Question: Park City Mountain Resort, a Utah ski

> The Junior League of Yadkinville, California, collected recipes from members and published a cookbook entitled Food for Everyone . The book will sell for $18 per copy. The chairwoman of the cookbook development committee esti

> Currently, the unit selling price of a product is $1,500, the unit variable cost is $1,200, and the total fixed costs are $4,500,000. A proposal is being evaluated to increase the unit selling price to $1,600. a. Compute the current break-even sales (un

> Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions): In addition, assume that Anheuser-Busch InBev sold 400 million barrels of beer during the year. Assume that variable costs were 75% of t

> For the current year ended October 31, Yentling Company expects fixed costs of $14,000,000, a unit variable cost of $200, and a unit selling price of $300. a. Compute the anticipated break-even sales (units). b. Compute the sales (units) required to re

> The following data relate to labor cost for production of 22,000 cellular telephones: Actual: 4,220 hrs. at $44.50 Standard: 4,160 hrs. at $46.00 a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost varian

> Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, t

> a. What is (1) overapplied factory overhead and (2) underapplied factory overhead? b. If the factory overhead account has a debit balance, was factory overhead underapplied or overapplied?

> Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks ® and TurboTax ®. Classify each of the following costs and expenses for this company as either variable or fixed to the number o

> Southeastern Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified t

> On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: a. Prepare an absorption costing income statement. b. Reconcile the variable costing income fr

> Product K has a unit contribution margin of $120. Product L has a unit contribution mar - gin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the most profitable product, assuming that the furnace is

> Product A has a unit contribution margin of $24. Product B has a unit contribution mar - gin of $30. Product A requires four testing hours, while Product B requires six testing hours. Determine the most profitable product, assuming that the testing is a

> Green Thumb Garden Tools Inc. produces and sells home and garden tools and equipment. A lawn mower has a total cost of $230 per unit, of which $160 is product cost and $70 is selling and administrative expenses. In addition, the total cost of $230 is mad

> Light Force Inc. produces and sells lighting fixtures. An entry light has a total cost of $180 per unit, of which $100 is product cost and $80 is selling and administrative expenses. In addition, the total cost of $180 is made up of $110 variable cost an

> Portable Power Company expects to operate at 80% of productive capacity during July. The total manufacturing costs for July for the production of 25,000 batteries are budgeted as follows: Direct materials …………………………………………………. $162,500 Direct labor………………

> H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (3,128 pounds) has the following standards: The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual

> a. How is a predetermined factory overhead rate calculated? b. Name three common bases used in calculating the rate.

> BriteLite Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated activity costs and activity bases are as follows: Corporate records were obtained to estima

> Artscape Inc. is considering the purchase of automated machinery that is expected to have a useful life of five years and no residual value. The average rate of return on the average investment has been computed to be 20%, and the cash payback period was

> CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the

> Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it can make. The production process includes an autoclave

> Instant Image Inc. manufactures color laser printers. Model J20 presently sells for $460 and has a product cost of $230, as follows: Direct materials …………………. $175 Direct labor……………………………. 40 Factory overhead……………………. 15 Total…………………………………. $230 It is e

> Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry’s total unit cost for the upc

> Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows: Smart Stream wants a profit equal to a 30% rate of return on invested assets

> La Femme Accessories Inc. produces women’s handbags. The cost of producing 800 handbags is as follows: Direct materials ……………………………………. $18,000 Direct labor……………………………………………. 8,500 Factory overhead. ……………………………………. 5,500 Total manufacturing cost …………………

> What is the difference between a clock card and time ticket?

> Keystone Healthcare Corp. is proposing to spend $260,820 on an eight-year project that has estimated net cash flows of $42,000 for each of the eight years. a. Compute the net present value, using a rate of return of 10%. Use the present value of an annu

> Under what circumstances is a static budget appropriate?

> The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.20 per pound, and raw sugar can be sold without further processing for $1.40 per pound. Raw sugar is produc

> Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays and leisure customers during the week- end. However, the leisure customers on weekends occupy fewer rooms than do b

> Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone is evaluating a special order from a European automob

> Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling price is $42 per unit. On November 12 of the current yea

> Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,000 pounds. The standard quantity of materials required in the process is 6,000 pounds, which cost $5.50 per pound. Columbian coffee can be sold without further processing for $9.22 p

> Big Fork Lumber Company incurs a cost of $402 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $540 per hbf. An alternative is to produce a “finished cut” at a total processing cost of $523 per hbf, which can be s

> Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,000, the accumulated depreciation is $24,000, its remaining useful life is five yea

> A company is considering replacing an old piece of machinery, which cost $105,000 and has $55,000 of accumulated depreciation to date, with a new machine that has a purchase price of $83,000. The old machine could be sold for $56,300. The annual variable

> The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company fo

> Diamond Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $59 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct

> Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $43,056 and could be used to deliver an additional 95,000 bags of pretzels per year. Each bag of

> On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixe

> What document is the source for (a) debiting the accounts in the materials ledger and (b) crediting the accounts in the materials ledger?

> Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 580 tablets during December. However, due to LCD defects, the company ac

> Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): a. How does a brokerage compan

> The condensed product-line income statement for Dish N’ Dat Company for the month of May is as follows: Fixed costs are 15% of the cost of goods sold and 30% of the selling and administrative expenses. Dish N’ Dat ass

> A condensed income statement by product line for Celestial Beverage Inc. indicated the following for Star Cola for the past year: Sales ……………………………………………………………. $390,000 Cost of goods sold …………………………………………… 184,000 Gross profit ……………………………………………………. $20

> D’Amato Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $315,000. The freight and installation costs for the equipment are $15,000. If purchased, annual repairs and maintenance are estimated to be $1

> Matrix Construction Company is considering selling excess machinery with a book value of $75,000 (original cost of $200,000 less accumulated depreciation of $125,000) for $60,000 less a 5% brokerage commission. Alternatively, the machinery can be leased

> Based on the data presented in Exercise 25-18, assume that Smart Stream Inc. uses the variable cost concept of applying the cost-plus approach to product pricing. Data from Exercise 25-18: Smart Stream Inc. uses the product cost concept of applying the

> How are investments in sustainability justified?

> Give an example of a qualitative factor that should be considered in a capital investment analysis related to acquiring automated factory equipment.

> What are the major advantages of leasing a fixed asset rather than purchasing it?

> Which account is used in the job order cost system to accumulate direct materials, direct labor, and factory overhead applied to production costs for individual jobs?

> Why would the cash payback method understate the attractiveness of a project with a large residual value?

> The following data relate to the direct materials cost for the production of 10,000 automobile tires: Actual: ……………………………………. 145,000 lb. at $2.80 Standard: ………………………………...150,000 lb. at $2.75 a. Determine the direct materials price variance, direct mat

> Your boss has suggested that a one-year payback period is the same as a 100% average rate of return. Do you agree? Explain.

> Discuss the principal limitations of the cash payback method for evaluating capital investment proposals.

> What are the principal objections to the use of the average rate of return method in evaluating capital investment proposals?

> What are the major disadvantages of the use of the net present value method of analyzing capital investment proposals?

> Two projects have an identical net present value of $9,000. Are both projects equal in desirability? Explain.

> The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $156,218 and annual net cash flows of $38,000 for each of the six years of

> A net present value analysis used to evaluate a pro- posed equipment acquisition indicated a $7,900 net present value. What is the meaning of the $7,900 as it relates to the desirability of the proposal?

> Why would the use of the cash payback period for analyzing the financial performance of theatrical releases from a motion picture production studio be supported over the net present value method?

> What kind of firm would use a job order cost system?

> What are the major disadvantages of the use of the internal rate of return method of analyzing capital investment proposals?

> The Commercial Division of Herring Company has income from operations of $420,000 and assets of $910,000. The minimum acceptable return on assets is 8%. What is the residual income for the division?

> Genie in a Bottle Company (GBC) manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows: At the beginning of July, GBC management planned to produce 400,000 bottles. The actual number

> The Consumer Division of Galena Company has income from operations of $12,680,000 and assets of $74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the division?

> Briggs Company has income from operations of $36,000, invested assets of $180,000, and sales of $720,000. Use the DuPont formula to compute the return on investment and show (a) the profit margin, (b) the investment turnover, and (c) the return on inv

> Cash Company has income from operations of $112,500, invested assets of $750,000, and sales of $1,875,000. Use the DuPont formula to compute the return on investment and show (a) the profit margin, (b) the investment turnover, and (c) the return on in

> Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser’s activities in its central Financial Services Department: • Payro

> Using the data for Hardy Company from Practice Exercise 24-2B along with the following data, determine the divisional income from operations for the Retail Division and the Commercial Division:

> The centralized computer technology department of Hardy Company has expenses of $320,000. The department has provided a total of 4,000 hours of service for the period. The Retail Division has used 2,750 hours of computer technology service during the per

> The centralized employee travel department of Croce Company has expenses of $724,000. The department has serviced a total of 5,000 travel reservations for the period. The South Division has made 2,850 reservations during the period, and the West Division

> a. Name two principal types of cost accounting systems. b. Which system provides for a separate record of each particular quantity of product that passes through the factory? c. Which system accumulates the costs for each department o

> Conley Company’s costs were under budget by $198,000. The company is divided into North and South regions. The North Region’s costs were over budget by $52,000. Deter - mine the amount that the South Region’s costs were over or under budget.

> Caroline Company’s costs were over budget by $319,000. The company is divided into West and East regions. The East Region’s costs were under budget by $47,500. Determine the amount that the West Region’s costs were over or under budget.

> One of Danielle’s first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Jerrod Moore, is intent on purchasing the warehouse beca

> Sana Rosa Furniture Company manufactures designer home furniture. Sana Rosa uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining room table are as follows: a. Determine the standard cos

> Metro-Goldwyn-Mayer Studios Inc. (MGM) is a major producer and distributor of theatrical and television filmed entertainment. Regarding theatrical films, MGM states, “Our feature films are exploited through a series of sequential domest

> The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $1,400,000. The manager believes that the new investment will result in direct labor savings of $350,000 per ye

> The following are some selected quotes from senior executives: CEO, Worthington Industries (a high-technology steel company): “We try to find the best technology, stay ahead of the competition, and serve the customer. . . . We’ll make any investment tha

> A Masters of Accountancy degree at Central University costs $12,000 for an additional fifth year of education beyond the bachelor’s degree. Assume that all tuition is paid at the be- ginning of the year. A student considering this inves

> Global Electronics Inc. invested $1,000,000 to build a plant in a foreign country. The labor and materials used in production are purchased locally. The plant expansion was estimated to produce an internal rate of return of 20% in U.S. dollar terms. Due

> Divide your team into two groups. In one group, find a local business, such as a copy shop, that rents time on desktop computers for an hourly rate. Determine the hourly rate. In the other group, determine the price of a mid-range desktop computer at www

> Mainline Marine Company has total estimated factory overhead for the year of $2,090,000, divided into four activities: fabrication, $750,000; assembly, $240,000; setup, $600,000; and inspection, $500,000. Mainline manufactures two types of boats: a speed

> What is the appropriate measure of a product’s value when a firm is operating under production bottlenecks? Answer The proper measure of product value in a bottlenecked process is the contribution margin per bottleneck hour.

> Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable production cost is $5.00 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume that ther

> Product AA is normally sold for $120 per unit. A special price of $112 is offered for the export market. The variable production cost is $80 per unit. An additional export tariff of 30% of revenue must be paid for all export products. Assume that there i

> Product D is produced for $24 per gallon. Product D can be sold without additional processing for $36 per gallon or processed further into Product E at an additional cost of $9 per gallon. Product E can be sold for $43 per gallon. Prepare a differential

> Product K is produced for $155 per pound. Product K can be sold without additional processing for $220 per pound or processed further into Product L at an additional cost of $28 per pound. Product L can be sold for $250 per pound. Prepare a differential

> Bi-Coastal Railroad Inc. is considering acquiring equipment at a cost of $520,000. The equipment has an estimated life of eight years and no residual value. It is expected to provide yearly net cash flows of $104,000. The company’s mini

> Edward Seymour is a financial consultant to Cornish Inc., a real estate syndicate. Cornish finances and develops commercial real estate (office buildings) projects. The completed projects are then sold as limited partnership interests to individual inves

> A machine with a book value of $80,000 has an estimated five-year life. A proposal is offered to sell the old machine for $50,500 and replace it with a new machine at a cost of $75,000. The new machine has a five-year life with no residual value. The new

> A machine with a book value of $250,000 has an estimated six-year life. A proposal is offered to sell the old machine for $320,000 and replace it with a new machine at a cost of $390,000. The new machine has a six-year life with no residual value. The ne

> A company manufactures various sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $67 per unit (100 bottles), including fixed costs of $22 per unit. A proposal is offered to purchase small bottles from an outside

> A restaurant bakes its own bread for a cost of $230 per unit (100 loaves), including fixed costs of $47 per unit. A proposal is offered to purchase bread from an outside source for $180 per unit, plus $18 per unit for delivery. Prepare a differential ana

> Product B has revenue of $39,500, variable cost of goods sold of $25,500, variable selling expenses of $16,500, and fixed costs of $15,000, creating a loss from operations of $17,500. Prepare a differential analysis as of May 9 to determine whether Produ

> Although the cost-plus approach to product pricing may be used by management as a general guideline, what are examples of other factors that managers should consider in setting product prices?

> Product Alpha has revenue of $545,000, variable cost of goods sold of $400,000, variable selling expenses of $65,000, and fixed costs of $90,000, creating a loss from operations of $10,000. Prepare a differential analysis as of December 10 to determine w

> Timberlake Company owns equipment with a cost of $165,000 and accumulated depreciation of $60,000 that can be sold for $82,000 less a 6% sales commission. Alternatively, Timberlake Company can lease the equipment to another company for five years for a t