Sardina Manufacturing Company makes a product that sells for $30 per unit. Manufacturing costs for the product amount to $16 per unit variable, and $96,000 fixed. During the current accounting period, Sardina made 8,000 units of the product and sold 7,600 units. Selling and administrative expenses were zero. Required 1. Prepare an absorption costing income statement. 2. Prepare a variable costing income statement. 3. Explain why the amount of net income on the absorption costing income statement differs from the amount of net income on the variable costing income statement. Your answer should include the amount of the inventory balance that would exist under the two costing approaches.
> René Alverez knew she was in over her head soon after she took the job. Even so, the opportunity for promotion comes along rarely and she believed that she would grow into it. Ms. Alverez is the cost accounting specialist assigned to the finishing depart
> What does the term activity-based management mean?
> What does the term reengineering mean? Name some reengineering practices.
> What is a just-in-time (JIT) inventory system? Name some inventory costs that can be eliminated or reduced by its use.
> What costs should be considered in determining the sales price of a product?
> What are some of the common ethical conflicts that accountants encounter?
> How has the Institute of Management Accountants responded to the need for high standards of ethical conduct in the accounting profession?
> What is cost allocation? Give an example of a cost that needs to be allocated.
> Why is cost classification important to managers?
> How does a product cost differ from a selling, general, and administrative cost? Give examples of each.
> What is an indirect cost? Provide examples of product costs that would be classified as indirect.
> Professor Julia Silverman received the following e-mail message: “I don’t know if you remember me. I am Tim Wallace. I was in your introductory accounting class a couple of years ago. I recently graduated and have just started my first real job. I rememb
> How do product costs affect the financial statements? How does the classification of product cost (as an asset vs. an expense) affect net income?
> This problem is an extension of Problem 5-15B, which must be completed first. Assume the same data as in Problem 5-15B with the following additional information. The hours of machine time for processing plates are 1,000 for Kate plates and 2,500 for Monr
> Casey’s Commemoratives makes and sells two types of decorative plates. One plate displays a hand-painted image of Princess Kate; the other plate displays a machine-pressed image of Marilyn Monroe. The Kate plates require 25,000 hours of direct labor to m
> Since its inception, Batum Laboratory has produced a single product, Product S109. With the advent of automation, the company added the technological capability to begin producing a second product, Product N227. Because of the success of Product N227, ma
> Western Boot and Shoe Company makes hand-sewn boots and shoes. Western uses a companywide overhead rate based on direct labor hours to allocate indirect manufacturing costs to its products. Making a pair of boots normally requires 2.4 hours of direct lab
> The following financial statements were drawn from the records of Boston Materials Inc. Table Summary: The Balance Sheets as of December 31 show 3 columns. Column 1 has entries. Column 2 has year 2. Column 3 has year 1. The Income Statement for the year
> The Electric Company engaged in the following transactions during Year 2. The beginning cash balance was $43,000 and the ending cash balance was $48,600. 1. Sales on account were $274,000. The beginning receivables balance was $86,000 and the ending bala
> The comparative balance sheets and an income statement for Wang Beauty Products Inc. are shown as follows. Table Summary: The Balance Sheets as of December 31 show 3 columns. Column 1 has entries. Column 2 has year 2. Column 3 has year 1. Other Informati
> The following financial statements were drawn from the records of Culinary Products Co. Table Summary: The Balance Sheets as of December 31 show 3 columns. Column 1 has entries. Column 2 has year 2. Column 3 has year 1. Additional Data 1. During Year 2,
> The following information can be obtained by examining a company’s balance sheet and income statement information: 1. Increases in current asset account balances, other than cash. 2. Cash outflows to purchase noncurrent assets. 3. Decre
> Obtain the Form 10-Ks for these three companies: AGCO Corporation, Crown Holdings, Inc., and Transocean, Ltd. To obtain the Form 10-Ks, you can use the EDGAR system, or they can be found on the companies’ websites: www.agcocorp.com (Investors), www.crown
> We are the leading U.S. global airline serving 200 million customers every year. We connect customers across our expansive global network to more than 300 destinations in over 50 countries. We are the world’s largest airline by total re
> The following information was drawn from the year-end balance sheets of Long’s Wholesale Inc. Additional information regarding transactions occurring during Year 2: 1. Long’s Wholesale Inc. issued $90,000 of bonds duri
> The following information was drawn from the year-end balance sheets of Vigotti Company. Additional information regarding transactions occurring during Year 2: 1. Investment securities that had cost $11,300 were sold. The Year 2 income statement containe
> The following accounts and corresponding balances were drawn from Crimson Sports Inc.’s Year 2 and Year 1 year-end balance sheets. Assume that Accounts Payable is used for purchases of inventory only. The Year 2 income statement is sho
> Use the financial statements for Bluffton Company from Problem 13-17B to compute the following for Year 4. Round percentages to two decimal points. 1. Current ratio. 2. Quick (acid-test) ratio. 3. Average days to collect accounts receivable, assuming all
> The following financial statements apply to Bedford Appliances Inc. Table Summary: A table shows the Balance Sheets as of December 31 v. Column 1 has entries. Column 2 has year 4. Column 3 has year 3. BEDFORD APPLIANCES INC. Balance Sheets As of December
> Information from Forman Company’s financial statements follows. Average number of shares outstanding was 16,000 for Year 3 and 15,000 for Year 2. Required Compute the following ratios for Forman Company for Year 3 and Year 2 and round c
> Selected data for Hoback Company for Year 3 and additional information on industry averages follow. Industry averages Earnings per share $2.00 Price-earnings ratio 8.00 Return on equity 7.30% Required Round computations to two decimal points. 1. Calcula
> Rustin Craft discovered a piece of wet and partially burned balance sheet after his office was destroyed by fire. He could recall a current ratio of 1.75 and a debt-to-assets ratio of 45 percent. Required Complete the balance sheet by supplying the missi
> Lowery Company has a current ratio of 2:1 on June 30, Year 3. Indicate whether each of the following transactions would increase (+), decrease (−), or not affect (NA) Lowery’s current ratio and its working capital. Required 1. Issued 10-year bonds for $3
> Use the financial statements for Bluffton Company from Problem 13-17B to perform a vertical analysis (based on total assets, total equities, and sales) of both the balance sheets and income statements for Year 4 and Year 3. Round computations to one deci
> Bowen Bridge Company constructs bridges for the State of Kentucky. During Year 2, Bowen started work on three bridges. The cost of materials and labor for each bridge follows. The predetermined overhead rate is $1.20 per direct labor dollar. Actual overh
> Bluffton Company’s stock is quoted at $16 per share at December 31, Year 4 and Year 3. Bluffton’s financial statements follow. Table Summary: A table shows the Balance Sheets as of December 31 in thousands. Column 1 ha
> Burton Corporation’s controller has prepared the following vertical analysis for the president. Required Sales were $800,000 in Year 3 and $900,000 in Year 4. Convert the analysis to income statements for the two years.
> Starr Gifts makes unique western gifts that are sold at souvenir shops. One of the company’s more popular products is a ceramic eagle that is produced in a mass production process that entails two manufacturing stages. In the first prod
> Grenora Company’s beginning work in process inventory consisted of 7,500 units of product on January 1, Year 2. During Year 2, the company started 32,500 units of product and transferred 34,000 units to finished goods inventory. The ending work in proces
> At the beginning of Year 3, Elgin Company had 5,000 units of product in its work in process inventory, and it started 25,000 additional units of product during the year. At the end of the year, 6,000 units of product were in the work in process inventory
> Fullerton Paper Products Corporation produces paper cups using two production departments, printing and forming. Beginning balances and printing department data for Year 2 follow. 1. Fullerton Paper Products issued additional common stock for $180,000 ca
> Letcher Corporation makes blue jeans. Its process involves two departments, cutting and sewing. The following data pertain to the cutting department’s transactions in Year 2. 1. The beginning balance in work in process inventory was $30,000. This invento
> Use the ending balances from Problem 12-15B as the beginning balances for this problem. The transactions for the second year of operation (Year 2) are described here. (Assume that all transactions are cash transactions unless otherwise indicated.) 1. The
> Dawson Food Company makes frozen vegetables. Production involves two departments, processing and packaging. Raw materials are cleaned and cut in the processing department and then transferred to the packaging department where they are packaged and frozen
> Prairie Roofing Corporation was founded on January 1, Year 1, when stockholders contributed $12,000 for common stock. During the year, Prairie purchased $6,400 of direct raw materials and used $5,520 of direct materials. There were 80 hours of direct lab
> Custom Automobile Restoration Shop (CARS) is a small shop dedicated to high-quality restora­tions of vintage cars. Although it will restore an automobile that a customer already owns, usually the shop buys an old vehicle, restores it, and then
> Preston Corporation was created on January 1, Year 1, when it received a stockholder’s contribution of $92,000. It purchased $21,000 of raw materials and worked on three job orders during the year. Data about these jobs follow. (Assume
> Darwin Manufacturing pays its production managers a bonus based on the company’s profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products. Darwin’s sal
> Covington Company makes leather chairs that it sells for $500 per chair. Each chair requires $72 of direct materials and $170 of direct labor. Fixed overhead costs are expected to be $300,000 per year. Covington expects to sell 1,500 chairs during the co
> Linda Wheeler has worked as the plant manager of Vicksburg Corporation, a large manufacturing company, for 10 years. The company produces stereo DVD players for automotive vehicles and sells them to some of the largest car manufacturers in the country. M
> The following events apply to Andover Manufacturing Company. Assume that all transactions are cash transactions unless otherwise indicated. Transactions for the Year 1 Accounting Period 1. The company was started on January 1, Year 1, when it acquired $4
> Blanchard Manufacturing Company manufactures puzzles that depict the works of famous artists. The company rents a small factory and uses local labor on a part-time basis. The following accounting events affected Blanchard during its first year of operati
> Meadowbrook Manufacturing started Year 2 with the following account balances. Cash $7,000 Common stock 5,600 Retained earnings 2,800 Raw materials inventory 600 Work in process inventory 440 Finished goods inventory (50 units @ $7.20/unit) 360 Transact
> The following Balance Sheet was taken from the records of Ansgar Manufacturing Company at the beginning of Year 2. Transactions for the Accounting Period 1. Ansgar purchased $2,600 of direct raw materials and $300 of indirect raw materials on account. Th
> The following accounting events affected Carmel Manufacturing Company during its first three years of operation. Assume that all transactions are cash transactions. Transactions for Year 1 Started manufacturing company by issuing common stock for $1,000.
> Stanley Manufacturing Company, which sold 16,000 units of product at $20 per unit, collected the following information regarding three different levels of production. Required 1. Construct a spreadsheet that includes the preceding data in the top of the
> Mansell Corporation faces stiff market competition. Top management is considering the replacement of its current production facility. The board of directors requires all capital investments to meet or exceed a 9 percent rate of return. However, the board
> Laurel Steel Company decided to spend $160,000 to purchase new state-of-the-art equipment for its manufacturing plant. The equipment has a five-year useful life and a salvage value of $40,000. It is expected to generate additional cash revenue of $64,000
> Wonda Munro just won a lottery and received a cash award of $450,000 net of tax. She is 61 years old and would like to retire in four years. Weighing this important fact, she has found two possible investments, both of which require an immediate cash pay
> Pratt and Sullivan Services is planning a new business venture. With $125,000 of available funds to invest, it is investigating two options. One is to acquire an exclusive contract to operate vending machines in civic and recreation centers in a small su
> Dale Thomas's rich uncle gave him $100,000 cash as a gift for his 40th birthday. Unlike his spoiled cousins who spend money carelessly, Mr. Thomas wants to invest the money for his future retirement. After an extensive search, he is considering one of tw
> Shawn Guzman is wondering whether he made the right decision four years ago. As the president of Guzman Health Care Services, he acquired a hospital specializing in elder care with an initial cash investment of $1,400,000. Mr. Guzman would like to know w
> Craig Pike, the president of Craig’s Moving Services Inc., is planning to spend $800,000 for new trucks. He expects the trucks to increase the company’s cash inflow as follows. Note that annual cash inflows below are
> Perry Automobile Repair Inc. currently has three repair shops in Boston. Jerry Perry, the president and chief executive officer, is facing a pleasant dilemma: the business has continued to grow rapidly and major shareholders are arguing about different w
> Gardner Electronics Corporation makes a Wi-Fi receiver that it sells to retail stores for $75 each. The variable cost to produce a receiver is $35 each; the total fixed cost is $5,000,000. Gardner is operating at 80 percent of capacity and is producing 2
> Beaumont Trading Company (BTC) has three divisions. BTC has a desired rate of return of 6.0 percent. The operating assets and income for each division are as follows. BTC headquarters has $250,000 of additional cash to invest in one of its divisions. The
> Manning Cassey Computers (MCC) plans to produce and sell 1,600 computers for $720 each in the next fiscal year. The company’s cost data follow. Components from wholesaler $480 per computer Assembly labor $15 per hour Manufacturing space rent $3,000 per
> Roswell Company has operating assets of $8,000,000. The company’s operating income for the most recent accounting period was $600,000. The Lawrence Division of Roswell controls $1,600,000 of the company’s assets and earned $144,000 of its operating incom
> Gwinnett Corporation operates three investment centers. The following financial statements apply to the investment center named Rite Division. Required 1. Should operating income or net income be used to determine the rate of return (ROI) for the Rite in
> Bonner Corporation’s balance sheet indicates that the company has $320,000 invested in operating assets. During Year 3, Bonner earned $24,000 of operating income on $480,000 of sales. Required 1. Compute Bonner’s operating profit margin percentage for Ye
> Sheridan Industries Inc. has five different divisions; each is responsible for producing and marketing a particular product line. The electronics division makes cellular telephones, pagers, and modems. The division also buys and sells other electronic pr
> The mortgage division of Magee Financial Services Inc. is managed by a vice president who supervises three regional operations. Each regional operation has a general manager and several branches directed by branch managers. The West region has two branch
> Chad Bentley, president of Sabrin Corporation, evaluated the performance report of the company’s production department. Mr. Bentley was confused by some arguments presented by Jeannette Dolan, the production manager. Some relevant data
> At a professional conference just a few days ago, Carlos Santiago, the president of Ocala Corporation, learned how the concept of controllability relates to performance evaluation. In preparing to put this new knowledge into practice, he reviewed the fin
> A fire destroyed most of Ordessa Products Corporation’s records. Megan Carey, the company’s accountant, is trying to piece together the company’s operating results from salvaged documents. She discovered the following data. Standard materials quantity pe
> Gould Manufacturing Company, which makes aluminum alloy wheels for automobiles, recently introduced a new luxury wheel that fits small sports cars. The company developed the following standards for its new product. Amount of direct materials per wheel 2
> Shaffer Corporation makes mouse pads for computer users. After the first year of operation, Peggy Shaffer, the president and chief executive officer, was eager to determine the efficiency of the company’s operation. In her analysis, she used the followin
> Cliff Dennis may become a rich man. He is the creative force behind Amazing Drives, a new company. Amazing makes external drives that permit computer users to store large amounts of information on thumb drives. Amazing has experienced tremendous growth s
> Watonga Swimsuit makes swimsuits. In Year 2, Watonga produced its most popular swimsuit, the Sarong, for a standard labor price of $33.60 per hour. The standard amount of labor was 1.0 hour per swimsuit. The company had planned to produce 100,000 Sarong
> Watonga Swimsuit Specialties Inc. makes fashionable women’s swimsuits. Its most popular swimsuit, with the Sarong trade name, uses a standard fabric amount of six yards of raw material with a standard price of $9 per yard. The company planned to produce
> Martin Hickey was a new cost accountant at Freeport Plastics Corporation. He was assigned to analyze the following data that his predecessor left him. Planned volume for year (static budget) 10,000 units Standard direct materials cost per unit 2 pounds @
> Newkirk Sporting Goods Co. manufactures baseballs. According to Newkirk’s Year 3 budget, the company planned to incur $180,000 of fixed manufacturing overhead costs to make 200,000 baseballs. Newkirk actually produced 187,000 balls, incurring $177,600 of
> Use the standard price and cost data supplied in Problem 8-20B. Assume that Ponca actually produced and sold 432,000 units. The actual sales price and costs incurred follow. Required 1. Determine the flexible budget variances. 2. Indicate whether each v
> Ponca Food Corporation developed the following standard price and costs for a refrigerated TV dinner that the company produces. Standard price and variable costs per unit Sales price $5.40 Materials cost 1.60 Labor cost 0.60 Overhead cost 0.12 Selling, g
> The Marketing Department of Barlett State University planned to hold its annual distinguished visiting lecturer (DVL) presentation in October Year 4. The head of the department prepared the following budget based on costs that had been incurred in the pa
> Executive officers of Freedonia Seafood Processing Company are holding a planning session for fiscal Year 3. They have already established the following standard price and costs for their canned seafood product. Standard price and variable costs Price pe
> Inwood Gifts Corporation begins business today, December 31, Year 1. Rebecca Ortiz, the president, is trying to prepare the company’s master budget for the first three months (January, February, and March) of Year 2. Since you are her good friend and an
> Myrtle Enterprises Inc. has two products, palm-size computers and programmable calculators. Tammy Dwyer, the chief executive officer, is working with her staff to prepare next year’s budget. Ms. Dwyer estimates that sales will increase
> Barret Cameron, a student in Professor Wagner’s managerial accounting course, asked the following question: “In the first accounting course, the teacher said inventory costs flow on a FIFO, LIFO, or weighted average pattern. Now you are telling us invent
> Shane Corbett, a successful entrepreneur, is reviewing the results of his first year in business. His accountant delivered the following income statement just five minutes ago. Mr. Corbett would like net income to increase 20 percent in the next year. Th
> Chang Company has budgeted the following cash flows. Chang had an $18,000 cash balance on April 1. The company desires a $30,000 cash balance before paying interest. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of
> Javior’s Travel Services has prepared its selling and administrative expenses budget for the next quarter. It pays all expenses when they are incurred except sales commissions, advertising expense, and telephone expense. These three ite
> Mankota Company’s purchasing manager, Fernando Garza, is preparing a purchases budget for the next quarter. At his request, Ruben Carpenter, the manager of the sales department, forwarded him the following preliminary sales budget. For
> Estlin Corporation sells mail-order computers. In December Year 2, it has generated $300,000 of sales revenue; the company expects a 20 percent increase in sales in January and 10 percent in February. All sales are on account. Estlin normally collects 80
> Melissa Putnam, the director of Kelso Corporation’s Mail-Order Division, is preparing the division’s budget proposal for next year. The company’s president will review the proposal for approval. Ms. P
> Ewing Company makes two products, M and N. Product information follows. 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 M requires three ho
> Liao Construction Components Inc. purchased a machine on January 1, Year 1, for $480,000. The chief engineer estimated the machine’s useful life to be six years and its salvage value to be zero. The operating cost of this machine is $240,000 per year. By
> Rooney Company’s electronics division produces a DVD player. The vice president in charge of the division is evaluating the income statement showing annual revenues and expenses associated with the division’s operating
> Hana Company has three separate operating branches: Division X, which manufactures utensils; Division Y, which makes plates; and Division Z, which makes cooking pots. Each division operates its own facility. The company’s administrative
> Intel Corporation is mostly known by the public for manufacturing silicon chips for personal computers, but it does other things as well. Answer the following questions using the company’s Form 10-K for the period ended December 28, 2019. The Form 10-K c
