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Question: Information for two companies follows. (1) Compute

Information for two companies follows. (1) Compute the degree of operating leverage (DOL) for each company. (2) Which company is expected to produce a greater percent increase in income from a 20% increase in sales?
Information for two companies follows. (1) Compute the degree of operating leverage (DOL) for each company. (2) Which company is expected to produce a greater percent increase in income from a 20% increase in sales?


> Refer to the information from Exercise 23-27. Compute the following. 1. Variable overhead spending and efficiency variances. 2. Fixed overhead spending and volume variances. 3. Controllable variance.

> Sedona Company set the following standard costs for one unit of its product for this year. The $5.60 ($4.00 + $1.60) total overhead rate per direct labor hour (DLH) is based on a predicted activity level of 37,500 units, which is 75% of the factory&acirc

> Mia Wiz sells computers. During May, it sold 350 computers at a $1,200 per unit price. The fixed budget for May predicted sales of 365 computers at an per unit price of $1,100. 1. Compute the sales price variance and identify it as favorable or unfavorab

> Key figures for Apple and Google follow. Required 1. Compute the recent two years’ cash flow on total assets ratios for Apple and Google. 2. For the current year, which company has the better cash flow on total assets ratio? 3. For the

> For May, Mariana Company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget. The company applies overhead with a standard of 3 DLH per unit and a standard overhead rate of $3.85 p

> Complete the following partial flexible budget performance report, and indicate whether each variance is favorable or unfavorable. The company budgets a selling price of $80 per unit and variable costs of $35 per unit.

> Shaw Inc. began this period with a budget for 1,000 units of predicted production. The budgeted overhead at this predicted activity follows. At period-end, total actual overhead was $92,000, and actual units produced were 900. The company applies overhea

> Shawke Company’s partially completed flexible overhead budget for the current period follows. This budget is based on its predicted activity of 50% of productive capacity. Complete its flexible overhead budgets for the current period us

> Compute total overhead variance using the following information.

> Shaw Co. produced 680 units. Its overhead allocation base is DLH and its standard amount per allocation base is 8 DLH per unit. Its standard overhead rate is $10 per DLH. The flexible overhead budget at an activity level of 680 units shows $26,000 in var

> Kenshaw Company’s flexible overhead budget at an activity level of 1,000 units shows $10,000 in variable overhead costs and $5,000 in fixed overhead costs. Actual total overhead is $13,000. Compute the controllable variance.

> Blaze Corp. allocates overhead on the basis of DLH and the standard amount per allocation base is 4 DLH per unit. For March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following budget.

> Refer to the information from Exercise 23-17. Compute the overhead (1) volume variance and (2) controllable variance, and identify each as favorable or unfavorable.

> Manuel Company predicts it will operate at 80% of its productive capacity. Its overhead allocation base is DLH and its standard amount per allocation base is 0.5 DLH per unit. The company reports the following for this period. 1. Compute the standard ove

> Key figures for Apple and Google follow Required 1. Compute return on total assets for Apple and Google for the two most recent years. 2. Which of these two companies has the better return on total assets for the current year? 3. Compute both profit mar

> Javon Co. set standards of 3 hours of direct labor per unit at a rate of $15 per hour. During October, the company actually uses 16,250 hours of direct labor at a $247,000 total cost to produce 5,600 units. In November, the company uses 22,000 hours of d

> The following information relates to production activities of Mercer Manufacturing for the year. 1. Compute the direct materials price and quantity variances and identify each as favorable or unfavorable. 2. Compute the direct labor rate and efficiency v

> JPAK manufactures and sells mountain bikes. Classify each of the following costs as fixed or variable with respect to the number of bikes made. a. Bike frames d. Property taxes g. Accountant salary b. Screws for assembly e. Bike tires h. Depreci

> Jasper Company has 70% of its sales on credit and 30% for cash. All credit sales are collected in full in the first month following the sale. The company budgets sales of $525,000 for April, $535,000 for May, and $560,000 for June. Total sales for March

> Garden Yeti manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $3 per pound and 0.5 direct labor hour at a rate of $18 per hour. Variable overhead is budgeted at a rate of $3 per direct labor hour. Budgeted

> Ramos Co. provides the following (partial) production budget for the next three months. Each finished unit requires 0.50 hour of direct labor at the rate of $16 per hour. The company budgets variable overhead at the rate of $20 per direct labor hour and

> Ramos Co. provides the following budgeted production for the next four months. Each finished unit requires 5 pounds of direct materials. The company wants to end each month with direct materials inventory equal to 30% of next month’s pr

> Zira Co. reports the following production budget for the next four months. Each finished unit requires five pounds of direct materials, and the company wants to end each month with direct materials inventory equal to 30% of next month’s

> Rida Inc. is preparing its direct materials budget for the second quarter. It budgets production of 240,000 units in the second quarter and 52,500 units in the third quarter. Each unit requires 0.60 pound of direct material, priced at $175 per pound. The

> Ruiz Co. provides the following budgeted sales for the next four months. The company wants to end each month with ending finished goods inventory equal to 25% of next month’s budgeted unit sales. Finished goods inventory on April 1 is 1

> Key figures for Apple and Google follow. Required 1. Compute the debt-to-equity ratios for Apple and Google for both the current year and the prior year. 2. Use the ratios from part 1 to determine which company’s financing structure is

> MM Co. budgets sales of $30,000 for May. MM’s production manager discovered a way to use more sustainable packaging. As a result, MM’s product will receive better placement on store shelves and May sales are predicted to increase by 8%. Compute budgeted

> Prepare a budgeted balance sheet at March 31 using the following information from Zimmer Company. a. The cash budget for March shows an ending loan balance of $10,000 and an ending cash balance of $50,000. b. The sales budget for March shows sales of $14

> Hardy Co. reports budgeted merchandise purchases below. For those purchases, 40% of a month’s purchases is paid in the month of purchase, and 60% is paid in the first month after purchase. Prepare the schedule of cash payments for merch

> Use the budgeted information in Exercise 22-28, and the ending year balance of Retained Earnings of $78,000 on December 31, to prepare Lamonte Co.’s budgeted balance sheet as of December 31.

> Lamonte Co. reports the following budgeted December 31 adjusted trial balance. Prepare the budgeted income statement for the current year ended December 31. Ignore income taxes.

> Ahmed Company purchases all merchandise on credit. It recently budgeted the month-end accounts payable balances below. Cash payments on accounts payable during each month are expected to be June, $1,490,000; July, $1,425,000; and August, $1,495,000. Use

> Walker Company prepares monthly budgets. Company policy is to end each month with merchandise inventory equal to 15% of budgeted unit sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. Beginning inve

> Fortune Inc. is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are budgeted at 150,000 for the first quarter. Cost of goods sold is $14 per unit. Other expense informatio

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

> Zisk Co. purchases direct materials on credit. Budgeted purchases are April, $80,000; May, $110,000; and June, $120,000. Cash payments for purchases are: 70% in the month of purchase and 30% in the first month after purchase. Purchases for March are $70,

> Use the following comparative figures for Apple and Google. Required 1. Compute the basic EPS for each company using these data. 2. Compute the dividend yield for each company using these data. 3. Compute the price-earnings ratio for each company using t

> Match the definitions 1 through 6 with the phrase a through f. 1. Helps determine financing needs. 2. The usual starting point in the master budget process. 3. A report that shows predicted revenues and expenses for a budgeting period. 4. A budgetary cus

> Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. Compute (a) contribution margin per unit, (b) contribution margin ratio, (c) break-even point i

> Compute the missing amounts a through j for the contribution margin income statements below.

> A jeans maker is designing a new line of jeans called Slams. Slams will sell for $205 per unit and cost $164 per unit in variable costs to make. Fixed costs total $60,000. 1. Compute the contribution margin per unit. 2. Compute the contribution margin ra

> Refer to the information from Exercise 21-5. Use spreadsheet software to use ordinary least squares regression to estimate the cost equation, including fixed and variable cost amounts.

> Felix & Co. reports the following information. (1) Use the high-low method to estimate the fixed and variable components of total costs. (2) Estimate total costs if 3,000 units are produced.

> Classify each of the following costs as either variable, fixed, or mixed. Costs are from a manufacturer of portable basketball hoops.

> Following are four series of costs measured at various volume levels. Identify each series as either fixed, variable, mixed, or step-wise. Hint: It can help to graph each cost series.

> A manufacturer reports the information below for three recent years. Compute income for each of the three years using absorption costing.

> Match each of the cost classifications a through e with its definition.

> Over the years, Apple and Google have evolved into large corporations. Today it is difficult to imagine them as fledgling start-ups. Research each company’s history online. Required 1. In what year was each company first organized/started as a business?

> Apple offers extended service contracts that provide repair coverage for its products. Assume its repair division reports the following annual results. Required 1. Compute the repair division’s degree of operating leverage. 2. Compute

> A manufacturer’s contribution margin income statement for the year follows. Prepare contribution margin income statements for each of the three separate cases below. 1. The 10,000 units sold and produced increases to 10,400 units and fi

> Refer to the information in Exercise 21-11. The company is considering buying a new machine that will increase its fixed costs by $40,500 per year and decrease its variable costs by $9 per unit. Prepare a contribution margin income statement for the next

> Refer to the information in Exercise 21-11. If the company raises its selling price to $240 per unit, compute its (1) contribution margin per unit, (2) contribution margin ratio, (3) break-even point in units, and (4) break-even point in sales dollars.

> Refer to the information in Exercise 21-11. The marketing manager believes that increasing advertising costs by $81,000 will increase the company’s sales volume to 11,000 units. Prepare a contribution margin income statement for the next year assuming th

> Harrison Co. expects to sell 200,000 units of its product next year, which would generate total sales of $17,000,000. Management predicts that income for next year will be $1,250,000 and that the contribution margin per unit will be $25. Use this informa

> Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. The sales manager predicts that next year’s annual sales of the company’s product will be 40,00

> Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. Management targets an annual income of $1,012,500. Compute the (1) unit sales to earn the targe

> Refer to the information in Exercise 21-11. 1. Assume Hudson has a target income of $162,000. What amount of sales dollars is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent)?

> Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. 1. Prepare a contribution margin income statement at the break-even point. 2. If the company’s

> Key figures for Apple and Google follow. Required 1. Compute times interest earned for the three years’ data shown for each company. 2. In the current year, and using times interest earned, which company appears better able to pay inter

> Following are four graphs representing various cost behaviors. 1. Identify whether the cost behavior in each graph is mixed, step-wise, fixed, or variable. 2. Identify the graph (I, II, III, or IV) that best illustrates the cost behavior for each of the

> College Life produces sweatshirts for college organizations and uses hybrid costing. It reports the following for its fabrication process. Customers choose screen-printed or embroidered logos. a. Compute the cost per unit for both the screen-printed and

> RSTN Co. produces its product in two sequential processing departments. During October, the first process finished and transferred 150,000 units of its product to the second process. Of these units, 30,000 were in process at the beginning of the month an

> Pro Power makes a protein powder in several processes. Packaging, the last department in the company’s production process, reports the following. 1. Compute the cost per completed unit for both the current month and the prior month. 2.

> Prepare journal entries to record the following production activities. 1. Transferred completed goods from the Assembly department to finished goods inventory. The goods cost $135,600. 2. Sold $315,000 of goods on credit. Their cost is $175,000.

> Refer to the information in Exercise 20-24. Prepare journal entries dated June 30 to record (a) raw materials purchases, (b) direct materials used, (c) indirect materials used, (d) direct labor used, (e) indirect labor used, ( f ) other actual overhead c

> Re-Tire produces bagged mulch from recycled tires. Production involves shredding tires and packaging the pieces in the Bagging department. All direct materials enter in the Shredding process. A predetermined overhead rate of 175% of direct labor costs is

> Sharpe Co. makes organic salsa in two production departments, Cooking and Bottling. Direct materials costs are added at the beginning of each process, and conversion costs are added evenly throughout each process. The company reports the following for a

> Blue Sky Soda estimates total factory overhead costs of $4,200,000 and total direct labor costs of $2,800,000 for its first year of operations. During January, the company used $80,000 of direct labor cost in its Blending department and $60,000 of direct

> Prepare journal entries to record the following production activities. 1. Paid other actual overhead costs of $40,000 in cash. 2. Applied overhead at 110% of direct labor costs. Direct labor costs were $42,000 in the Roasting department and $33,000 in th

> Comparative figures for Apple and Google follow. Required 1. Compute total asset turnover for the most recent two years for Apple and Google using the data shown. 2. in the current year, which company is more efficient in generating net sales given total

> Prepare journal entries to record the following production activities. 1. Incurred $42,000 of direct labor in the Roasting department and $33,000 of direct labor in the Blending department .Credit Factory Wages Payable. 2. Incurred $20,000 of indirect la

> Oslo Company produces large quantities of a standardized product. The following information is available for the first production department for May. Prepare a production cost report for this process using the weighted average method.

> Elliott Company produces large quantities of a standardized product. The following information is available for its first production department for March. Prepare a production cost report for this department using the weighted average method.

> Refer to the information in Exercise 20-14. Prepare a production cost report using the FIFO method.

> The following data reports on the July production activities of the Molding department at Ash Company. Prepare the Molding department’s production cost report using the weighted average method.

> Midway Metal produces wire baskets in two departments, Bending and Painting. The Work in Process Inventory T-account for the Bending department is shown below. The 2,000 units in beginning work in process inventory had direct materials costs of $2,400 an

> Hi-T Company uses the weighted average method of process costing. Information for the company’s first production process follows. All direct materials are added at the beginning of this process, and conversion costs are added uniformly

> Refer to the information in Exercise 20-9. (a) Calculate the costs per equivalent unit of production for both direct materials and conversion for the department. (b) Assign costs to the department’s output—specifically, to the units transferred out and t

> Refer to the information in Exercise 20-8. (a) Compute the number of units started and completed this period for the first production department. (b) Compute the number of equivalent units of production for both direct materials and conversion for the fi

> 1. Prepare general journal entries for the following transactions of Valdez Services. a. B. Valdez invested $20,000 cash in the company. b. The company provided services to a client and immediately received $900 cash. c. The company received $10,000 cash

> Comparative figures for Apple and Google follow. Required 1. Compute the accounts receivable turnover for the two most recent years for (a) Apple and (b) Google. 2. Which company more quickly collects its accounts receivable in the current year?

> 1. Prepare general journal entries for the following transactions of Valdez Services. a. The company paid $2,000 cash for payment on a 6-month-old account payable for office supplies. b. The company paid $1,200 cash for the just-completed two-week salary

> After recording the transactions of Exercise 2-13 in T-accounts and calculating the balance of each account, prepare a trial balance. Use May 31 as its report date.

> Use the information in Exercise 2-9 to open these T-accounts: Cash; Supplies; Prepaid Insurance; Equipment; M. Harris, Capital; Services Revenue; and Utilities Expense. (1) Post the general journal entries to these T-accounts (which will serve as the led

> Swiss Group reports net income of $40,000 for the year. At the beginning of the year, Swiss Group had $200,000 in assets. By the end of the year, assets had grown to $300,000. What is Swiss Group’s return on assets for the current year? Did Swiss Group p

> MA homes Co. reported the following data at the end of its first year of operations on December 31. (a) Prepare its year-end statement of owner’s equity. (b) Prepare its year-end balance sheet using owner’s capital c

> Use the information in Exercise 1-18 to prepare a December statement of cash flows for Ernst Consulting. Assume the following additional information. a. The owner’s initial investment consists of $38,000 cash and $46,000 in land. b. The company’s $18,000

> Use the information in Exercise 1-18 to prepare a December 31 balance sheet for Ernst Consulting. Hint: The solution to Exercise 1-19 can help.

> Use the information in Exercise 1-18 to prepare a December statement of owner’s equity for Ernst Consulting. Hint: J. Ernst, Capital, on December 1 was $0.

> Ming Chen started a business and had the following transactions in June. Create the following table similar to Exhibit 1.9 and use additions and subtractions to show the dollar effects of the transactions on individual items of the accounting equation. S

> Answer the following questions. Hint: Use the accounting equation. a. On January 1, Lumia Company’s liabilities are $60,000 and its equity is $40,000. On January 3, Lumia purchases and installs solar panel assets costing $10,000. For the panels, Lumia pa

> Key comparative figures for Apple and Google follow. Required 1. Compute days’ sales uncollected (rounded to one decimal) for the current year and the prior year for (a) Apple and (b) Google. 2. Which company had more success collecting

> Answer the following questions. Hint: Use the accounting equation. a. At the beginning of the year, Addison Company’s assets are $300,000 and its equity is $100,000. During the year, assets increase $80,000 and liabilities increase $50,000. What is the e

> Sofia Gomez runs a mobile pet grooming service. She charges $35 direct labor per grooming hour. She applies overhead to jobs on the basis of grooming hours. She predicts 800 grooming hours for the year. Her estimated overhead costs for the year follow. 1

> At the beginning of the year, Miramax set its predetermined overhead rate for movies produced during the year by using the following estimates: overhead costs, $1,680,000, and direct labor costs, $480,000. At year-end, the company’s actual overhead costs

> At the beginning of the year, Custom Mfg. set its predetermined overhead rate using the following estimates: overhead costs, $750,000, and direct materials costs, $625,000. At year-end, the company reports that actual overhead costs for the year are $758

> A manufacturing company reports the following for the period. 1. Prepare a schedule of cost of goods manufactured. 2. Compute gross profit.

> A manufacturer reports the following information at June 30. 1. Compute Work in Process Inventory at June 30. 2. Compute Finished Goods Inventory at June 30. 3. Compute cost of goods sold for June.

> Following are simplified job cost sheets for three custom jobs at the end of June for Custom Patios. All jobs were started in June. Overhead is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 were finished in June, and Job

> A manufacturer began operations on April 1 and reports the information below. All jobs are sold for 20% above cost. 1. Compute the May 31 balance in (a) Work in Process Inventory and (b) Finished Goods Inventory. 2. Compute gross profit for May.

2.99

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