The Whole Life Baked Goods Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: he management of The Whole Life Baked Goods Company is evaluating each division as a basis for planning a future expansion of operations. Instructions 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round percentages and the investment turnover to one decimal place. 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Explain.
> MatchPoint Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows: Both rackets are produced in two departments, Forming and Assembly. The direct labo
> On October 1, White Way Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternatively, the company could use the funds to invest in $180,000 of 6% U.S. Treasury bonds that mature in 16 years
> Anticipated sales for Safety Grip Company were 42,000 passenger car tires and 19,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires as follows: The purchase prices of rubber and steel are $1.20 and $0.80 per poun
> Coca-Cola Enterprises is the largest bottler of Coca-Cola ® in Western Europe. The company purchases Coke ® and Sprite ® concentrate from The Coca-Cola Company, dilutes and mixes the concentrate with carbonated water, and then fills the blended beverage
> Bergan Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000. For Bergan Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity b
> Lorenzo’s Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12" and 16" frozen pizzas for September: Three direct materials are used in producing the two types of pizza. The quan
> Based on the data in Exercise 22-7 and assuming that the average compensation per hour for staff is $45 and for partners is $140, prepare a professional labor cost budget for each department for Rollins and Cohen, CPAs, for the year ending December 31,
> The following information is available for Shanika Company for 20Y6: Instructions 1. Prepare the statement of cost of goods manufactured. 2. Prepare the income statement Inventorles January 1 December 31 Materials $ 77,350 $ 95,550 Work in process 10
> Rollins and Cohen, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending December 31, 20Y7: The averag
> Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget: Rumble Thunder Estimated inventory (units), June 1 750 300 Desire
> Weightless Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows: The finished goods inventory estimated for October 1 for the Bath and Gym scale models is 18,00
> Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department Direct labor pe
> The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: The actual amount spent and the actual units produced in the first three months in the Machining Department we
> Pure Cane Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the am
> Morningside Technologies Inc. uses flexible budgets that are based on the following data: Sales commissions ......................................... 15% of sales Advertising expense ........................................ 12% of sales Miscellaneous ad
> In what order should the three inventories of a manufacturing business be presented on the balance sheet?
> Distinguish between prime costs and conversion costs.
> During August, Rothchild Company incurred factory overhead costs as follows: indirect materials, $17,500; indirect labor, $22,000; utilities cost, $9,600; and factory depreciation, $17,500. Journalize the entry to record the factory overhead incurred dur
> What manufacturing cost term is used to describe the cost of materials that are an integral part of the manufactured end product?
> a. Differentiate between a department with line responsibility and a department with staff responsibility. b. In an organization that has a Sales Department and a Personnel Department, among others, which of the two departments has (1) line responsibil
> Tybee Industries Inc. uses a job order cost system. The following data summarize the operations related to production for January, the first month of operations: a. Materials purchased on account, $29,800. b. Materials requisitioned and factory labor u
> Munson Co. uses a job order cost system. The following data summarize the operations related to production for July: a. Materials purchased on account, $225,750 b. Materials requisitioned, $217,600, of which $17,600 was for general factory use c. Fact
> a. Where should a declared but unpaid cash dividend be reported on the balance sheet? b. Where should a declared but unissued stock dividend be reported on the balance sheet?
> Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are
> Ginocera Inc. is a designer, manufacturer, and distributor of low cost, high quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $600,000
> Explain the meaning of each of the following terms as they relate to a bond issue: (a) convertible and (b) callable.
> During Year 1, its first year of operations, Galileo Company purchased two available-for- sale investments as follows: Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $50 per share and the Pavlov Co. s
> Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December. Instructions 1. Determine the amounts of the missing items, identifying them by letter.
> Briefly explain why firms might use nonfinancial performance measures.
> If variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?
> a. What are the two variances between the actual cost and the standard cost for direct labor? b. Who generally has control over the direct labor cost variances?
> Three phases of the management process are controlling, planning, and decision making. Match the following descriptions to the proper phase: Phase of management process Controlling Description a. Monitoring the operating results of implemented plan
> Fire Rock Company manufactures designer paddle boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for June: In addition, the following information is available: a. Materials
> The materials cost variance report for Nickols Inc. indicates a large favorable materials price variance and a significant unfavorable materials quantity variance. What might have caused these offsetting variances?
> A partial list of The Grand Hotel’s costs follows: Instructions 1. What would be The Grand Hotel’s most logical definition for the final cost object? Explain. 2. Identify whether each of the costs is to be classified
> What is meant by reporting by the “principle of exceptions” as the term is used in reference to cost control?
> How does the target cost concept differ from cost- plus approaches?
> Many fast-food restaurant chains such as McDonald’s occasionally discontinue restaurants in their system. What are some financial considerations in deciding to eliminate a store?
> A company fabricates a component at a cost of $6.00. A supplier offers to supply the same component for $5.50. Under what circumstances is it reasonable to purchase from the supplier?
> A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
> A company could sell a building for $250,000 or lease it for $2,500 per month. What would need to be considered in determining if the lease option would be preferred?
> Explain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income.
> Under what conditions might a company use activity-based costing to allocate factory overhead to products?
> Valotic Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as follows (in thousands): During January, the costs inc
> The following is a list of costs incurred by several businesses: a. Salary of quality control supervisor b. Packing supplies for products sold. These supplies are a very small portion of the total cost of the product. c. Factory operating supplies d.
> Identify the following costs as a product cost or a period cost for a magazine publisher: a. Sales salaries b. Paper used for the magazine c. Maintenance on printing machines d. Depreciation expense—corporate headquarters
> Garcon Inc. manufactures electronic products, with two operating divisions, the Consumer and Commercial divisions. Condensed divisional income statements, which involve no intracompany transfers and include a breakdown of expenses into variable and fixed
> The vice president of operations of Pavone Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Instructions 1. P
> A condensed income statement for the Commercial Division of Maxell Manufacturing Inc. for the year ended December 31 is as follows: Assume that the Commercial Division received no charges from service departments. The president of Maxell Manufacturing h
> Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense account
> Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $175 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity
> Hit-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican street food, Ethiopian cuisine, and Lebanese-Italian fusi
> American Express Company is a major financial services company, noted for its American Express ® card. Some of the performance measures used by the company in its balanced scorecard follow: For each measure, identify whether the measure best
> H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through two segments: company-owned offices and franchised operations. Recent financial information provided by H
> When is the negotiated price approach preferred over the market price approach in setting transfer prices?
> Differentiate between a profit center and an investment center.
> A business issued a 45-day, 6% note for $210,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.
> Identify the following costs as a product cost or a period cost for an automobile manufacturer: a. Steel b. Wages of employees that operate painting equipment c. Rent on office building d. Sales staff salaries
> Data for Uberto Company are presented in the following table of returns on investment and residual incomes: Determine the missing items, identifying each item by the appropriate letter. Minimum Acceptable Income from Operations (b) $93,000 $58,500
> The Walt Disney Company has four profitable business segments, described as follows: • Media Networks: The ABC television and radio network, Disney channel, ESPN, A&E, E!, and Disney.com • Parks and Resorts: Walt
> The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): The manager of the Consumer Products Division is considering ways to increase the return on investment. a
> Glades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adju
> Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: The service department charge rate for the service department costs was based
> Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: The other corporate administrative expenses inc
> Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to charge profit centers with Computing and Communications Services (CCS) service department costs. The following table identifies an a
> An examination of the accounting records of Clowney Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely means of improving income from operations. Explain.
> The following data were summarized from the accounting records for Jersey Coast Construction Company for the year ended June 30, 20Y8: Prepare divisional income statements for Jersey Coast Construction Company. Cost of goods sold: Service departmen
> Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a magazine publisher: a. Paper used for the magazine b. Wages of printing machine employees c. Glue used to bind magazine d. Maintenance on print
> Partially completed budget performance reports for Garland Company, a manufacturer of light duty motors, follow: a. Complete the budget performance reports by determining the correct amounts for the lettered spaces. b. Compose a memo to Cassandra Reid,
> Based on T_Kong Industries’ data in Exercise 24-20, assume that a transfer price of $160 has been established and that 50,000 units of materials are transferred, with no reduction in the Components Division’s current sales. a. How much would T_Kong Indu
> Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (5,200 bars) are as follows: Determine the standard direct materials cost per bar of
> Alpha University wants to monitor the efficiency and quality of its course registration process. a. Identify three input and three output measures for this process. b. Why would Alpha University use nonfinancial measures for monitoring this process?
> Diamond Inc. is an Internet retailer of woodworking equipment. Customers order wood- working equipment from the company, using an online catalog. The company processes these orders and delivers the requested product from its warehouse. The company wants
> In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost estimated?
> The following data were taken from the records of Griggs Company for December: Administrative expenses …………………………………………………………..$100,800 Cost of goods sold (at standard) …………………………………………………..550,000 Direct materials price variance—unfavorable ……………………………
> The Assembly Department produced 5,000 units of product during March. Each unit required 2.20 standard direct labor hours. There were 11,500 actual hours used in the Assembly Department during March at an actual rate of $17.60 per hour. The standard dire
> The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: The wind turbines require an investment of $887,600, while the biofuel equipment requires a
> Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions: a. Purchased 2,450 units of copper tubing on acco
> The management of Style Networks Inc. is considering two TV show projects. The estimated net cash flows from each project are as follows: After Hours requires an investment of $913,600, while Sun Fun requires an investment of $880,730. No residual value
> Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 20,000 hours for production: Tannin has available 25,000 hours of monthly productive capacity
> First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: Instructions 1. Assuming that the desired rate of return is 15%, prepare
> Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows: Each product requires an investment of $125,000. A rate of 10% has been selected for the net present value analysis.
> The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Each project requires an investment of $368,000. Str
> Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows: The company&ac
> Melinda Stoffers owns and operates ABC Print Co. During February, ABC incurred the following costs in acquiring two printing presses. One printing press was new, and the other was purchased from a business that recently file
> Junck Company has sales of $550,000, and the break-even point in sales dollars is $385,000. Determine the company’s margin of safety as a percent of current sales.
> During May, Bergan Company incurred factory overhead costs as follows: indirect materials, $8,800; indirect labor, $6,600; utilities cost, $4,800; and factory depreciation, $9,000. Journalize the entry to record the factory overhead incurred during May
> Liu Inc. has sales of $48,500,000, and the break-even point in sales dollars is $31,040,000. Determine the company’s margin of safety as a percent of current sales
> Westminster Co. reports the following data: Determine Westminster Co.’s operating leverage. Sales $875,000 Variable costs Contribution margin 425,000 $450,000 Fixed costs 150,000 $300,000 Income from operations
> SungSam Enterprises reports the following data: Determine SungSam Enterprises’s operating leverage Sales $340,000 Variable costs Contribution margin 180,000 $160,000 Fixed costs B0,000 S B0,000 Income from operations
> Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of
> Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer: a. Wages of employees that operate painting equipment b. Wages of the plant manager c. Steel d. Oil used for assembly
> Ramirez Inc. sells a product for $80 per unit. The variable cost is $60 per unit, and fixed costs are $2,000,000. Determine (a) the break-even point in sales units and (b) the break- even point in sales units if the company desires a target profit of $
> Elrod Inc. sells a product for $75 per unit. The variable cost is $45 per unit, while fixed costs are $48,000. Determine (a) the break-even point in sales units and (b) the break- even point if the selling price were increased to $95 per unit.
> Bigelow Inc. sells a product for $800 per unit. The variable cost is $600 per unit, while fixed costs are $1,200,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $850 per unit.
> The manufacturing costs of Carrefour Enterprises for three months of the year follow: Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost Total Cost Units Produced July $300,000 2,700 units August Septe
> The manufacturing costs of Ackerman Industries for the first three months of the year follow: Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost Total Cost Units Produced January $1,900,000 2,250,000 2
> The following are inputs and outputs to the copying process of a copy shop: Number of employee errors Number of times paper supply runs out Copy machine downtime (broken) Number of pages copied per hour Number of customer complaints Percent of jobs done
> Dvorak Company produced 1,000 units that require 5 standard pounds per unit at $2.50 standard price per pound. The company actually used 4,500 pounds in production. Journalize the entry to record the standard direct materials used in production.
> Bellingham Company produced 15,000 units that require 2.5 standard pounds per unit at $3.75 standard price per pound. The company actually used 36,000 pounds in production. Journalize the entry to record the standard direct materials used in production.
