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. The firm now employs 3,500 production employees and 450 staff and management personnel in six large plants located across the United States. In the past few years, the growth of sales and profits has declined sharply, because of the entrance into the market of new competitors. As part of a recent strategic planning effort, JIC identified its key competitive strengths and weaknesses. JIC management believe that the critical strengths are in the quality of the product and that the weakness in recent years has been in customer service, particularly in meeting scheduled deliveries. The failure to meet promised delivery dates can be quite costly to JIC’s customers, because it is likely to delay the construction or upgrading of the customers’ plants and therefore delay the customers’ production and sales. JIC’s management believes that the adoption of the balanced scorecard for internal reporting might help the firm become more competitive. Required 1. Explain how the balanced scorecard might help a firm like JIC. 2. Develop a brief balanced scorecard for JIC. Give some examples of the items that might be included in each of these four parts of the scorecard: (a) customer satisfaction, (b) financial performance, (c) internal processes, and (d) learning and growth.
> Washington State Fisheries, Inc. processes salmon for various distributors. Two departments, processing and packaging, are involved. Data relating to tons of salmon sent to the processing department during May follow: Required: 1. Calculate the number
> Process costing is a good fit for companies in process industries in which costs are more easily traced to production departments than to individual products. The products are generally produced on a continuous, mass production basis. Process industries
> Second Republic Bank is a lending company that operates in the Southeastern United States. Current economic conditions have kept lending rates low which limits the revenue potential for Second Republic. The bank manager, Vivian Caldwell is concerned ab
> Garner Industries manufactures precision tools. The firm uses an activity-based costing system. CEO Deb Garner is very proud of the accuracy of the system in determining product costs. She noticed that since the installment of the ABC system 10 years ear
> Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Colleen Company sells its products at $200 per unit. The firm’s gross margin ratio is 25%. Both Jerry and Kate pay t
> The luxury hotel chain, Ritz-Carlton recently introduced a system called “Mystique” that collects information about its customers from employees and staff at the hotel. The information is used to personalize the services provided to each guest. For examp
> Studemeir Paint & Floors (SPF) is a retail store specializing in home improvement. The store has experienced net operating losses in its Other Flooring Products line during the last few periods. SPF’s management team thinks that the
> For problems 6-18 to 6-21, fill in the missing amount. Work-in-Process Inventory, February 1 80,000 units Work-in-Process Inventory, February 28 ? Units started during February 60,000 Units completed and transferred during February 75,000
> Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in the last few periods. Management believes that the store can improve its profitability if SFS discontinues frozen foods. The operating results from the m
> Activity-based costing is used widely within the U.S. government. One example is the Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS). APHIS helps to protect U.S. agriculture from exotic pests and diseases, to minimize wildl
> The Lindex General Hospital has determined the activities of a nurse including the following: a. Report for duty and review patient charts b. Visit each patient and take her/his temperature c. Update patients’ records d. Coordinate lab and radiology e
> North Company designs and manufactures machines that facilitate DNA sequencing. Depending on the intended purpose of each machine and its functions, each machine is likely to be unique. The job costing system in its Norfolk plant has five activity cost p
> Lexan Textile Company’s Job X12 had one of its 20 units spoiled. The cost incurred on the unit was $600. It was specific normal spoilage with an estimated disposal price of $300 for the spoiled unit. Job Y34 had common normal spoilage with the estimated
> Progressive Painting Company (PPC) is a successful company in commercial and residential painting. PPC has a variety of jobs: new construction, repair and repainting of existing structures, and restoration of very old buildings and homes. The company is
> Norton Associates is an advertising agency in Austin, Texas. The company’s controller estimated that it would incur $325,000 in overhead costs for the current year. Because the overhead costs of each project change in direct proportion to the amount of d
> Tomek Company uses a job costing system that applies factory overhead on the basis of direct labor hours. The company’s factory overhead budget for the current year included the following estimates: Budgeted total factory overhead ………………………………. $568,000
> Whitley Construction Company is in the home remodeling business. Whitley has three teams of highly skilled employees, each of whom has multiple skills involving carpentry, painting, and other home remodeling activities. Each team is led by an experienced
> Johnson Inc. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 95,000 and estimated factory overhead is $6
> The materials handling charge for ABC Corp. is $0.50 per pound of finished product. What is the materials handling charge for a job that produced 10,000 units at a weight of 6 pounds per unit?
> Alles Company uses a job costing system that applies factory overhead on the basis of direct labor dollars. No job was in process on February 1. During the month of February, the company worked on these three jobs: During the month, the company complet
> Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine-hours. At the beginning of the year, management estimated that the company would incur $1,980,000 of factory overhead costs and use 66,000 m
> Papa’s Pizza Heaven serves take-out pizza from three locations in Columbus, Maryland. Papa’s considers each pizza delivered (even if the order is for two or more pizzas) as the cost object for the company. The company incurs the following costs: 1. Food
> Pet Partner is a small company that provides per boarding, grooming and minor medical services for dogs and cats. The company has been successful for its first three years because of its careful attention to customer expectations. The staff knows the
> Company A has 50% of its total variable manufacturing cost in labor and the other 50% in fuel cost. Company B has 80% of its total variable manufacturing cost in labor and the remainder in fuel cost. Suppose in a given year labor costs rise 5% and fuel c
> The American Institute of CPAs (AICPA) and the Hackett Group, a consulting firm, partnered to study the trends in the nature and amount spent on the accounting function in corporations. A key finding was that the world’s best accounting
> Billy Bob's Manufacturing had the following data for the fiscal year ended December 31. Direct Materials Inventory, January 1 ……………………………….. $ 30,000 Direct materials purchases ………………………………………………… 350,000 Direct materials used ……………………………………………………….. 34
> Zipcar (www.zipcar.com) is a car sharing club founded in Cambridge, MA in 1999. The club members pay an annual fee and then have the opportunity to rent from a pool of available cars for a fixed hourly or daily rate. Zipcar is located largely in select m
> Habib Manufacturing has five manufacuring departments and operating and cost information for the two most recent months of activity. Required: Identify whether the cost in each department is fixed, variable, or mixed.
> Adams Manufacturing’s five manufacturing departments had the following operating and cost information for the two most recent months of activity: Required: Identify whether the cost in each department is fixed, variable, or mixed.
> Locke Data Processing reported expenses of $5 million for labor, of which $3 million was for data analysis and $2 million was for data entry. Locke recorded 30,000 hours of data analysis and 100,000 hours of data entry. What are the activity-based rates
> PhotoGraphicImages, Inc (PGI) is an international supplier of graphic and digital photo images that are used in the publishing business and by a variety of firms that need graphic images for their annual reports, sales brochures and other documents. PGI
> Jan Holliday Dance Studios is a chain of 45 wholly owned dance studios that offer private lessons in ballroom dancing. The studios are located in various cities throughout the southern and southeastern states. Holliday offers a set of 12 private lessons;
> The Accounting Club wants to have a party for its members. The cost of renting a space is $1,500, and the cost of refreshments will be $15 per person. Required 1. What is the total cost if 100 people attend? What is the average cost? 2. What is the tota
> To retain skilled employees instead of letting them go when demand falls, Lincoln Electric trains employees for other tasks in the company. The Cleveland-based manufacturer of welding and cutting parts has integrated the approach in all its operations, s
> Jane Wilson is the production manager for a company that produces high-fashion designer clothing for women. The product is made in small batches, which are pre-sold to high-end retailers, based on specific orders. Jane manages the flow of small batches o
> Zeller Manufacturing Company produces four lines of high-quality lighting fixtures in a single manufacturing plant. Products are built to specific customer specifications. All products are made-to-order. Management of the plant lists the following as the
> The following is a list of costs from the accounting records of Sunshine Pool Management, Inc. Each of Sunshine’s 77 customers is a swin club. Sunshine maintains each customer’s pool by providing supplies, cleaning, and repairs. 1. Lifesaving supplies
> Speedy Auto Service provides oil changes, tire repair/replacement, and minor repairs from 12 different locations in Wadesborough, Pennsylvania. The technicians who replace the oil and parts (mostly windshield wipers, air filters, and the like) are paid f
> Seventh Generation, Inc. (SGI) manufactures environmentally-friendly cleaning products, including laundry detergent, soap, and all-purpose cleaners. Prior to 2008, SGI would not do business with Wal-Mart, because of the perception of a poor environmental
> One way the value chain can be helpful is to provide a basis for a company to determine the full cost of its product or service, over the entire value chain. Often companies tend to focus only on manufacturing costs and ignore the upstream (design and te
> Haywood Printing is processing a job with the following activity rates: If this job requires 5 hours for 1,000 copies, what is the activity-based cost of the job?
> A recent report of the consulting firm McKinsey & Company indicates that about one-half of all corporate alliance fail. These alliances are partnerships in which the two corporations participate in one or more of the activities in the industry value chai
> In 2011–2013, Brazil’s economy was flourishing in many dimensions, except for a significant and worsening trade deficit with China in 2011–2012. The root of the problem was that the value of the Brazilian currency (the real) had increased by 10% relative
> Joel Deaine, CEO of Deaine Enterprises, Inc. (DEI), is considering a special offer to manufacture a new line of women’s clothing for a large department store chain. DEI has specialized in designer women’s clothing sold in small, upscale retail clothing s
> Like myself, perhaps you love a good cup of coffee. Suppose that you do, and you have the following information about the company that makes the coffee you are considering. You are selecting a pound bag of coffee and you can choose to pay anywhere from $
> HighTech, Inc., manufactures computer chips and components. High-Tech has just introduced a new version of its memory chip, which is far faster than the previous version. Because of high product demand for the new chip, the testing process has been thoro
> 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
> 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
> 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?
> 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:
