Question: The budget director for Kanosh Cleaning Services

> 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.

> 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 cushion of $10,000. Funds are assumed to be borrowed, in increments of $2,000, and repaid o

> 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

> Spalding Pointers Corporation expects to begin operations on January 1, 2019; it will operate as a specialty sales company that sells laser pointers over the Internet. Spalding expects sales in January 2019 to total $120,000 and to increase 5 percent per

> 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

> Sturdy Bike Company makes the frames used to build its bicycles. During 2018, 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)…………………

> David Catrow is the manufacturing production supervisor for Faraday Motor Works (FMW), a company that manufactures electrical motors for industrial applications. Trying to explain why he did not get the year-end bonus that he had expected, he told his wi

> 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 annual revenues and

> 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

> 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. a. Describe two decision-making contexts, one in which unit-level materials costs are avoidable, and the other in which they are unavoidable. b. Describe two decision-making contexts, one in which batch-level se

> 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

> 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 + $

> John Dillworth is in charge of buying property used as building sites for branch offices of the National Bank of Commerce. Mr. Dillworth recently paid $110,000 for a site located in a growing section of the city. Shortly after purchasing this lot, Mr. Di

> 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

> 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 Financial data Salary of vice presiden

> 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

> Gletchen Cough Drops operates two divisions. The following information pertains to each division for 2018. Required: a. Compute each division’s residual income. b. Which division increased the company’s profitability

> Climax Corporation has a desired rate of return of 7.50 percent. William Tobin is in charge of one of Climax’s three investment centers. His center controlled operating assets of $4,000,000 that were used to earn $480,000 of operating income. Required:

> An investment center of Tribune Corporation shows an operating income of $7,500 on total operating assets of $125,000. Required: Compute the return on investment. Round the computation to two decimal points.

> Garrison Rentals can purchase a van that costs $54,000; it has an expected useful life of three years and no salvage value. Garrison uses straight-line depreciation. Expected revenue is $36,000 per year. Assume that depreciation is the only expense assoc

> Rainbow Painting Company is considering whether to purchase a new spray paint machine that costs $16,000. The machine is expected to save labor, increasing net income by $1,200 per year. The effective life of the machine is 15 years according to the manu

> State law permits the State Department of Revenue to collect taxes for municipal governments that operate within the state’s jurisdiction and allows private companies to collect taxes for municipalities. To promote fairness and to ensure the financial we

> The Monarch Division of Allgood Corporation has a current ROI of 12 percent. The company target ROI is 8 percent. The Monarch Division has an opportunity to invest $4,800,000 at 10 percent but is reluctant to do so because its ROI will fall to 11.25 perc

> Supply the missing information in the following table for Unify Company. Sales………………………………………………….$605,000 ROI………………………………………………………………..? Operating assets……………………………………………..? Operating income……………………………………………? Turnover…………………………………………………….2.2 Residual i

> Eastevan Company calculated its return on investment as 10 percent. Sales are now $300,000, and the amount of total operating assets is $320,000. Required: a. If expenses are reduced by $28,000 and sales remain unchanged, what return on investment will

> Secor Educational Services had budgeted its training service charge at $120 per hour. The company planned to provide 30,000 hours of training services during 2019. By lowering the service charge to $114 per hour, the company was able to increase the actu

> Muskrat Medical Equipment Company makes a blood pressure measuring kit. Jason McCoy is the production manager. The production department’s static budget and actual results for 2019 follow. Required: a. Convert the static budget into a

> Helen Kaito, the president of Gladstone Toys Corporation, is trying to determine this year’s pay raises for the store managers. Gladstone Toys has seven stores in the southwestern United States. Corporate headquarters purchases all toys from different ma

> Nunn Company, which sells electric razors, had $200,000 of cost of goods sold during the month of June. The company projects a 5 percent increase in cost of goods sold during July. The inventory balance as of June 30 is $15,000, and the desired ending in

> Dickey Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory. Dickey Books s accountant prepared the following schedule of cash payments for inventory

> Lumpkin Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Lumpkin’s policy is to maintain an ending inventory balance equal to 10 percent of the followi

> Ozark Company operates a candy store located in a large shopping mall. Required: Write a brief memo describing the sales pattern that you would expect Ozark to experience during the year. In which months will sales likely be high? In which months will s

> In recent years, the United States Postal Service (USPS) has experienced declining revenues, largely due to the increase in digital communications such as e-mail. These declining revenues have led the USPS to experience financial losses. On February 16,

> Carmen’s Dress Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of $400,000 in December. Because Carmen’s Dress Delivery is in the mail-order business, all sales are made on account. The company exp

> Axon Corporation, which has three divisions, is preparing its sales budget. Each division expects a different growth rate because economic conditions vary in different regions of the country. The growth expectations per quarter are 4 percent for Cummings

> The budget director of Heather’s Florist has prepared the following sales budget. The company had $50,000 in accounts receivable on July 1. Heather’s Florist normally collects 100 percent of accounts receivable in the

> Parliament Company, which expects to start operations on January 1, 2018, will sell digital cameras in shopping malls. Parliament has budgeted sales as indicated in the following table. The company expects a 10 percent increase in sales per month for Feb

> Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow. Historically, cost of goods sold is about 60 percent of sales revenue. Selling and admin

> Lois Bragg owns a small restaurant in Boston. Ms. Bragg provided her accountant with the following summary information regarding expectations for the month of June. The balance in accounts receivable as of May 31 is $40,000. Budgeted cash and credit sale

> The accountant for Jean’s Dress Shop prepared the following cash budget. Jean’s desires to maintain a cash cushion of $10,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of eac

> January budgeted selling and administrative expenses for the retail shoe store that Craig Shea plans to open on January 1, 2018, are as follows: sales commissions, $50,000; rent, $30,000; utilities, $10,000; depreciation, $5,000; and miscellaneous, $2,50

> Executive officers of Stoneham Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources. Stoneham’s past experience indicates that cost of goods sold

> Prepare revised product-line earnings statements based on the elimination of Sugar-Bits. Revenue (12,000 units × $1,200)…………………………………………………………….$14,400,000 Unit-level variable costs Product materials cost (12,000 × $60)………………………………………….……………..(720

> Teresa Flanagan, the accountant, is a perfectionist. No one can do the job as well as she can. Indeed, she has found budget information provided by the various departments to be worthless. She must change everything they give her. She has to admit that h

> Production workers for Essa Manufacturing Company provided 300 hours of labor in January and 600 hours in February. Essa expects to use 5,000 hours of labor during the year. The rental fee for the manufacturing facility is $6,000 per month. Required: Ex

> Fanya Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Assume Fanya needs to allocate two major overhead costs ($80,000 of employee fringe benefits

> Willey Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include the following: Factory manager’s salary……………………………………$210,000 Factory utility cost……

> Tyson Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Tyson expects to incur $480,000 of overhead cost during the next fiscal year. Other budget information follows: Required: a. Use direct labor hours as the c

> 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 Sewer bill Staples Natural gas bill Pens Ink cartridges Payroll taxes Paper rolls for cash

> Ware Manufacturing Company produced 2,000 units of inventory in January 2018. It expects to produce an additional 14,000 units during the remaining 11 months of the year. In other words, total production for 2018 is estimated to be 16,000 units. Direct m

> Rasmussen Corporation expects to incur indirect overhead costs of $80,000 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of 2017 is as follows. Required: a. Calculate a predetermined

> Beasley Services Company (BSC) has 50 employees, 28 of whom are assigned to Division A and 22 to Division B. BSC incurred $450,000 of fringe benefits cost during 2018. Required: Determine the amount of the fringe benefits cost to be allocated to Divis

> Miriana Clinics provides medical care in three departments: internal medicine (IM), pediatrics (PD), and obstetrics gynecology (OB). The estimated costs to run each department follow: Miriana expects to incur $450,000 of indirect (overhead) costs in th

> Real-world companies often reduce the complexity of their operations in an attempt to increase profits. In late 2014 and early 2015 McDonald’s Corporation announced a series of restructuring efforts it planned to undertake t

> Competitive Markets Concepts. Indicate whether each of the following statements is true or false, and explain why. a In long-run equilibrium, every firm in a perfectly competitive industry earns zero profit. b. Perfect competition exists in a market wh

> Dynamic Competitive Equilibrium. Wal-Mart and other movie DVD retailers, including online vendors like amazon.com, employ a two-step pricing policy. During the first six months following a theatrical release, movie DVD buyers are wiling to pay a premiu

> Competitive Market Equilibrium. Dozens of Internet web sites offer quality auto parts for the replacement market. Their appeal is obvious. Price-conscious shoppers can often obtain up to 80% discounts from the prices charged by original equi

> Long-run Competitive Firm Supply. The Hair Stylist, Ltd., is a popular-priced hairstyling salon in College Park, Maryland. Given the large number of competitors, the fact that stylists routinely tailor services to meet customer needs, and the lack o

> The Heritage Club at Harbor Town offers elegant accommodations for discriminating vacationers on Hilton Head Island, South Carolina. Like many vacation resorts, Heritage Club has discovered the advantages of offering its services on an annual membership

> The idea of using the difference between the market value of the firm and accounting book values as an indicator of market power and/or valuable intangible assets stems from the pioneering work of Nobel laureate James Tobin. Tobin introduced the so-calle

> Coach Industries, Inc., is a leading manufacturer of recreational vehicle products. Its products include travel trailers, fifth-wheel trailers (towed behind pick-up trucks), and van campers, as well as parts and accessories. Coach offers its fifth-wheel

> The General Eclectic Company manufactures an electric toaster. Sales of the toaster have increased steadily during the previous five years, and, because of a recently completed expansion program, annual capacity is now 500,000 units. Production and sales

> Hathaway-Ross Instruments, Inc., manufactures an innovative piece of diagnostic equipment used in medical laboratories and hospitals. OSHA has determined that additional safety precautions are necessary to bring radioactive leakage occurring during use o

> Coal-fired electricity-generating plants emit substantial amounts of sulfur dioxide and particulate pollution into the atmosphere. Concerned citizens are appalled at the aesthetic and environmental implications of such pollution, as well as the potential

> Short-run Market Supply. New England Textiles, Inc., is a medium-sized manufacturer of blue denim that sells in a perfectly competitive market. Given $25,000 in fixed costs, the total cost function for this product is described by: TC = $25,000 + $1Q +

> Short-run Firm Supply. Farm Fresh, Inc., supplies sweet peas to canneries located throughout the Mississippi River Valley. Like many grain and commodity markets, the market for sweet peas is perfectly competitive. With $250,000 in fixed costs, the compa

> Short-run Firm Supply. Florida is the biggest sugar-producing state, but Michigan and Minnesota are home to thousands of sugar beet growers. Sugar prices in the United States average about 20¢ per pound, or more than double the world-wide average of le

> Controller Elliot Reid has asked you to review the pricing practices of Hollywood Medical, Inc. Use the following data to calculate the relevant markup on cost and markup on price for the following disposable items: Marginal Cost Markup оn Cost (%)

> Each ton of ore mined from the Baby Doe Mine in Leadville, Colorado, produces one ounce of silver and one pound of lead in a fixed 1:1 ratio. Marginal costs are $10 per ton of ore mined. The demand and marginal revenue curves for silver are PS = $11 - $0

> Textbook publishers evaluate market size, the degree of competition, expected revenues, and costs for each prospective new title. With these data in mind, they estimate the probability that a given book will reach or exceed the breakeven point. If the pu

> Angelica Pickles is manager of a Quick Copy franchise in White Plains, New York. Pickles projects that by reducing copy charges from 5¢ to 4¢ each, Quick Copy's $600-per-week profit contribution will increase by one-third. a. If average variable costs ar

> Three graduate business students are considering operating a fruit smoothie stand in the Harbour Springs, Michigan, resort area during their summer break. This is an alternative to summer employment with a local firm, where they would each earn $6,000 ov

> South Park Software, Inc. produces innovative interior decorating software that it sells to design studios, home furnishing stores, and so on. The yearly volume of output is 15,000 units. Selling price and costs per unit are as follows:

> While net income is an obviously useful indicator of a firm’s profit-generating ability, it has equally obvious limitations. Net income will grow with a simple increase in the scale of the operation. A 2% savings account will display growing interest inc

> Indicate whether each of the following involves an upward or downward shift in the long-run average cost curve or, instead, involves a leftward or rightward movement along a given curve. Also indicate whether each will have an increasing, decreasing, or

> Untouchable Package Service (UPS) offers overnight package delivery to Canadian business customers. UPS has recently decided to expand its facilities to better satisfy current and projected demand. Current volume totals two million packages per week at

> The U.S. Bureau of the Census publishes employment statistics and demand forecasts for various occupations. a. Using a spreadsheet or hand-held calculator, calculate the ten-year growth rate forecast using the constant growth model with annual compoundi

> Appalachia Beverage Company, Inc. is considering alternative proposals for expansion into the Midwest. Alternative 1: Construct a single plant in Indianapolis, Indiana, with a monthly production capacity of 300,000 cases, a monthly fixed cost of $262,500

> Almost 2 million persons per year visit wondrous Glacier National Park. Due to the weather, monthly park attendance figures varied widely during a recent year: a. Notice that park attendance is lower in December than in January, despite a 42.4% average

> Toys Unlimited Ltd., must forecast sales for a popular adult computer game to avoid stockouts or excessive inventory charges during the upcoming Christmas season. In percentage terms, the company estimates that game sales fall at double the rate of price

> Environmental Designs, Inc., produces and installs energy- efficient window systems in commercial buildings. During the past ten years, sales revenue has increased from $25 million to $65 million. a. Calculate the company's growth rate in sales using the

> Mid-Atlantic Cinema, Inc., runs a chain of movie theaters in the east-central states and has enjoyed great success with a Tuesday Night at the Movies promotion. By offering half off its regular $9 admission price, average nightly attendance has risen fro

> Dorothy Gale, a quality-control supervisor for Wizard Products, Inc., is concerned about unit labor cost increases for the assembly of electrical snap-action switches. Costs have increased from $80 to $100 per unit over the previous three years. Gale thi

> Supersonic Industries, based in Seattle, Washington, manufactures a wide range of parts for aircraft manufacturers. The company is currently evaluating the merits of building a new plant to fulfill a new contract with the federal government. The alternat

> Profitability Effects of Firm Size for DJIA Companies Does large firm size, pure and simple, give rise to economic profits? This question has long been a source of great interest in both business and government, and the basis for lively debate over the

> Determine whether each of the following is true or false. Explain why. a. Average cost equals marginal cost at the minimum efficient scale of plant. b. When total fixed cost and price are held constant, an increase in average variable cost will typicall

> Warren Buffett, chairman and CEO of Berkshire Hathaway, Inc., is an outspoken critic of executive-stock option plans, at least as they are commonly employed. In a typical stock-option plan, top executives are given the right to buy company stock at the c

> Shareholders face a daunting information asymmetry problem when it comes to measuring the performance of the CEO. As head of the corporation, the CEO is in charge of the firm’s management information system. Accounting methods always leave room for manag

> The Sarbanes-Oxley Act, named for sponsors Sen. Paul Sarbanes, D-Md., and Rep. Michael Oxley, R-Ohio, is the most sweeping law affecting corporations since the 1930s. It is having a dramatic effect on the costs companies pay for independent audits of the

> At the end of World War II, goods production and services provision were each responsible for roughly one-half of economic activity and total employment in the United States. Today, the provision of services is responsible for roughly two-thirds of emplo

> According to the Coase Theorem, resource allocation will be efficient so long as transaction costs remain low and property rights can be freely assigned and exchanged. a. Does the Coase Theorem imply that government has little if any role to play in the

> In 2002, Congress held hearings to investigate the collapse of Houston-based energy giant Enron Corp., aiming to discover how to protect against similar disasters. The spectacular implosion of Enron led to the largest corporate bankruptcy in U.S. history