Components transferred between the two divisions are recorded at a predetermined transfer price. Standard variable manufacturing cost per unit in the Fabrication Divisio
> When transfer prices are based on actual cost, a supplying division often has no incentive to reduce cost. For example, a design change that would reduce the supplying division’s manufacturing cost would benefit only downstream divisions if the transfer
> The Boston Consulting Group identified the world’s 50 most innovative companies. The rankings are based on a survey of senior executives, as well as financial metrics such as total shareholder return (a measure that incorporates stock price change and di
> A paper published in the Harvard Business Review points out a new way to calculate economic profit that could be more appropriate for service firms and other people-intensive companies. Instead of focusing on investment and return on investment, the focu
> Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions (investment centers): soap products, skin lotions, and hair products. Information about the most recent year’s operations follows. Th
> Consider the following data (in millions) from Trident Financial Inc., which has two main divisions, mortgage loans and consumer loans: Required: 1. Based on ROI, which division is more successful? Why? 2. Trident uses residual income (RI) as a measure
> As indicated in the chapter, return on investment (ROI) is well entrenched in business practice. However, its use can have negative incentive effects on managerial behavior. For example, assume you are the manager of an investment center and that your an
> Which is the most important function of management? Explain why.
> Schwenn Products, a bicycle manufacturer, uses normal volume as the basis for setting prices. That is, it sets prices on the basis of long-term volume predictions and then adjusts these prices only for large changes in pay rates or materials prices. You
> Liz Raiborn Inc. has the following financial results for the years 2022 through 2024 for its three regional divisions: Required: Calculate return on sales (ROS), asset turnover (AT), and return on investment (ROI) for each division and also for the fir
> Alex Chunn Inc. has the following financial data for 2022 for its three regional divisions: Required: Prepare an Excel spreadsheet that will calculate return on sales (ROS) for each division for 2022. The sales in the North Atlantic, Mid Atlantic, and
> Fill in the blanks:
> Tartan Corporation has been manufacturing high-quality home lighting systems for more than 90 years. The company’s first products in the 1920s—the Classic line—were high-quality floor lamps and table
> Fowler’s Farm is a 1,000-acre dairy and tobacco farm located in southern Virginia. Jack Fowler, the owner, has been farming since 1982. He initially purchased 235 acres and has made the following purchases since then: 300 acres in 1985, 150 acres in 1988
> Consumers, employers, and governments at all levels are very concerned about the rising costs of health care. As a result, health care systems nationwide are experiencing an ongoing demand to improve the efficiency of their operations. The health care in
> Mark Hancock Inc. manufactures a specialized surgical instrument called the HAN-20. The firm has grown rapidly in recent years because of the product’s low price and high quality. However, sales have declined this year primarily due to
> Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $55 per unit and STI had sales of
> Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Required: (Round calculations to the nearest dollar) 1.
> Assume that actual overhead is $613,000 in a given year, the overhead rate is $10 per unit, 60,000 units were sold, and 59,000 units were produced. For the end of the year, is overhead underapplied or overapplied? By how much?
> Start Me Up, Inc., manufactures a caffeinated energy drink that sells for $4 each. The results for its first year of operations appear in the table below: Number of drinks produced ………………………………... 52,000 Number of drinks sold ………………………………………... 50,000 D
> Kate’s Kale Chips produces a healthy snack made primarily of kale. Each bag of the product sells for $5. The company computes the manufacturing overhead rate on a quarterly basis based upon the planned number of units to be produced that quarter. The fol
> Woodland Hotels Inc. operates four resorts in the heavily wooded areas of northern California. The resorts are named after the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to
> Some states in the United States are encountering increased pressure from citizen groups and other organizations to increase efforts to reduce carbon emissions. One of the key producers of carbon emissions is the automobile, so some states have become mo
> Samentech Inc. operates in the highly competitive agribusiness industry. Recently, rising fuel costs have added a significant financial burden to day-to-day operations, and top management has become increasingly concerned about the financial performance
> Effective use of research and development (R&D) is an important part of any firm’s competitive strategy. Some firms take an “incrementalist” approach to R&D, continually striving to add value to their products and services. Other firms take a quite diffe
> Intangibles such as customer relationships can account for a massive amount of the total assets of firms in the United States, though such assets are not recorded on firms’ balance sheets under current U.S. accounting standards. The importance of nonfina
> Suppose there are three passengers sharing a single cab ride and that passenger A’s usual fare to his destination would be $12, passenger B’s usual fare to her destination would be $18, and passenger C’s fare would be $30. Because they are sharing the ca
> Some years ago, Walmart’s Sam’s Club outsourced 10,000 jobs (about 9% of its workforce) to independent marketing firms. The marketing firms provide in-store product demonstrations. Most of the 10,000 jobs were part-time jobs. Industry analysts suggested
> The management of office printing, duplicating, filing, and overall document storage is one of the most significant overhead costs in many companies, especially companies with large and complex product lines and/or a diverse customer base, such as the la
> For the current year BSJ Industries estimated overhead would be $1,400,000 and there would be 70,000 machine hours. Using machines hours as the allocation base, how much overhead would be assigned to each of the jobs listed below? Job ………………………………….. Ma
> Kristen Langdon, the sales manager at a large bicycle manufacturer, has secured an order from a major department store that is due to ship on November 1. She is eager to please the department store in the hope of getting more future business. She asks Br
> General Hospital leases its diagnostic equipment from Normed Leasing, which is also responsible for maintaining the equipment. Recently, the hospital’s MRI machine needed repair and physicians were required to order expensive nonemergency laboratory test
> Wical Rental Management Services manages four apartment buildings, each with a different owner. Wical’s CEO has observed that the apartment buildings with more expensive rental rates tend to require more of her time and also the time of
> Chilton Day School allocates marketing and administrative costs to its three schools on the basis of each school’s annual tuition revenue (as a percentage of the total). Last year the allocations (000s omitted) were as follows: In the
> Elvis Wilbur owns two restaurants, the Beef Barn and the Fish Bowl. Each restaurant is treated as a profit center for performance evaluation. Although the restaurants have separate kitchens, they share a central baking facility. The principal costs of th
> Training courses and other forms of professional development are commonly used by organizations to improve managers’ effectiveness in leading teams, providing the desired motivation to their employees, and leading their SBUs to success. Often these train
> When the economic outlook becomes uncertain, some managers look to cut costs in research and development to provide a short-term boost to profits. The problem with this strategy is that it reduces the opportunities for new products and product improvemen
> John Holt is the production supervisor for ITEXX, a manufacturer of plastic parts with customers in the automobile and consumer products industries. On a Tuesday morning, one of ITEXX’s sales managers asks John to reschedule his manufacturing jobs for th
> John Smith is the production manager of Elmo’s Glue Company. Because of limited capacity, the company can produce only one of two possible products. The two products are: a. A space-age bonding formula that has a 15% probability of making a profit of $1,
> Marshall Company is a large manufacturer of office furniture. The company has recently adopted lean accounting and has identified two value streams—office chairs and office tables. Total sales in the most recent period for the two strea
> Use the following information from BSJ Industries to determine the predetermined overhead rate based on direct labor costs. Direct labor hours ……………………………………… 50,000 Average hourly pay rate …………………………..…… $16.00 Manufacturing overhead ………………………. $1,400,
> Watlow Electric Manufacturing Company introduced lean principles in 2005 and reported a successful implementation in 2008. Watlow began with the implementation of lean principles and then adopted value-stream management (VSM) using the value-stream incom
> Much discussion at your organization recently has centered on the notion of lean. In preparation for an upcoming meeting of senior managers across business functions, you have been asked to prepare an explanatory memo. Your memo should address, at a mini
> All processes illustrate some variation (in quality, conformance to specification, etc.). One hallmark of a quality process is stability. As noted in the text, both control charts and run charts (as well as histograms) can be used to examine process stab
> Refer to the background information in Exercise 17-54 for the Destin Company. Based on customer requirements for on-time delivery, management has determined that the target performance level for manufacturing cycle time is 14.0 minutes with a tolerance o
> The following causes of absenteeism for a fellow student are for the year just completed: Cause of Absenteeism ………………………… Occurrences Personal illness ………………………………………………… 12 Child’s illness ………………………………………………….. 26 Car broke down ………………………………………………… 8 P
> Grey Company is evaluating two manufacturing process layout options, each of which has the following characteristics for producing a batch of output: Required: (Note: In responding to the following questions, it may be helpful to refer back to Exhibit
> Cope Farm Equipment has recently conducted market research regarding a number of issues, including customer loyalty and customer satisfaction. In regard to the latter, Cope obtained the following responses to the question, “How likely is it that you woul
> ABC Mfg. is evaluating the desirability of implementing process improvements and is seeking your help in determining whether it should proceed with the proposed improvements. One area of focus is how the improvements will affect processing time (manufact
> Assume that the company for which you are working is interested in implementing a comprehensive monitoring and control system regarding environmental performance. The company is convinced that improved performance in this area will lead to reduced costs,
> Destin Company produces water control valves, made of brass, that it sells primarily to builders for use in commercial real estate construction. These valves must meet rigid specifications (i.e., the quality tolerance is small). Valves that, upon inspect
> The Walden Manufacturing Corp. has office support salaries of $4,000, factory supplies of $1,000, indirect labor of $6,000, direct materials of $16,000, advertising expense of $2,500, office expense of $14,000, and direct labor of $20,000. What is the to
> CVI Inc. had November sales totaling $4,200,000 and incurred the following quality-related costs: Spoiled work-in-process inventory disposal ……………………………… $28,000 Downtime, due to quality problems ……………………………………………. 24,000 Field test of new computer …………
> Pack-and-Go, a new competitor to FedEx and UPS, does intra-city package deliveries in seven major metropolitan areas. The performance of Pack-and-Go is measured by management as (1) delivery time (relative to budgeted delivery time), (2) on-time delive
> As part of its commitment to quality, the J. J. Borden manufacturing company is proposing to introduce just-in-time (JIT) production methods. Managers of the company have an intuitive feel regarding the financial benefits associated with a change to JIT,
> PIM Industries Inc. manufactures electronics components. Each unit costs $30 before the final test. The final test rejects, on average, 5% of the 50,000 units manufactured per year. The average rejection rate of the industry is 3%. A consultant has deter
> You are given the following environmental quality-related costs: Employee training ………………………………………………………………… $100,000 Product design ……………………………………………………………………….. 140,000 Supplier certification ………………………………………………………………… 40,000 Process inspection ………………
> This chapter includes an overview of a COQ reporting system. Such a system has, in fact, been applied in practice by a number of companies. This exercise pertains to the application of a COQ reporting framework to environmental management. Required: 1.
