Question: Khan Inc. has conducted the following analysis

> Canadian Motorcycle Company (CMC) produces two models of motorcycles: Faster and Slower. The company has five categories of overhead costs: purchasing, receiving, machine operating, handling, and shipping. Each category represents the following percentag

> The CEO of Walker Ltd. is currently investigating ways to modernize the company's manufacturing process. At the first staff meeting, the chief engineer presented a proposal for automating the assembly department, and recommended that the company purchase

> Coats Galore Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats. Calculate the activity-based overhead rates using the following budgeted data for each of the activity cost pools. Calculate act

> The Peace Barber Shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $3,900 per month. The other barbers are paid $1,900 per month. In addition, each barber is paid a commission of $2 per haircut. Other monthly cost

> Wet Ride Inc. manufactures and distributes three types of water skis: beginner, intermediate, and advanced. Production is highly automated for the beginner model, whereas the intermediate and advanced models require increasing degrees of labour, dependin

> For Dene Company, the predetermined overhead rate is 150% of direct labour cost. During the month, Dene incurred $100,000 of factory labour costs, of which $85,000 is direct labour and $15,000 is indirect labour. Actual overhead incurred was $120,000. Ap

> B & B Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $900, and the Flat, a new model, which sells for $1,260. Based on the following income statement for 2020, the

> Aerotech International Inc. of Montreal has supported a research and development (R&D) department that for many years has been the sole contributor to the company's new products. The R&D activity is an overhead cost centre that provides services

> For the past five years, Collins Ltd. has been running a consulting practice in which it provides two major services: general management consulting and executive training seminars. The CFO is not quite sure that he is charging accurate fees for the diffe

> ProDriver Inc. (PDI) recently started operations to obtain a share of the growing market for golf equipment. PDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. Two professional engineers and a professional g

> McDonald and O'Toole is a law firm that serves both individuals and corporations. A controversy has developed between the partners of the two service lines as to who is contributing the greater amount to the bottom line. The area of contention is the ass

> Scalar Manufacturing produces automobile parts in batches in one continuous manufacturing process. The company uses direct labour hours to assign overhead to each part. Magda Malakova, the financial controller, is wondering what the reasons are for the l

> National Steel Company has budgeted manufacturing overhead costs of $2.5 million. It has allocated overhead on a plant-wide basis to its two products (Standard Steel and Deluxe Steel) using machine hours, which are estimated to be 100,000 for the current

> Quality Paints Inc. uses a traditional cost accounting system to apply quality-control costs uniformly to all its products at a rate of 30% of the direct labour cost. The monthly direct labour cost for the varnish paint line is $100,000. The company is c

> Ronald Enterprises Ltd. has estimated the following costs for producing and selling 15,000 units of its product: Calculate the break-even point in units and target income after tax. Direct materials ………………………………………….………. $75,000 Direct labour …………………………

> Prime Furniture designs and builds premium factory-made wood armoires for homes. All are made of white oak. Its budgeted manufacturing overhead costs for the year 2020 are as follows. Assign overhead costs using traditional costing and ABC; compare resul

> Ayala Company manufactures four products in a single production facility. The company uses activity-based costing. The company has identified the following activities through its activity analysis: (a) inventory control, (b) machine set-ups, (c) employee

> During the current month, Seeza Corporation completed Job 310 and Job 312. Job 310 cost $60,000 and Job 312 cost $40,000. Job 312 was sold on account for $90,000. Journalize the entries for the completion of the two jobs and the sale of Job 312. Prepare

> Mars Company has four categories of overhead: purchasing and receiving materials, machine operating costs, material handling, and shipping. The costs estimated for these categories for the coming year are as follows: Assign overhead costs using tradition

> Tough Thermos Inc. manufactures two plastic thermos containers at its plastic moulding facility in Lethbridge, Alberta. Its large container, called the Ice House, has a volume of five litres, side carrying handles, a snap-down lid, and a side drain and p

> VidPlayers Inc. manufactures two types of DVD players: a deluxe model and a superior model. The deluxe model is a multi-format progressive-scan DVD player with networking capability, Dolby digital, and DTS decoder. The superior model's primary feature is

> GoGo Ltd. manufactures three models of children's swing sets: Standard, Deluxe, and Super. The Standard set is made of steel, the Deluxe set is made of aluminum, and the Super set is made of a titanium aluminum alloy. Because of the different materials u

> Hy and van Lamsweerde is a public accounting firm that offers two primary services: auditing and tax return preparation. A controversy has developed between the partners of the two service lines regarding who is contributing the greater amount to the bot

> International Steel Company has budgeted manufacturing overhead costs of $1,930,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 90,000 for the current yea

> Stellar Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are made of white oak

> Imagen Arquitectónica of Tijuana, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftspersons. Alfredo Ayala, Imagen's owner, is considering replacing the draftspersons with a c

> Kiddy Company manufactures bicycles. It recently received a request to manufacture 10 units of a mountain bike at a price lower than it normally accepts. Bruce, the sales manager, indicated that, if the order were accepted at that price, the company coul

> Jacobson Electronics manufactures two HD television models: the Royale, which sells for $1,400, and a new model, the Majestic, which sells for $1,100. The production costs calculated per unit under traditional costing for each model in 2020 were as follo

> Allen Inc. is a manufacturer of quality shoes. The company has always used a plant-wide allocation rate for allocating manufacturing overhead to its products. The plant manager believes it is time to change to a better method of cost allocation. The acco

> Fishel Company is working on two job orders. The job cost sheets show the following: Assign costs to work in process. Prepare the three summary entries to record the assignment of costs to Work in Process from the data on the job cost sheets. Job 2

> Altex Co. identifies the following activities that pertain to manufacturing overhead: material handling, machine set-ups, factory machine maintenance, factory supervision, and quality control. For each activity, identify an appropriate cost driver. Ident

> FireOut Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-litre cylinder that holds 2.5 kilograms

> Otto Dieffenbach & Sons Inc. is a small manufacturing company that uses activity-based costing. Dieffenbach & Sons accumulates overhead in the following activity cost pools. Classify activities by level. 1. Hiring personnel 2. Managing parts inventory 3.

> Having itemized its costs for the first quarter of next year's budget, Galavic Corporation wants to install an activity-based costing system. First, it identified the activity cost pools in which to accumulate factory overhead; second, it identified the

> Duplessis and Najarali is a law firm that is initiating an activity-based costing system. Réjean Duplessis, the senior partner and a strong supporter of ABC, has prepared the following list of activities performed by a typical lawyer in a day at the firm

> Anna Bellatorre Inc. is interested in using its activity-based costing system to improve its operating efficiency and its profit margins by applying activity-based management techniques. As part of this undertaking, you have been asked to classify its pl

> The CVP income statements shown below are available for Billings Company and Bozeman Company. Calculate the degree of operating leverage and evaluate the impact of alternative cost structures on operating income. Instructions a. Calculate the degree of

> In an effort to expand the usefulness of its activity-based costing system, Peter Catalano's Verde Vineyards decides to adopt activity-based management techniques (ABM). One of these ABM techniques is classifying its activities as either value-added or n

> Lim Clothing Company manufactures its own designed and labelled sports attire and sells its products through catalogue sales and retail outlets. While Lim has used activity-based costing in its manufacturing activities for years, it has always used tradi

> H&Y Company uses four activity pools to apply overhead to its products. Each activity has a cost driver used to allocate the overhead costs to the product. The activities and related overhead costs are as follows: Calculate overhead rates and assign

> Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, it produced 50 range instruments and 300 pressure gauges and incurred estimated overhead costs of $94,500. An analysis of estimated o

> During the current month, Dalmar Company incurs the following manufacturing costs: Prepare journal entries for manufacturing costs. 1. Purchased raw materials of $16,000 on account. 2. Incurred factory labour of $40,000. Of that amount, $31,000 relates t

> Peter Catalano's Verde Vineyards, in the Niagara Peninsula, produces three varieties of wine: merlot, viognier, and pinot noir. His winemaster, Kyle Pohle, has identified the following activities as cost pools for accumulating overhead and assigning it t

> Sassafras Inc. has conducted an analysis of overhead costs related to one of its product lines using a traditional costing system (volume based) and an activity-based costing system. Following are its results: Identify differences between costing systems

> Galavic Corporation manufactures snowmobiles in its Blue Mountain plant. It has budgeted the following costs for the first quarter's operations. Identify activity cost pools and cost drivers. Instructions Classify the above costs of Galavic Corporation

> Shady Lady sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year: Assign overhead using traditional costing and ABC. The controller, Susan Chan, is concern

> Alonzo Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, YuYu Ortega, has developed the following information: Assign overhead using traditional costing and AB

> Mega Electronix sells television sets and Blu-ray DVD players. The business is divided into two divisions along product lines. A variable cost income statement for a recent quarter's activity is presented below: Determine the break-even point in dollars

> International Fabrics has budgeted overhead costs of $955,000. It has allocated overhead on a plant-wide basis to its two products (wool and cotton) using direct labour hours, which are estimated to be 477,500 for the current year. The company has decide

> Elle Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour costs. The president has heard of activity-based costing and wants to see how the results would differ if this

> Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools. Apply ABC to a service company. Instructions a. Calculate the activity-based overhead rates for each pool. b. Dete

> Good Harvest Company manufactures four lines of garden tools. As a result of an activity analysis, the accounting department has identified eight activity cost pools. Each of the product lines is produced in large batches, with the whole plant devoted to

> At December 31, balances in Manufacturing Overhead are Diaz Company—debit $1,200, Garcia Company—credit $900. Prepare the adjusting entry for each company at December 31, assuming the adjustment is made to cost of goods sold. Prepare adjusting entries fo

> Weber Industries has three activity cost pools and two products. It estimates production of 3,000 units of Product BC113 and 1,400 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Weber accumulated the follo

> Tool Time Inc. operates 20 injection moulding machines in the production of tool boxes of four different sizes, named the Apprentice, the Handyman, the Journeyman, and the Professional. Classify each of the following costs as unit-level, batch-level, pro

> Infotrac Inc. sells a high-speed retrieval system for information. It provides the following information for the year. Identify differences between costing systems. Overhead is applied on the basis of machine hours. a. Calculate the predetermined overh

> Presented below are the CVP income statements for Finch Company and Sparrow Company. They are in the same industry, with the same operating incomes, but different cost structures. Calculate break-even point with change in operating leverage. Calculate

> Veejay Golf Accessories sells golf shoes, gloves, and a laser guided range-finder that measures distance. Shown below are unit cost and sales data: Calculate the break-even point in units for a company with multiple products. Fixed costs are $660,000.

> Sanjay's Shingle Corporation is considering the purchase of a new automated shingle-cutting machine. The new machine will reduce variable labour costs but will increase depreciation expense. The contribution margin is expected to increase from $160,000 t

> The degrees of operating leverage for Delta Corp. and Epsilon Co. are 1.4 and 5.6, respectively. Both have operating incomes of $50,000. Determine their respective contribution margins. Determine contribution margin.

> NYX Inc. sells its product for $24 per unit and variable costs are $14 per unit. Its fixed costs are $130,000. Calculate the required sales in units to achieve its target operating income of 10% of total costs. Calculate required sales for target operati

> Part 1 The vice-president of sales and marketing, Madison Tremblay, is trying to plan for the coming year in terms of production needs to meet the forecasted sales. The board of directors is very supportive of any initiatives that will lead to increased

> Rapid Auto has 200 auto-maintenance service outlets nationwide. It provides two main lines of service: oil changes and brake repair. Oil changes and related services represent 70% of its sales and provide a contribution margin ratio of 20%. Brake repair

> Grass King manufactures lawn mowers, weed trimmers, and chainsaws. Grass King has fixed costs of $4.2 million. Its sales mix and contribution margin per unit are as follows: Calculate the break-even point in units for a company with more than one product

> An investment banker is analyzing two companies that specialize in the production and sale of candied apples. Old-Fashioned Apples uses a labour-intensive approach, and Mech-Apple uses a mechanized system. Variable costing income statements for the two c

> A firm sells its product for $30 per unit. Its direct material costs are $6 per unit and direct labour costs are $4. Fixed manufacturing overhead costs are $40,000 and variable overhead costs are $8 per unit. Calculate the required sales in dollars to br

> Volmar Company had sales in 2020 of $1,250,000 on 50,000 units. Variable costs totalled $600,000, and fixed costs totalled $500,000. Prepare a CVP income statement before and after changes in the business environment. A new raw material is available tha

> Determine the missing amounts: Determine missing amounts for contribution margin. Unit Selling Unit Variable Contribution Margin Contribution Price Margin Ratio (b) Costs per Unit 1. $640 $352 (a) 2. $300 (c) $ 93 (d) 3. (e) (f) $325 25%

> Current Designs manufactures two different types of kayaks: rotomoulded kayaks and composite kayaks. The following information is available for each product line. The company's fixed costs are $820,000. An analysis of the sales mix identifies that roto

> Friendly Airways Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. The planes seat 10 passengers each, and they fly commuters from Friendly's base airport to the major city in the province,

> Moran Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs $217,000; and fixed costs $70,000. Management is considering the following independent courses of action to increase operating inc

> Johansen Company had $210,000 of operating income in 2020, when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per-unit data and total fixed costs to remain the same in 202

> In the month of June, New Day Spa served 560 clients at an average price of $120. During the month, fixed costs were $21,024 and variable costs were 60% of sales. Calculate the contribution margin and break-even point. Instructions a. Determine the cont

> Lisah Inc. manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $10,000 from sales $200,000, variable costs $180,000, and fixed costs $30,000. If the Big Bart line is eliminated, $20,000 of fixed costs will remain. P

> In 2019, Demuth Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2020, the selling price and the variable cost per unit did not change, but the breakeven point increased to $420,000. Calcu

> The Richibouctou Inn is trying to determine its breakeven point. The inn has 75 rooms available that are rented at $50 a night. Operating costs are as follows: Calculate the break-even point and margin of safety. / / Instructions a. Determine the inn's

> Trail King manufactures mountain bikes. Its sales mix and contribution margin information per unit are as follows: Calculate the break-even point in units for a company with more than one product. It has fixed costs of $5,440,000. Instructions Calcula

> Jagswear Inc. earned operating income of $100,000 during 2020. The company wants to earn operating income of $140,000 during 2020. Its fixed costs are expected to be $56,000, and variable costs are expected to be 30% of sales. Calculate the sales require

> Panciuk Company has a unit selling price of $520, variable costs per unit of $286, and fixed costs of $163,800. Calculate the break-even point in units using (a) the mathematical equation and (b) the contribution margin per unit. Calculate break-even poi

> The Creekside Inn is a restaurant that specializes in southwestern style meals in a moderate price range. Terry Ducasse, the manager of Creekside, has determined that during the past two years the sales mix and contribution margin ratio of its offerings

> Kirkland Video Games Inc. is developing a new video game. It is the most sophisticated game on the market. It sells the video game for $250 per copy. Variable costs to produce and sell the video game amount to $50 per copy. Fixed costs amount to $450,000

> Bergen Hospital is contemplating an investment in an automated surgical system. Its current process relies on a number of skilled physicians. The new equipment would employ a computer robotic system operated by a technician. The hospital requested an ana

> Glacial Springs produces and sells water filtration systems for homeowners. Information regarding its three models is shown below. Calculate sales mix, weighted-average contribution margin, and breakeven point. The company's total fixed costs to produc

> Cottonwood Company reports the following operating results for the month of April. Calculate the break-even point and margin of safety under different alternatives. Management is considering the following course of action to increase operating income:

> Naylor Manufacturing Inc. sold 8,000 units and recorded sales of $400,000 for the first month of 2020. In making the sales, the company incurred the following costs and expenses. Prepare CVP income statement and calculate contribution margin. Instructi

> Chudzick Company has a factory machine with a book value of $180,000 and a remaining useful life of five years. A new machine is available at a cost of $300,000. This machine will have a five-year useful life with no salvage value. The new machine will l

> Queensland Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $200,000 and variable costs to be $20 per unit. Calculate break-even point, margin of safety ratio, and sales for target operating income

> Vince Company has a unit selling price of $250, variable cost per unit of $160, and fixed costs of $135,000. Calculate break-even point in units. Instructions Calculate the break-even point in units using (a) the mathematical equation and (b) contributi

> Presto Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product lines is birthday candles 30%, standard tapered candles 50%, and large scented candles 20%. The contribution margin ratio of each candle type i

> Russell Corporation sells three different models of mosquito “zapper.” Model A12 sells for $50 and has variable costs of $40. Model B22 sells for $100 and has variable costs of $70. Model C124 sells for $400 and has variable costs of $300. The sales mix

> Reyes Tool & Die begins operations on January 1. Because it does all the work to customer specifications, the company decides to use a job-order costing system. Prepare a flowchart of a typical job-order cost accounting system with arrows showing t

> Family Furniture Co. has two divisions: bedroom division and dining room division. The results of operations for the most recent quarter are as follows: Determine weighted-average contribution margin. Determine the company's weighted-average contributi

> Fontillas Manufacturing Inc. had sales of $2.4 million for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses: Prepare CVP income statement. Prepare a CVP income statement for the quarter ended March 3

> Love All is a fairly large company manufacturing hockey equipment, located in Toronto. The company manufactures hockey sticks, pucks, clothing, and skates, all bearing the company's distinctive logo, a large green question mark on a white flocked hockey

> Chris Koplinski has prepared the following list of statements about managerial accounting and financial accounting. Explain the distinguishing features of managerial accounting. 1. Financial accounting focuses on providing information to internal users.

> Financial accounting information and managerial accounting information have a number of distinguishing characteristics, which are listed below. Explain the distinguishing features of managerial accounting. 1. ________ General-purpose reports 2. ________

> The following is a list of terms related to a company's organizational structure: Identify the role of management accountants in an organizational structure. 1. ______Board of directors 2. ______Chief financial officer 3. ______Treasurer 4. ______Control

> Phil Clark Jr., president of Waterways, was very pleased with how adopting a CVP approach to reporting operating income was helping management to make good business decisions with respect to planning, production, and sales for the coming year. He has a f

> Listed below are the three functions of the management of an organization. Identify the three broad functions of management. 1. Planning 2. Directing 3. Controlling Instructions Identify which of the following statements best describes each of the above

> The U.S. Institute of Management Accountants has developed ethical standards for managerial accountants. Explain the importance of business ethics. Instructions Identify the four specific standards.