Question: Refer to the information for Mullett Marina
Refer to the information for Mullett Marina above. Relevant fixed costs associated with this line include 60% of Boat Maintenance’s garage/warehouse rent and 50% of Boat Maintenance’s supervision salaries. In addition, assume that dropping the Boat Maintenance service line would reduce sales of the Winter Storage line by 20% and sales of the Boat Fuel & Concessions line by 10%. All other information remains the same. Required: 1. If the Boat Maintenance service line is dropped, what is the contribution margin for the Boat Fuel & Concessions line? For the Winter Storage line? 2. Which alternative (keep or drop the Boat Maintenance line) is now more cost effective and by how much? Data for Exercise 30: Shown below is a segmented income statement for Mullett Marina’s three main boating service lines: 
Transcribed Image Text:
Winter Storage $4,000,000 Boat Fuel & Вoat Concessions Maintenance Total Sales revenue $1,000,000 $5,000,000 $10,000,000 Less: Variable expenses Contribution margin Less direct fixed expenses: Garage/warehouse rent Supervision Equipment depreciation Segment margin 2,000,000 200,000 4,900,000 7,100,000 $2,000,000 $ 800,000 $ 100,000 $ 2,900,000 (700,000) (50,000) (250,000) $1,000,000 (55,000) (70,000) (75.000) $ 600,000 (350,000) (150,000) (100,000) $ (500,000) (1,105,000) (270,000) (425.000) $ 1,100,000
> At the beginning of the year, Han Company estimated the following: Overhead ………………………………….$582,400 Direct labor hours ………………………….80,000 Han uses normal costing and applies overhead on the basis of direct labor hours. For the month of January, direct la
> The controller of Ashton Company prepared the following projected income statement: Sales ……………………………………………………..$88,000 Total variable cost ……………………………………23,760 Contribution margin ………………………………$64,240 Total fixed cost ………………………………………..43,800 Operating i
> Paterson Company,* a U.S.-based company, manufactures and sells electronic components worldwide. Virtually all its manufacturing takes place in the United States. The company has marketing divisions throughout Europe, including France. Debbie Kishimoto,
> Corporate sustainability reports vary greatly across companies and industries. Select two companies that interest you and conduct an online search to find their corporate sustainability report. (If one or both of the companies you selected do not issue a
> Artistic Woodcrafting Inc. began several years ago as a one-person, cabinet-making operation. Employees were added as the business expanded. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000,
> Lindell Manufacturing embarked on an ambitious quality program that is centered on continual improvement. This improvement is operationalized by declining quality costs from year to year. Lindell rewards plant managers, production supervisors, and worker
> Luna Company is a printing company and a subsidiary of a large publishing company. Luna is in its fourth year of a 5-year, quality improvement program. The program began in 20X1 as a result of a report by a consulting firm that revealed that quality cost
> Gateway Construction Company, run by Jack Gateway, employs 25 to 30 people as subcontractors for laying gas, water, and sewage pipelines. Most of Gateway’s work comes from contracts with city and state agencies in Nebraska. The company&
> The comparative balance sheets and income statement of Piura Manufacturing follow. Additional transactions for 20X2 were as follows: a. Cash dividends of $8,000 were paid. b. Equipment was acquired by issuing common stock with a par value of $6,000
> Shaftel Ready Mix is a processor and supplier of concrete, aggregate, and rock products. The company operates in the intermountain western United States. Currently, Shaftel has 14 cement-processing plants and a labor force of more than 375 employees. Wit
> Under the weighted average method, how are prior-period costs and output treated? How are they treated under the FIFO method?
> Manny Carson, certified management accountant and controller of Wakeman Enterprises, has been given permission to acquire a new computer and software for the company’s accounting system. The capital investment analysis showed an NPV of $100,000. However,
> Refer to the information for Jasmine Company above. Required: Prepare common-size income statements by using Year 1 as the base period. (Note: Round answers to the nearest whole percentage.) Data for Exercise 24: Jasmine Company provided the followin
> Refer to the information for Toby’s on the previous page. Required: Note: Round answers to one decimal place. 1. Calculate the average inventory. 2. Calculate the inventory turnover ratio. 3. Calculate the inventory turnover in days. 4
> Refer to the information for Jasmine Company above. Required: Prepare common-size income statements by using net sales as the base. (Note: Round answers to the nearest whole percentage.) Data for Exercise 25: Jasmine Company provided the following inc
> Refer to the information for Theta Company above. Required: Compute the (1) theoretical cycle time (in minutes), (2) actual cycle time (in minutes), (3) theoretical velocity in units per hour, and (4) actual velocity in units per hour. (Round units to t
> Teslum Inc. has a number of divisions, including the Machina Division, a producer of high-end espresso makers, and the Java Division, a chain of coffee shops. Machina Division produces the EXP-100 model espresso maker that can be used by Java Division to
> Blackburn Inc. uses Otavalo Manufacturing and Piura Company to buy two precision- machined parts used in the manufacture of its permanent-magnet motors: Part #625 and Part #827. Consider two activities: testing parts and reordering parts. After the two p
> Limpio Company produces dishwashers for 36 retail outlets. Of the 36 retail outlets, 34 are small, separately owned appliance stores and two are large retail chains. The two large retailers buy 80% of the dishwashers produced. The 34 smaller customers pu
> Community Credit Union has collected the following information for four activities and two types of credit cards: There are 12,500 holders of Silver cards and 50,000 holders of Premium cards. Required: Calculate the unit cost (rounded to the nearest c
> Refer to the information for Sanjay Company on the previous page. Now assume that Sanjay uses the sequential method to allocate support department costs. S1 is allocated first, then S2. Required: 1. Calculate the cost assignment ratios to be used under
> Discuss the benefits of quality cost reports that simply list the quality costs for each category.
> Refer to the information for Sanjay Company above. Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios—one for Assembly and
> At the beginning of March, Mendez Company had two jobs in process, Job 86 and Job 87, with the following accumulated cost information: During March, two more jobs (88 and 89) were started. The following direct materials and direct labor costs were adde
> Refer to the information for Cinturas Company given above. Required: 1. Calculate the consumption ratios for the four drivers. 2. Is there evidence of product diversity? Explain. Data for Exercise 29: Cinturas Company produces two types of menâ&
> Refer to the information for Jonson Company above. Jonson uses departmental overhead rates. In the firing department, overhead is applied on the basis of kiln hours (number of hours spent in the gas-fired kiln). In the polishing department, overhead is a
> Refer to the data for Pelham Company on the previous page. Required: 1. How many units are in ending inventory? 2. Using absorption costing, calculate the per-unit product cost. 3. What is the value of ending inventory under absorption costing? Data fo
> Refer to the information for Speedy Pete’s on the previous page. Coefficients shown by a regression program for Speedy Pete’s data are: Intercept ………â
> Refer to the information for Speedy Pete’s on the previous page. Assume that this information was used to construct the following formula for monthly delivery cost. Total Delivery Cost = $41,850 + ($12.00 × Number of Delive
> Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling
> Refer to the information for Speedy Pete’s above. Speedy Pete’s controller wants to calculate the fixed and variable costs associated with its cutting-edge delivery service. Required: Using the high-low method, calcul
> Kleenaire Motors manufactures hybrid sports utility vehicles (SUVs). Kleenaire incurs monthly depreciation costs of $10,000,000 on its highly automated plant machinery and warehousing facility. Also, each SUV requires materials and manufacturing overhead
> Identify and discuss the four kinds of quality costs.
> Refer to the information for Theta Company on the previous page. The actual cycle time for Theta Company is 3.2 minutes, and the theoretical cycle time is 3 minutes. Required: 1. Calculate the amount of processing time and the amount of non processing t
> Belnap Company has provided the following partial comparative balance sheets and the income statement for 20X2. Required: Compute operating cash flows using the direct method. Belnap Company Comparative Balance Sheets At December 31, 20X1 and 20X
> During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following cos
> Gumbrecht Company has the following departmental manufacturing layout for one of its plants: A consulting firm has recommended a value stream with the following manufacturing cell: Required: 1. Calculate the total time it takes to produce a batch of
> Pintura Company implemented a quality improvement program and tracked the following for the five years: By cost category as a percentage of sales for the same period of time: Required: 1. Prepare a bar graph that reveals the trend in quality cost as
> Loring Company had total sales of $2,400,000 for fiscal 20X1. The costs of quality-related activities are given below. Discounts due to defects ………………….…..$100,000 Retesting ……………………………………………..30,000 Vendor certification ……………………………….14,000 Rework ……………
> Palakiko’s Fish Taco Hut is a small start-up restaurant in Hanalei. Palakiko recently completed an online risk management course and has identified food safety as his restaurant’s top risk. Specifically, he is concerne
> Techno Inc. intends to invest in one of two competing types of flexible manufacturing systems: FLEX-1K and FLEX-2Z. Both systems have a project life of 10 years. The purchase price of the FLEX-1K system is $9,600,000, and it has a net annual after-tax ca
> Talmage Inc. has just completed development of a new printer. The new product is expected to produce annual revenues of $2,700,000. Producing the printer requires an investment in new equipment costing $2,880,000. The printer has a projected life cycle o
> Aretha Company provided the following information: Standard variable overhead rate (SVOR) per direct labor hour ….$4.70 Actual variable overhead costs …………………………………………….$335,750 Actual direct labor hours worked (AH) …………………………………….69,200 Actual product
> Explain how performance measurement can help improve an organization’s business sustainability efforts.
> Mulliner Company showed the following information for the year: Standard variable overhead rate (SVOR) per direct labor hour ……$3.50 Standard hours (SH) allowed per unit ………………………………………………3 Actual production in units ……………………………………………………….20,000 Actual
> Tulum Inc. makes a Mexican chocolate mix sold in 4-pound boxes. Planned production in units for the first 3 months of the coming year is: January ……………………….24,700 February ……………………..22,000 March …………………………30,200 Each box requires 4.2 pounds of chocol
> Refer to the information for Relax Spas above. Assume that a maximum of 8,000 massages of each type can be sold. Required: 1. What is the contribution margin per hour of masseuse time for each type of massage? 2. What is the optimal mix of massages? 3.
> Refer to the information for Relax Spas above. Assume that there are no other constraints. Required: 1. What is the contribution margin per hour of masseuse time for each type of massage? 2. What is the optimal mix of massages? 3. What is the total cont
> Bart’s Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart’s, one container equals one
> Refer to the information for Mullett Marina above. Mullett’s management is deciding whether to keep or drop the Boat Maintenance service line. Mullett’s Boat Maintenance service line has a contribution margin of $100,0
> Rabbit Foot Motors has been approached by a new customer with an offer to purchase 5,000 units of its hands-free, Wi-Fi-enabled automotive model—the SMAK—at a price of $18,000 per automobile. Rabbit Foot’s other sales would not be affected by this new cu
> Coed Scents, a national producer of young adult perfumes and colognes, needs to determine if it would be cheaper to produce 100,000 bottles of its most popular perfume, Two AM, for sale in its college town shops or to purchase them from an outside suppli
> Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have variable costs of $9 each. Total fixed cost for Chillmax
> How is business sustainability different from environmental sustainability?
> Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fi
> Tidwell Company has provided the following partial comparative balance sheets and the income statement for 20X2. Required: Compute operating cash flows using the direct method. Tidwell Company Comparative Balance Sheets At December 31, 20X1 and
> Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2 Required: Compute operating cash flows using the indirect method. Swasey Company Comparative Balance Sheets At December 31, 20X1 and 20X2 2
> During the week of May 10, Hyrum Manufacturing produced and shipped 16,000 units of its aluminum wheels: 4,000 units of Model A and 12,000 units of Model B. The cycle time for Model A is 1.09 hours and for Model B is 0.47 hour. The following costs and pr
> Mabbut Company has the following departmental manufacturing layout for one of its plants: Cutting A consulting firm recommended a value stream with the following manufacturing cell: Required: 1. Calculate the total time it takes to produce a batch o
> Norris Company implemented a quality improvement program and tracked the following for the 5 years: By cost category as a percentage of sales for the same period of time: Required: 1. Prepare a bar graph that reveals the trend in quality cost as a pe
> Whitley Company had total sales of $1,000,000 for the year ending 20X1. The costs of quality are given below. Returns/allowances ……………………………….………$50,000 Design changes ……………………………………………….60,000 Prototype inspection ………………………………………..13,000 Downtime ……………
> Hunt Inc. intends to invest in one of two competing types of computer-aided manufacturing equipment: CAM X and CAM Y. Both CAM X and CAM Y models have a project life of 10 years. The purchase price of the CAM X model is $3,600,000, and it has a net annua
> Refer to the information above for Tico Inc. on the previous page Required: Calculate the labor rate and efficiency variances using the columnar and formula approaches.
> Bradshaw Company provided the following data: Standard fixed overhead rate (SFOR) ……………$5 per direct labor hour Actual fixed overhead costs …………………………………………………$301,680 Standard hours allowed per unit ……………………………………………4 hours Actual production ………………………
> Why should the incremental cost of a risk response alternative be considered when deciding how best to respond to an important risk?
> Refer to the information for Aztec Inc. on the previous page. Required: 1. Calculate the equivalent units for July. 2. Calculate the unit cost. (Note: Round to two decimal places.) 3. Assign costs to units transferred out and EWIP using the FIFO method.
> Rath Company provided the following information: Standard variable overhead rate (SVOR) per direct labor hour ……$3.75 Actual variable overhead costs……………………………………………….$222,816 Actual direct labor hours worked (AH) ………………………………………57,200 Actual productio
> Manzer Inc. manufactures bicycle frames in two departments: cutting and welding. Manzer uses the weighted average method. Manufacturing costs are added uniformly throughout the process. The following are cost and production data for the cutting departmen
> Clearsound uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125X and Component 30Y. Consider two activities: testing components and reordering components. After the two compo
> Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattr
> Snow Inc. has just completed development of a new cell phone. The new product is expected to produce annual revenues of $1,400,000. Producing the cell phone requires an investment in new equipment, costing $1,500,000. The cell phone has a projected life
> Perkins National Bank has collected the following information for four activities and two types of credit cards: There are 7,500 holders of Classic cards and 30,000 holders of Gold cards. Required: Calculate the unit cost (rounded to the nearest cent)
> Gardner Company produces 18-ounce boxes of a wheat cereal in three departments: mixing, cooking, and packaging. During August, Gardner produced 250,000 boxes with the following costs: Required: 1. Calculate the costs transferred out of each department.
> Refer to the information for Zapato Company given above. Required: 1. Calculate the consumption ratios for the four drivers (round to two decimal places). 2. Is there evidence of product diversity? Explain. Data for Exercise 21: Zapato Company produce
> Cooper Movie Studio Corp. makes movies and is interested in lowering its operating costs for the following year, while maintaining the high quality and appeal of its movies. Cooper’s management is concerned about the additional costs th
> A fire insurance policy on a manufacturing plant is an example of a risk reduction alternative that would reduce which component of the inherent risk of a plant fire? a. Likelihood only b. Impact only c. Both likelihood and impact d. Neither likelihood n
> Select the graph (A through L) that best matches the numbered (1 through 7) italicized descriptions of various cost behavior. For each graph, the vertical (y) axis represents total dollars of cost, and the horizontal (x) axis represents output units duri
> The percentage of accounts receivable that is uncollectible can be ignored for cash budgeting because a. no cash is received from an account that defaults. b. it is included in cash sales. c. it appears on the budgeted income statement. d. for most compa
> Define the fraud triangle.
> Refer to the information for Hickory Company above. Hickory’s management is deciding whether to keep or drop the parquet product line. Hickory’s parquet flooring product line has a contribution margin of $50,000 (sales
> Define forensic accounting.
> Jack Man Company produces die-cast metal bulldozers for toy shops. Jack Man estimated the following average costs per bulldozer: Direct materials …………………………………………..$8.65 Direct labor …………………………………………………….1.10 Manufacturing overhead ………………………………..0.95 P
> An advantage of the scattergraph method is that it a. is objective. b. is easier to use than the high-low method. c. is the most accurate method. d. removes outliers. e. is descriptive
> Why are units shipped used to calculate the value-stream cost?
> What is a segment?
> The use and importance of managerial accounting is growing in each of the following areas except for a. enterprise risk management. b. nanotechnology advancements. c. corporate sustainability reporting. d. quality accounting. e. lean accounting.
> What is overapplied overhead? When Cost of Goods Sold is adjusted for overapplied overhead, will the cost increase or decrease? Why?
> What is underapplied overhead? When Cost of Goods Sold is adjusted for underapplied overhead, will the cost increase or decrease? Why?
> Lean manufacturing seeks to achieve all of the following except for a. zero defects. b. maximizing customer value. c. zero inventories. d. waiting. When materials costs differ significantly among products in a value stream, the value stream product cost
> What is product diversity?
> Describe the two-stage process associated with plantwide overhead rates.
> The use and importance of managerial accounting is growing in each of the following areas except for a. enterprise risk management. b. nanotechnology advancements. c. corporate sustainability reporting. d. quality accounting. e. lean accounting.
> What is the difference between inherent risk and residual risk?
> Knitpix Products is a division of Parker Textiles Inc. During the coming year, it expects to earn income of $310,000 based on sales of $3.45 million. Without any new investments, the division will have average operating assets of $3 million. The division
> Leslie Blandings, division manager of Audiotech Inc., was debating the merits of a new product—a weather radio that would put out a warning if the county in which the listener lived were under a severe thunderstorm or tornado alert. The budgeted income o
> Refer to the information for Kepler Company on the previous page. Also, assume that for last year and for the current year, the market price per share of common stock is $2.98. In addition, for last year, assets and equity were the same at the beginning
> Refer to the information for Kepler Company above. Required: Note: Round all percentages to one decimal place. 1. Compute the percentage change for each item in the balance sheet and income statement. 2. Comment on any significant trends. Data for Prob
> Grammatico Company has just completed its third year of operations. The income statement is as follows: Selected information from the balance sheet is as follows: Required: Note: Round answers to two decimal places. 1. Compute the times-interest-earn
> The following balance sheets are taken from the records of Golding Company (numbers are expressed in thousands): Additional information is as follows: (a) equipment costing $10,000,000 was purchased at yearend; no equipment was sold; and (b) net income
> Refer to the information for Booth Manufacturing above. Required: 1. Calculate the cash flows from operations using the indirect method. 2. Prepare a statement of cash flows. 3. Search the Internet to find a statement of cash flows. Which method was use
