Question: Labor costs of an auto repair mechanic

> Addison Co. budgets production of 2,400 units during the second quarter. In addition, information on its direct labor and its variable and fixed overhead is shown below. For the second quarter, prepare (1) a direct labor budget and (2) a factory overhead

> Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It plans production of 240,000 units in the second quarter and 52,500 units in the third quarter. Raw material inventory is 43,200 pounds

> Health Co-op is an outpatient surgical clinic that wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinicâ&#1

> Singh and Smythe is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period. 1. Using ABC, compute the firm’s activity overhead rates. Form activity c

> Consider the following data for two products of Vigano Manufacturing. 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. 2. If the market price for Product A is $20

> Refer to the information in Exercise C-1 to answer the following requirements. 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each product line if the direct labor and direct materials cos

> Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and

> Google generates much of its revenue by providing online advertising. It is said that: “Activity-based costing is only useful for manufacturing companies.” Is this a true statement? Explain.

> Samsung must assign overhead costs to its products. Activity-based costing is generally considered more accurate than other methods of assigning overhead. If this is so, why do all manufacturers not use it?

> What is activity-based costing? What is its goal?

> Access Samsung’s 2013 Corporate Sustainability Report, from its website www.samsung.com. Identify and read the section “Social Responsibility: Making Contributions Around the Globe.” Required Samsung’s 2013 Corporate Sustainability Report notes that the

> Visit or call a local auto dealership and inquire about leasing a car. Ask about the down payment and the required monthly payments. You will likely find the salesperson does not discuss the cost to purchase this car but focuses on the affordability of t

> Read the chapter opener about Limor Fried and her company, Adafruit Industries. Suppose Limor’s business continues to grow, and she builds a massive new manufacturing facility and warehousing center to make her business more efficient and reduce costs.

> Break into teams and identify four reasons that an international airline such as Southwest or Delta would invest in a project when its direct analysis using both payback period and net present value indicate it to be a poor investment. Provide an example

> Many companies must determine whether to internally produce their component parts or to outsource them. Further, some companies now outsource key components or business processes to international providers. Access the website sourcingmag.com and review t

> Payback period, accounting rate of return, net present value, and internal rate of return are common methods to evaluate capital investment opportunities. Assume that your manager asks you to identify the type of measurement basis and unit that each meth

> A consultant commented that “too often the numbers look good but feel bad.” This comment often stems from estimation error common to capital budgeting proposals that relate to future cash flows. Three reasons for this error often exist. First, reliably p

> Apple and Google sell a variety of products, including smartphones and tablet computers. Some products are more profitable than others. Teams of employees in each company make advertising, investment, and product mix decisions. A certain portion of adver

> Assume Apple invested $2.12 billion to expand its manufacturing capacity. Assume that these assets have a 10-year life, and that Apple requires a 10% internal rate of return on these assets. Required 1. What is the amount of annual cash flows that Apple

> Selected product data from Samsung (www.samsung.com) follow. Required 1. Compute the percentage growth in net sales for each product line from fiscal year 2012 to 2013. Round percents to one decimal. 2. Which product line’s net sales

> Visit a local movie theater and check out both its concession area and its showing areas. The manager of a theater must confront questions such as: * How much return do we earn on concessions? * What types of movies generate the greatest sales? * What ty

> Brian Linton’s company, United By Blue, sells jewelry and apparel. His company plans for continued expansion into other types of products. Required 1. How can United By Blue use departmental income statements to assist in understanding and controlling o

> Apple and Samsung compete across the world in several markets. Required 1. Design a three-tier responsibility accounting organizational chart assuming that you have available internal information for both companies. Use Exhibit 24.1 as an example. The g

> This chapter described and used spreadsheets to prepare various managerial reports (see Exhibit 24-6). You can download from websites various tutorials showing how spreadsheets are used in managerial accounting and other business applications. Required

> Improvement Station is a national home improvement chain with more than 100 stores throughout the country. The manager of each store receives a salary plus a bonus equal to a percent of the store’s net income for the reporting period. T

> Super Security Co. offers a range of security services for athletes and entertainers. Each type of service is considered within a separate department. Marc Pincus, the overall manager, is compensated partly on the basis of departmental performance by sta

> Apple and Google compete in several product categories. Sales, income, and asset information is provided for fiscal year 2013 for each company below. Required 1. Compute profit margin for each company. 2. Compute investment turnover for each company. A

> Review Apple’s income statement in Appendix A and identify its revenues for the years ended September 28, 2013, September 29, 2012, and September 24, 2011. For the year ended September 28, 2013, Apple reports the following product reven

> Access the annual report of Samsung (at samsung.com) for the year ended December 31, 2013. The usefulness of its budgets, variances, and related analyses depends on the accuracy of management’s estimates of future sales activity. Required 1. Identify an

> Niner Bikes, as discussed in the chapter opener, uses a costing system with standard costs for direct materials, direct labor, and overhead costs. Two comments frequently are mentioned in relation to standard costing and variance analysis: “Variances are

> Access iSixSigma’s website (iSixSigma.com) to search for and read information about benchmarking to complete the following requirements. Required 1. Write a one-paragraph explanation (in layperson’s terms) of benchmarking. 2. How does standard costing

> The reason we use the words favorable and unfavorable when evaluating variances is made clear when we look at the closing of accounts. To see this, consider that (1) all variance accounts are closed at the end of each period (temporary accounts), (2) a f

> Setting materials, labor, and overhead standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to of

> The usefulness of budgets, variances, and related analyses often depends on the accuracy of management’s estimates of future sales activity. Required 1. Identify and record the prior three years’ sales (in dollars) for Apple and Google using their finan

> Analysis of flexible budgets and standard costs emphasizes the importance of a similar unit of measure for meaningful comparisons and evaluations. When Apple compiles its financial reports in compliance with GAAP, it applies the same unit of measurement,

> Access Samsung’s income statement (in Appendix A) for the business year 2013. Required 1. Is Samsung’s selling and administrative expenses budget likely to be an important budget in its master budgeting process? Explain. 2. Identify three types of expen

> To help understand the factors impacting a sales budget, you are to visit three businesses with the same ownership or franchise membership. Record the selling prices of two identical products at each location, such as regular and premium gas sold at Chev

> Solben sells technology to use in the production of biodiesel. Company founder Daniel Gómez Iñiguez stresses the importance of planning and budgeting for business success. Required 1. How can budgeting help Daniel efficiently develop and operate his bus

> Your team is to prepare a budget report outlining the costs of attending college (full-time) for the next two semesters (30 hours) or three quarters (45 hours). This budget’s focus is solely on attending college; do not include personal items in the team

> Access information on e-budgets through The Manage Mentor website (themanagementor. com/kuniverse/kmailers_universe/finance_kmailers/cfa/budgeting2.htm). Read the information provided. Required 1. Assume the role of a senior manager in a large, multidiv

> The sales budget is usually the first and most crucial of the component budgets in a master budget because all other budgets usually rely on it for planning purposes. Required Assume that your company’s sales staff provides information on expected sales

> Both the budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a

> One source of cash savings for a company is improved management of inventory. To illustrate, assume that Apple and Google both have $1 billion per month in sales of one model of smartphone in Canada, and both forecast this level of sales per month for th

> Financial statements often serve as a starting point in formulating budgets. Review Apple’s financial statements in Appendix A to determine its cash paid for acquisitions of property, plant, and equipment in the current year and the budgeted cash needed

> Access and review Samsung’s website (www.samsung.com) to answer the following questions. Required 1. Do you believe that Samsung’s managers use single product CVP analysis or multiproduct break-even analysis? Explain. 2. How does the addition of a new p

> Multiproduct break-even analysis is often viewed differently when actually applied in practice. You are to visit a local fast-food restaurant and count the number of items on the menu. To apply multiproduct break-even analysis to the restaurant, similar

> Fast Yeti Custom Tees, launched by entrepreneurs Reid Lyle, Jordan Roudenis, and Ryan Montgomery, produces apparel products. The company has a diverse product line of T-shirts, hats, and polo shirts. Required 1. Identify at least two fixed costs that wi

> A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational

> Access and review the entrepreneurial information at Business Owner’s Toolkit [Toolkit.com]. Access and review its New Business Cash Needs Checklist (or similar worksheets related to controls of cash and costs) under the “Start Up” link. (Look under the

> Both Apple and Google sell electronic devices like phones and computers, and each of these companies has a different product mix. Required 1. Assume the following data are available for both companies. Compute each company’s break-even point in unit sal

> Apple offers extended service contracts that provide repair coverage for its products. As you complete the following requirements, assume that Apple’s repair services department uses many of the company’s existing resources such as its facilities, repair

> Samsung, Apple, and Google are competitors in the global marketplace. Selected data for Samsung follow. Required 1. Review the discussion of the importance of the cost of goods sold divided by total expenses ratio in BTN 20-2. Compute the cost of goods

> In process costing, the process is analyzed first and then a unit measure is computed in the form of equivalent units for direct materials, conversion (direct labor and overhead), and both types of costs combined. The same analysis applies to both manufa

> This chapter’s opener featured Nick Nicolay and his company Kar’s Nuts. Required 1. Kar’s Nuts uses three processes: roasting, blending, and packaging. What are some benefits of using separate process cost summary reports for each process? 2. Nick tries

> The purpose of this team activity is to ensure that each team member understands process operations and the related accounting entries. Find the activities and flows identified in Exhibit 20.14 with numbers 1 – 10. Pick a member of the

> Many companies acquire software to help them monitor and control their costs and as an aid to their accounting systems. One company that supplies such software is proDacapo (prodacapo.com). There are many other such vendors. Access proDacapo’s website, c

> You hire a new assistant production manager whose prior experience is with a company that produced goods to order. Your company engages in continuous production of homogeneous products that go through various production processes. Your new assistant e-ma

> Many accounting and accounting-related professionals are skilled in financial analysis, but most are not skilled in manufacturing. This is especially the case for process manufacturing environments (for example, a bottling plant or chemical factory). To

> Manufacturers such as Apple and Google usually work to maintain a high-quality and lowcost operation. One ratio routinely computed for this assessment is the cost of goods sold divided by total expenses. A decline in this ratio can mean that the company

> Apple reports in notes to its financial statements that, in addition to its products sold, it includes the following costs (among others) in cost of sales: customer shipping and handling expenses and warranty expenses. Required 1. Why do you believe App

> Apple and Samsung are competitors in the global marketplace. Apple’s and Samsung’s financial statements are in Appendix A. Required 1. Determine the change in Apple’s and Samsung’s inventories for the most recent year reported. Then identify the impact

> Job order costing is frequently used by home builders. Required 1. You (or your team) are to prepare a job cost sheet for a single-family home under construction. List four items of both direct materials and direct labor. Explain how you think overhead

> Refer to the chapter opener regarding Quintin Middleton and his company, Middleton Made Knives. All successful businesses track their costs, and it is especially important for start-up businesses to monitor and control costs. Required 1. Assume that Mid

> Many contractors work on custom jobs that require a job order costing system. Required Access the website AMSI.com; click on “Construction Management Software,” and then on “starbuilder.” Prepare a one-page memorandum for the CEO of a construction compa

> Assume that you are preparing for a second interview with a manufacturing company. The company is impressed with your credentials but has indicated that it has several qualified applicants. You anticipate that in this second interview, you must show what

> An accounting professional requires at least two skill sets. The first is to be technically competent. Knowing how to capture, manage, and report information is a necessary skill. Second, the ability to assess manager and employee actions and biases for

> Manufacturers and merchandisers can apply just-in-time (JIT) to their inventory management. Both Apple and Google want to know the impact of a JIT inventory system for their operating cash flows. Review each company’s statement of cash flows in Appendix

> Apple’s financial statements and notes in Appendix A provide evidence of growth potential in its sales. Required 1. Identify at least two types of costs that will predictably increase as a percent of sales with growth in sales. 2. Explain why you believ

> Access Samsung’s 2013 annual report from its website (www.samsung.com). Like Apple, Samsung offers warranties on its products. Required 1. Access and read footnote 18, “Provisions,” included in Samsung’s 2013 annual report. What amount of warranty expen

> Visit your favorite fast-food restaurant. Observe its business operations. Required 1. Describe all business activities from the time a customer arrives to the time that customer departs. 2. List all costs you can identify with the separate activities d

> Eden Full of SunSaluter must understand manufacturing costs to effectively operate and succeed as a profitable and efficient business. Required 1. What are the three main categories of manufacturing costs Eden must monitor and control? Provide examples

> The following calendar-year information is taken from the December 31, 2015, adjusted trial balance and other records of Dahlia Company. Required 1. Each team member is to be responsible for computing one of the following amounts. You are not to duplic

> Managerial accounting professionals follow a code of ethics. As a member of the Institute of Management Accountants, the managerial accountant must comply with Standards of Ethical Conduct. Required 1. Identify, print, and read the Statement of Ethical

> Write a one-page memorandum to a prospective college student about salary expectations for graduates in business. Compare and contrast the expected salaries for accounting (including different subfields such as public, corporate, tax, audit, and so forth

> Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs, and DVDs. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because

> Both Apple and Google have audit committees as part of their boards of directors. Access each company’s website (investor.apple.com or investor.google.com) and read about the purpose of the audit committee. Required 1. From Apple’s website, select Leade

> Managerial accounting is more than recording, maintaining, and reporting financial results. Managerial accountants must provide managers with both financial and nonfinancial information including estimates, projections, and forecasts. An important estima

> Samsung (www.Samsung.com), which is a leading manufacturer of consumer electronic products, along with Apple and Google, are competitors in the global marketplace. Key figures for Samsung follow (in KRW millions). Required 1. Compute common-size percen

> You are to devise an investment strategy to enable you to accumulate $1,000,000 by age 65. Start by making some assumptions about your salary. Next compute the percent of your salary that you will be able to save each year. If you will receive any lump-s

> Assume that David and Tom Gardner of The Motley Fool (Fool.com) have impressed you since you first heard of their rather improbable rise to prominence in financial circles. You learn of a staff opening at The Motley Fool and decide to apply for it. Your

> A team approach to learning financial statement analysis is often useful. Required 1. Each team should write a description of horizontal and vertical analysis that all team members agree with and understand. Illustrate each description with an example.

> Access the February 21, 2014, filing of the December 31, 2013, 10-K report of The Hershey Company (ticker HSY) at www.SEC.gov and complete the following requirements. Required Compute or identify the following profitability ratios of Hershey for its yea

> As Beacon Company controller, you are responsible for informing the board of directors about its financial activities. At the board meeting, you present the following information. After the meeting, the company’s CEO holds a press con

> Key figures for Apple and Google follow. Required 1. Compute common-size percents for each of the companies using the data provided. (Round percents to one decimal.) 2. Which company retains a higher portion of cumulative net income in the company? 3.

> Refer to Apple’s financial statements in Appendix A to answer the following. 1. Using fiscal 2011 as the base year, compute trend percents for fiscal years 2011, 2012, and 2013 for net sales, cost of sales, operating income, other income (expense) net, p

> Visit The Motley Fool’s website (Fool.com). Enter the Fool’s School (at Fool.com/School). Identify and select the link “How to Value Stocks.” (This site might ask you to register with your email address; registration had been free and did grant access to

> Jenna and Matt Wilder are completing their second year operating Mountain High, a downhill C1 A1 ski area and resort. Mountain High reports a net loss of $(10,000) for its second year, which includes an $85,000 extraordinary loss from fire. This past yea

> Review the chapter’s opener involving LSTN and its entrepreneurial owner, Bridget Hilton. Required 1. In a business such as LSTN, monitoring cash flow is always a priority. Even though it is off to a successful start and is growing with a positive net i

> Team members are to coordinate and independently answer one question within each of the following three sections. Team members should then report to the team and confirm or correct teammates’ answers. 1. Answer one of the following questions about the st

> Access the March 31, 2014, filing of the 10-K report (for year ending December 31, 2013) of Mendocino Brewing Company, Inc. (ticker: MENB), at www.SEC.gov. Required 1. Does Mendocino Brewing use the direct or indirect method to construct its consolidate

> Your friend, Diana Wood, recently completed the second year of her business and just received annual financial statements from her accountant. Wood finds the income statement and balance sheet informative but does not understand the statement of cash flo

> Katie Murphy is preparing for a meeting with her banker. Her business is finishing its fourth year of operations. In the first year, it had negative cash flows from operations. In the second and third years, cash flows from operations were positive. Howe

> Key figures for Apple and Google follow. Required 1. Compute the recent two years’ cash flow on total assets ratios for Apple and Google. 2. What does the cash flow on total assets ratio measure? 3. Which company has the highest cash

> Key comparative information for Samsung (www.Samsung.com), which is a leading manufacturer of electronic consumer products, follows. Required 1. Compute the recent two years’ cash flow on total assets ratio for Samsung. 2. How does Sa

> Refer to Apple’s financial statements in Appendix A to answer the following. 1. Is Apple’s statement of cash flows prepared under the direct method or the indirect method? How do you know? 2. For each fiscal year 2013, 2012, and 2011, is the amount of ca

> Samsung, Apple, and Google are competitors in the global marketplace. Following are selected data from each company. Required 1. Compute Samsung’s return on total assets, and its components of profit margin and total asset turnover, f

> Refer to the opening feature in this chapter about Hannah Davis and her company, BANGS. Assume that the company must acquire the Japanese rights to the website BANGS, which will then be branded with its shoes for sale in Japan. Assume the company acquire

> Access the July 30, 2013, 10-K filing (for year-end June 30, 2013) of Microsoft (MSFT) at www.SEC.gov. Review its note 4, “Investments.” Required 1. How does the “cost-basis” total amount for its investments as of June 30, 2013, compare to the prior yea

> Assume that you are Jolee Company’s accountant. Company owner Mary Jolee has reviewed the 2015 financial statements you prepared and questions the $6,000 loss reported on the sale of its investment in Kemper Co. common stock. Jolee acquired 50,000 shares

> Kasey Hartman is the controller for Wholemart Company, which has numerous long-term investments in debt securities. Wholemart’s investments are mainly in five-year bonds. Hartman is preparing its year-end financial statements. In accounting for long-term