Question: Executive officers of Norman Company are assessing

> Watonga Swimsuit Specialties Inc. makes fashionable women’s swimsuits. Its most popular swimsuit, with the Sarong trade name, uses a standard fabric amount of six yards of raw material with a standard price of $9 per yard. The company planned to produce

> Martin Hickey was a new cost accountant at Freeport Plastics Corporation. He was assigned to analyze the following data that his predecessor left him. Planned volume for year (static budget) 10,000 units Standard direct materials cost per unit 2 pounds @

> Newkirk Sporting Goods Co. manufactures baseballs. According to Newkirk’s Year 3 budget, the company planned to incur $180,000 of fixed manufacturing overhead costs to make 200,000 baseballs. Newkirk actually produced 187,000 balls, incurring $177,600 of

> Use the standard price and cost data supplied in Problem 8-20B. Assume that Ponca actually produced and sold 432,000 units. The actual sales price and costs incurred follow. Required 1. Determine the flexible budget variances. 2. Indicate whether each v

> Ponca Food Corporation developed the following standard price and costs for a refrigerated TV dinner that the company produces. Standard price and variable costs per unit Sales price $5.40 Materials cost 1.60 Labor cost 0.60 Overhead cost 0.12 Selling, g

> The Marketing Department of Barlett State University planned to hold its annual distinguished visiting lecturer (DVL) presentation in October Year 4. The head of the department prepared the following budget based on costs that had been incurred in the pa

> Executive officers of Freedonia Seafood Processing Company are holding a planning session for fiscal Year 3. They have already established the following standard price and costs for their canned seafood product. Standard price and variable costs Price pe

> Inwood Gifts Corporation begins business today, December 31, Year 1. Rebecca Ortiz, the president, is trying to prepare the company’s master budget for the first three months (January, February, and March) of Year 2. Since you are her good friend and an

> Myrtle Enterprises Inc. has two products, palm-size computers and programmable calculators. Tammy Dwyer, the chief executive officer, is working with her staff to prepare next year’s budget. Ms. Dwyer estimates that sales will increase

> Barret Cameron, a student in Professor Wagner’s managerial accounting course, asked the following question: “In the first accounting course, the teacher said inventory costs flow on a FIFO, LIFO, or weighted average pattern. Now you are telling us invent

> Shane Corbett, a successful entrepreneur, is reviewing the results of his first year in business. His accountant delivered the following income statement just five minutes ago. Mr. Corbett would like net income to increase 20 percent in the next year. Th

> Chang Company has budgeted the following cash flows. Chang had an $18,000 cash balance on April 1. The company desires a $30,000 cash balance before paying interest. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of

> Javior’s Travel Services has prepared its selling and administrative expenses budget for the next quarter. It pays all expenses when they are incurred except sales commissions, advertising expense, and telephone expense. These three ite

> Mankota Company’s purchasing manager, Fernando Garza, is preparing a purchases budget for the next quarter. At his request, Ruben Carpenter, the manager of the sales department, forwarded him the following preliminary sales budget. For

> Estlin Corporation sells mail-order computers. In December Year 2, it has generated $300,000 of sales revenue; the company expects a 20 percent increase in sales in January and 10 percent in February. All sales are on account. Estlin normally collects 80

> Melissa Putnam, the director of Kelso Corporation’s Mail-Order Division, is preparing the division’s budget proposal for next year. The company’s president will review the proposal for approval. Ms. P

> Ewing Company makes two products, M and N. Product information follows. Required Identify the product that should be produced or sold under each of the following constraints. Consider each constraint separately. 1. One unit of Product M requires three ho

> Liao Construction Components Inc. purchased a machine on January 1, Year 1, for $480,000. The chief engineer estimated the machine’s useful life to be six years and its salvage value to be zero. The operating cost of this machine is $240,000 per year. By

> Rooney Company’s electronics division produces a DVD player. The vice president in charge of the division is evaluating the income statement showing annual revenues and expenses associated with the division’s operating

> Hana Company has three separate operating branches: Division X, which manufactures utensils; Division Y, which makes plates; and Division Z, which makes cooking pots. Each division operates its own facility. The company’s administrative

> Intel Corporation is mostly known by the public for manufacturing silicon chips for personal computers, but it does other things as well. Answer the following questions using the company’s Form 10-K for the period ended December 28, 2019. The Form 10-K c

> Pam’s Grocery Store has three departments—meat, canned food, and produce—each of which has its own manager. All departments are housed in a single store. Recently, the produce department has been suff

> During Year 2, Adaire Toy Company made 10,000 units of Model K, the costs of which follow. Unit-level materials costs (10,000 units × $30) $ 300,000 Unit-level labor costs (10,000 units × $40) 400,000 Unit-level overhead costs (10,000 × $8) 80,000 Depre

> One of Riku Company’s major products is a fuel additive designed to improve fuel efficiency and keep engines clean. Riku, a petrochemical firm, makes and sells 100,000 units of the fuel additive per year. Its management is evaluating the possibility of h

> Schmidt Company made 100,000 electric drills in batches of 1,000 units each during the prior accounting period. Normally, Schmidt markets its products through a variety of hardware stores. The following is the summarized cost to produce electric drills.

> Quinn Machines Company is evaluating two customer orders. It can accept only one because of capacity limitations. The data associated with each order follow. Required 1. Assume that Quinn has decided to accept one of the two orders. Identify the informat

> Respond to each requirement independently. 1. Describe two decision-making contexts, one in which unit-level labor costs are avoidable and the other in which they are unavoidable. 2. Describe two decision-making contexts, one in which batch-level shippin

> Steve Gauthier, the president of Southern Plastic Company, is a famous cost cutter in the plastics industry. Two years ago, he accepted an offer from Southern’s board of directors to help the company cut costs quickly. In fact, Mr. Gaut

> Moreno Corporation manufactures two different coffee makers, Professional for commercial use and Home for family use. Albert Moreno, the president, recently received complaints from some members of the board of directors about the companyâ€&#1

> Klein Corporation manufactures two models of watches. Model Wonder displays cartoon characters and has simple features designed for kids. Model Marvel has sophisticated features such as dual time zones and an attached calculator. Klein’

> Miller Furniture Corporation makes two types of dining tables, Elegance for formal dining and Comfort for casual dining, at its single factory. With the economy beginning to experience a recession, Hank Miller, the president, is concerned about whether t

> The following information is from the accounts of Depree Manufacturing Company for Year 2. Required Divide the class into groups of four or five students per group and organize the groups into three sections. Assign Task 1 to the first section of groups,

> Elmore CPA and Associates is a local accounting firm specializing in bookkeeping and tax services. The firm has four certified public accountants who supervise 20 clerks. The clerks handle basic bookkeeping jobs and prepare tax return drafts. The CPAs re

> Garza Corporation has three production departments: forming, assembly, and packaging. The maintenance department supports only the production departments; the computer services department supports all departments, including maintenance. Other relevant in

> Templeton Furniture Company has two production departments. The parts department uses automated machinery to make parts; as a result, it uses very few employees. The assembly department is labor intensive because workers manually assemble parts into fini

> Mountain Tea Co. makes two products: a high-grade tea branded Wulong and a low-grade tea branded San Tea for the Asian market. Mountain purchases tea leaves from tea firms in mountainous villages of Taiwan and processes the tea leaves into a high-quality

> Dickson Furniture Company incurred the following costs in the process of making tables and chairs. Glue: Paint Supervisor salaries: Water bill Gas bill: Vacation pay Payroll taxes: Sewer bill Cost of nails: Staples Medical insurance: Electric bill Requir

> Fletcher Corporation has hired a marketing representative to sell the company’s two products: Marvelous and Wonderful. The representative’s total salary and fringe benefits are $8,000 monthly. The product cost is $150 per unit for Marvelous and $240 per

> Pruitt Corporation’s overhead costs are usually $20,000 per month. However, the company pays $120,000 of real estate tax on the factory facility in March. Thus, the overhead costs for March increase to $140,000. The company normally uses 5,000 direct lab

> Copeland Door Corporation makes a particular type of door. The labor cost is $120 per door and the material cost is $160 per door. Copeland rents a factory building for $80,000 a month. Copeland plans to produce 24,000 doors annually. In March and April,

> Lincoln, Snyder, and Associates provides legal services for its local community. In addition to its regular attorneys, the firm hires some part-time attorneys to handle small cases. Two office managers assist all part-time attorneys exclusively. In Year

> Fokine Research Institute has three departments: biology, chemistry, and physics. The institute’s controller wants to estimate the cost of operating each department. He has identified several indirect costs that must be allocated to eac

> Phalanges Systems, Inc. (PSI) makes keypads that it sells to manufacturers of products such as ATMs and PIN machines. The average materials cost per keypad is $4.70, and the average labor cost is $1.45. PSI incurs approximately $5,900,000 of fixed manufa

> Lamb Tools Company has two production departments in its manufacturing facilities. Home tools specializes in hand tools for individual home users, and professional tools makes sophisticated tools for professional maintenance workers. Lambâ€&#1

> Executive officers of Roth Company have prepared the annual budgets for its two products, Washer and Dryer, as follows. Table Summary: A table has 4 columns. Column 1 has entries. Column 2 has washer. Column 3 has dryer. Column 4 has total. Washer is div

> Milton Company sells tennis racquets; variable costs for each are $45, and each is sold for $135. Milton incurs $540,000 of fixed operating expenses annually. Required 1. Determine the sales volume in units and dollars required to attain a $270,000 profi

> O’Hara Company makes a product that it sells for $200. O’Hara incurs annual fixed costs of $250,000 and variable costs of $160 per unit. Required The following requirements are interdependent. For example, the $50,000 desired profit introduced in Require

> Egan Company is analyzing whether its new product will be profitable. The following data are provided for analysis. Expected variable cost of manufacturing $24 per unit Expected fixed manufacturing costs $65,000 per year Expected sales commission $6 per

> Jerome Company has three distinctly different options available as it considers adding a new product to its automotive division: engine oil, coolant, or windshield washer. Relevant information and budgeted annual income statements for each product follow

> Stackhouse Company manufactures and sells its own brand of digital cameras. It sells each camera for $250. The company’s accountant prepared the following data. Manufacturing costs Variable $90 per unit Fixed $300,000 per year Selling and administrative

> Kilner Company reported the following data regarding the one product it sells. Sales price $40 Contribution margin ratio 30% Fixed costs $540,000 per year Required Use the contribution margin ratio approach and consider each requirement separately. 1. Wh

> Vezinov Company manufactures portable heaters and sells them for $200 each. According to the company’s records, the variable costs, including direct labor and direct materials, are $80. Factory depreciation and other fixed manufacturing costs are $960,00

> ASAP Delivery is a small company that transports business packages between San Francisco and Los Angeles. It operates a fleet of small vans that moves packages to and from a central depot within each city and uses a common carrier to deliver the packages

> Mantooth Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Acquired $50,000 by issuin

> Stan Fox, the production manager of Hollis Construction Components, is trying to figure out the cost behavior of his factory supplies cost. The company uses machine hours as the cost driver. Joe Parrish, the assistant manager, collected the following cos

> Jenkins Frames Company, which manufactures ornate frames for original art work, began operations in January, Year 1. Bruce Preston, the owner, asks for your assistance. He believes that he needs to better understand the cost of the frames for pricing pur

> Kane Legal Services provides legal advice to clients. The following data apply to the first six months of operation. Required 1. What is the average service revenue per hour for the six-month time period? 2. Use the high-low method to estimate the total

> West Tours, Inc., organizes adventure tours for people interested in visiting a desert environment. A desert tour generally lasts three days. West provides food, equipment, and guides. Dan Silva, the president of West Tours, needs to set prices for the c

> The Magic Amusement Park is considering signing a contract to hire a circus at a cost of $3,000 per day. The contract requires a minimum performance period of one week. Estimated circus attendance is as follows. /Required 1. For each day, determine the a

> June Wade has invested in two startup companies. At the end of the first year, she asks you to evaluate their operating performance. The following operating data apply to the first year. Required 1. Use the contribution margin approach to compute the ope

> Canton Club and Tobin Club are competing health and recreation clubs in Orlando. They both offer tennis training clinics to adults. Canton pays its coaches $4,800 per season. Tobin pays its coaches $120 per student enrolled in the clinic per season. Both

> CFEs R Us conducts CFE review courses. Public universities that permit free use of a classroom support the classes. The only major expense incurred by CFEs R Us is the salary of instructors, which is $5,000 per course taught. The company recently planned

> Sean Franklin sells a newly developed camera, Panorama Vision. He purchases the cameras from the manufacturer for $150 each and rents a store in a shopping mall for $6,000 per month. Required 1. Determine the average cost of sales per unit if Mr. Frankli

> Kelly and Valdez Tax Services’ Development Department is responsible for establishing new community branches. Each branch opens with four tax accountants. Total cost of payroll per branch is $240,000 per year. Together the four accountants can process up

> Kilby Company is considering the purchase of new automated manufacturing equipment that would cost $150,000. The equipment would save $42,500 in labor costs per year over its six-year life. At the end of the fourth year, the equipment would require an ov

> Nancy Watson visited her personal physician for treatment of flu symptoms. She was greeted by the receptionist, who gave her personal history and insurance forms to complete. She needed no instructions; she completed these same forms every time she visit

> The CEO and the CFO of Automation Company were both aware that the company’s controller was reporting fraudulent revenues. Upper-level executives are paid very large bonuses when the company meets the earnings goals established in the company’s budgets.

> Briggs Company was started when it acquired $150,000 by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs (materials, labor, and overhead) amounting to $120,000. Briggs also incurred $

> Mark’s Hamburger is a small fast-food shop in a busy shopping center that operates only during lunch hours. Mark Thorpe, the owner and manager of the shop, is confused. On some days, he does not have enough hamburgers to satisfy customer demand. On other

> Garza Automobile Dealership, Inc. (GAD), buys and sells a variety of cars made by Perez Motor Corporation. GAD maintains about 30 new cars in its parking lot for customers’ selection; the cost of this inventory is approximately $750,000. Additionally, GA

> Packer Company began operations on January 1, Year 1, by issuing common stock for $120,000 cash. During Year 1, Packer received $98,000 cash from revenue and incurred costs that required $90,000 of cash payments. Required Prepare a GAAP-based income stat

> Distant Ride, Inc., develops and makes a battery for electrical cars. The manufacturing costs per unit include $450 direct materials, $180 direct labor, and $300 manufacturing overhead. These costs are based on a production and sales volume of 5,000 unit

> The following transactions pertain to Year 1, the first year of operations of Fuzhou Company. All inventory was started and completed during the accounting period. All transactions were cash transactions. 1. Acquired $50,000 of contributed capital from i

> Ito Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, all transactions were cash transactions. Also, assume that all financial statement data are prepared

> Zell Manufacturing Company was started on January 1, Year 1, when it acquired $98,000 cash by issuing common stock. Zell immediately purchased office furniture and manufacturing equipment costing $28,000 and $58,000, respectively. The office furniture ha

> Gaines Company recently initiated a postaudit program. To motivate employees to take the program seriously, Gaines established a bonus program. Managers receive a bonus equal to 10 percent of the amount by which actual net present value exceeds the proje

> Use the following table to indicate whether the information is more representative of managerial versus financial accounting. The first item is shown as an example. Information Item Cost per unit of individual products Profit margin of individual product

> Chris Quill asks you to analyze the operating cost of his lawn services business. He has purchased the needed equipment with a cash payment of $90,000. Upon your recommendation, he agrees to adopt straight-line depreciation. The equipment has an expected

> Identify the following costs as fixed or variable. Costs related to operating a retail gasoline company follow. 1. Depreciation of equipment relative to the number of customers served at a station. 2. Property and real estate taxes relative to the amount

> Bombay Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required

> Fenway Electronics produces video games in three market categories: commercial, home, and miniature. Fenway has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently

> Duncan Paint Company makes paint in many different colors; it charges the same price for all of its paint regardless of the color. Recently, Duncan’s chief competitor cut the price of its white paint, which normally outsells any other color by a margin o

> York Company engaged in the following transactions for Year 1. The beginning cash balance was $86,000 and the ending cash balance was $59,100. 1. Sales on account were $548,000. The beginning receivables balance was $128,000 and the ending balance was $9

> The comparative balance sheets and an income statement for Raceway Corporation follow. Table Summary: The Balance Sheets as of December 31 show 3 columns. Column 1 has entries. Column 2 has year 2. Column 3 has year 1. The Income Statement for the year e

> The comparative balance sheets and income statements for Gypsy Company follow. Table Summary: The Balance Sheets as of December 31 show 3 columns. Column 1 has entries. Column 2 has year 2. Column 3 has year 1. The Income Statement for the year ended Dec

> Webb Publishing Company is evaluating two investment opportunities. One is to purchase an Internet company with the capacity to open new marketing channels through which Webb can sell its books. This opportunity offers a high potential for growth but inv

> The following information can be obtained by examining a company’s balance sheet and income statement information: 1. Increases in current asset account balances, other than cash. 2. Decreases in current asset account balances, other th

> The following information was drawn from the year-end balance sheets of Fox River Inc. Additional information regarding transactions occurring during Year 2: 1. Fox River Inc. issued $100,000 of bonds during Year 2. The bonds were issued at face value. A

> The following information was drawn from the year-end balance sheets of Mass Trading Company. Additional information regarding transactions occurring during Year 2: 1. Investment securities that had cost $6,100 were sold. The Year 2 income statement cont

> Green Brands Inc. (GBI) presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from GBI’s Year 2 and Year 1 year-end balance sheets. Assume that Accounts Payable is

> Use the financial statements for Allendale Company from Problem 13-17A to calculate the following ratios for Year 4 and Year 3: 1. Working capital. 2. Current ratio. 3. Quick ratio. 4. Receivables turnover (beginning receivables at January 1, Year 3, wer

> The following financial statements apply to Karl Company: Required Calculate the following ratios for Year 1 and Year 2. When data limitations prohibit computing averages, use year-end balances in your calculations. Round computations to two decimal poin

> Otis Company’s income statement information follows. The average number of shares outstanding was 9,600 for Year 3 and 8,000 for Year 2. Required Compute the following ratios for Otis for Year 3 and Year 2 and round the computation to t

> Selected data for Dalton Company for Year 3 and additional information on industry averages follow. Industry averages Earnings per share $ 2.60 Price-earnings ratio 9.50 Return on equity 11.20% Required 1. Calculate Dalton Companyâ€&#15

> The bookkeeper for Packard’s Country Music Bar left this incomplete balance sheet. Packard’s working capital is $90,000 and its debt-to-assets ratio is 40 percent. Required Complete the balance sheet by supplying the m

> Riley Manufacturing has a current ratio of 3:1 on December 31, Year 3. Indicate whether each of the following transactions would increase (+), decrease (−), or have no effect (NA) on Riley’s current ratio and its working capital. Required 1. Paid cash fo

> Obtain Shake Shack Inc.’s Form 10-K for the fiscal year ending on December 25, 2019. To obtain the Form 10-K, you can use the EDGAR system, or it can be found under the “Investor Relations” link on the company’s website at www.shakeshack.com. Read the fo

> Use the financial statements for Allendale Company from Problem 13-17A to perform a vertical analysis of both the balance sheets and income statements for Year 4 and Year 3. Round computations to two decimal points. Data from Problem 13-17A: Financial s

> Financial statements for Allendale Company follow. Table Summary: The Balance Sheet of Allendale Company as of December 31 shows 3 columns. Column 1 has entries. Column 2 has year 4. Column 3 has year 3. Table Summary: The Statements of Income and retain

> The following percentages apply to Thornton Company for Year 3 and Year 4. Required Assuming that sales were $800,000 in Year 3 and $960,000 in Year 4, prepare income statements for the two years.