Wheelco, Inc., manufactures automobile and truck wheels. The company produces four basic, high-volume wheels used by each of the large automobile and pickup truck manufacturers. Wheelco also has two specialty wheel lines. These are fancy, complicated wheels used in expensive sports cars. Lately, Wheelco’s profits have been declining. Foreign competitors have been undercutting Wheelco’s prices in three of its bread-and-butter product lines, and Wheelco’s sales volume and market share have declined. In contrast, Wheelco’s specialty wheels have been selling steadily, although in relatively small numbers, in spite of three recent price increases. At a recent staff meeting, Wheelco’s president made the following remarks: “Our profits are going down the tubes, folks. It costs us 29 dollars to manufacture our A22 wheel. That’s our best seller, with a volume last year of 17,000 units. But our chief competitor is selling basically the same wheel for 27 bucks. I don’t see how they can do it. I think it’s just one more example of foreign dumping. I’m going to write my senator about it! Thank goodness for our specialty wheels. I think we’ve got to get our salespeople to push those wheels more and more. Take the D52 model, for example. It’s a complicated thing to make, and we don’t sell many. But look at the profit margin. Those wheels cost us 49 dollars to make, and we’re selling them for 105 bucks each.” Required: What do you think is behind the problems faced by Wheelco? Comment on the president’s remarks. Do you think his strategy is a good one? What do you recommend, and why?
> Cayuga Hardwoods produces handcrafted jewellery boxes. A standard-size box requires 8 board feet of hardwood in the finished product. In addition, 2 board feet of scrap lumber are normally left from the production of one box. Hardwood costs $4.00 per boa
> Choose one of the following manufacturers (or any manufacturer of your choosing), and use the Internet to gather information about any new products the company has recently introduced or plans to introduce. Required: Discuss the steps you think the comp
> The behaviour of the annual maintenance and repair cost in the Bus Transportation Department of the Summerset Public School District is shown by the solid line in the following graph. The dashed line depicts a semi variable-cost approximation of the depa
> Refer to the data in the preceding exercise. Use diagrams similar to those in Exhibits 10-2, 10–3, and 10–4 to determine the direct-material and direct-labour variances. Indicate whether each variance is favourable or
> Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Actual material purchases amounted to 240,000 k
> Handy Hardware is a retail hardware store. Information about the store’s operations follows. November 20x1 sales amounted to $200,000. Sales are budgeted at $220,000 for December 20x1 and $200,000 for January 20x2. Collections are expec
> Sound Investments, Inc., is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20x2. Past experience has indicated that 75 percent of the store’s sales are cash sales. The collec
> Tanya Williams is the new accounts manager at East Bank of Mississippi. She has just been asked to project how many new bank accounts she will generate during 20x2. The economy of the county in which the bank operates has been growing, and the bank has e
> The following information is from Tejas Window Tint’s financial records. Month Sales Purchase April …………………………………. $72,000…………………………… $42,000 May ………………………………….. 66,000 ……………………………. 48,000 June …………………………………. 60,000 ……………………………. 36,000
> Greener Grass Fertilizer Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5 percent per month. The desired monthly ending inventory in units of finished product is 80 percent of the next month’s es
> Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the year 20x1. Two units of raw material are required to produce each unit of finished product. Required: 1. If Bodin Company plans
> Choose a city or state in the United States (or a Canadian city or province), and use the Internet to explore the annual budget of the governmental unit you selected. For example, you could check out the budget for Houston, Texas, at www.houstontx.gov/bu
> Fill in the missing amounts in the following schedules.
> Draw a graph of the cost behaviour for each of the following costs incurred by the Mountain Summit Hospital. The hospital measures monthly activity in patient days. Label both axes and the cost line in each graph. 1. The cost of food varies in proportion
> Search the internet to find two companies other than those referenced in the chapter that report sustainability/ESG results using either the ISO or GRI models. Evaluate their reporting. Is one report better than the other?
> San Mateo Circuitry manufactures electrical instruments for a variety of purposes. The following costs related to maintaining product quality were incurred in May. Required: Prepare a quality-cost report similar to the report shown in Exhibit 8â&#
> The following costs were incurred by Osaka Metals Company to maintain the quality of its products. (The yen is the national currency of Japan.) 1. Operating an X-ray machine to detect faulty welds, 110,000 yen 2. Repairs of products sold last year, 116,0
> Information taken from Allied Pipe Company’s records for the most recent year is as follows: Required: 1. Assuming Allied Pipe Company uses absorption costing, compute the inventoriable costs for the year. 2. Compute the yearâ
> Refer to the data given in the exercise 8-24 for Bianca Bicycle Company. Required: 1. Prepare a cost-volume-profit graph for the company. (Scale the vertical axis in millions of dollars.) 2. Calculate Bianca Bicycle Company’s break-even point in units,
> Bianca Bicycle Company manufactures mountain bikes with a variable cost of $200. The bicycles sell for $350 each. Budgeted fixed manufacturing overhead for the most recent year was $2,200,000. Planned and actual production for the year were the same. Re
> Pandora Pillow Company’s planned production for the year just ended was 10,000 units. This production level was achieved, but only 9,000 units were sold. Other data follow: The cost per unit remained the same in the current year as in t
> Easton Pump Company’s planned production for the year just ended was 20,000 units. This production level was achieved, and 21,000 units were sold. Other data follow: The cost per unit remained the same in the current year as in the prev
> Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 20 percent, and its annual fixed expenses are $120,000. The firm’s income-tax rate is 25 percent. Requ
> Refer to the income statement given in the exercise 7-31. Prepare a new contribution income statement for the Nantucket Inn in each of the following independent situations. (Ignore income taxes.) 1. The hotel’s volume of activity increa
> Information taken from Tuscarora Paper Company’s records for the most recent year is as follows: Required: 1. Assuming Tuscarora Paper Company uses variable costing, compute the inventoriable costs for the year. 2. Compute the year&aci
> A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.) Required: 1. Show the hotel’s cost structure by indicating the percentage of the hotel’s revenue represented by each item on
> Use the Internet to access the website of one of these airlines, or a different airline of your choosing. Required: Find the company’s most recent annual report. Does the management discussion in the report disclose the airlineâ&#
> Tim’s Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows: Three-quarters of the shop’s sales are medium-quality bikes.
> Europa Publications, Inc., specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results of the company’s operations during the prior year are given in the following table.
> Refer to the data given in the exercise 7-26. Required: 1. Prepare a fully labelled profit-volume graph for the Houston Armadillos. 2. What is the safety margin for the baseball franchise if the team plays a 12-game season and the team owner expects the
> The Houston Armadillos, a minor-league baseball team, play their weekly games in a small stadium just outside Houston. The stadium holds 10,000 people and tickets sell for $10 each. The franchise owner estimates that the team’s annual fixed expenses are
> Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm’s fixed costs are 4,000,000 p per year. The variable cost of each component is 2,000 p, and the components are sold for 3,000 p each.
> College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the followi
> Fill in the missing data for each of the following independent cases. (Ignore income taxes.)
> Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company’s stores are
> Manta Ray Company manufactures diving masks with a variable cost of $25. The masks sell for $34. Budgeted fixed manufacturing overhead for the most recent year was $792,000. Actual production was equal to planned production. Required: Under each of the
> Explain the nature and importance of internal controls over financial reporting.
> Recent monthly costs of providing on-board flight service incurred by Great Plains Airlines are shown in the following table. Required: 1. Build a spreadsheet: Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regressi
> Weathereye Inc. manufactures weather satellites. The final assembly and testing of the satellites is a largely manual operation involving dozens of highly trained electronics technicians. The following learning curve has been estimated for the firmâ
> The State Department of Taxation processes and audits income-tax returns for state residents. The state tax commissioner has recently begun a program of work measurement to help in estimating the costs of running the department. The independent variable
> Chillicothe Meat Company produces one of the best sausage products in southern Ohio. The company’s controller used the account-classification method to compile the following information. a. Depreciation schedules revealed that monthly depreciation on bui
> The Iowa City Veterinary Laboratory performs a variety of diagnostic tests on commercial and domestic animals. The lab has incurred the following costs over the past year. Required: 1. Plot the data above in a scatter diagram. Assign cost to the vertica
> Hold a classroom discussion (or debate) arguing the following two viewpoints, A: Sound data analytics is the key to using data for decision making. This is where the story embedded in the data is unlocked. Data visualization is all fluff—just a bunch of
> Refer to the data in the exercise 6-25. 1. Draw a scatter diagram and graph the company’s energy cost behaviour using the visual-fit method. 2. Predict the energy cost for a month in which 26,000 pints of applesauce are produced. 3. Wha
> Jonathan Macintosh is a highly successful Pennsylvania orchard man who has formed his own company to produce and package applesauce. Apples can be stored for several months in cold storage, so applesauce production is relatively uniform throughout the ye
> WMEJ is an independent television station run by a major state university. The station’s broadcast hours vary during the year depending on whether the university is in session. The station’s production-crew and supervi
> Redwood Company sells craft kits and supplies to retail outlets and through its catalogue. Some of the items are manufactured by Redwood, while others are purchased for resale. For the products it manufactures, the company currently bases its selling pri
> Visit the website of one of the following organizations, or a different organization of your choosing. Required: Read about the organization’s activities and operations. Then list three activities that you think the organization would
> Finger Lakes Winery is a small, family-run operation in upstate New York. The winery produces two varieties of wine: Riesling and chardonnay. Among the activities engaged in by the winery are the following: 1. Trimming: At the end of a growing season, th
> Refer to the information given in the exercise 5-28. For each of the activity cost pools identified, indicate whether it represents a unit-level, batch-level, product-sustaining-level, or facility-level activity. Data from Exercise 5-28: Kentaro Corporat
> Kentaro Corporation Manufactures Digital Video Recorders (DVRs) in its Tokyo plant. The following costs are budgeted for January. (Yen is the Japanese monetary unit.) Required: Divide these costs into activity cost pools, and identify a cost driver for
> Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 14.5 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $27,500. In an attempt to mor
> Big Apple Design Company specializes in designing commercial office space in Manhattan. The firm’s president recently reviewed the following income statement and noticed that operating profits were far below her expectations. She had a
> The customer profitability analysis for Dronze Inc., which is displayed in Exhibit 5–14, ranks customers by operating income. An alternative, often-used approach is to rank customers by sales revenue. Required: 1. List the customer num
> Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of
> Think carefully about a recent visit to a sit-down restaurant. List as many activities as you can think of that were performed by the restaurant’s employees for its customers. Required: For each activity on your list, indicate the following: 1. Value-ad
> Consider the following costs that were incurred during the current year: 1. Tire costs incurred by Ford Motor Company. 2. Sales commissions paid to the sales force of Dell Inc. 3. Wood glue consumed in the manufacture of Rooms to Go furniture (assume tha
> Refer to the data given in the preceding exercise 17-17. Required: Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR De
> Not all manufacturing processes fall neatly into the structure presented in the chapter. One variation is called mass customization. Search the term mass customization on the Internet. Required: Select and read several articles about mass customization.
> A loom operator in a textiles factory earns $16 per hour. By contract, the employee earns $24 (time and a half) for overtime hours. The operator worked 45 hours during the first week of May, and overtime is paid after the usual 40 hours. Required: 1. Co
> List the costs that would likely be included in each of the following marginal-cost calculations. 1. The marginal cost of one additional passenger on an American Airlines flight. 2. The marginal cost of serving one additional customer in a Chipotle Mexic
> Suppose you paid $150 for a ticket to see your university’s football team compete in a bowl game. Someone offered to buy your ticket for $400, but you decided to go to the game. Required: 1. What did it really cost you to see the game? 2. What type of c
> The state Department of Education owns a computer system, which its employees use for word processing and keeping track of education statistics. The governor’s office recently began using this computer also. As a result of the increased usage, the demand
> Orbital Communications, Inc., manufactures communications satellites used in TV signal transmission. The firm currently purchases one component for its satellites from a European firm. An Orbital Communications engineering team has found a way to use the
> Martin Chuzzlewit purchased a vacant lot outside of London for £1,350,000, because he heard that a shopping mall was going to be built on the other side of the road. He figured that he could make a bundle by putting in a fast-food outlet on the site. As
> A hotel pays the phone company $100 per month plus $.25 for each call made. During January 6,000 calls were made. In February 5,000 calls were made. Required: 1. Calculate the hotel’s phone bills for January and February. 2. Calculate the cost per phone
> Mighty Muffler, Inc., operates an automobile service facility that specializes in replacing mufflers on compact cars. The following table shows the costs incurred during a month when 600 mufflers were replaced. Required: Fill in the missing amounts, la
> A foundry employee worked a normal 40-hour shift, but four hours were idle due to a small fire in the plant. The employee earns $18 per hour. Required: 1. Calculate the employee’s total compensation for the week. 2. How much of this compensation is a di
> Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the t
> Use the Internet to access the website for one of the following companies, or any other company of your choosing. Required: After perusing the company’s website, work as a group to 1. List three key activities you believe would be in th
> For each of the following activities, explain which of the objectives of managerial accounting activity is involved. In some cases, several objectives may be involved. 1. Developing a bonus reward system for the managers of the various offices of the AAA
> Give an example of managerial accounting information that could help a manager make each of the following decisions. 1. The president of Budget Rent a Car is deciding whether to add luxury cars to the rental car fleet. 2. The production manager in a Volv
> For each case below, find the missing amount. Case I Case II Case III Beginning inventory of finished goods ……………………… ? $12,000 $ 7,000 Cost of goods manufactured during period ……………….. $419,000 $95,000 ? Ending inventory of finished g
> Refer to the original data given in Exercise III–5 for Fiber Technology, Inc. Required: Prepare a graphical analysis of the economic order quantity decision for XL-20. Data from Exercise III-5: Fiber Technology, Inc., manufactures glass fibers used in
> You plan to retire at age 40 after a highly successful but short career. You would like to accumulate enough money by age 40 to withdraw $225,000 per year for 40 years. You plan to pay into your account 15 equal installments beginning when you are 25 and
> Refer to the answers given for the preceding exercise. Required: 1. Refer to requirement 1 of the preceding exercise. Prepare a display similar to Exhibit II-1 to show how your accumulation grows each year to equal $5,487.50 after six years. 2. Refer to
> Answer each of the following independent questions. Ignore personal income taxes. 1. Suppose you invest $2,500 in an account bearing interest at the rate of 14 percent per year. What will be the future value of your investment in six years? 2. Your best
> Refer to the data given in Exercise 17–17 for Tuscaloosa National Bank. Required: Use the reciprocal-services method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Data from Exe
> Refer to the data given in Exercise 17–20. Breakfast time Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $.50 per kilogram, and the mulch w
> Refer to the data given in the preceding exercise 17-15. Required: 1. Use the step-down method to allocate Hudson Community College’s service department costs to the Liberal Arts and Sciences departments. 2. Build a spreadsheet: Constr
> Refer to the data given in the preceding exercise 17-20. Required: Use the relative-sales-value method to allocate Breakfast time Cereal Company’s joint production cost between Yummies and Crummies. Data from Exercise 17-20: Breakfast
> Breakfast time Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows: Required: Use the physical-units method to allocate the company’s joint production cost between Yummies a
> Refer to the data in the preceding exercise 16-38. Required: 1. Compute the nominal interest rate. 2. Prepare a schedule of cash flows measured in nominal dollars. 3. Using cash flows measured in nominal dollars, compute the net present value of the pro
> The state’s Secretary of Education is considering the purchase of a new computer for $100,000. A cost study indicates that the new computer should save the Department of Education $30,000, measured in real dollars, during each of the next eight years. Th
> Metro Car Washes, Inc., is reviewing an investment proposal. The initial cost as well as the estimate of the book value of the investment at the end of each year, the net after-tax cash flows for each year, and the net income for each year are presented
> Allegience Insurance Company’s management is considering an advertising program that would require an initial expenditure of $165,500 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $75,000, wit
> The owner of Atlantic City Confectionary is considering the purchase of a new semiautomatic candy machine. The machine will cost $25,000 and last 10 years. The machine is expected to have no salvage value at the end of its useful life. The owner projects
> Sharpe Machining Company purchased industrial tools costing $100,000, which fall in the 3-year property class under MACRS. Required: 1. Prepare a schedule of depreciation deductions assuming: a. The firm uses the accelerated depreciation schedule specif
> In December of 20x4, Atlas Chemical Corporation sold a forklift for $9,255. The machine was purchased in 20x1 for $50,000. Since then $38,845 in depreciation has been recorded on the forklift. Required: 1. What was the forklift’s book value at the time
> Daly Publishing Corporation recently purchased a truck for $30,000. Under MACRS, the first year’s depreciation was $6,000. The truck driver’s salary in the first year of operation was $32,000. Required: Show how each of the amounts mentioned above shoul
> Hudson Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of these two service departments’ output
> Use the Internet to access the home page for the City of Chicago, www.cityofchicago.org. Use one of the links there to access the home page for one of Chicago’s sister organizations, such as the following: Each of these linked pages con
> Refer to the data given in the exercise 16-24. Required: Compute the internal rate of return on the new well. Should the governing board approve the new well? Data from Exercise 16-24: Jack and Jill’s Place is a non-profit nursery school run by the par
> Jack and Jill’s Place is a non-profit nursery school run by the parents of the enrolled children. Since the school is out of town, it has a well rather than a city water supply. Lately, the well has become unreliable, and the school has had to bring in b
> The following data pertain to Royal Lighting Company’s oak-clad, contemporary chandelier. Variable manufacturing cost …………………………………………………….. $200 Applied fixed manufacturing cost ……………………………………………… 70 Variable selling and administrative cost …………
> The following data pertain to Lawn Master Corporation’s top-of-the-line lawn mower. Variable manufacturing cost …………………………………………………….. $250 Applied fixed manufacturing cost ……………………………………………… 50 Variable selling and administrative cost …………………………
> Visit the website of one of the following companies, or a different company of your choosing. Required: Read about a new product or service to be offered by the company. Then explain how the firm could use target costing to price the new product or serv
> Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 5.00 p per unit. Fixed costs are expected to amount to 60,000 p for the year, and all variable manufacturing and administrative costs are expected to be incur
> Refer to the data given in the preceding two exercises (Exercise 15-28 and 15-29). Required: 1. Prepare a table of Spectrum Sound’s revenue, cost, and profit relationships. For guidance, refer to panel C of Exhibit 15–
> Refer to the exercise 15-28. The divisional controller at Spectrum Sound’s St. Louis Division has estimated the following cost data for the division’s CD players. (Assume there are no fixed costs.) Required: 1. Prepar
