Question: Improvement Station is a national home improvement

> Tyler Co. predicts the following unit sales for the next four months: April, 3,000 units; May, 4,000 units; June, 6,000 units; and July, 2,000 units. The company’s policy is to maintain finished goods inventory equal to 30% of the next month’s sales. At

> Kelsey is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow: Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the

> Castor, Inc., is preparing its master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the next three months follow: Sales are 50% cash and 50% on credit. All credit sales are collected in the month following t

> Hector Company reports the following sales and purchases data. Payments for purchases are made in the month after purchase. Selling expenses are 10% of sales, administrative expenses are 8% of sales, and both are paid in the month of sale. Rent expense o

> Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory in each month to equal 20% of the next month’s budgeted cost of goods

> Quick Dollar Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,600,000;

> Hardy Company’s cost of goods sold is consistently 60% of sales. The company plans to carry ending merchandise inventory for each month equal to 20% of the next month’s budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the p

> Use the information in Exercise 22-24 and the following additional information to prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31. a. Cost of goods sold is 55% of sales. b. Inventory at the end of June i

> Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash disbursements for the month and the cash balance expected on July 31. a. Beginning cash balance on July 1: $50,000. b. Cash receipts

> Walker Company prepares monthly budgets. The current budget plans for a September ending inventory of 30,000 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Bud

> Mike’s Motors Corp. manufactures motors for dirt bikes. The company requires a minimum $30,000 cash balance at each month-end. If necessary, the company takes a loan to meet this requirement, at a cost of 2% interest per month (paid at

> Use the following information to prepare the September cash budget for PTO Manufacturing Co. The following information relates to expected cash receipts and cash disbursements for the month ended September 30. a. Beginning cash balance, September 1, $40,

> Foyert Corp. requires a minimum $30,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month end. The cash balance on October 1 is $30,000

> For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and

> a. How much would you have to deposit today if you wanted to have $60,000 in four years? Annual interest rate is 9%. b. Assume that you are saving up for a trip around the world when you graduate in two years. If you can earn 8% on your investments, how

> Starr Company decides to establish a fund that it will use 10 years from now to replace an aging production facility. The company will make a $100,000 initial contribution to the fund and plans to make quarterly contributions of $50,000 beginning in thre

> Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $3 per pound and 0.5 direct labor hours at a rate of $18 per hour. Variable manufacturing overhead is charged at a rate of $3 per

> MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.8 direct labor hours at a rate of $16 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor ho

> Blue Wave Co. predicts the following unit sales for the coming four months: September, 4,000 units; October, 5,000 units; November, 7,000 units; and December, 7,600 units. The company’s policy is to maintain finished goods inventory equal to 60% of the n

> Electro Company budgets production of 450,000 transmissions in the second quarter and 520,000 transmissions in the third quarter. Each transmission requires 0.80 pounds of a key raw material. Electro Company aims to end each quarter with an ending invent

> Spiller Corp. plans to issue 10%, 15-year, $500,000 par value bonds payable that pay interest semiannually on June 30 and December 31. The bonds are dated December 31, 2015, and are issued on that date. If the market rate of interest for the bonds is 8%

> Otto Co. borrows money on April 30, 2015, by promising to make four payments of $13,000 each on November 1, 2015; May 1, 2016; November 1, 2016; and May 1, 2017. 1. How much money is Otto able to borrow if the interest rate is 8%, compounded semiannually

> C&H Ski Club recently borrowed money and agrees to pay it back with a series of six annual payments of $5,000 each. C&H subsequently borrows more money and agrees to pay it back with a series of four annual payments of $7,500 each. The annual int

> Dave Krug finances a new automobile by paying $6,500 cash and agreeing to make 40 monthly payments of $500 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobi

> Rad Co. provides the following sales forecast and production budget for the next four months: The company plans for finished goods inventory of 120 units at the end of June. In addition, each finished unit requires 5 pounds of raw materials and the com

> Addison Co. budgets production of 2,400 units during the second quarter. In addition, information on its direct labor and its variable and fixed overhead is shown below. For the second quarter, prepare (1) a direct labor budget and (2) a factory overhead

> Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It plans production of 240,000 units in the second quarter and 52,500 units in the third quarter. Raw material inventory is 43,200 pounds

> Health Co-op is an outpatient surgical clinic that wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinicâ&#1

> Singh and Smythe is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period. 1. Using ABC, compute the firm’s activity overhead rates. Form activity c

> Consider the following data for two products of Vigano Manufacturing. 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. 2. If the market price for Product A is $20

> Refer to the information in Exercise C-1 to answer the following requirements. 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each product line if the direct labor and direct materials cos

> Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and

> Google generates much of its revenue by providing online advertising. It is said that: “Activity-based costing is only useful for manufacturing companies.” Is this a true statement? Explain.

> Samsung must assign overhead costs to its products. Activity-based costing is generally considered more accurate than other methods of assigning overhead. If this is so, why do all manufacturers not use it?

> What is activity-based costing? What is its goal?

> Access Samsung’s 2013 Corporate Sustainability Report, from its website www.samsung.com. Identify and read the section “Social Responsibility: Making Contributions Around the Globe.” Required Samsung’s 2013 Corporate Sustainability Report notes that the

> Visit or call a local auto dealership and inquire about leasing a car. Ask about the down payment and the required monthly payments. You will likely find the salesperson does not discuss the cost to purchase this car but focuses on the affordability of t

> Read the chapter opener about Limor Fried and her company, Adafruit Industries. Suppose Limor’s business continues to grow, and she builds a massive new manufacturing facility and warehousing center to make her business more efficient and reduce costs.

> Break into teams and identify four reasons that an international airline such as Southwest or Delta would invest in a project when its direct analysis using both payback period and net present value indicate it to be a poor investment. Provide an example

> Many companies must determine whether to internally produce their component parts or to outsource them. Further, some companies now outsource key components or business processes to international providers. Access the website sourcingmag.com and review t

> Payback period, accounting rate of return, net present value, and internal rate of return are common methods to evaluate capital investment opportunities. Assume that your manager asks you to identify the type of measurement basis and unit that each meth

> A consultant commented that “too often the numbers look good but feel bad.” This comment often stems from estimation error common to capital budgeting proposals that relate to future cash flows. Three reasons for this error often exist. First, reliably p

> Apple and Google sell a variety of products, including smartphones and tablet computers. Some products are more profitable than others. Teams of employees in each company make advertising, investment, and product mix decisions. A certain portion of adver

> Assume Apple invested $2.12 billion to expand its manufacturing capacity. Assume that these assets have a 10-year life, and that Apple requires a 10% internal rate of return on these assets. Required 1. What is the amount of annual cash flows that Apple

> Selected product data from Samsung (www.samsung.com) follow. Required 1. Compute the percentage growth in net sales for each product line from fiscal year 2012 to 2013. Round percents to one decimal. 2. Which product line’s net sales

> Visit a local movie theater and check out both its concession area and its showing areas. The manager of a theater must confront questions such as: * How much return do we earn on concessions? * What types of movies generate the greatest sales? * What ty

> Brian Linton’s company, United By Blue, sells jewelry and apparel. His company plans for continued expansion into other types of products. Required 1. How can United By Blue use departmental income statements to assist in understanding and controlling o

> Apple and Samsung compete across the world in several markets. Required 1. Design a three-tier responsibility accounting organizational chart assuming that you have available internal information for both companies. Use Exhibit 24.1 as an example. The g

> This chapter described and used spreadsheets to prepare various managerial reports (see Exhibit 24-6). You can download from websites various tutorials showing how spreadsheets are used in managerial accounting and other business applications. Required

> Super Security Co. offers a range of security services for athletes and entertainers. Each type of service is considered within a separate department. Marc Pincus, the overall manager, is compensated partly on the basis of departmental performance by sta

> Apple and Google compete in several product categories. Sales, income, and asset information is provided for fiscal year 2013 for each company below. Required 1. Compute profit margin for each company. 2. Compute investment turnover for each company. A

> Review Apple’s income statement in Appendix A and identify its revenues for the years ended September 28, 2013, September 29, 2012, and September 24, 2011. For the year ended September 28, 2013, Apple reports the following product reven

> Access the annual report of Samsung (at samsung.com) for the year ended December 31, 2013. The usefulness of its budgets, variances, and related analyses depends on the accuracy of management’s estimates of future sales activity. Required 1. Identify an

> Niner Bikes, as discussed in the chapter opener, uses a costing system with standard costs for direct materials, direct labor, and overhead costs. Two comments frequently are mentioned in relation to standard costing and variance analysis: “Variances are

> Access iSixSigma’s website (iSixSigma.com) to search for and read information about benchmarking to complete the following requirements. Required 1. Write a one-paragraph explanation (in layperson’s terms) of benchmarking. 2. How does standard costing

> The reason we use the words favorable and unfavorable when evaluating variances is made clear when we look at the closing of accounts. To see this, consider that (1) all variance accounts are closed at the end of each period (temporary accounts), (2) a f

> Setting materials, labor, and overhead standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to of

> The usefulness of budgets, variances, and related analyses often depends on the accuracy of management’s estimates of future sales activity. Required 1. Identify and record the prior three years’ sales (in dollars) for Apple and Google using their finan

> Analysis of flexible budgets and standard costs emphasizes the importance of a similar unit of measure for meaningful comparisons and evaluations. When Apple compiles its financial reports in compliance with GAAP, it applies the same unit of measurement,

> Access Samsung’s income statement (in Appendix A) for the business year 2013. Required 1. Is Samsung’s selling and administrative expenses budget likely to be an important budget in its master budgeting process? Explain. 2. Identify three types of expen

> To help understand the factors impacting a sales budget, you are to visit three businesses with the same ownership or franchise membership. Record the selling prices of two identical products at each location, such as regular and premium gas sold at Chev

> Solben sells technology to use in the production of biodiesel. Company founder Daniel Gómez Iñiguez stresses the importance of planning and budgeting for business success. Required 1. How can budgeting help Daniel efficiently develop and operate his bus

> Your team is to prepare a budget report outlining the costs of attending college (full-time) for the next two semesters (30 hours) or three quarters (45 hours). This budget’s focus is solely on attending college; do not include personal items in the team

> Access information on e-budgets through The Manage Mentor website (themanagementor. com/kuniverse/kmailers_universe/finance_kmailers/cfa/budgeting2.htm). Read the information provided. Required 1. Assume the role of a senior manager in a large, multidiv

> The sales budget is usually the first and most crucial of the component budgets in a master budget because all other budgets usually rely on it for planning purposes. Required Assume that your company’s sales staff provides information on expected sales

> Both the budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a

> One source of cash savings for a company is improved management of inventory. To illustrate, assume that Apple and Google both have $1 billion per month in sales of one model of smartphone in Canada, and both forecast this level of sales per month for th

> Financial statements often serve as a starting point in formulating budgets. Review Apple’s financial statements in Appendix A to determine its cash paid for acquisitions of property, plant, and equipment in the current year and the budgeted cash needed

> Access and review Samsung’s website (www.samsung.com) to answer the following questions. Required 1. Do you believe that Samsung’s managers use single product CVP analysis or multiproduct break-even analysis? Explain. 2. How does the addition of a new p

> Multiproduct break-even analysis is often viewed differently when actually applied in practice. You are to visit a local fast-food restaurant and count the number of items on the menu. To apply multiproduct break-even analysis to the restaurant, similar

> Fast Yeti Custom Tees, launched by entrepreneurs Reid Lyle, Jordan Roudenis, and Ryan Montgomery, produces apparel products. The company has a diverse product line of T-shirts, hats, and polo shirts. Required 1. Identify at least two fixed costs that wi

> A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational

> Access and review the entrepreneurial information at Business Owner’s Toolkit [Toolkit.com]. Access and review its New Business Cash Needs Checklist (or similar worksheets related to controls of cash and costs) under the “Start Up” link. (Look under the

> Labor costs of an auto repair mechanic are seldom based on actual hours worked. Instead, the amount paid a mechanic is based on an industry average of time estimated to complete a repair job. The repair shop bills the customer for the industry average am

> Both Apple and Google sell electronic devices like phones and computers, and each of these companies has a different product mix. Required 1. Assume the following data are available for both companies. Compute each company’s break-even point in unit sal

> Apple offers extended service contracts that provide repair coverage for its products. As you complete the following requirements, assume that Apple’s repair services department uses many of the company’s existing resources such as its facilities, repair

> Samsung, Apple, and Google are competitors in the global marketplace. Selected data for Samsung follow. Required 1. Review the discussion of the importance of the cost of goods sold divided by total expenses ratio in BTN 20-2. Compute the cost of goods

> In process costing, the process is analyzed first and then a unit measure is computed in the form of equivalent units for direct materials, conversion (direct labor and overhead), and both types of costs combined. The same analysis applies to both manufa

> This chapter’s opener featured Nick Nicolay and his company Kar’s Nuts. Required 1. Kar’s Nuts uses three processes: roasting, blending, and packaging. What are some benefits of using separate process cost summary reports for each process? 2. Nick tries

> The purpose of this team activity is to ensure that each team member understands process operations and the related accounting entries. Find the activities and flows identified in Exhibit 20.14 with numbers 1 – 10. Pick a member of the

> Many companies acquire software to help them monitor and control their costs and as an aid to their accounting systems. One company that supplies such software is proDacapo (prodacapo.com). There are many other such vendors. Access proDacapo’s website, c

> You hire a new assistant production manager whose prior experience is with a company that produced goods to order. Your company engages in continuous production of homogeneous products that go through various production processes. Your new assistant e-ma

> Many accounting and accounting-related professionals are skilled in financial analysis, but most are not skilled in manufacturing. This is especially the case for process manufacturing environments (for example, a bottling plant or chemical factory). To

> Manufacturers such as Apple and Google usually work to maintain a high-quality and lowcost operation. One ratio routinely computed for this assessment is the cost of goods sold divided by total expenses. A decline in this ratio can mean that the company

> Apple reports in notes to its financial statements that, in addition to its products sold, it includes the following costs (among others) in cost of sales: customer shipping and handling expenses and warranty expenses. Required 1. Why do you believe App

> Apple and Samsung are competitors in the global marketplace. Apple’s and Samsung’s financial statements are in Appendix A. Required 1. Determine the change in Apple’s and Samsung’s inventories for the most recent year reported. Then identify the impact

> Job order costing is frequently used by home builders. Required 1. You (or your team) are to prepare a job cost sheet for a single-family home under construction. List four items of both direct materials and direct labor. Explain how you think overhead

> Refer to the chapter opener regarding Quintin Middleton and his company, Middleton Made Knives. All successful businesses track their costs, and it is especially important for start-up businesses to monitor and control costs. Required 1. Assume that Mid

> Many contractors work on custom jobs that require a job order costing system. Required Access the website AMSI.com; click on “Construction Management Software,” and then on “starbuilder.” Prepare a one-page memorandum for the CEO of a construction compa

> Assume that you are preparing for a second interview with a manufacturing company. The company is impressed with your credentials but has indicated that it has several qualified applicants. You anticipate that in this second interview, you must show what

> An accounting professional requires at least two skill sets. The first is to be technically competent. Knowing how to capture, manage, and report information is a necessary skill. Second, the ability to assess manager and employee actions and biases for

> Manufacturers and merchandisers can apply just-in-time (JIT) to their inventory management. Both Apple and Google want to know the impact of a JIT inventory system for their operating cash flows. Review each company’s statement of cash flows in Appendix

> Apple’s financial statements and notes in Appendix A provide evidence of growth potential in its sales. Required 1. Identify at least two types of costs that will predictably increase as a percent of sales with growth in sales. 2. Explain why you believ

> Access Samsung’s 2013 annual report from its website (www.samsung.com). Like Apple, Samsung offers warranties on its products. Required 1. Access and read footnote 18, “Provisions,” included in Samsung’s 2013 annual report. What amount of warranty expen

> Visit your favorite fast-food restaurant. Observe its business operations. Required 1. Describe all business activities from the time a customer arrives to the time that customer departs. 2. List all costs you can identify with the separate activities d

> Eden Full of SunSaluter must understand manufacturing costs to effectively operate and succeed as a profitable and efficient business. Required 1. What are the three main categories of manufacturing costs Eden must monitor and control? Provide examples

> The following calendar-year information is taken from the December 31, 2015, adjusted trial balance and other records of Dahlia Company. Required 1. Each team member is to be responsible for computing one of the following amounts. You are not to duplic

> Managerial accounting professionals follow a code of ethics. As a member of the Institute of Management Accountants, the managerial accountant must comply with Standards of Ethical Conduct. Required 1. Identify, print, and read the Statement of Ethical

> Write a one-page memorandum to a prospective college student about salary expectations for graduates in business. Compare and contrast the expected salaries for accounting (including different subfields such as public, corporate, tax, audit, and so forth

> Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs, and DVDs. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because