Question: Myrick Woodcraft Company (MWC) manufactures

> Camden Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, Year 1. The company president formed a planning committee to prepare a master budget for the first thre

> A widely recognized financial trick known as the “big bath” occurs when a company makes huge unwarranted asset write-offs that drastically overstate expenses. Outside auditors (CPAs) permit companies to engage in the practice because the assets being wri

> Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 5 percent for peaches and 1

> Top executive officers of Tildon Company, a merchandising firm, are preparing the next year’s budget. The controller has provided everyone with the current year’s projected income statement. Cost of goods sold is usual

> Fayette Medical Clinic has budgeted the following cash flows. Fayette Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash balance of $10,000. Funds are assumed to be borrowed, in increments of $2,000, and repaid on

> Malcolm is a retail company specializing in men’s hats. Its budget director prepared the list of expected operating expenses that follows. All items are paid when incurred except sales commissions and utilities, which are paid in the mo

> Humboldt Inc. sells fireworks. The company’s marketing director developed the following cost of goods sold budget for April, May, June, and July. Humboldt had a beginning inventory balance of $1,800 on April 1 and a beginning balance in

> Spalding Pointers Corporation expects to begin operations on January 1, Year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Spalding expects sales in January Year 1 to total $120,000 and to increase 5 percent

> Amherst Corporation has three divisions, each operating as a responsibility center. To provide an incentive for divisional executive officers, the company gives divisional management a bonus equal to 15 percent of the excess of actual net income over bud

> The following information applies to the products of Corbett Company. Required Identify the product that should be produced or sold under each of the following constraints. Consider each constraint separately. 1. One unit of Product A requires two hours

> Frank Moran manages the cutting department of Greene Timber Company. He purchased a tree-cutting machine on January 1, Year 2, for $200,000. The machine had an estimated useful life of five years and zero salvage value, and the cost to operate it is $45,

> Bain Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company’s chief accountant recently prepared the following income statement showing an

> Green Lawn Mower Inc. recently acquired Hallit Engines, a small engine manufacturing company. Green’s president believes in decentralization and intends to permit Hallit to continue to operate as an independent entity. However, she has instructed the man

> The following transactions pertain to Year 1, the first year of operations of the Barlett Company. All inventory was started and completed during Year 1. Assume that all transactions are cash transactions. 1. Acquired $2,000 cash by issuing common stock.

> Lenox Manufacturing Co. produces and sells specialized equipment used in the petroleum industry. The company is organized into three separate operating branches: Division A, which manufactures and sells heavy equipment; Division B, which manufactures and

> Western Boot Co. sells men’s, women’s, and children’s boots. For each type of boot sold, it operates a separate department that has its own manager. The manager of the men’s departme

> Sturdy Bike Company makes the frames used to build its bicycles. During Year 2, Sturdy made 20,000 frames; the costs incurred follow. Unit-level materials costs (20,000 units × $35.00) $700,000 Unit-level labor costs (20,000 units × $42.50) 850,000 Unit-

> Townsend Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Townsend produces a relatively small amount (15,000 units) of the cream and is considering the purchase of the product fro

> Dalton Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Dalton made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summariz

> Continent Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Continent does not ha

> Respond to each requirement independently. 1. Describe two decision-making contexts, one in which unit-level materials costs are avoidable and the other in which they are unavoidable. 2. Describe two decision-making contexts, one in which batch-level set

> The following quality cost report came from the records of Willoughby Company. Table Summary: A table has 3 columns. Column 1 has entries. Column 2 has year 2. Column 3 has year 1. Columns 2 and 3 are divided into amount and percentage. Required 1. Expla

> Silva Chairs Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in t

> Bismarck Cameras Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Bismarck uses an activity-based costing system. The following are the relevant cost data for the previous month. Bismarck’s f

> Obtain Berkshire Hathaway’s (Berkshire) Form 10-K for the year ended December 31, 2019, and complete the following requirements. To obtain the Form 10-K, you can use the EDGAR system (see Appendix A at the back of this text for instructions), or it can b

> Horten Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to

> Apple Academy is a profit-oriented education business. Apple provides remedial training for high school students who have fallen behind in their classroom studies. It charges its students $750 per course. During the previous year, Apple provided instruct

> Compton Information Services Inc. has two service departments: human resources and billing. Compton’s operating departments, organized according to the special industry each department serves, are health care, retail, and legal services

> Clement Manufacturing Company uses two departments to make its products. Department I is a cutting department that is machine intensive and uses very few employees. Machines cut and form parts and then place the finished parts on a conveyor belt that car

> Harper Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 12,000 pounds of raw chicken t

> Russell Department Stores Inc. has three departments: women’s, men’s, and children’s. The following are the indirect costs related to its operations: Vacation pay Payroll taxes Sewer bill Paper rolls for cash registers Staples Medical insurance Natural g

> Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $7,500. The booth will be open 30 hours

> Velez Corporation estimated its overhead costs would be $50,000 per month except for January when it pays the $30,000 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $80,000 ($30,000 + $

> Camp Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $80,000 per year to inspect completed tents before they are shipped to customers. Assum

> Eagle Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail Inc. Never-Fail is a multimillion-dollar company started by Wes Never immediately after he failed to finish his first accounting

> Bellco, a division of Becker International Corporation, is operated under the direction of Antoin Sedatt. Bellco is an independent investment center with approximately $72,000,000 of assets that generate approximately $8,640,000 in annual net income. Bec

> The Huffman School of Vocational Technology has organized the school training programs into three departments. Each department provides training in a different area as follows: nursing assistant, dental hygiene, and office technology. The schoolâ&#

> Yalland Manufacturing Company makes two different products, M and N. The company’s two departments are named after the products; for example, Product M is made in Department M. Yalland’s accountant has identified the f

> Kidd Company produces two products. Budgeted annual income statements for the two products are provided as follows. Table Summary: A table has 4 columns. Column 1 has entries. Column 2 has power. Column 3 has lite. Column 4 has total. Power is divided in

> Vaughn Corporation sells hammocks; variable costs are $75 each, and the hammocks are sold for $125 each. Vaughn incurs $240,000 of fixed operating expenses annually. Required 1. Determine the sales volume in units and dollars required to attain a $60,000

> Trevino Company makes and sells products with variable costs of $24 each. Trevino incurs annual fixed costs of $315,000. The current sales price is $87. Required The following requirements are interdependent. For example, the $252,000 desired profit intr

> Cahill Company is considering adding a new product. The cost accountant has provided the following data. Expected variable cost of manufacturing $57 per unit Expected annual fixed manufacturing costs $216,000 The administrative vice president has provide

> Hampton Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant information and budgeted annual income statements for each

> Reid Company is considering the production of a new product. The expected variable cost is $27 per unit. Annual fixed costs are expected to be $810,000. The anticipated sales price is $72 each. Required Determine the break-even point in units and dollars

> Bauer Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $100. Variable costs Manufacturing $30 per unit Selling 12 per unit Fixed costs Manufacturing $360,000 per year Selling and administ

> Massey Company reported the following data regarding the product it sells. Sales price $25 Contribution margin ratio 40% Fixed costs $810,000 Required Use the contribution margin ratio approach and consider each requirement separately. 1. What is the

> The following excerpt is from Coca-Cola Company’s 2019 annual report filed with the SEC. Management evaluates the performance of our operating segments separately to individually monitor the different factors affecting financial perform

> Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling a

> Dean and Powell Tax Services Company has 31 branch offices in the nation. Each office has about three to six professional accountants and one to two secretaries. In a busy season, the office manager, who is also a professional accountant, can hire tempor

> Thornton Computer Services, Inc., has been in business for six months. The following are basic operating data for that period. Table Summary: A table shows 2 columns. Column 1 has entries. Column 2 has months. The months are divided into July, August, Se

> Nepal Corporation offers mountain-climbing expeditions for its customers, providing food, equipment, and guides. Climbs normally require one week to complete. The company’s accountant is reviewing historical cost data to establish a pri

> Lakeshore Cinemas is considering a contract to rent a movie for $1,980 per day. The contract requires a minimum one-week rental period. Estimated attendance is as follows. /Required 1. Determine the average cost per person of the movie rental contract se

> Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $800,000 in a startup firm. He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the p

> Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,000 per course taught. Denton pays its instructors $250 per student enrolled in the class. Both universities charge executives a $450 tui

> Franklin Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in the clients’ offices on the clients’ equipment. The only major expense FTS incurs is instructor salarie

> Rita Jekyll operates a sales booth in computer software trade shows, selling an accounting software package, Abacus. She purchases the package from a software company for $210 each. Booth space at the convention hall costs $8,400 per show. Required 1. Sa

> Wilkin Fruit Drink Company planned to make 400,000 containers of apple juice. It expected to use two cups of frozen apple concentrate to make each container of juice, thus using 800,000 cups (400,000 containers × 2 cups) of frozen concentrate. The standa

> Seattle Bank’s startup division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $96,000 per year. The three tellers combined can process up to 90,000 customer transactions per year. If a branch does not

> Vernon Company invented a new process for manufacturing ice cream. The ingredients are mixed in high-tech machinery that forms the product into small round beads. Like a bag of balls, the ice cream beads are surrounded by air pockets in packages. This de

> Ted Cowan is a model employee. He has not missed a day of work in the last five years. He even forfeits his vacation time to make sure that things run smoothly. Ted literally does the work of two people. He started out working as the purchasing agent in

> Campbell Manufacturing Company (CMC) was started when it acquired $80,000 by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs (materials, labor, and overhead) amounting to $75,000. CM

> CIA Review, Inc., provides review courses twice each year for students studying to take the CIA exam. The cost of textbooks is included in the registration fee. Text material requires constant updating and is useful for only one course. To minimize print

> Kenta Manufacturing Company obtains its raw materials from a variety of suppliers. Kenta’s strategy is to obtain the best price by letting the suppliers know that it buys from the lowest bidder. Approximately four years ago, unexpected increases in deman

> Wang Company began operations on January 1, Year 1, by issuing common stock for $70,000 cash. During Year 1, Wang received $88,000 cash from revenue and incurred costs that required $65,000 of cash payments. Required Prepare a GAAP-based income statement

> Power-To-Spare, Inc., makes a smartphone case that includes a battery that extends the operating life of an iPhone. The manufacturing costs per unit include $15 direct materials, $17 direct labor and $8 manufacturing overhead. These costs are based on a

> The following transactions pertain to Year 1, the first-year operations of Gibson Company. All inventory was started and completed during Year 1. Assume that all transactions are cash transactions. 1. Acquired $12,000 cash by issuing common stock. 2. Pai

> Sinclair Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions and that financial statement d

> Irvine Publications established the following standard price and costs for a hardcover picture book that the company produces. Standard price and variable costs Sales price $48.00 Materials cost 12.00 Labor cost 6.00 Overhead cost 8.40 Selling, general,

> Stuart Manufacturing Company was started on January 1, Year 1, when it acquired $89,000 cash by issuing common stock. Stuart immediately purchased office furniture and manufacturing equipment costing $32,000 and $40,000, respectively. The office furnitur

> Use the following table to indicate whether the information is more representative of managerial versus financial accounting. The first item is shown as an example. Information Item: Estimates of future revenue GAAP-based product cost Salary of the man

> Janice Huffman has decided to start Janice Cleaning, a residential housecleaning service company. She is able to rent cleaning equipment at a cost of $600 per month. Labor costs are expected to be $50 per house cleaned and supplies are expected to cost $

> Identify the following costs as fixed or variable. Costs related to plane trips between Boston, Massachusetts, and San Diego, California, follow. Pilots are paid on a per-trip basis. 1. Pilots’ salaries relative to the number of trips flown. 2. Depreciat

> This problem is an extension of Problem 5-15A, which must be completed first. Bombay’s accounting staff has disaggregated the $216,000 of overhead costs into the following items. (1) Inspection costs $ 19,200 (2) Setup costs 12,960 (3) Engineering cos

> Gilchrist Corporation recognized the annual expiration of insurance on December 31, Year 2. Using the following horizontal financial statements model, indicate how this event affected the company’s GAAP-based financial statements under

> Ocean Plastics Company accrued a tax liability for $7,000. Use the following horizontal financial statements model to show the effect of this accrual under the following two assumptions: (1) the tax is on administrative buildings, or (2) the tax is on pr

> Use the following table to classify each cost as a product cost or as an SG&A cost. Also indicate whether the cost would be recorded as an asset or an expense. Assume that product costs are defined in accordance with GAAP. The first cost item is shown as

> Indicate whether each of the following costs should be classified as a product cost or as an SG&A cost in accordance with GAAP. 1. Wages paid to workers in a manufacturing plant. 2. The salary of the receptionist working in the sales department. 3. Suppl

> 1. Indicate whether each of the following items is representative of financial or managerial accounting. 2. Financial results used by stockbrokers to evaluate a company’s profitability. 3. Quarterly budgets used by management to determine future borrowin

> Melody Lovelady is the most highly rewarded sales representative at Swift Corporation. Her secret to success is always to understate her abilities. Ms. Lovelady is assigned to a territory in which her customer base is increasing at approximately 25 perce

> On January 1, Year 1, Sanita Company had a balance of $76,300 in its Office Equipment account. During Year 1, Sanita purchased office equipment that cost $30,300. The balance in the Office Equipment account on December 31, Year 1, was $75,400. The Year 1

> On January 1, Year 1, Poole Company had a balance of $178,000 in its Land account. During Year 1, Poole sold land that had cost $71,000 for $95,000 cash. The balance in the Land account on December 31, Year 1, was $210,000. Required 1. Determine the cash

> The following accounts and corresponding balances were drawn from Geneses Company’s Year 2 and Year 1 year-end balance sheets. The Year 2 income statement is shown as follows. Required 1. Prepare the operating activities section of the

> Ragg Shop Inc. (RSI) recognized $3,800 of sales revenue on account and collected $2,950 of cash from accounts receivable. Further, RSI recognized $1,200 of operating expenses on account and paid $900 cash as partial settlement of accounts payable. Requir

> The following accounts and corresponding balances were drawn from Pixi Company’s Year 2 and Year 1 year-end balance sheets. The Year 2 income statement is shown as follows. Required 1. Use the direct method to compute the amount of cash

> The following accounts and corresponding balances were drawn from Osprey Company’s Year 2 and Year 1 year-end balance sheets. During the year, $84,000 of unearned revenue was recognized as having been earned. Rent expense for Year 2 was

> Pella Company presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Pella’s Year 2 and Year 1 year-end balance sheets. The income statement reported a $700 loss

> Napoleon Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company’s Year 2 and Year 1 year-end balance sheets. The Year 2 income statement

> The following accounts and corresponding balances were drawn from Cushing Company’s Year 2 and Year 1 year-end balance sheets. Other information drawn from the accounting records: 1. Dividends paid during the period amounted to $50,000.

> On January 1, Year 1, Milam Company had a balance of $300,000 in its Common Stock account. During Year 1, Milam paid $18,000 to purchase treasury stock. Treasury stock is accounted for using the cost method. The balance in the Common Stock account on Dec

> Kemp Corporation makes a protein supplement called Power Punch™. Its principal competitor for Power Punch is the protein supplement Superior Strength™, made by Jim Adams Company (JAC). Mr. Adams, a world-renowned weight-lifting champion, founded JAC. The

> On January 1, Year 1, Van Company had a balance of $800,000 in its Bonds Payable account. During Year 1, Van issued bonds with a $300,000 face value. There was no premium or discount associated with the bond issue. The balance in the Bonds Payable accoun

> The following accounts and corresponding balances were drawn from Teva Company’s Year 2 and Year 1 year-end balance sheets. Other information drawn from the accounting records: 1. Teva incurred a $3,000 loss on the sale of investment se

> An accountant for Farve Enterprise Companies (FEC) computed the following information by making comparisons between FEC’s Year 2 and Year 1 balance sheets. Further information was determined by examining the company’s Year 2 income statement. 1. The amou

> December 31, Year 4, balance sheet data for Hestand Company follow. All accounts are represented. Amounts indicated by question marks (?) can be calculated using the following additional information. Required Determine the following: 1. The balance in ac

> Balance sheet data for the Beech Corporation follows. Required Compute the following and round computations to one decimal point: 1. Working capital. 2. Current ratio. 3. Debt-to-assets ratio. 4. Debt-to-equity ratio.

> On October 31, Year 4, Corona Company’s total current assets were $160,000 and its total current liabilities were $40,000. On November 1, Year 4, Corona bought manufacturing equipment for $20,000 cash. Required 1. Compute Corona’s working capital before

> On October 31, Year 4, Corona Company’s total current assets were $160,000 and its total current liabilities were $40,000. On November 1, Year 4, Corona purchased marketable securities for $20,000 cash. Required 1. Compute Corona’s working capital before

> Bruno Corporation purchased $480 of merchandise on account. Required Explain the effect of the purchase on Bruno’s current ratio.

> Selected financial information for Purdy Company for Year 4 follows. Sales $3,200,000 Cost of goods sold 2,100,000 Merchandise inventory Beginning of year 350,000 End of year 490,000 Required Assuming that the merchandise inventory buildup was relativel

> Alpena Company reported the following operating results for Year 4 and Year 3. Required Round percentages to one decimal point. 1. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 4 and Year 3.