In its latest Annual Report, Monterey Holdings reported revenues of $849,414,000 and net income of $22,682,000 for the year. Part of the revenues and income for the year was generated by Montego Motors, which Monterey Holdings acquired on February 26 for $83.4 million. Since this acquisition was made after the start of the year, the reported amounts do not reflect an entire year’s worth of revenue and income from this segment of the company. In a footnote to the financial statements, Monterey Holdings disclosed total revenues of $868,237,000 and net income of $21,921,000, which are the amounts the company would have reported if the acquisition had occurred before the beginning of the year. Required: a. Are the revenue and income amounts disclosed in the footnote pro-forma amounts? Why? b. Why would Monterey Holdings disclose the additional revenue and income amounts?
> Nancy’s Nut House is a processor and distributor of a variety of different nuts. The company buys nuts from around the world and roasts, seasons, and packages them for resale. Nancy’s Nut House currently offers 15 diff
> Lancaster Orthopedics specializes in hip, knee, and shoulder replacement surgery. In addition to the actual surgery, the company provides its patients with preoperative and postoperative inpatient care in a fully equipped hospital. Lancaster pays its sur
> Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $5 per person. To differentiate his gym and better serve his clients, Anthony provides a towel, a bottle of water, and an after-work out pro
> Chevis Consulting provides weekly payroll processing for a number of small businesses. Gia Chevis, the company’s owner, has been using an activity-based costing system for several years. She used the following information in preparing t
> Refer to the information about Voss Visuals in Problem 7-20. Voss’s managers have gathered the following information about selling and administrative costs. Reference from Problem 7-20: Required: a. Using the information given here
> Ellis Perry is an electronics components manufacturer. Information about the company’s two products follows: The company incurs $899,000 in overhead per year and has traditionally applied overhead on the basis of direct labor hours. R
> Voss Visuals produces tablets and books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decide
> The Trust Department of First National Bank offers two types of service, Basic and Premier. Trust customers with basic service do not grant trust officers any discretion in managing their accounts. The trust officers or their assistants merely execute th
> In the Reality Check on page 370, you read that the U.S. Postal Service altered its pricing strategy based on the results of an activity-based costing analysis. Specifically, the new rates were designed to encourage customers to use computer-readable mai
> Clive Franks was reviewing the product costs for his line of artist’s oil paints. The current production schedule calls for the paints to be produced in batches of 1,000 tubes. Between each batch, the mixing and packaging lines must be completely cleaned
> Jay Krue makes two products, Simple and Complex. As their names suggest, Simple is the more basic product, and Complex comes with all the bells and whistles. The company has always allocated overhead costs to products based on machine hours. Last year, t
> You’re killing me!” exclaimed Myles Werntz, product manager for Premium products. “All along I’ve been told that the Premium line costs the company $125; we charge $225 and make a $100 profi t. Now you’re saying that costs have increased to $200. That’s
> Harrison-Brown is a book publisher that reissues old titles. The company offers these books with either a standard machine-glued hard cover or a deluxe, hand-embossed, hand-stitched, leather cover. Harrison-Brown currently allocates overhead to the books
> The Carpenter Company sells sports decals that can be personalized with a player’s name, team name, and jersey number for $10 each. Carpenter buys the decals from a supplier for $3 each and spends an additional $0.50 in variable operating costs per decal
> Clifton Informatics provides data processing services to small businesses in the Northeast. For years, the company has allocated the cost of the data storage department using the number of tape mounts (how many times a data tape is loaded onto the comput
> Refer to the data in exercise 7-7. Reference of Exercise 7-7: Eric Parker has been studying his department’s profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to quest
> Wieters Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The company’s production activities, budge
> Pletzke Company manufactures dental instruments. The company’s product line includes products as simple as dental picks and products as complex as panoramic x-ray machines. Carol Lindquist, a senior product manager responsible for imple
> Brett Graham has been working on Hiltech’s activity based cost implementation team. One of his assignments is to study the information services department. One activity cost pool in the department is providing support for computer users by providing a he
> Grimes Grocery operates a chain of convenience stores in the Northwest. As a result of a recent consultant’s visit, the company is in the beginning stages of implementing an activity-based costing system. The following activity cost pools have been ident
> Using the table below, place an X in the column that corresponds to the type of activity level referred to in each scenario. UNIT BATCH PRODUCT CUSTOMER ORGANIZATIONAL Setting up a machine for a production run of 500 units a. b. Conducting a seminar
> Mitchell Manufacturing’s single finished goods warehouse is located across the street from its manufacturing facility. A recent study of product sales showed that most product lines are sold primarily in a single geographical region. For instance, the Wi
> Plyler Plastics Company produces a variety of custom plastics products for a worldwide clientele. The company’s cost accounting manager, Martha Johns, is beginning to implement an activity-based costing system and has gathered data on the quality inspect
> Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 150,000 board games. The budgeted income statement for the period is as follows. During November, Barnes produced and sold 180,000 board game
> After graduating from dental school two years ago, Dr. Lauren Farish purchased the dental practice of a long-time dentist who was retiring. In January of this year she had to replace the outdated autoclave equipment she inherited from the previous dentis
> Stratton, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Sandy Robison, operations manager, was reviewing the results for November when he be
> Pressure Reducers, Inc. produces and sells lumbar support cushions for office chairs using a special foam that molds to a person’s back. Since all products are made to order, the only inventory the company maintains is raw materials. Th
> Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to ge
> Attacus Company manufactures deep-sea fishing rods, which it distributes internationally through a chain of wholesalers. The following data are taken from the budget prepared at the beginning of the year by Attacus’s controller. The com
> Russell Marks shook his head in disbelief as he and operations manager Tom Hanover reviewed the month’s flexible budget performance report. “How did you manage to make such a poor showing last month?” he asked Hanover. “You didn’t meet your production sc
> Sommers Irrigation, Inc. is known throughout the world for its H2O-X high-capacity water pump, used in irrigation systems. The pump’s standard cost is as follows. The company’s predetermined fixed overhead rate is base
> Carson Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Carson, based on performing 2,100 core tests per month. / At th
> Hunter Family Instruments makes cellos. During the past year, the company made 6,400 cellos even though the budget planned for only 5,600. The company paid its workers an average of $15 per hour, which was $1 higher than the standard labor rate. The prod
> POD Incasements manufactures protective cases for MP3 players. During November, the company’s workers clocked 800 more direct labor hours than the flexible budget amount of 25,000 hours to complete 100,000 cases for the Christmas season. All workers were
> The following information is available for Coady’s Chocolates: Required: a. Calculate the direct materials price and quantity variances. b. What might have caused the variances you calculated? Actual production Budgeted production
> The Boeing Company produces commercial aircraft. The following passage is taken from Management’s Discussion and Analysis, included in Boeing’s 2005 Annual Report. Commercial aircraft production costs include a significant amount of infrastructure costs,
> The sole supplier of Montrose, Inc.’s critical direct material declared bankruptcy last year. As a result, Montrose had to quickly find alternative sources for the material. Since no one supplier had enough material to meet the company’s needs, Montrose
> Levine Labs used 50,000 ounces of specimen adhesive during the year. The direct materials standard allows 1.5 ounces of adhesive at a price of $0.40 per ounce for each pathology test. The direct materials quantity variance was $880 F. Required: How many
> Refer to the information about Adarmes Adventures given in Exercise 6-4. Information from Exercise 6-4: Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500
> Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $800 each. The standard variable cost informatio
> Rogers Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 2,000 kits was prepared for the year. Fixed operating expenses account for 80% of total operating expenses at this le
> At the monthly management meeting, Leslie Smith, president of Mama Fran’s Fantastic Foods, was reviewing the April budget report with some satisfaction. “Our actual results are never exactly what we budget, but I guess
> Spitzer Specialty Furniture manufactures furniture for specialty shops throughout the Southwest. With annual sales of $12 million, the company has four major product lines—bookcases, magazine racks, end tables, and bar stoolsâ
> Conradt Connectivity Company manufactures various electrical connectors. The company’s sales budget for the first six months of the coming year is as follows. All sales are made on credit. Conradt is planning to change its credit poli
> R. Wilson Ascots, a retailer of collegiate neckwear, has completed the sales forecast for the coming year. R. Wilson Ascots maintains an ending inventory level of 60% of the following month’s cost of goods sold. The companyâ€
> Identify each of the following costs in terms of its cost behavior—variable, fixed, mixed, or step. a. The cost of coffee beans at a Starbucks shop b. Depreciation of airplanes at Southwest Airlines c. Nurses’ wages at M. D. Anderson Cancer Center, assum
> Aaron Furniture builds high-end hand-made dining tables. Attacus Simmons, the company’s owner, has developed the following sales forecast for 2018. Because of the time needed to create each table, Aaron maintains an ending Finished Go
> Simmons Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Vanessa Aaron, the company’s sales manager, prepared the following sales f
> Bill Thomas, Bates & Hill’s controller, has received all the budgets prepared by the various operating units (see Exercises 5-8, 9, 11, 15, 17, 19, 20, 23, 25, and 29) and is ready to compile the pro-forma financial statements for t
> John Wills, Bates & Hill Fabricators’ budget director, has received budget information from several managers (see Exercises 5-8, 9, 11, 15, 17, 19, 20, 23, and 25) and is preparing the company’s cash budget. In addition to the information he received fro
> Inc. prepared the following cash budget for the fourth quarter. Required: Fill in the missing amounts, assuming that Topper desires to maintain a $15,000 minimum monthly cash balance. Any required borrowings and repayments must be made in even increment
> Will Benjamin has been working on Heston Paints’ cash budget for the coming year. Based on his projections for March, the beginning cash balance will be $45,700, cash collections will be $650,000, and cash disbursements will be $684,000. Heston Paints de
> Maria Bockman, Bates & Hill Fabricators’ accounts payable manager, has just received the company’s direct materials purchases budget for the first quarter (see Exercise 5-15). The company makes all of its direct materials purchases on account. Maria’s re
> Dakota Williams is one of Texas’s premiere party planners. She purchases a variety of supplies, such as plastic tableware, stemware, and decorations, throughout the year. Dakota has prepared the following purchases budget for the coming
> Laura Falk, Bates & Hill Fabricators’ accounts receivable manager, has just received the company’s sales budget for the first quarter (see Exercise 5-8). The company makes all sales on credit. Laura recently reviewed the company’s collection history and
> Charlie Anderson recently began a new job as the office manager for a prominent medical clinic. He has just received a bill from Med-Count, one of the labs that performs tests for the clinic. In reviewing the bill, Charlie notices that the lab has charge
> Brooks/Neff, Ltd. personalizes scrapbooks for customers, using their digital photographs. Each scrapbook sells for $50. Brooks/Neff collects cash at the time of sale from 30% of customers. Of the remaining sales, 75% are collected in the month of sale an
> In the coming year, Urayse, Inc. will be introducing its first product, a wrist brace that protects serious video gamers from repetitive-motion injuries. The brace will be sold for $11.25 to retailers throughout the country. All sales will be made on acc
> Joshua Hill, Bates & Hill Fabricators’ production manager, has just completed the company’s production budget (see Exercise 5-11) and manufacturing overhead budget (see Exercise 5-19) for the first quarter. He also
> Joshua Hill, Bates & Hill Fabricators’ production manager, has just completed the company’s production budget for the first quarter (see Exercise 5-11). He has identified the following monthly expenses that will be
> Sanchez Sleep Systems manufactures nylon mesh hammocks for a chain of retail outlets located throughout the Southeast. The company plans to manufacture and sell 30,000 hammocks during the fourth quarter. Overhead costs are expected to include: Variable
> Joshua Hill, Bates & Hill Fabricators’ production manager, has just completed the company’s production budget for the first quarter (see Exercise 5-11). Each brick requires 15 minutes to produce, and Joshua expects to pay workers $20 per direct labor hou
> Rider Auto has developed the following production plan for its new auto part. Each unit passes through two departments before completion. The company has developed the following direct labor standards: Required: Prepare the direct labor budget for the th
> Marcy Jones, Bates & Hill Fabricators’ purchasing manager, has just received the company’s production budget for the first quarter (see Exercise 5-11). Each brick requires 5 pounds of clay, and Marcy expects to pay $0.40 per pound of clay in the coming y
> Mackenzie Chemicals has developed a new window cleaner that requires two ingredients, AM972 and CA38. Based on forecasted sales, Mackenzie has developed the following budgeted production for the coming year. Each gallon of window cleaner requires 100 oun
> Rider Auto has developed the following production plan for its new auto part. Each unit contains four pounds of raw material. The desired raw materials ending inventory is 40% of the next month’s production needs, plus an additional 100
> After working for three different companies in ten years, Martin Long decided that he just wasn’t cut out to be someone else’s employee. For the next four years, he saved 25% of his salary and then opened his own graphic design firm. He intends to target
> High Flyers manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month’s budgeted sales. Follo
> Bates & Hill Fabricators’ marketing department has identified the following monthly expenses that will be needed to support the company’s sales and administrative functions (see Exercise 5-8). In addition to these monthly expenses, the company will pay a
> Mark Newton has just opened a gourmet coffee bar, the first of its kind in Fountain, North Carolina. You are Mark’s accountant. On a recent visit to the store, you asked how the budget was coming along. Mark replied that since there was no history of gou
> Miller Manufacturing makes several different products for the mountain biking enthusiast. In an extremely competitive market, Miller has assumed a strong position by stressing cost control. Several years ago, the company implemented a standard cost syste
> Joseph A. Knab distributes men’s suits in the Southwest. The following information was gathered to prepare the budget for the third quarter. Suits are budgeted to sell for an average price of $225. Unit sales are expected to be as follo
> (Data set from “Café Data,” Concetta A. DePaolo and David F. Robinson, Journal of Statistics Education Volume 19, Number 1 (2011) used by permission of the authors.) The Peppy Paladin Café is an experiential learning lab at a state university in the Mid
> Refer to Problem 4-28. Reference from Problem 4-28: ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: On Nove
> Refer to Problem 4-26. Reference from Problem 4-26: Paladin Parabolics Company produces high-quality microscopes for education and health care uses. The company uses a job order costing system. Because the microscopes’ optics require s
> ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: On November 30, ErgoFurn’s Raw Materials I
> E. Cain, Ltd. produces decorative lamps in several styles and finishes. The company uses a job order costing system to accumulate product costs. Because much of the production process is automated, E. Cain, Ltd. has selected machine hours as its overhead
> Macon Vitamins sells a variety of vitamins and herbal supplements to small health food stores. Macon purchases the vitamins and supplements from leading manufacturers. Identify each of the following costs incurred by Macon Vitamins in terms of its cost b
> Harker Company manufactures automobile components for the worldwide market. The company has three large production facilities in Virginia, New Jersey, and California, which have been operating for many years. Brett Harker, vice president of production, b
> All businesses are involved in three types of activities—financing, investing, and operating. Listed below are the names and descriptions of companies in several different industries. Abitibi Consolidated Inc.—manufacturer and marketer of newsprint Cal S
> Classify each item as an asset, liability, common stock, revenue, or expense. (a) Issuance of ownership shares. (b) Land purchased. (c) Amounts owed to suppliers. (d) Bonds payable. (e) Amount earned from selling a product. (f) Cost of advertising.
> Columbia Sportswear Company’s fi nancial statements are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions (a) Based on the information in these financial statements, determine the following for each
> The accounting equation is Assets = Liabilities + Stock- holders’ Equity. Appendix A, at the end of this textbook, reproduces Apple’s financial statements. Replacing words in the equation with dollar amounts, what is Apple’s accounting equation at Septem
> What types of information are presented in the notes to the financial statements?
> Why is it important for financial statements to receive an unqualified auditor’s opinion?
> What is the purpose of the management discussion and analysis section (MD&A)?
> The annual report provides financial information in a variety of formats, including the following. Management discussion and analysis (MD&A) Financial statements Notes to the financial statements Auditor’s opinion Instructions For each of the following,
> How are each of the following financial statements interrelated? (a) Retained earnings statement and income statement. (b) Retained earnings statement and balance sheet. (c) Balance sheet and statement of cash flows.
> The summaries of data from the balance sheet, income statement, and retained earnings statement for two corporations, Walco Corporation and Gunther Enterprises, are presented as follows for 2017. Instructions Determine the missing amounts. Assume all ch
> Which of these items are liabilities of White Glove Cleaning Service? (a) Cash. (b) Accounts payable. (c) Dividends. (d) Accounts receivable. (e) Supplies. (f) Equipment. (g) Salaries and wages payable. (h) Service revenue. (i) Rent expense.
> Suppose the following items were taken from the balance sheet of Nike, Inc. (All dollars are in millions.) Instructions Perform each of the following. (a) Classify each of these items as an asset, liability, or stockholders’ equity, an
> (a) Define the terms assets, liabilities, and stockholders’ equity. (b) What items affect stockholders’ equity?
> Match each of the following forms of business organization with a set of characteristics: sole proprietorship (SP), partnership (P), corporation (C). (a) _____ Shared control, tax advantages, increased skills and resources. (b) _____ Simple to set up and
> Wayne Holtz is the bookkeeper for Beeson Company. Wayne has been trying to get the balance sheet of Beeson Company to balance. It fi nally balanced, but now he’s not sure it is correct. Instructions Prepare a correct balance sheet.
> What is the basic accounting equation?
> Suppose the following data are derived from the 2017 financial statements of Southwest Airlines. (All dollars are in millions.) Southwest has a December 31 year-end. Cash balance, January 1, 2017…………………………….$1,390 Cash paid for repayment of debt………………………
> What is retained earnings? What items increase the balance in retained earnings? What items decrease the balance in retained earnings?
> Although Clif Bar & Company is not a public company, it does share its financial information with its employees as part of its open-book management approach. Further, although it does not publicly share its fi nancial information, it does provide a diffe
> What are the three main categories of the statement of cash flows? Why do you think these categories were chosen?
> This information is for Williams Corporation for the year ended December 31, 2017. Cash received from lenders……………………..$20,000 Cash received from customers…………………..50,000 Cash paid for new equipment……………………28,000 Cash dividends paid……………………..…………..8,000
