Jack’s Apps Company researches, develops, and sells traditional applications (i.e., apps) for middle-aged mobile phone device users. In an attempt to tap into the large young adult app market to boost sales and advertising revenues, Jack’s CFO, Daniel, is considering hiring students from area high schools and universities to drastically increase the innovativeness of the company’s apps. Specifically, Daniel hopes that Jack’s new student employee pool will make Jack’s next wave of phone apps inventions popular with young adults by providing innovative services, such as exchanging payments for late-night food deliveries, arranging informal dating and other social gatherings, exchanging perspectives on different professors, and identifying unusual debit card purchase patterns to assist with early fraud detection notification. Based on cost estimates from Jack’s finance team and surveys of its new target customers (i.e., New Customer Financial Survey), Daniel estimates that this new customer market would increase Jack’s annual net income by $10,000,000. In addition to the New Customer Financial Survey, Jack’s management team conducted a Business Sustainability Analysis. Specifically, the stakeholder engagement portion of the Business Sustainability Analysis revealed that four of Jack’s most important stakeholder groups (advertisers, regulators, employees, and customers) would react strongly—some favorably and others unfavorably—to the decision to push its app business in the direction of the young adult market. Specifically, ten percent of its existing advertisers would drop Jack’s as a client, thereby reducing its annual advertising revenue of $10,000,000. Also, confidential discussions with competitors suggest that the new fraud detection app would require sensitive customer information that Jack’s would be unable to protect perfectly from data hackers, thereby resulting in annual fines of $1,500,000 from regulators. In addition, employee engagement meetings indicated that they would strongly favor the expansion into the young adult market. Daniel estimates that improved employee morale would significantly increase their productivity and creativity, thereby increasing annual sales revenue by $2,000,000. Finally, focus groups with existing customers revealed that they would highly value the increased workforce diversity of Jack’s hiring a large number of talented young female employees with an expertise in technology. Daniel estimates that this positive customer sentiment would translate into an additional $3,000,000 in annual traditional apps sales. Required: 1. Using the New Customer Financial Survey and the Business Sustainability Analysis, calculate the net change in Jack’s Apps Company’s net income that would be expected from pursuing the young adult app market. 2. Based on the calculation in Requirement 1, should Jack’s Apps pursue the young adult app market? Explain your answer. 3. Describe two additional considerations that Jack’s Apps Company management might be wise to consider before making a final decision on whether or not to pursue the young adult apps market.
> Refer to Problem 6-65. Required: 1. Using the FIFO method, prepare the following for Department A: (a) a physical flow schedule, (b) an equivalent unit calculation, (c) calculation of unit costs (Note: Round to three decimal places.), (d) cost of EWIP a
> Refer to the information for Farnsworth Company (p. 139) for the first 10 months of data on receiving orders and receiving cost. Now suppose that Tracy has gathered 2 more months of data: Note: For the following requirements, round the intercept terms
> Borques Company produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows: Variable costs per unit: Direct materials ……………………………………..$ 2.85 Direct labor ……………………………………………..$
> Seacrest Company uses a process-costing system. The company manufactures a product that is processed in two departments: A and B. As work is completed, it is transferred out. All inputs are added uniformly in Department A. The following summarizes the pr
> Define outsourcing, and discuss why companies may outsource various functions.
> Suppose that Kicker had the following sales and cost experience (in thousands of dollars) for May of the current year and for May of the prior year: In May of the prior year, Kicker started an intensive quality program designed to enable it to build
> FunTime Company produces three lines of greeting cards: scented, musical, and regular. Segmented income statements for the past year are as follows: Kathy Bunker, president of FunTime, is concerned about the financial performance of her firm and is s
> Candyland Inc. produces a particularly rich praline fudge. Each 10-ounce box sells for $5.60. Variable unit costs are as follows: Pecans ………………………………………..$0.70 Sugar ……………………………………………0.35 Butter ……………………………………………1.85 Other ingredients ………………………….0.34 Bo
> Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled $340,000, of which $184,000 can be avoided if the blenders are not produced and
> Refer to the information for Farnsworth Company on the previous page. Required: 1. Prepare a scattergraph based on the 10 months of data. Does the relationship appear to be linear? 2. Using the high-low method, prepare a cost formula for the receiving a
> Basu Company produces two types of sleds for playing in the snow: basic sled and aerosled. The projected income for the coming year, segmented by product line, follows: The selling prices are $30 for the basic sled and $60 for the aerosled. (Round brea
> Willow Company produces lawnmowers. One of its plants produces two versions of mowers: a basic model and a deluxe model. The deluxe model has a sturdier frame, a higher horsepower engine, a wider blade, and mulching capability. At the beginning of the ye
> Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A’s production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers.
> Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania’s plant manager has heard that departmental overhead rates can offer significantly better cost assignments tha
> Hayward Company, a manufacturing firm, has supplied the following information from its accounting records for the month of May: Required: 1. Prepare a statement of cost of goods manufactured. 2. Prepare a statement of cost of goods sold. Direct l
> What is a foreign trade zone, and what advantages does it offer U.S. companies?
> Laworld Inc. manufactures small camping tents. Last year, 200,000 tents were made and sold for $60 each. Each tent includes the following costs: Direct materials ………………………………………………$18 Direct labor ………………………………………………………12 Manufacturing overhead ……………………
> Heurion Company is a job-order costing firm that uses a plantwide overhead rate based on direct labor hours. Estimated information for the year is as follows: Overhead …………&
> Newmarge Products Inc. is evaluating a new design for one of its manufacturing processes. The new design will eliminate the production of a toxic solid residue. The initial cost of the system is estimated at $860,000 and includes computerized equipment,
> Pop’s Drive-Thru Burger Heaven produces and sells quarter-pound hamburgers. Each burger is wrapped and put in a “burger bag,” which also includes a serving of fries and a soft drink. The price for the
> I know that it’s the thing to do,” insisted Pamela Kincaid, vice president of finance for Colgate Manufacturing. “If we are going to be competitive, we need to build this completely automated plant.” “I’m not so sure,” replied Bill Thomas, CEO of Colgate
> Leakam Company’s product engineering department has developed a new product that has a 3-year life cycle. Production of the product requires development of a new process that requires a current $100,000 capital outlay. The $100,000 will be raised by issu
> Foster Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines (to replace an existing manual system). The outlay required is $3,500,000. The NC equipment will la
> Ondi Airlines is interested in acquiring a new aircraft to service a new route. The route will be from Tulsa to Denver. The aircraft will fly one round-trip daily except for scheduled maintenance days. There are 15 maintenance days scheduled each year. T
> Techno Inc. has two divisions: Auxiliary Components and Audio Systems. Divisional managers are encouraged to maximize ROI and EVA. Managers are essentially free to determine whether goods will be transferred internally and what the internal transfer pric
> Dr. Whitley Avard, a plastic surgeon, had just returned from a conference in which she learned of a new surgical procedure for removing wrinkles around eyes, reducing the time to perform the normal procedure by 50%. Given her patient-load pressures, Dr.
> Explain what a post audit is and how it can provide useful input for future capital
> GreenWorld Inc. is a nursery products firm. It has three divisions that grow and sell plants: the Western Division, the Southern Division, and the Canadian Division. Recently, the Southern Division of GreenWorld acquired a plastics factory that manufactu
> Suppose that Larimer Company sells a product for $24. Unit costs are as follows: Direct materials …………………………………………………………$4.98 Direct labor …………………………………………………………………..2.10 Variable factory overhead ……………………………………………..1.00 Variable selling and administrat
> Saludable Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows: The following activity data have been collected: Inspecting products ……â€&b
> Crazy Fan Guard Company provides security services to popular live sporting event venues. Crazy Fan management has identified one of its top risks as the possibility that restrictions on premium close seating options will severely decrease its sales reve
> Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $2,700,000 a
> Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Cobre Company is considering the purchase of new equipment that will speed up the process for extracting copper. The equipment will cost $3,600,000 an
> Bryce Company manufactures pet supplies. However, Bryce’s electronic accounting system recently crashed and, unfortunately, only a partial recovery of the company’s year-end accounting records (which included several profitability ratios) was possible. A
> Refer to the information for Oliver Company above and on the previous page. Required: Prepare a schedule that provides operating cash flows for the year 20X2 using the direct method. Data for Exercise 40: Oliver Company provided the following informat
> Refer to the information for Oliver Company above and on the previous page. Required: 1. Calculate the change in cash flows that serves as the control figure for the statement of cash flows. 2. Prepare a schedule that provides operating cash flows for t
> During 20X1, Craig Company had the following transactions: a. Purchased $300,000 of 10-year bonds issued by Makenzie Inc. b. Acquired land valued at $105,000 in exchange for machinery. c. Sold equipment with original cost of $810,000 for $495,000; accumu
> What are the advantages of the scattergraph method over the high-low method? The high-low method over the scattergraph method?
> Consider each of the following situations. Is there a potential problem? Which part of the fraud triangle is involved, if any? A. Susan is an accounts payable clerk. She sets up creditors in a financial database and pays invoices as they come in. Last ye
> A Box Scorecard was prepared for a value stream: Required: 1. How many nonfinancial measures are used to evaluate performance? Why are nonfinancial measures used? 2. Classify the operational measures as time-based, quality-based, or efficiency-based. D
> A value stream has three activities and two products. The units produced and shipped per week are 50 of the limited model (Model K), characterized by special additional features, and 150 of the regular model (Model R), with only basic features. The conve
> Erba Inc. has the following departmental layout for producing an herbal supplement: After a detailed study, the head of the plant’s industrial engineering department recommended that the following cellular manufacturing layout replace
> The controller of Emery, Inc. has computed quality costs as a percentage of sales for the past 5 years (20X1 was the first year the company implemented a quality improvement program). This information is as follows: Required: 1. Prepare a trend graph f
> Bradshaw Company reported sales of $5,000,000 in 20X1. At the end of the fiscal year (June 30, 20X1), the following quality costs were reported: Vendor certification ……………………………..$ 43,500 Warranty ……………………………………………….100,000 Rework ………………………………………………….1
> Classify the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs: 1. Scrap (created by defective units) 2. Certifying a vendor to ensure that quality parts are provided 3. Stopping work to contr
> Budgeted amounts for the year: Materials ……………………2 leather strips @ $7.00 Labor …………………………………….1.5 hr. @ $18.00 VOH ……………………………………….1.5 hr. @ $1.20 FOH ……………………………………………………$6,800 Required: 1. Prepare a flexible budget for 3,500, 4,000, and 4,500 unit
> Princeville Paradise Ice Cream Shoppe manufactures and sells premium ice cream in a unique Hawaiian environment. Princeville Paradise’s management performed a stakeholder engagement exercise to identify its most important stakeholders, given its strategy
> Apple Inc. is a multinational technology company that designs, develops, manufactures, and sells innovative consumer electronics products and services around the globe. Its products include laptop (e.g., MacBook) and desktop (e.g., iMac) computers, mobil
> How do international issues affect the role of the management accountant?
> At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic products: Direct materials (5 lbs. @ $4.00) …………………$20.00 Direct labor (2 hrs. @ $15.00) ………………………..30.00 Standard prime cost per unit …………………………$50
> Lake McDonald Gift Shop has decided to price the National Parks Memory Card Game that it sells at cost plus 65%. The National Parks Memory Card Game costs $20 each, and another one, the Guess This Animal Track Game, costs $40 each. Required: 1. What pr
> Susan Lewis, owner of a florist shop, is interested in predicting the cost of delivering floral arrangements. She collected monthly data on the number of deliveries and the total monthly delivery cost (depreciation on the van, wages of the driver, and fu
> The controller for Beckham Company believes that the number of direct labor hours is associated with overhead cost. He collected the following data on the number of direct labor hours and associated factory overhead cost for the months of January through
> Knitline Inc. produces high-end sweaters and jackets in a single factory. The following information was provided for the coming year. A sales commission of 5% of sales is paid for each of the two product lines. Direct fixed selling and administrative
> Refer to the information for Smooth Move Company on the previous page. Suppose a customer wants to have its company logo affixed to each paperweight using a label. Smooth Move would have to purchase a special logo labeling machine that will cost $12,000.
> Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the company was making an effort to reduce costs. As part of this effort, management implemented an activity-based management system and began focusing its att
> Refer to the information for Smooth Move Company on the previous page. If Smooth Move accepts the order, no fixed manufacturing activities will be affected because there is sufficient excess capacity. Required: 1. What are the alternatives for Smooth Mo
> Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 20,000 portable grills, 50,000 stationary gri
> When will the average unit cost be used for value streams?
> What is the most important reason for an organization to use enterprise risk management?
> Using the Internet or other research tool, search “cloud computing” and create a list of at least 10 companies that provide cloud computing services. List the names of the companies and a brief description of the cloud computing services provided by each
> Refer to the notes payable audit program excerpt presented in Exhibit 7‑3. If an auditor had a copy of this client’s data file for its notes receivable, how could a general audit software or data analysis software package be used to assist with these aud
> Identify whether each of the following audit tests is used to evaluate internal access controls (I), external access controls (E), or both (B): • Authenticity tests • Penetration tests • Vulnerability assessments • Review of access logs • Review of p
> Suppose a company has 1,000 units of a raw material part on hand. If 750 of these units are routed into production, should the company place an order to stock up on more of these parts? In order to answer this question, determine the economic order quant
> Identify whether each of the following activities represents preventive controls, detective controls, or corrective controls: • Job rotation • Preparation of a bank reconciliation • Segregation of duties • Recalculating totals on computer reports •
> Explain how control totals such as record counts, batch totals, and hash totals serve as input controls, processing controls, and output controls.
> Describe the differences in the following three types of processing: a. batch processing b. online processing c. real‐time processing
> For each report shown in the table below, indicate in the appropriate column whether the report is likely to be for internal or external users (some reports may be both), and whether data would come exclusively from the general ledger. Report Name I
> Locate the stock tables for the two major stock exchanges in any issue of the Wall Street Journal. Beginning from any point within the table, prepare a list of the first digits of the daily volume for 100 stocks. Determine whether the listed numbers con
> Visit the AICPA website at www.aicpa.org and select the tab for Career Paths. Click on “This Way to CPA” to locate information on audit careers.
> Categorize each of the following as either a general control or an application control: a. Validity check b. Encryption c. Security token d. Batch total e. Output distribution f. Vulnerability assessment g. Firewall h. Antivirus software
> Describe the purpose of each of the following cost accounting records or reports: • Work‐in‐process and finished goods inventory accounts • Bill of materials • Variance reports • Routing slips
> For the following activities within the conversion process, place them in sequence that indicates the order in which they would normally be performed: • Inspection of goods • Materials issuance • Preparation of time sheets • Preparation of a bill of
> Some companies use the same facility for both inventory stores and warehousing. Describe the difference between these two inventory control activities, and how the respective areas might be distinguished within the facility.
> List and describe each activity within the planning component of the logistics function.
> Give some examples of manufacturing processes that would fit into each of the three different types of production processes: continuous processing, batch processing, and custom made‐to‐order.
> Consider a company that is in the business of producing canned fruits for grocery stores. (It is not in the business of growing the fruit.) List the items that would likely be included as this company’s direct materials, direct labor, indirect materials,
> Explain the types of unethical behavior that may occur in the fixed assets area.
> The authorization to purchase should include investment analysis. Explain the two parts of investment analysis.
> Explain the ways in which electronic transfer of funds can improve payroll processes.
> Explain the various reconciliation procedures that should occur in payroll.
> Why is it true that the accounting software in and of itself is not the entire accounting information system?
> Explain how duties are segregated in payroll. Specifically, who or which departments conduct the authorization, timekeeping, recording, and custody functions?
> The calculation of gross and net pay can be a complicated process. Explain the items that complicate payroll calculations.
> Describe the type of information that a human resources department should maintain for each employee.
> Describe how a procurement card improves the efficiency of purchasing supplies.
> Describe how an ERS system could improve the efficiency of expenditures processes.
> Describe how the matching of key information on supporting documents can help a company determine whether purchase transactions have been properly executed.
> Expenditures systems are crucial in the automobile manufacturing industry, where hundreds or thousands of parts must be purchased to manufacture cars. Briefly describe how EDI would be beneficial in this industry.
> Describe what is likely to occur if company personnel erroneously recorded a purchase transaction for the wrong vendor. What if a cash disbursement were posted to the wrong vendor? Identify internal controls that would detect or prevent this from occurri
> Briefly describe an example from your personal experience where you purchased something from a company that uses a POS system. How might your experience have been different if the POS system did not exist in the experience you described?
> Describe how a POS system could be useful to a company’s marketing managers. How could it be useful to purchasing agents?
> Why would the training of employees be an impediment to updating legacy systems?
> Describe how the use of prenumbered forms for receiving reports and credit memos can help a company determine that sales return transactions have not been omitted from the accounting records.
> Use the process maps in this chapter to answer the following questions: a. What would a credit manager do if a sales order received caused a customer to exceed its credit limit? b. What happens after the shipping department verifies that the quantities
> Revenue systems are crucial in the health care industry, where hundreds of billions of dollars are spent annually reconciling revenues and billing data from the perspectives of providers (doctors and clinics, etc.) and payers (insurance companies). Brief
> Debate the logic used in the following statement: The person responsible for handling cash receipts should also prepare the bank reconciliation because he is most familiar with the deposits that have been made to the bank account.
> Describe what is likely to occur if company personnel erroneously recorded a sales transaction for the wrong customer. What if a cash receipt were applied to the wrong customer? Identify internal controls that would detect or prevent this from occurring.
> Distinguish between the various service organization controls (SOC) reporting options available to auditors who evaluate cloud computing service providers.
> Explain why continuous auditing is growing in popularity. Identify and describe a computer assisted audit technique useful for continuous auditing.
