Question: A company has already incurred $5,000

> During the current month, a company that uses job order costing purchases $50,000 in raw materials for cash. It then uses $12,000 of raw materials indirectly as factory supplies and uses $32,000 of raw materials as direct materials. Prepare journal entri

> An advertising agency is estimating costs for advertising a music festival. The job will require 200 direct labor hours at a cost of $50 per hour. Overhead costs are applied at a rate of $65 per direct labor hour. What is the total estimated cost for thi

> On March 1 a dressmaker starts work on three custom-designed wedding dresses. The company uses job order costing and applies overhead to each job (dress) at the rate of 40% of direct materials costs. During the month, the jobs used direct materials as sh

> A company allocates overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $950,000, and direct labor cost is $600,000. Prepare the journal entry to close over- or under-applied overhead to Cost of Goods Sold.

> Project A requires a $280,000 initial investment for new machinery with a five-year life and a salvage value of $30,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $20,000 per year for the next five y

> Siemens AG invests €80 million to build a manufacturing plant to build wind turbines. The company predicts net cash flows of €16 million per year for the next eight years. Assume the company requires an 8% rate of return from its investments. 1. What is

> Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. If Park Co. requires a 10% return on its investments, what is the net present value of this investment?

> Signal mistakenly produced 1,000 defective cell phones. The phones cost $60 each to produce. A salvage company will buy the defective phones as they are for $30 each. It would cost Signal $80 per phone to rework the phones. If the phones are reworked, Si

> Xia Co. currently buys a component part for $5 per unit. Xia believes that making the part would require $2.25 per unit of direct materials and $1.00 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 200% of direct l

> For a recent year L’Oréal reported operating profit of €3,385 (in millions) for its cosmetics division. Total assets were €12,888 (in millions) at the beginning of the year and €13,099 (in millions) at the end of the year. Compute return on investment fo

> Compute and interpret (a) manufacturing cycle time and (b) manufacturing cycle efficiency using the following information from a manufacturing company. Process time ... 15 minutes Inspection time 2 minutes Move time 6.4 minutes Wait time 36.6 minut

> Mervon Company has two operating departments: mixing and bottling. Mixing has 300 employees and occupies 22,000 square feet. Bottling has 200 employees and occupies 18,000 square feet. Indirect factory costs for the current period follow: administrative,

> Walt Disney reports the following information for its two Parks and Resorts divisions. Assume Walt Disney uses a balanced scorecard and sets a target of 85% occupancy in its resorts. Using Exhibit 24.22 as a guide, show how the companyâ€&#15

> A company’s shipping division (an investment center) has sales of $2,420,000, net income of $516,000, and average invested assets of $2,250,000. Compute the division’s profit margin and investment turnover.

> Gordands purchased $600,000 of merchandise in August and expects to purchase $720,000 in September. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. Compute cash disbursements for merchandise for Sep

> Hotwax completed products costing $275,000 and transferred them to finished goods. Prepare its journal entry to record the transfer of units from production to finished goods inventory

> Following are selected accounts for a company. For each account, indicate whether it will appear on a budgeted income statement (BIS) or a budgeted balance sheet (BBS). If an item will not appear on either budgeted financial statement, label it NA.

> Prepare journal entries to record the following production activities for Hotwax. 1. Incurred direct labor of $125,000 (credit Factory Payroll Payable). 2. Incurred indirect labor of $10,000 (credit Factory Payroll Payable). 3. Total factory payroll of $

> Hotwax makes surfboard wax in a single operation. This period, Hotwax purchased $62,000 in raw materials. Its production department requisitioned $50,000 of those materials for use in production. Prepare journal entries to record its (1) purchase of raw

> Zilly Co. predicts sales of $400,000 for June. Zilly pays a sales manager a monthly salary of $6,000 and a commission of 8% of sales dollars. Prepare a selling expense budget for the month of June.

> Music World reports the following sales forecast: August, $150,000; September, $170,000. Cash sales are normally 40% of total sales and all credit sales are expected to be collected in the month following the date of sale. Prepare a schedule of cash rece

> The Guitar Shoppe reports the following sales forecast: August, $150,000; September, $170,000. Cash sales are normally 40% of total sales, 55% of credit sales are collected in the month following sale, and the remaining 5% of credit sales are written off

> Based on predicted production of 24,000 units, a company anticipates $300,000 of fixed costs and $246,000 of variable costs. If the company actually produces 20,000 units, what are the flexible budget amounts of fixed and variable costs?

> Corme Company expects sales of $34 million (400,000 units). The company’s total fixed costs are $17.5 million and its variable costs are $35 per unit. Prepare a CVP chart from this information.

> Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. If the company expects sales of 10,000 units, compute its margin of safety (a) in dollars and (b) as a percent of expected sales.

> Refer to the information in QS 23-16. Alvarez records standard costs in its accounts. Prepare the journal entry to charge overhead costs to the Work in Process Inventory account and to record any variances. Information from QS 23-16: Alvarez Company’s o

> Alvarez Company’s output for the current period yields a $20,000 favorable overhead volume variance and a $60,400 unfavorable overhead controllable variance. Standard overhead applied to production for the period is $225,000. What is the actual total ove

> Refer to information in QS 23-14. Compute the overhead volume variance for November. Information from QS 23-14: AirPro Corp. reports the following for November. $28,175 Actual total factory overhead incurred Standard factory overhead: Variable ove

> AirPro Corp. reports the following for November. Compute the controllable overhead variance for November. $28,175 Actual total factory overhead incurred Standard factory overhead: Variable overhead $3.10 per unit produced Fixed overhead $I per unit

> Nestlé reports beginning raw materials inventory of 3,815 and ending raw materials inventory of 3,499 (both numbers in millions of Swiss francs). If Nestlé purchased 13,860 (in millions of Swiss francs) of raw materials during the year, what is the amoun

> Frontera Company’s output for the current period results in a $20,000 unfavorable direct labor rate variance and a $10,000 unfavorable direct labor efficiency variance. Production for the current period was assigned a $400,000 standard direct labor cost.

> Use the following information to compute the cost of direct materials used for the current year. January | December 31 Inventories Raw materials inventory $ 6,000 $7,500 Work in process inventory Finished goods inventory..... Activity during current

> Juan Company’s output for the current period was assigned a $150,000 standard direct materials cost. The direct materials variances included a $12,000 favorable price variance and a $2,000 favorable quantity variance. What is the actual total direct mate

> Macee Department Store has three departments, and it conducts advertising campaigns that benefit all departments. Advertising costs are $100,000 this year, and departmental sales for this year follow. How much advertising cost is allocated to each depart

> Refer to QS 20-4. Compute the total equivalent units of production with respect to conversion for March using the weighted-average inventory method. Data from QS 20-4: The following refers to units processed in Sunflower Printing’s bi

> Clemens Cars’ job cost sheet for Job A40 shows that the cost to add security features to a car was $10,500. The car was delivered to the customer, who paid $14,900 in cash for the added features. What journal entries should Clemens record for the complet

> Identify whether each description most likely applies to managerial or financial accounting. ______ 1. Its primary users are company managers. ______ 2. Its information is often available only after an audit is complete. ______ 3. Its primary focus is on

> A cell phone company offers two different plans. Plan A costs $80 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your 14-year-old sister. Your sister currently uses 1

> Which of the following items a through i are part of financial reporting but are not included as part of general-purpose financial statements? ______ a. Income statement ______ b. Balance sheet ______ c. Prospectus ______ d. Financial statement notes

> If Quail Company invests $50,000 today, it can expect to receive $10,000 at the end of each year for the next seven years, plus an extra $6,000 at the end of the seventh year. What is the net present value of this investment assuming a required 10% retur

> Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Assume Peng requires a 15% return on its investments. Comp

> Howard Co. is considering two alternative investments. The payback period is 3.5 years for Investment A and 4 years for Investment B. (1) If management relies on the payback period, which investment is preferred? (2) Why might Howard’s analysis of these

> Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. Assume Park Co. requires a 10% return on its investments. Based on its internal rate of return, should

> Heels, a shoe manufacturer, is evaluating the costs and benefits of new equipment that would custom fit each pair of athletic shoes. The customer would have his or her foot scanned by digital computer equipment; this information would be used to cut the

> Google applies overhead to product costs. What account(s) is (are) used to eliminate over-applied or under-applied overhead from the Factory Overhead account, assuming the amount is not material?

> Rory Company has a machine with a book value of $75,000 and a remaining five-year useful life. A new machine is available at a cost of $112,500, and Rory can also receive $60,000 for trading in its old machine. The new machine will reduce variable manufa

> A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 40% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated?

> A guitar manufacturer is considering eliminating its electric guitar division because its $76,000 expenses are higher than its $72,000 sales. The company reports the following expenses for this division. Should the division be eliminated? Avoidable

> Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and it has 4,000 production hours available. Contribution

> Holmes Company produces a product that can either be sold as is or processed further. Holmes has already spent $50,000 to produce 1,250 units that can be sold now for $67,500 to another manufacturer. Alternatively, Holmes can process the units further at

> Kando Company incurs a $9 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase Product B for $5 per unit and sell it for $12 per unit. If i

> Radar Company sells bikes for $300 each. The company currently sells 3,750 bikes per year and could make as many as 5,000 bikes per year. The bikes cost $225 each to make; $150 in variable costs per bike and $75 of fixed costs per bike. Radar received an

> A company is considering investing in a new machine that requires a cash payment of $47,947 today. The machine will generate annual cash flows of $21,000 for the next three years. Assume the company uses an 8% discount rate. Compute the net present value

> Refer to the information in QS 25-11 and instead assume the investment has a salvage value of $20,000. Compute the investment’s net present value. Information from QS 25-11: Following is information on an investment considered by Hudso

> Assume that we tour Samsung’s factory where it makes its products. List three direct costs and three indirect costs that we are likely to see.

> Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a 12% return from its investments. Compute this investment’s net present value. Investment Al Initial in

> Compute return on investment for each of the divisions below (each is an investment center). Comment on the relative performance of each investment center. Investment Center Net Income Average Assets Return on Investment Cameras and camcorders $4,50

> Use the information in the following table to compute each department’s contribution to overhead (both in dollars and as a percent). Which department contributes the largest dollar amount to total overhead? Which contributes the highest

> Car Mart pays $130,000 rent each year for its two-story building. The space in this building is occupied by five departments as specified here. The company allocates 65% of total rent expense to the first floor and 35% to the second floor, and then all

> For each of the following types of indirect expenses and service department expenses, identify one allocation basis that could be used to distribute it to the departments indicated. ______ 1. Computer service expenses of production scheduling for operati

> A company purchases a 10,020 square-foot commercial building for $325,000 and spends an additional $50,000 to divide the space into two separate rental units and prepare it for rent. Unit A, which has the desirable location on the corner and contains 3,3

> The windshield division of Fast Car Co. makes windshields for use in Fast Car’s assembly division. The windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000 windshields per year. The market price is $450 per wi

> The windshield division of Fast Car Co. makes windshields for use in Fast Car’s assembly division. The windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000 windshields per year. The market price is $450 per wi

> Fill in the blanks in the schedule below for two separate investment centers A and B. Round answers to the nearest whole percent. Investment Center A B Sales ... $10,400,000 Net income ... $ 352,000 Average invested assets. $1,400,000 Profit margin.

> Refer to information in QS 24-9. Assume a target income of 12% of average invested assets. Compute residual income for each division. Information from QS 24-9: Investment Center Net Income Average Assets Return on Investment Cameras and camcorders

> If the present value of the expected net cash flows from a machine, discounted at 10%, exceeds the amount to be invested, what can you say about the investment’s expected rate of return? What can you say about the expected rate of return if the present v

> For the current period, Kayenta Company’s manufacturing operations yield a $4,000 unfavorable price variance on its direct materials usage. The actual price per pound of material is $78; the standard price is $77.50 per pound. How many pounds of material

> Tercer reports the following on one of its products. Compute the direct materials price and quantity variances. Direct materials standard (4 lbs. @ $2/lb.) Actual direct materials used . Actual finished units produced . | cost $8 per finished unit 3

> BatCo makes metal baseball bats. Each bat requires 1 kg of aluminum at $18 per kg and 0.25 direct labor hours at $20 per hour. Overhead is assigned at the rate of $40 per direct labor hour. What amounts would appear on a standard cost card for BatCo?

> Refer to information in QS 23-3. Assume that actual sales for the year are $480,000, actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000. Prepare a flexible budget performance report for the year. Informatio

> Brodrick Company expects to produce 20,000 units for the year ending December 31. A flexible budget for 20,000 units of production reflects sales of $400,000; variable costs of $80,000; and fixed costs of $150,000. If the company instead expects to produ

> In a recent year, BMW sold 216,944 of its 1 Series cars. Assume the company expected to sell 225,944 of these cars during the year. Also assume the budgeted sales price for each car was $30,000, and the actual sales price for each car was $30,200. Comput

> Farad, Inc., specializes in selling used SUVs. During the month, the dealership sold 50 trucks at an average price of $9,000 each. The budget for the month was to sell 45 trucks at an average price of $9,500 each. Compute the dealership’s sales price var

> Refer to the information from QS 23-18. Compute the variable overhead spending variance and the variable overhead efficiency variance. Information from QS 23-18: Mosaic Company applies overhead using machine hours and reports the following information.

> Fogel Co. expects to produce 116,000 units for the year. The company’s flexible budget for 116,000 units of production shows variable overhead costs of $162,400 and fixed overhead costs of $124,000. For the year, the company incurred actual overhead cost

> The following information describes a company’s usage of direct labor in a recent period. Compute the direct labor rate and efficiency variances for the period. Actual direct labor hours used. 65,000 Actual direct labor rate per ho

> Explain in simple terms the notion of equivalent units of production (EUP). Why is it necessary to use EUP in process costing?

> Beech Company produced and sold 105,000 units of its product in May. For the level of production achieved in May, the budgeted amounts were: sales, $1,300,000; variable costs, $750,000; and fixed costs, $300,000. The following actual financial results ar

> Scora, Inc., is preparing its master budget for the quarter ending March 31. It sells a single product for $50 per unit. Budgeted sales for the next four months follow. Prepare a sales budget for the months of January, February, and March. January F

> Tora Co. plans to produce 1,020 units in July. Each unit requires two hours of direct labor. The direct labor rate is $20 per hour. Prepare a direct labor budget for July.

> Zortek Corp. budgets production of 400 units in January and 200 units in February. Each finished unit requires five pounds of raw material Z, which costs $2 per pound. Each month’s ending inventory of raw materials should be 40% of the following month’s

> Liza’s predicts sales of $40,000 for May and $52,000 for June. Assume 60% of Liza’s sales are for cash. The remaining 40% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

> Grace manufactures and sells miniature digital cameras for $250 each. 1,000 units were sold in May, and management forecasts 4% growth in unit sales each month. Determine (a) the number of units of camera sales and (b) the dollar amount of camera sales

> Royal Philips Electronics of the Netherlands reports sales of €25,400 million for a recent year. Assume that the company expects sales growth of 3 percent for the next year. Also assume that selling expenses are typically 20 percent of sales, while gener

> Activity-based budgeting is a budget system based on expected activities. (1) Describe activity-based budgeting, and explain its preparation of budgets. (2) How does activity-based budgeting differ from traditional budgeting?

> Montel Company’s July sales budget calls for sales of $600,000. The store expects to begin July with $50,000 of inventory and to end the month with $40,000 of inventory. Gross margin is typically 40% of sales. Determine the budgeted cost of merchandise p

> Lexi Company forecasts unit sales of 1,040,000 in April, 1,220,000 in May, 980,000 in June, and 1,020,000 in July. Beginning inventory on April 1 is 280,000 units, and the company wants to have 30% of next month’s sales in inventory at the end of each mo

> Prepare a flexible budget performance report title (in proper form) for Spalding Company for the calendar year 2015. Why is a proper title important for this or any report?

> Raider-X Company forecasts sales of 18,000 units for April. Beginning inventory is 3,000 units. The desired ending inventory is 30% higher than the beginning inventory. How many units should Raider-X purchase in April?

> Meyer Co. forecasts merchandise purchases of $15,800 in January, $18,600 in February, and $20,200 in March; 40% of purchases are paid in the month of purchase and 60% are paid in the following month. At December 31 of the prior year, the balance of accou

> Use the following information to prepare a cash budget for the month ended on March 31 for Gado Company. The budget should show expected cash receipts and cash disbursements for the month of March and the balance expected on March 31. a. Beginning cash b

> Messers Company is preparing a cash budget for February. The company has $20,000 cash at the beginning of February and anticipates $75,000 in cash receipts and $100,250 in cash disbursements during February. What amount, if any, must the company borrow d

> Lighthouse Company anticipates total sales for June and July of $420,000 and $398,000, respectively. Cash sales are normally 60% of total sales. Of the credit sales, 20% are collected in the same month as the sale, 70% are collected during the first mont

> Wells Company reports the following sales forecast: September, $55,000; October, $66,000; and November, $80,000. All sales are on account. Collections of credit sales are received as follows: 25% in the month of sale, 60% in the first month after sale, a

> Good management includes good budgeting. (1) Explain why the bottom-up approach to budgeting is considered a more successful management technique than a top-down approach.

> Hockey Pro budgets production of 3,900 hockey pucks during May. The company assigns variable overhead at the rate of $1.50 per unit. Fixed overhead equals $46,000 per month. Prepare a factory overhead budget for May.

> In a job order costing system, what records serve as a subsidiary ledger for Work in Process Inventory? For Finished Goods Inventory?

> Miami Solar budgets production of 5,300 solar panels for August. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Variable factory overhead is budgeted to be 70% of direct labor cost, and fixed factory overhead is $180,000 per month.

> Miami Solar budgets production of 5,000 solar panels in July. Each unit requires 4 hours of direct labor at a rate of $16 per hour. Prepare a direct labor budget for July.

> Miami Solar manufactures solar panels for industrial use. The company budgets production of 5,000 units (solar panels) in July and 5,300 units in August. Each unit requires 3 pounds of direct materials, which cost $6 per pound. The company’s policy is to