Question: Kraft Foods Group reports the following for

> Refer to the information in Problem 23-1A. Phoenix Company’s actual income statement for 2015 follows. Required 1. Prepare a flexible budget performance report for 2015. Analysis Component 2. Analyze and interpret both the (a) sales

> Phoenix Company’s 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. Required 1. Classify all items listed in the fixed budget as variable or fixed. A

> Merline Manufacturing makes its product for $75 per unit and sells it for $150 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows. Management expects December’s results

> Built-Tight is preparing its master budget for the quarter ended September 30, 2015. Budgeted sales and cash payments for product costs for the quarter follow: Sales are 20% cash and 80% on credit. All credit sales are collected in the month following

> Near the end of 2015, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2015. To prepare a master budget for January, February, and March of 2016, management gathers the foll

> Aztec Company sells its product for $180 per unit. Its actual and budgeted sales follow. All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sale, 50% in the month after the sale, 28% in the second

> During the last week of August, Oneida Company’s owner approaches the bank for a $100,000 loan to be made on September 2 and repaid on November 30 with annual interest of 12%, for an interest cost of $3,000. The owner plans to increase

> Keggler’s Supply is a merchandiser of three different products. The company’s February 28 inventories are footwear, 20,000 units; sports equipment, 80,000 units; and apparel, 50,000 units. Management believes that exce

> The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2015: To prepare a master budget for April, May, and June of 2015, management gathers the following information: a. Sales for March total 20,500 units. Fore

> Maxlon Company manufactures custom-made furniture for its local market and produces a line of home furnishings sold in retail stores across the country. The company uses traditional volume-based methods of assigning direct materials and direct labor to i

> Tent Master produces two lines of tents sold to outdoor enthusiasts. The tents are cut to specifications in department A. In department B the tents are sewn and folded. The activities, costs, and drivers associated with these two manufacturing processes

> Craftmore Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Additional information on the drivers for its production activities follows. Required 1. Compute

> B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $360,000 with a six-year life and no salvage value. It will be depreciated on a straight-line basis. The com

> Refer to the information in Exercise 25-5. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (Round to the nearest dollar.) Information from Exercise 25-5: a. A new operating

> Compute the payback period for each of these two separate investments (round the payback period to two decimals): a. A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an inc

> Refer to the information in Exercise 25-3 and assume instead that double-declining depreciation is applied. Compute the machine’s payback period (ignore taxes). (Round the payback period to three decimals.) Information from Exercise 25

> A machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value. Compute the machine’

> This chapter explained two methods to evaluate investments using recovery time, the payback period and break-even time (BET). Refer to QS 25-26 and (1) compute the recovery time for both the payback period and break-even time, (2) discuss the advantage(s

> Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of 5 years, at which time its salvage value will be zero. It has a current market value of $52,000. Variable m

> Suresh Co. expects its five departments to yield the following income for next year. Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios: Management

> Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,750 hours per year. Both products are s

> Cobe Company has already manufactured 28,000 units of Product A at a cost of $28 per unit. The 28,000 units can be sold at this stage for $700,000. Alternatively, the units can be further processed at a $420,000 total additional cost and be converted int

> Varto Company has 7,000 units of its sole product in inventory that it produced last year at a cost of $22 each. This year’s model is superior to last year’s and the 7,000 units cannot be sold at last year’s regular selling price of $35 each. Varto has t

> A company must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost $6 per unit to manufacture. The units can be sold as is for $2.50 each, or they can be reworked for $4.50 each and th

> Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing process. Variable costs are $1.95 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $58,500 per ye

> Refer to the information in Exercise 25-1 and assume that Beyer requires a 10% return on its investments. Compute the net present value of this investment. (Round to the nearest dollar.) Should Beyer accept the investment? Information from Exercise 25-1

> Gilberto Company currently manufactures 65,000 units per year of one of its crucial parts. Variable costs are $1.95 per unit, fixed costs related to making this part are $75,000 per year, and allocated fixed costs are $62,000 per year. Allocated fixed co

> Goshford Company produces a single product and has capacity to produce 100,000 units per month. Costs to produce its current sales of 80,000 units follow. The regular selling price of the product is $100 per unit. Management is approached by a new custom

> Farrow Co. expects to sell 150,000 units of its product in the next period with the following results. The company has an opportunity to sell 15,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Dir

> Refer to the information in Exercise 25-10. Create an Excel spreadsheet to compute the internal rate of return for each of the projects. Round the percentage return to two decimals. Information from Exercise 25-10: Following is information on two altern

> Phoenix Company can invest in each of three cheese-making projects: C1, C2, and C3. Each project requires an initial investment of $228,000 and would yield the following annual cash flows. (1) Assuming that the company requires a 12% return from its in

> Refer to the information in Exercise 25-11. Create an Excel spreadsheet to compute the internal rate of return for each of the projects. Based on internal rate of return, determine whether the company should accept either of the two projects. Informatio

> Refer to the information in Exercise 25-11 and instead assume the company requires a 12% return on its investments. Compute each project’s (a) net present value and (b) profitability index. (Round present value calculations to the neare

> Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% return from its investments. Compute each project’s (a) net present value and (b) profitability index. (Round present valu

> Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments. For each alternative project compute the (a) net present value, and (b) profitability index. (Round your

> Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Compute the payback period for this investment (round years to two decimals).

> Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). 1. Compute return on investment for each department. Using return on investment, which department is most effic

> You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $1,000,000 investment and is expected to

> Jansen Company reports the following for its ski department for the year 2015. All of its costs are direct, except as noted. Prepare a (1) departmental income statement for 2015 and (2) departmental contribution to overhead report for 2015. (3) Based o

> Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow. De

> Jessica Porter works in both the jewelry department and the hosiery department of a retail store. Porter assists customers in both departments and arranges and stocks merchandise in both departments. The store allocates Porter’s $30,000

> L’Oréal reports the following for a recent year for the major divisions in its cosmetics branch. 1. Compute profit margin for each division. State your answers as percents, rounded to two decimal places. Which Lâ&#1

> Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $21 per pound and the flakes for $14 per pound. On average, 100 pounds of lobster are processed into 52 pounds of tails and 22 pounds of fl

> Marathon Running Shop has two service departments (advertising and administrative) and two operating departments (shoes and clothing). During 2015, the departments had the following direct expenses and occupied the following amount of floor space. The

> Heart & Home Properties is developing a subdivision that includes 600 home lots. The 450 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 150 lots in the Hilltop section offer unobstructed views

> The trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a retail price of $200 each. Each trailer incurs $80 of variable manufacturing costs. The trailer division has capacity

> Best Ink produces ink-jet printers for personal computers. It received an order for 500 printers from a customer. The following information is available for this order. 1. Compute the company’s manufacturing cycle time. 2. Compute the

> Oakwood Company produces maple bookcases to customer order. It received an order from a customer to produce 5,000 bookcases. The following information is available for the production of the bookcases. 1. Compute the company’s manufact

> ZNet Co. is a web-based retail company. The company reports the following for 2015. The company’s CEO believes that sales for 2016 will increase by 20%, and both profit margin (%) and the level of average invested assets will be the s

> Refer to information in Exercise 24-9. Compute profit margin and investment turnover for each department. Which department generates the most net income per dollar of sales? Which department is most efficient at generating sales from average invested ass

> Marvin Dinardo manages an auto dealership’s service department. Costs and expenses for a recent quarter for his department follows. List the controllable costs that would appear on a responsibility accounting report for the service depa

> Refer to the information in Exercise 23-8 and compute the (1) direct materials price and (2) direct materials quantity variances. Indicate whether each variance is favorable or unfavorable. Information from Exercise 23-8: A manufactured product has the

> A manufactured product has the following information for June. Compute the (1) standard cost per unit and (2) total cost variance for June. Indicate whether the cost variance is favorable or unfavorable. Standard Actual Direct materials.. (6 Ibs. @

> Resset Co. provides the following results of April’s operations: F indicates favorable and U indicates unfavorable. Applying the management by exception approach, which of the variances are of greatest concern? Why? Direct material

> Bay City Company’s fixed budget performance report for July follows. The $647,500 budgeted total expenses include $487,500 variable expenses and $160,000 fixed expenses. Actual expenses include $158,000 fixed expenses. Prepare a flexibl

> Comp Wiz sells computers. During May 2015, it sold 350 computers at a $1,200 average price each. The May 2015 fixed budget included sales of 365 computers at an average price of $1,100 each. 1. Compute the sales price variance and the sales volume varian

> Blaze Corp. applies overhead on the basis of direct labor hours. For the month of March, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following budget: During March, the company operate

> James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget: During May, the company op

> Refer to the information from Exercise 23-19. Compute the (1) overhead volume variance and (2) overhead controllable variance. Information from Exercise 23-19: World Company expects to operate at 80% of its productive capacity of 50,000 units per month.

> Tempo Company’s fixed budget (based on sales of 7,000 units) for the first quarter of calendar year 2015 reveals the following. Prepare flexible budgets following the format of Exhibit 23.3 that show variable costs per unit, fixed costs

> World Company expects to operate at 80% of its productive capacity of 50,000 units per month. At this planned level, the company expects to use 25,000 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate

> Refer to the information from Exercise 23-17. Compute and interpret the following. 1. Variable overhead spending and efficiency variances. 2. Fixed overhead spending and volume variances. 3. Controllable variance. Information from Exercise 23-17: Sedona

> Sedona Company set the following standard costs for one unit of its product for 2015. The $5.60 ($4.00 1 $1.60) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity o

> Refer to Exercise 23-13. Hart Company records standard costs in its accounts and its materials variances in separate accounts when it assigns materials costs to the Work in Process Inventory account. 1. Show the journal entry that both charges the direct

> Hart Company made 3,000 bookshelves using 22,000 board feet of wood costing $266,200. The company’s direct materials standards for one bookshelf are 8 board feet of wood at $12 per board foot. 1. Compute the direct materials price and quantity variances

> Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. During June the company incurred the following actual costs to produce 9,000 units. Compute the (1) direct materials price and

> Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. During May the company incurred the following actual costs to produce 9,000 units. Compute the (1) direct materials price and

> Refer to the information in Exercise 23-8 and compute the (1) direct labor rate and (2) direct labor efficiency variances. Indicate whether each variance is favorable or unfavorable. Information from Exercise 23-8: A manufactured product has the followi

> JPAK Company manufactures and sells mountain bikes. It normally operates eight hours a day, five days a week. Using this information, classify each of the following costs as fixed or variable. If additional information would affect your decision, describ

> Refer to Exercise 22-8. For April, May, and June, prepare (1) a direct labor budget and (2) a factory overhead budget. Data from Exercise 22-8: Rad Co. provides the following sales forecast and production budget for the next four months: The company p

> The production budget for Manner Company shows units to be produced as follows: July, 620; August, 680; September, 540. Each unit produced requires two hours of direct labor. The direct labor rate is currently $20 per hour but is predicted to be $21 per

> Refer to the information in Exercise 22-3. In addition, each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month’s production needs. Beginni

> Hospitable Co. provides the following sales forecast for the next four months: The company wants to end each month with ending finished goods inventory equal to 25% of next month’s sales. Finished goods inventory on April 1 is 190 uni

> Karim Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400 and th

> Jasper Company has sales on account and for cash. Specifically, 70% of its sales are on account and 30% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $525,000 for April, $535,000 for May,

> Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash disbursements (excluding cash disbursements for loan principal and interest payments) for the first three months of next year. According to a credit a

> Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished goods inventory for the first quarter will be 75,000 units. The following unit sales of the transmissions are expected during t

> 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 forecasted at 45,000 for January, 55,000 for February, and 50,000 for March. Cost of goods sold is $1

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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