Text riles Company creates different types of bolts of cloth. These bolts of cloth are made on the same machinery. The textile machines have the capacity of 3,600 hours per month. Text riles is considering producing three different types of cloth: denim, chenille, and gauze, with contribution margins per bolt of $14, $22, and $9, respectively. Text riles knows it can sell only a total of 6,000 bolts of denim, 2,000 bolts of chenille, and/or 1,200 bolts of gauze. A bolt of each type of cloth requires a different amount of machine time as follows: denim takes 0.5 machine-hours, chenille takes 1 machine-hour, and gauze takes 0.3 machine-hours. What combination of products will maximize the profits of Text riles?
> State College Technology Store (SCTS) is a retail computer store in the university center of a large Midwestern university. SCTS engaged in the following transactions during November of the current year Assume that the other expenses incurred by SCTS du
> Match the following transactions, which are denominated in a foreign currency, with the appropriate foreign currency and exchange gain or loss effects. //
> Satka Fishing Expeditions, Inc., recorded the following transactions in July. 1. Provided an ocean fishing expedition for a credit customer; payment is due August 10. 2. Paid Marine Service Center for repairs to boats performed in June. (In June, Satka
> The following computation of the materials variances of Weitzen Foods is incomplete. The missing data are labeled (a) through (d). Supply the missing data for items (a) through (d). Prepare a caption describing the item, as well as indicating the dollar
> Margo Corporation produces air filtration systems. Information pertaining to the company’s monthly direct labor usage is provided as follows. a. Compute the company’s labor rate variance. b. Compute the companyâ
> Klinkhammer Corporation estimated overhead for the year as follows: fixed = $720,000; variable = $4 per unit. Klinkhammer expected to produce 72,000 units for the year. a. Compute the rate that will be used to apply overhead costs to products. b. During
> Gumchara Corporation reported the following information with respect to the materials required to manufacture amalgam florostats during the current month. a. Determine Gumchara’s materials price variance. b. Determine Gumcharaâ&#
> Explain why companies that undergo periods of rapid growth often experience cash flow problems.
> The cost accountant for Blue Pharmaceuticals has informed you that the company’s materials quantity variance for the drug Allegro was exactly equal to its materials price variance for the year. The company’s normal lev
> Blue Dingo uses a standard costing system. The company’s standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows. Determine the actual costs incurred during the month of
> It may be easier to think about setting standards to help manage manufacturing businesses, like the lumber business of Brice Mills, Inc., discussed in this chapter, than to help manage retail establishments. For a company like Home Depot, main inputs (di
> For each of the following variances, briefly explain at least one probable cause and indicate the department manager (if any) responsible for the variance. a. A favorable materials price variance. b. An unfavorable labor rate variance. c. A favorable vol
> The following are nine global business terms used in this chapter. Each of the following statements may describe one of these terms. For each statement, indicate the global business term described, or answer “None” if
> Peter Corporation sells its products to a single customer. At the beginning of the current quarter, the company reports the following selected account balances. Peter’s management has made the following budget estimates regarding opera
> Mountain Mabel’s is a small general store located just outside of Yellowstone National Park. The store uses a periodic inventory system. Every January 1, Mabel and her husband close the store and take a complete physical inventory while watching the Rose
> Nolan Mills uses a standard cost system. During May, Nolan manufactured 15,000 pillowcases, using 27,000 yards of fabric costing $3.05 per yard and incurring direct labor costs of $19,140 for 3,300 hours of direct labor. The standard cost per pillowcase
> Mastrolia’s overhead spending variance is unfavorable by $900. The company’s cost accountant credited the Cost of Goods Sold account for $6,300 to close out any over- or underapplied overhead at the end of the current period. Compute Mastrolia’s overhead
> Zeta, Inc., produces handwoven rugs. Budgeted production is 5,000 rugs per month, and the standard direct labor required to make each rug is 2 hours. All overhead is allocated based on direct labor hours. Zeta’s manager is interested in
> Use the information in Exercise 24.9 to prepare the journal entry to record the overhead at Alfred Industries. Data from Exercise 24.9: From the following information for Alfred Industries, compute the overhead spending variance and the volume variance.
> The following are seven technical terms introduced in this chapter. Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term discussed, or answer “None&ac
> Delmar Foods has two divisions: (1) a processed meat division and (2) a frozen pizza division. Delmar’s frozen pizzas use processed meat as a topping. The company’s processed meat division supplies the frozen pizza division with all of its meat toppings.
> For the year just ended, Fillips, Inc., had income before income taxes of $275,000 from its normal, recurring operations. In addition, during the year, a tornado damaged one of the company’s warehouses and its contents. Tornado damage is quite rare in Fi
> Shown as follows is a segmented income statement for Drexel-Hall during the current month. All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than wer
> The financial statements of large public companies are often accompanied by a multiple-year summary of key financial and other information that is helpful in understanding the company. Appendix A of this text includes the financial statements of Home Dep
> Shown as follows is a segmented income statement for Drexel-Hall during the current month. All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than wer
> Shown as follows is a segmented income statement for Drexel-Hall during the current month. All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than wer
> Sky Probe sells state-of-the-art telescopes to individuals and organizations interested in studying the solar system. At December 31 last year, the company’s inventory amounted to $250,000. During the first week of January this year, th
> Barley, Inc., wants a projection of cash receipts and cash payments for the month of November. On November 28, a note will be payable in the amount of $102,250, including interest. The cash balance on November 1 is $37,200. Accounts payable to merchandis
> Nicholas Technologies operates two divisions: Hardware Services and Software Services. During the current month, the two divisions reported the following results. In addition, fixed costs common to both divisions amounted to $300,000. Prepare an income
> Consider the Home Depot “Five-Year Summary of Financial and Operating Results” shown at the end of Appendix A. Assume that Home Depot designates each of the countries in which it operates as an investment center (i.e., 87 percent of its stores are in the
> The controller of Maxwell Department Store is preparing an income statement divided by sales departments and including subtotals for contribution margin, performance margin, and responsibility margin. Indicate the appropriate classification of the seven
> Video World owns and operates a national chain of video game arcades. Indicate whether Video World would evaluate each of the following as an investment center, a profit center (other than an investment center), or a cost center. Briefly explain the reas
> Visit the Home Depot’s website and locate the “Investor Relations” link in the “About Us” section. From there, follow the “Financial Reports” link to access the company’s annual report (10-K) by selecting the “SEC Filings” link. In Part I of the annual r
> Jasper Golf Resort has a full-service hotel and three golf courses. The hotel, in addition to having over 100 hotel rooms, has two dining areas and a catering service for weddings and meetings. The hotel has a housekeeping staff and a repairs and mainten
> Obtain from your the Internet, your college library, or other source the most recent annual report of a publicly owned company of your choice. a. Using the annual report data, compute the basic measures of liquidity, long-term credit risk, and profitabil
> Motor Magic has two operating divisions: one in the UK and one in Mexico. The Mexican division produces a component part used in the production process of the UK division. If the UK division purchases the part from the Mexican division, a transfer price
> An article in Bloomberg Business week stated that approximately one-third of the total federal budget is considered “controllable.” What is meant by a budgeted expenditure being controllable? Give two examples of government expenditures that may be consi
> Consider Exhibit 22–5, which shows the responsibility margins for the sales department and repairs department profit centers at the 42nd Street store of NuTech Electronics. Assume that 25 percent of the repairs department repair work is
> This selected information is from annual reports of two large retail pharmaceutical companies in the United States. (Dollar amounts are stated in billions.) a. Fill in the missing amounts and percentages. (Round all amounts to one decimal place.) b. On
> The following discussion occurred between two division managers, Bob and Jalenne, and the chief operating officer, Harry Use your understanding of common and traceable costs to discuss the appropriateness of Harry’s response. Is there
> Akeley Corporation manufactures and sells a single product. In preparing the budget for the first quarter, the company’s cost accountant has assembled the following information. The company uses the first-in, first-out method to report
> Listed are parts of various well-known businesses. 1. The bookstore of Central Michigan University. 2. The billing department of Jackson Life Insurance Co. 3. The San Francisco factory of Ghirardelli Chocolates. 4. The textiles and rugs department of IKE
> The following are nine technical accounting terms introduced or emphasized in this chapter. Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer &a
> Guns Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost and revenue data pertaining to each product are as follows At the present time, demand for each of the company’s products far exceeds its capacity to produ
> Road Master Shocks has 15,000 units of a defective product on hand that cost $80,000 to manufacture. The company can either sell this product as scrap for $6 per unit or it can sell the product for $9 per unit by reworking the units and correcting the de
> Selected information from the financial statements of Remmer, Inc., includes the following. a. Compute the percentage change in year 2 for the amounts of (1) net sales and (2) total expenses. b. Using the information developed in part a, express your op
> Barometer, Inc., makes part no. 566 on one of its production lines. Each month Barometer makes 6,000 of part no. 566 at a variable cost of $4 per part. Barometer has been provided a bid for part no. 566 from another manufacturer that will make the part f
> The cost to Swank Company of manufacturing 15,000 units of a particular part is $135,000, of which $60,000 is fixed and $75,000 is variable. The company can buy the part from an outside supplier for $6 per unit. Fixed costs will remain the same regardles
> Heavenly Treat manufactures cases of hot chocolate that are typically sold to restaurants. Its main factory has the capacity to produce and sell 12,000 cases per month. The following information is available for the factory. Wildwood Camps is a youth or
> Golf World sold merchandise to Mulligans for $10,000, offering terms of 1/15, n/30. Mulligans paid for the merchandise within the discount period. Both companies use perpetual inventory systems. a. Prepare journal entries in the accounting records of Go
> Explain the concept of complementary products and why this concept is important in incremental decisions about individual products.
> Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to keep them secure. Olson’s plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs
> Walker Domestic manufactures and sells a single product. In preparing its master budget for the current quarter, the company’s controller has assembled the following information. Walker Domestic uses the average cost method to report i
> Refer to the section in Appendix A of this textbook entitled “Impairment of Long-Lived Assets.” Write a short paragraph regarding Home Depot’s policies for evaluating whether to close any of its stores. Identify the incremental, sunk, and opportunity cos
> Visit the Home Depot’s website and locate the “Corporate Information” link in the “About Us” section. From there, follow the “Corporate Responsibility” link to “The Home Depot Foundation.” Read about the company’s Team Depot initiative to learn how this
> A recent balance sheet of Save-A-Lot Supplies is provided as follows. Other information provided by the company is as follows. Compute and discuss briefly the significance of the following measures as they relate to Save-ALot Supplies. a. Net income p
> Gulf Breeze Corporation produces three products for water skiing enthusiasts: life vests, tow ropes, and water skis. Information relating to each product line is as follows. Gulf Breeze pays its direct labor workers an average of $10 per hour. At full
> Visionary Game Company sells 600,000 units per year of a particular video game at $20 each. The current unit cost of the game is broken down as follows. At the beginning of the current year, Visionary received a special order for 12,000 of these games
> Marzipan Corporation sells relays at a selling price of $28 per unit. The company’s cost per unit, Based on full capacity of 160,000 units, is as follows: Marzipan has been approached by a distributor in Montana offering to buy a spe
> Bimorphs Corporation produces three products in a monthly joint production process. During the first stage of the process liquids and chemicals costing $60,000 are heated and three different compounds emerge: 3,000 gallons of Molecule worth $22 per gallo
> Treadwell Pharmaceuticals produces two medications in a joint process: Amoxiphore and Denigrate. With each production run, Treadwell incurs $4,000 in common costs up to the split-off point.Amoxiphore can be sold for $2,700 at the split-off point or be pr
> Explain how the unit contribution margin can be used to determine the unit sales required to break even.
> Listed as follows are seven technical accounting terms introduced or emphasized in this chapter. Each of the following statements may (or may not) describe one of these terms. For each statement, indicate the accounting term or terms described, or answe
> Dinklemyer Corporation uses direct labor hours as its single cost driver. Actual overhead costs and actual direct labor hours for the first five months of the current year are as follows. a. Compute the company’s estimated variable man
> What is a flexible budget? Explain how a flexible budget increases the usefulness of budgeting as a means of evaluating performance.
> Home Run Corporation produces three products for baseball enthusiasts: bats, gloves, and balls. Information relating to each product line is as follows. Home Run pays its direct labor workers an average of $8 per hour. At full capacity, 60,000 direct la
> Shown are selected data from a recent annual report of CVS Health, a large drugstore chain. (Dollar amounts are in millions.) a. Compute for the year CVS Health’s return on average total assets. (Round computations to the nearest two-t
> Listed as follows are nine technical accounting terms introduced in this chapter. Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer â€
> TPS Incorporated is using activity-based cost information to determine whether it can save money by reassigning activities in its retail stores. The following information has been gathered for a typical store. In its activity analysis, TPS found that cl
> The three activities described as follows were part of the production process in November at Foundry & Bellows, Inc. Describe how each activity creates additional costs and whether it is value-added or non–value-added. If it is non–value-added, identify
> Charles Berkley is the managers of No gain Manufacturing and is interested in doing a cost of quality analysis. The following cost and revenue data are available for the most recent year ended December 31. a. Classify each of these costs into the four q
> Carts Corporation is trying to determine how long it takes for one product to pass through the production process. The following information was gathered regarding how many days the product spent in various production activities. a. Which of these acti
> Expo Lube is interested in producing and selling an industrial line of oil filters. Market research Indicates that wholesale customers are currently willing to pay $8 for similar filters, and that Expo Lube could sell 80,000 units per year at that price.
> You are the controller for Foxboro Technologies. Your staff has prepared an income statement for the current year and has developed the following additional information by analyzing changes in the company’s balance sheet accounts. Addi
> Blake Furniture, Inc., maintains an Accounts Receivable Department that currently employs eight people. Blake is interested in doing an activity analysis because an outside firm has offered to take over a portion of the activities currently handled by th
> Dainty Diners, Inc., produces various types of bird feeders. The following is a detailed description of the steps involved in the production of wooden bird feeders. 1. Raw materials, such as wood, nails, and clear plastic are purchased. 2. The raw materi
> Assume you have just been hired as the management accountant in charge of providing your firm’s managers with product cost information. Identify the activities you might undertake for the following four value chain components. a. Research and development
> Briefly explain at least three ways in which a business may expect to benefit from preparing a formal budget.
> In the Home Depot financial statements in Appendix A at the end of this textbook, find Note 1 to the financial statements summarizing the company’s significant accounting policies. Read the section in Note 1 entitled “Merchandise Inventories.” a. How doe
> Vitamin Bits Co. produces three joint products from mint leaves. At the split-off point, three basic products emerge: B1, B3, and B15. Each of these products can be either sold at the split-off point or processed further. If they are processed further, t
> “When special orders are accepted that are below full product cost (variable cost plus fixed costs), companies run the risk of filling up their capacity with products that do not provide enough contribution to cover fixed costs such ascent and management
> Flip Flop’s To Go has gathered the following data on its quality costs for the past two years. a. Compute the percentage change in the total quality costs from year 1 to year 2. b. Explain what you think caused the change.
> Classify each of the following activities into one of the four cost of quality categories and/or identify it as a value-added or a non–value-added activity. a. Rework, due to poor materials, on bicycles at Trek. b. Inspection costs incurred by Wal-Mart o
> Pizza Pies Limited has the following value chain for its pizzas. Boxes are designed by Shula Designers Inc. and printed and delivered by Redoes Printing Co. for $0.95 per box. The pizzas are made in the stores with fresh ingredients and baked in the oven
> The following information is related to manufacturing office furniture at Outreach, Inc. a. Accept and arrange raw materials in inventory—1 day. b. Store raw materials in inventory—6 days. c. Issue raw materials to various points in the production proces
> As a fundraiser, the pep band at Melrose University sells T-shirts fans can wear when attending the school’s 12 home basketball games. As the band’s business manager, you must choose among several options for ordering and selling the T-shirts. 1. Place
> Dust Buster’s Inc. manufactures two types of small hand-operated vacuum cleaners. Dust Busters is concerned about quality issues and has compiled the following information for the past year associated with the two vacuums. Find the qua
> The following are eight technical accounting terms introduced or emphasized in this chapter. Each of the following statements may (or may not) describe one of these terms. For each statement, indicate the accounting term described, or answer â
> Comparative balance sheets report average total assets for the year of $2,575,000 and average total equity of $1,917,000 (dollar amounts in thousands, except earnings per share). a. Prepare an income statement for the year in a multiple-step format. b. C
> A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as follows. During the year the company earned a gross profit of $1,116,000 on sales of $2,950,000. Accounts receivable, inventory, and plant assets remained almo
> a. Determine the amount of total liabilities reported in Coca-Cola’s balance sheet at the beginning of the year. b. Determine the amount of total owners’ equity reported in Coca-Cola’s balance sheet at the end of the year. c. Retained earnings was repo
> What important relationships are shown on a cost volume-profit (break-even) graph?
> Carnival Corporation & PLC is one of the world’s largest cruise line companies. Its printing costs for brochures are initially recorded as Prepaid Advertising and are later charged to Advertising Expense when they are mailed. Passenger deposits for upcom
> The Rockford Rollers, a professional roller derby team, prepares financial statements on a monthly basis. The roller derby season begins in February, but in January, the team engaged in the following transactions: 1. Paid $33,000 to the Sunbury Skating
> Springfield Company’s master budget includes estimated costs and expenses of $500,000 for its third quarter of operations. Of this amount, $300,000 is expected to be financed with current payables. Depreciation expense for the quarter is budgeted at $60,
> Selected financial data for Quick Sell, Inc., a retail store, appear as follows. a. Compute the following for both years: 1. Gross profit percentage. 2. Inventory turnover. 3. Accounts receivable turnover. b. Comment on favorable and unfavorable trends
> Lock Tight, Inc., produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning January 1. The manufacture of each door requires 20 pounds of steel and 6 square feet of glass.
> Naylor Manufacturing produces floor tiles. The managers at Naylor are trying to develop budgets for the upcoming quarter. The following data have been gathered for a particular tile design. a. Using this information, develop Naylor’s s
> Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. During a normal month the product’s direct labor cost per pound is budgeted using the following information The budget for March c
> The following information is from the manufacturing budget and the budgeted financial statements of Scheck Development Partners. Compute the budgeted amounts for a. Purchases of direct materials during the year. b. Cash payments during the year to suppl
