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Chapter: 10 -Problem: 2 >> Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Required: 1. Compute the ROI and the margin and turnover ratios for each year for the Frozen Foods Division.2. Compute the ROI and the margin and turnover ratios for each year for the Canned Foods Division. 3. Explain the change in ROI from Year 1 to Year 2 for each division. 4. Which of the dat
Answer Preview: 1. Frozen Foods Division ROI: Year 1: $420,000/$4,000,000 = 10 50% Year 2: $434,000/$4,000,000 = 10 …

, Chapter: 6 -Problem: 5 >> Limpiar Company produces a liquid household cleaning product. The Mixing Department, the first process department, mixes the ingredients required for the cleaning product. The following data are for May:Direct materials are added throughout the process. Ending inventory is 60 percent complete with respect to direct labor and overhead. Required: 1. Why would a manager want a production report?2. Pr
Answer Preview: 1. Since a production report summarizes the manufacturing and cos…

, Chapter: 4 -Problem: 15 >> A consulting firm has recently installed a TDABC system for the Shawnee University Library. The consulting firm identified four major processes or departments for the library: Acquisition, Cataloging, Circulation, and Document Delivery. The Acquisition Department is responsible for acquiring new books and new journal subscriptions. Information for the Acquisition Department is given as follows:Per
Answer Preview: 1. Capacity cost rate = $180,000/300,000 minutes = $0 60 per minute 2. Activity rates: Selecting $0 60 6 = $3 60 per selection Processing requests $0 …

, Chapter: 18 -Problem: 6 >> Ioannis Inc., produces and sells two types of countertop ovens—the toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.Budgeted Amounts:Actual Amounts: Required:1. Calculate the contribution margin variance. 2. What if actual units sold of the convection oven decreased? How would that affect the contribution margin variance? What if actual units sold o
Answer Preview: 1. Contribution margin variance = Actual contribution …

, Chapter: 6 -Problem: 6 >> Dulce Company produces 70 percent dark chocolate truffles. Conversion costs are added uniformly. For the first week in March, EWIP is 80 percent complete with respect to conversion costs. Materials are added at the beginning of the process. The following information is provided for the first week in March: Required: 1. Calculate the equivalent units for each input category.2. Calculate the unit co
Answer Preview: 1. 2. Unit direct materials cost = $22,500/150,000 = $0 15 Unit conversion cost = $14,400/144,…

, Chapter: 14 -Problem: 3 >> Lanman, Inc., estimates its hidden external failure costs using the Taguchi loss function. Lanman produces plastic sheets that vary in thickness and grade. For one of its large-volume products, it was determined that k = $40,000 and T = 0.31 inches in diameter. A sample of four units produced the following values: Required: 1. Calculate the average loss per unit. 2. Assuming that 100,000 units wer
Answer Preview: 1. Thus, the average loss per unit is $10 00. 2. Hidden cost = $10 00 100,000 …

, Chapter: 18 -Problem: 1 >> Privacy Window and Wall Treatments Company provides draperies, shades, and various window treatments. Privacy works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Privacy’s income statement for last year is as follows:Privacy wants to find a markup on cost of g
Answer Preview: 1. Markup on COGS = (Selling and administrative expenses + Oper…

, Chapter: 14 -Problem: 6 >> Shultz Company had the following environmental activities and product information: 1. Environmental activity costs2. Driver data3. Other production data Required: 1. Calculate the activity rates that will be used to assign environmental costs to products. 2. Determine the unit environmental and unit costs of each product using ABC. 3. What if the design costs increased to $540,000 and the cost of
Answer Preview: 1. Rates: Design products: $405,000/13,500 = $30 per design hour Testing: $720,000/36,000 = $20 per …

, Chapter: 18 -Problem: 8 >> Mayfair Electric Utility has excess electrical generating capacity. In order to utilize its excess capacity, Mayfair entered into a five-year contract with the U.S. government to sell Mayfair’s generated excess power to the U.S. power grid. The contract called for Mayfair to sell its excess electrical power at its “lowest reasonable cost.” During the five-year term of the contract, Mayfair charged
Answer Preview: 1. The contract calls for Mayfair to provide electric power at its lowest reasonable cost. The contract is a good deal for Mayfair because it allows t…

, Chapter: 4 -Problem: 5 >> Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.Overhead costs: Required: 1. Calculate the four activity rates. 2. Calculate the unit costs using activity rates. Also, calculate the overhead cost per unit. 3. What if consumption ratios ins
Answer Preview: 1. Machining rate: $24,000,000/1,200,000 = $20 per machine hour Engineering rate: $8,000,000/8,000 = …

, Chapter: 2 -Problem: 6 >> Picante, Inc., provided the following information for the last calendar year:During the year, direct materials purchases amounted to $184,800, direct labor cost was $149,100, and overhead cost was $228,800. There were 20,000 units produced. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cos
Answer Preview: 1. Direct materials used = $150,500 + $184,800 $145,300 …

, Chapter: 16 -Problem: 10 >> Aubrey Company produces a single product. Last year’s income statement is as follows: Required:1. Compute the break-even point in units and sales revenue. (Round break-even units to the nearest unit and revenue to the nearest dollar.)2. What was the margin of safety for the company last year?3. Suppose that Aubrey Company is considering an investment in new technology that will increase fixed cost
Answer Preview: 1. Unit contribution margin = $852,600/12,000 = $71 05 Break-even u…

, Chapter: 16 -Problem: 4 >> Nealon Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows. Required: 1. What is Nealon’s variable cost ratio? Its contribution margin ratio? 2. Suppose Nealon’s actual revenues are $190,000 greater than budgeted. By how much will before-tax profits increase? Give the answer without preparing a new income statement. 3. How much sales revenue
Answer Preview: 1. Variable cost ratio = $781,200/$1,240,000 = 0 63 Contribution marg…

, Chapter: 11 -Problem: 1 >> Alejandro’s Moab Grill features authentic Mexican dishes delivered in a relaxing Western motif. Given the short summer tourist season, Alejandro (the owner) decided to identify his top risk. Alejandro is most concerned that his restaurant will go relatively unnoticed by tourists as the number of other local competing restaurants continues to increase. As a result, he worries about the risk that th
Answer Preview: 1. The inherent risk for this risk equals the likelihood of the risk occurring multiplied by the impact that is expected should the risk actually occu…

, Chapter: 18 -Problem: 4 >> Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Whang’s direct costs and subcontractor costs as well as an amount referred to as “overhead and profit.” Whang’s bidding policy is to estimate the costs of direct materials, direct labor, and subcontractors’ costs. These are totaled, and a markup is applied to cov
Answer Preview: 1. Markup percentage = $525,000/$4,375,000 = 0 12, or 12% 2. Bid = $325,000 + (0 1…

, Chapter: 21 -Problem: 3 >> Goler Company, based in Illinois, sells its product at home and abroad. On March 1, Bondi Company, an Australian company, orders $30,000 worth of product to be delivered immediately and to be paid in Australian dollars (AUD$) on May 1. The selling price in Australian dollars is computed using the exchange rate in effect on March 1. Required: 1. On March 1, how much does Goler expect to receive fro
Answer Preview: 1. (1 40 $30,000) = AUD $42,000 2. Goler will b…

, Chapter: 13 -Problem: 2 >> Fontane, Inc., has provided the following information for one of its products for each hour of production: Actual velocity: 400 units (per hour) Move time: 25 minutes Inspection time: 5 minutes Rework time: 10 minutes Required: 1. Calculate MCE. Comment on its significance. Round answers to two decimal points. 2. What is the theoretical cycle time? Calculate MCE using actual and theoretical cycle
Answer Preview: 1. Process time = 60 minutes 25 minutes 5 minutes 10 minutes = 20 minu…

, Chapter: 13 -Problem: 1 >> Bemidii Company has the following data for one of its production departments: Theoretical velocity: 400 units per hour Productive minutes available per year: 5,000,000 Annual conversion costs: $120,000,000 Actual velocity: 240 units per hour Required: 1. Calculate the actual conversion cost per unit using actual cycle time and the standard cost per minute. 2. Calculate the ideal conversion cost pe
Answer Preview: 1. Actual cycle time = 60 minutes/240 units = 0 25 minutes …

, Chapter: 17 -Problem: 1 >> Each year, Giada Company produces 25,000 units of a component part used in tablet computers. An outside supplier has offered to supply the part for $4.00. The unit cost is: Required: 1. What are the alternatives for Giada Company? 2. Assume that none of the fixed cost is avoidable. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost effectiv
Answer Preview: 1. The alternatives are to make the part in house or buy the part external…

, Chapter: 15 -Problem: 3 >> Renlund Company is transitioning to a lean manufacturing system and has just finalized two order fulfillment value streams. One of the value streams has two products, and the other has four products. The two-product value stream produces precision machine parts, and the four-product value stream produces machine tools. Before moving to the value-stream structure, Renlund had a well-developed ABC s
Answer Preview: 1. Average conversion cost per unit = Conversions costs/Total units produced = $1,080,000/60,000 units = $18 per unit It is descriptive as it tells what is happening (whether it is telling an accurate …

, Chapter: 2 -Problem: 8 >> Vasani House Company produces numerous fabrics for use in automobile, airplane, and boat seats. For last year, Vasani House reported the following:Last year, Vasani House produced 6,800 units and sold 7,000 units at $250 per unit. Required: 1. Prepare a statement of cost of goods manufactured. 2. Prepare an absorption-costing income statement.
Answer Preview: 1. 2. Direct materials: Vasani House Company Statement of Cost of G…

, Chapter: 12 -Problem: 4 >> Wade Paving Company has a sealcoating activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: • Five truck-mounted sealing units, with a lease cost of $15,000 per year per unit • Ten sealcoating employees each paid a salary of $40,000 per year (A total of 20,000 sealcoating hours are supplied by the 10 workers.) • Sealcoating mate
Answer Preview: 1. Acquired in advance of usage: Acquired as neede…

, Chapter: 3 -Problem: 2 >> Noel’s Mobile Pet Services Company has a grooming department staffed by 10 professional pet groomers. Each groomer is paid $75,000 per year and is able to process 5,000 grooming orders. Last year, 46,000 grooming orders were processed by the 10 groomers. Required: 1. Calculate the activity rate per grooming order. 2. Calculate, in terms of grooming orders, the: a. total activity availability b. un
Answer Preview: 1. Activity rate = Total cost of professional pet groomers/Number of grooming …

, Chapter: 18 -Problem: 5 >> Holland Company is a garden products wholesale firm. In December, Holland Company expects to sell 84,000 bags of vegetable fertilizer at an average price of $8.75 per bag. Actual results are 85,000 bags sold at an average price of $8.50 per bag. Required: 1. Calculate the sales price variance for December. 2. Calculate the sales volume variance for December. 3. Calculate the overall sales variance
Answer Preview: 1. Sales price variance = (Actual price Expected price) Quantity sold = [($8 50 $8 75) 85,000] = $21…

, Chapter: 21 -Problem: 4 >> On June 1, Marano, Inc., sold product for $50,000 to be delivered immediately to a Japanese customer and to be paid in yen on August 1. Marano is worried that the exchange rate of dollars for yen could change significantly within two months. In hopes of avoiding a potential loss on exchange, the company has decided to purchase a forward contract. Required: 1. On June 1, how much does Marano expect
Answer Preview: 1. (107 $50,000) = 5,350,000 2. 5,350,000 converted into dollars at the …

, Chapter: 11 -Problem: 3 >> Tulsa Company is a car brake repair and replacement company operating in the after-sales market. Tulsa’s purchasing manager uses two suppliers (Stridulo and Fallimento) for the source of its passenger car brakes. Data relating to brake discs (Discs) and brake pads (Pads) are given on the next page. Required: 1. Calculate the activity rates for assigning costs to suppliers.2. Calculate the total un
Answer Preview: 1. Adverse buying rate = $800,000/16,000* = $50 per adverse purchase *(2,000 + 2,000 + 6,000 …

, Chapter: 12 -Problem: 1 >> Whitaker Company produces two models of blenders for restaurants: the “Super Model” (priced at $1,600) and the “Special Model” (priced at $800). Recently, Whitaker has been losing market share with its Special Model because of competitors offering blenders with the same quality and features but at a lower price. A careful market study revealed that if Whitaker could reduce the price of its Special
Answer Preview: 1. Plantwide rate = ($21,600,000 + $14,400,000 + $7,200,000)/360,000 = $120 per machine hour Unit ov…

, Chapter: 14 -Problem: 7 >> Ming Company reported the following sales and quality costs for the past four years. Assume that all quality costs are variable and that all changes in the quality cost ratios are due to a quality improvement program. Required: 1. Compute the quality costs for all four years. By how much did net income increase from Year 1 to Year 2 because of quality improvements? From Year 2 to Year 3? From Year
Answer Preview: 1. Quality costs: Year 1: $10,000,000 (0 25 $40,000,000) Year 2: $9,680,000 (0 22 $44,000,000) Year …

, Chapter: 21 -Problem: 2 >> Chinook, Inc., purchases components from a Japanese company that requires payment in yen (¥); it sells finished product to a German company that pays in euros. On June 1, Chinook ordered components from the Japanese company costing ¥6,890,000 and sold finished goods to the German company with a selling price of $150,000 to be paid in euros. The June 1 spot rates of U.S. dollars for yen and for eur
Answer Preview: 1. 6,890,000/106 = …

, Chapter: 17 -Problem: 3 >> Redwood Elegance Company, manufactures wooden coffee tables for sale to specialty furniture stores. Currently, the company is operating at 85 percent of capacity. A chain of furniture outlet stores has offered to buy 5,000 units of Redwood’s ornate rustic tables as long as the table can be customized with the outlet chain’s logo. While the normal selling price is $125 per table, the chain has offe
Answer Preview: 1. The two alternatives are to accept or reject the special order. The relevant benefits and costs o…

, Chapter: 10 -Problem: 1 >> For each of the following scenarios, determine whether the specified variable would increase, decrease, or remain the same. Explain your choice. 1. If sales and average operating assets for Kayman Company for Year 2 are identical to their values in Year 1, yet operating income is higher, ROI for Year 2 will __________.2. Amy Company budgeted sales of $450,000, operating expenses of $310,000, and a
Answer Preview: 1. Year 2 ROI will increase because operating income is higher while operat…

, Chapter: 5 -Problem: 1 >> Perrin Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $242,000, and budgeted direct labor hours were 20,000. The average wage rate for direct labor is expected to be $22 per hour. During June, Perrin Company worked on four jobs. Data relating to these four jobs follow:Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 an
Answer Preview: 1. Budgeted direct labor cost = $22 20,000 direct labor hours = $4…

, Chapter: 15 -Problem: 6 >> Richins Company is considering the acquisition of a computerized manufacturing system. The new system has a built-in quality function that increases the control over product specifications. An alarm sounds whenever the product falls outside the programmed specifications. An operator can then make some adjustments on the spot to restore the desired product quality. The system is expected to decreas
Answer Preview: 1. Productivity profiles: Current system: Materials: 60,000/240,000 = 0 25 Labor: 60,000/120,000 = 0 …

, Chapter: 3 -Problem: 3 >> J. Q. Higgins, owner of Robin’s Nest, wants to determine the cost behavior of labor and overhead. Higgins pays his workers a salary; during busy times, everyone works to get the orders out. Temps (temporary workers hired through an agency) may be hired to pack and prepare completed orders for shipment. During slower times, Higgins catches up on bookkeeping and administrative tasks while the salari
Answer Preview: 1. Average workers salaries = $58,800/6 = $9,800 Average temp agency payment = $8,850/6 = $1,475 Average warehouse rental = $2,400/6 = $400 Average el…

, Chapter: 10 -Problem: 1 >> Arbus Company provided the following information: Required: 1. What is ROI? 2. What is margin? Transcribed Image Text: Turnover Operating assets Operating income 1.4 $120,000 6,720
Answer Preview: 1. ROI = $6,720/$120…

, Chapter: 17 -Problem: 13 >> Petoskey Electronics Company manufactures specialized products for boats and recreational vehicles using its newly introduced patented engine analytics device. The first-year revenues and costs for the product device are as follows:The second year the product device was available, Petoskey Company sold only 12,000 units of its device, because a competitor, Charlevoix Supply Company, produced and s
Answer Preview: 1. The first-year profit for Petoskey Electronics Company: 2. Damages based on lost profits: If the damages are limited to lost profits, we must compute the net income in Year 2 and compare it with th…

, Chapter: 21 -Problem: 1 >> Aranda Company is an import-export company that relocated earlier this year in a foreign trade zone (FTZ) in a southwestern city. The company imports $760,000 of fabric from overseas for resale to clothing companies located in the United States. Aranda purchases and receives the fabric about four months before it is sold and shipped to customers; customers are billed and pay in two months. Duty is
Answer Preview: 1. Duty last year = $760,000 0 15 = $114,000 Duty this year = $760,00…

, Chapter: 4 -Problem: 1 >> Imprimo, Inc., produces two types of ink-jet printers: business and home. Imprimo uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year: Required: 1. Calculate the predetermined plantwide overhead rate and the applied overhead for each product, using direct labor hours. 2. Calculate the overhead c
Answer Preview: 1. Plantwide rate = $3,000,000/75,000 = $40 00 per hour Applied ove…

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