Question: The Easton plant produces sheet metal chassis

> Friendly Grocer has three departments in its store: beverages, dairy and meats, and canned and packaged foods. Each department is headed by a departmental manager. Operating results for the last month (in thousands) are given in the table. The direct cos

> One large company that has been successful in applying Total Quality Management (TQM) principles in manufacturing reports that it has had less success in applying the same techniques in improving administrative functions such as order taking, distributio

> Aspen View produces a full line of sunglasses. This year it began producing a new model of sunglasses, the Peak 32. It produced 5,300 pairs and sold 4,900 pairs. The following table summarizes the fixed and variable costs of producing Peak 32 sunglasses.

> DeJure Scents manufactures an aftershave and uses process costing. All materials are added at the beginning of the process and conversion costs are incurred uniformly over time. In May, DeJure started 15,000 gallons. There was no beginning inventory. May

> Just One, Inc., has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent. The ranking of projects differs, depending on the use of IRR or NPV measures. Which project should be selected? Why is t

> Wyatt Oil owns a major oil refinery in Channelview, Texas. The refinery processes crude oil into valuable outputs in a two-stage process. First, it distills a barrel of crude oil at a variable cost of $2 per barrel into two types of outputs: light distil

> Why are drivers for long-haul (cross-country) moving companies (e.g., Allied Van Lines) often franchised, while moving companies that move households within the same city hire drivers as employees? Franchised drivers own their own trucks. They are not pa

> Murray Hill was preparing the monthly report that allocates the three service department’s (A, B, and C) costs to the three operating divisions (D1, D2, and D3) when he choked to death on a stale double cream-filled donut. You must step

> Royal Resort and Casino (RRC), a publicly traded company, caters to affluent customers seeking plush surroundings, high-quality food and entertainment, and all the “glitz” associated with the best resorts and casinos.

> Department 100 is the first step in the firm’s manufacturing process. Data for the current quarter’s operations are as follows: Number of Units

> Dakota Mining is considering operating a strip mine, the cost of which is $4.4 million. Cash returns will be $27.7 million, all received at the end of the first year. The land must be returned to its natural state at a cost of $25 million, payable after

> The Winterton Group is an investment advisory firm specializing in high-income investors in upstate New York. Winterton has offices in Rochester, Syracuse, and Buffalo. Operating as a profit center, each office receives central services, including inform

> Robin Jensen, manager of market planning for Viral Products of the IDP Pharmaceutical Co., is responsible for advertising a class of products. She has designed a three-year marketing plan to increase the market share of her product class. Her plan involv

> Microelectronics is a large electronics firm with multiple divisions. The circuit board division manufactures circuit boards, which it sells externally and internally. The phone division assembles cellular phones and sells them to external customers. Bot

> Scanners Plus manufactures and sells two types of scanners for personal computers, the Home Scanner and the Pro Scanner. The Home model is a low resolution model for small office applications. The Pro model is a high resolution model for professional use

> Old Turkey Mash is a whiskey manufactured by distilling grains and corn and then aging the mixture for five years in 50-gallon oak barrels. Distilling requires about a week and aging takes place in carefully controlled warehouses. Before it ages, the wh

> A company recently raised the pay of employees by 20 percent. The productivity of the employees, however, remained the same. The CEO of the company was quoted as saying, “It just goes to show that money does not motivate people.” Provide a critical evalu

> Suppose the market rate of interest is 10 percent and you have just won a $1 million lottery that entitles you to $100,000 at the end of each of the next 10 years. Required: a. What is the minimum lump-sum cash payment you would be willing to take now in

> In its radio fund-raising campaign, National Public Radio (NPR) stated, “On-air radio membership campaigns are the most cost-effective means we have for raising the funds necessary to bring you the type of programming you expect.” NPR is commercial-free,

> The purchasing department of Ball Brothers purchases raw materials and supplies for the various divisions in the firm. Most of the purchasing department’s costs are labor costs. The costs of the purchasing department depend on the number of items purchas

> Carlos Sanguine, Inc., makes premium wines and table wines. Grapes are crushed and the free flowing juice and the first-processing juice are made into premium wines (bottles with corks). The second- and third-processing juices are made into table wines (

> The Medford Mug Company is an old-line maker of ceramic coffee mugs. It imprints company logos and other sayings on mugs for both commercial and wholesale markets. The firm has the capacity to produce 50 million mugs per year, but the recession has cut p

> Sunnybrook Farms is a local grocery store that is currently open only Monday through Saturday. Sunnybrook is considering opening on Sundays. The annual incremental costs of Sunday openings are estimated at $24,960. Sunnybrook Farms’ gross margin on sales

> Oneida Metal manufactures stainless steel boxes to house sophisticated communications integrated circuit boards for the defense industry. Oneida cuts the metal, bends it to form the chassis and top, punches holes, and drills and taps holes for screws. On

> Software Development Inc. (SDI) produces and markets software for personal computers, including spreadsheet, word processing, desktop publishing, and database management programs. SDI has annual sales of $800 million. Producing software is a time-consumi

> I’ve given a good deal of thought to this issue of how companies . . . go about negotiating objectives with their different business units. The typical process in such cases is that once the parent negotiates a budget with a unit, the budget then becomes

> Galt Electric Motors (GEM) produces two types of motors, small and large. Standard machine time to make one small motor is 20 minutes; standard machine time to make one large motor is 30 minutes. GEM plans to make 30,000 small motors and 20,000 large mot

> A Swiss firm, Smythe and Yves (S&Y), manufactures toiletries such as hand soaps, shampoo, conditioners, and a mouthwash that hotels purchase and place in the rooms for their guests. S&Y uses a standard cost system. One of the fragrances the compa

> Scion Corp. manufactures earth-moving equipment. Department A303 produces a number of small metal parts for the equipment, including specialized screw products, rods, frame fittings, and some engine parts. Scion uses flexible budgeting. The budget for ea

> True Cost Manufacturing, Inc., manufactures and sells large business equipment for the office and business markets. The primary function of Manufacturing is to provide components and subassemblies for the profit centers within the company. To maintain co

> Webb & Drye (WD) is a New York City law firm with over 200 attorneys. WD has a sophisticated set of information technologies—including intranets and extranets, e-mail servers, the firm’s accounting, payroll, and cl

> Silky Smooth lotions come in three sizes: 4, 8, and 12 ounces. The following table summarizes the selling prices and variable costs per case of each lotion size Fixed costs are $771,000. Current production and sales are 2,000 cases of 4-ounce bottles; 4,

> Alliance Tooling produces a single product in its plant. At the beginning of the year, there were no units in inventory. During the year, Alliance produced 120,000 units and sold 100,000 units at $26.75 per unit. Variable manufacturing costs are $13.50 p

> In the 1800s Australia was a colony of England and most of its trade was with England. Australia primarily exported agricultural products such as wheat and imported manufactured goods such as steel, machinery, and textiles. The volume of trade measured i

> Spa Ariana promotes itself as an upscale spa offering a variety of treatments, including massages, facials, and manicures, performed in a luxurious setting by qualified therapists. The owners of Spa Ariana invested close to $450,000 of their own money th

> Access.Com produces and sells software to libraries and schools to block access to Web sites deemed inappropriate by the customer. In addition, the software also tracks and reports on Web sites visited and advises the customer of other Web sites the cust

> Declining Market, Inc., is considering the problem of when to stop production of a particular product in its product line. Sales of the product in question have been declining and all estimates are that they will continue to decline. Capital equipment us

> You work on a team that reports to the chief financial officer of Fiedler International, a consumer products company that manages a variety of consumer beauty brands (shampoos, facial soaps, deodorants). Your team evaluates possible acquisitions. You are

> Compute the unknowns: There is no opening or closing finished goods or work-in-process inventory. Sales S100,000 29,000 Direct materials used Direct labor 10,000 Variable selling and administration expenses Fixed manufacturing overhead Fixed selling

> Ware Paper Box manufactures corrugated paper boxes. It uses a job order costing system. Operating data for February and March are as follows: The factory was closed due to a labor strike prior to January 28, when job #613 was started. There were no other

> Donovan Steel has two profit centers: Ingots and Stainless Steel. These profit centers rely on services supplied by two service departments: electricity and water. The profit centers’ consumption of the service departmentsâ€&

> Jim Shoe, chief executive officer of Jolsen International, a multinational textile conglomerate, has recently been evaluating the profitability of one of the company’s subsidiaries, Pride Fashions, Inc., located in Rochester, New York. The Rochester faci

> The Flower City Grocery is faced with the following capital budgeting decision. Its display freezer system must be repaired. The cost of this repair will be $1,000 and the system will be usable for another five years. Alternatively, the firm could purcha

> APC is a contract manufacturer of printed circuit board assemblies that specializes in manufacturing and test engineering support of complex printed circuit boards for companies in the defense and medical instruments industries. The assembly process begi

> At the Hilton Applefest and Trade Expo, James Jones, owner of Jones Orchard, saw a sign displayed in front of a vendor’s booth: I CAN GET YOU PESTICIDES AT $10.00 A GALLON—GUARANTEED IN WRITING! Over a one-year period,

> Consider the following two separate firms. One firm manufactures flexible packaging films for the snack, bakery, confectionery, and tobacco industries. Its manufacturing process has been quite stable for many years, with few technological innovations. Mo

> Wasley has three operating divisions. Each manager of a division is evaluated on that division’s total operating income. Managers are paid 10 percent of operating income as a bonus. The AB division makes products A and B. The C division

> At its Lyle Avenue plant, Milan Pasta produces two types of pasta: spaghetti and fettuccine. The two pastas are produced on the same machines, with different settings and slightly different raw materials. The fettuccine, being a wider noodle and more sus

> Familia Insurance Company (FMC) specializes in offering insurance products to the Hispanic community. It has its own direct sales organization of agents that sells three lines of insurance: life insurance, auto insurance, and home insurance. FMC is organ

> DigiEar has invented and patented a new digital behind-the-ear hearing aid with adaptive noise reduction and automatic feedback cancellation. DigiEar produces four different models of its DigiEar device. The following table summarizes the planned product

> A bank has three service centers: EDP (electronic data processing), copying, and accounting. These service centers provide services to one another as well as to three operating divisions: A, B, and C. The distribution of each service centerâ€&

> World Imports buys products from around the world for import into the United States. The firm is organized into a number of separate regional sales districts that sell the imported goods to retail stores. The eastern sales district is responsible for sel

> Veriplex manufactures process control equipment. This 100-year-old German company has recently acquired another firm that has a design for a new proprietary process control system. A key component of the new system to be manufactured by Veriplex is calle

> Joan Chris is the Denver district manager of Stale-Mart, an old established chain of more than 100 department stores. Her district contains eight stores in the Denver metropolitan area. One of her stores, the Broadway store, is over 30 years old. Chris b

> The demand for DVD players is expanding rapidly, but the industry is highly competitive. A plant to make DVD players costs $40 million, has an annual capacity of 100,000 units, and has an indefinite physical life. The variable production cost per unit is

> For each of the following questions draw a graph that depicts how costs vary with volume. Completely label each graph and axis. a. Plant XXX works a 40-hour week. Management can vary the number of employees. Currently, 200 employees are being paid $10 pe

> Using the data from Table 10–6, recast the analysis with one change of assumption: Instead of assuming that an additional $17,000 of overhead was incurred in both years, assume that overhead was lower each year by $10,000. How do incent

> Media Designs is a marketing firm that designs and prints customized marketing brochures. The design department designs the brochure and the printing department prints and binds it. Each department has separate overhead rates. The following estimates for

> Alexander Products manufactures dental equipment and uses a standard cost system. A new product (HV65) that is being introduced requires a particular type of stainless steel. Alexander purchased a quantity of this stainless steel (in meters). The followi

> The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year. Most firms have the following policy, “We set our standards before the fiscal year begins and we NEVER, NEVER change them duri

> Premier Brands buys and manages consumer personal products brands such as cosmetics, hair care, and personal hygiene. Premier management purchases underperforming brands and redesigns their marketing strategy and brand equity positioning, and then promot

> Innovative Sports sells a patented golf trainer called the Puttmaster. This device, which sells for $69.95, consists of a metal strip on the floor that is attached to the golfer’s putter with elastic bands. By taking practice strokes with the putter atta

> One of the main tenets of economic analysis is that people act in their narrow self-interest. Why then do people leave tips in restaurants? If a study were to compare the size of tips earned by servers in restaurants on interstate highways with those in

> Suppose that a mining operation has spent $8 million developing an ore deposit in South America. Current expectations are that the deposit will require two years of development and will result in a realizable cash flow of $10 million at that time. The co

> With gasoline prices at $3.00 per gallon, consumers are flocking to purchase hybrid vehicles (combination of gasoline and electric motors) that get 50 miles per gallon of gasoline. The monthly payment on a three-year lease of a hybrid is $499 compared to

> Artco manufactures fiberglass home and office planters in a variety of decorator colors. These planters, in three sizes, are used to hold indoor plants. Overhead is allocated based on the standard pounds of fiberglass per planter. Here are standards for

> Software Associates (SA) is a computer software consulting firm that specializes in designing and implementing integrated marketing database warehousing programs. Humphrey Catalog is a client. In preparing its bid for Humphrey, SA estimates its total lab

> A plant manufactures two products, Hi-V and Lo-V. Hi-V is the high-volume product that represents most of the plant’s revenue. It is produced 10 times per year, inventoried, and shipped to customers twice a month. Lo-V is a specialty pr

> To generate needed foreign exchange, the Cuban government entered into a joint venture with Domingo Cigars of Spain. The joint venture manufactures Domingo Cigars in Cuba using Cuban tobacco and employees. Domingo and the Cuban government split all profi

> Pebble Beach Sandals has designed and patented a luxury golf sandal for both men and women. The unique handmade designs include spikes and cleats to prevent the golfer from slipping during the swing. The sandal is made from sheepskin creating comfortable

> Ab Landlord owns a dilapidated 30-year-old apartment building in Los Angeles. The net cash flow from renting the apartments last year was $200,000. She expects that inflation will cause the net cash flows from renting the apartments to increase at a rate

> IVAX manufactures commercial brushes in two operating divisions (O1 and O2) and has two service departments (Human Resources and Janitorial/Maintenance). The two service departments’ costs are allocated to the two operating departments.

> You are evaluating ways to expand an optometry practice and its earnings capacity. Optometrists perform eye exams, prescribe corrective lenses (eyeglasses and contact lenses), and sell corrective lenses. One way to expand the practice is to hire an addit

> The following data summarize the operating performance of your company’s wholly owned Canadian subsidiary for 2009 to 2011. The cost of capital for this subsidiary is 10 percent. Required: Critically evaluate the performance of this sub

> Lys Wheels manufactures high-performance mountain bikes. Lys uses a predetermined overhead rate based on direct labor hours to absorb overhead to mountain bikes. For the last fiscal year, the firm had the following operating data: Actual direct labor hou

> Magic Floor produces and sells a complete line of floor care products: wax strippers, floor soaps, and floor waxes. All of these products are packaged on a new high-speed bottling fill line. Empty bottles (pints, quarts, half gallons, or gallons) are aut

> Sue Young sells fax machines for Fast Fax. There are two fax machines: model 700 and model 800. At the beginning of the month, Sue’s sales budget is as follows: At the end of the month, the number of units sold and the actual contributi

> Janitorial services is one of five service departments in a firm that allocates service department costs using the step-down allocation method. Janitorial services is currently the third service department (S3) in the step-down process. The following tab

> The sales department of a cellular phone company pays its salespeople $1,500 per month plus 25 percent of each new subscriber’s first month’s billings. A new subscriber’s first-month bill averages $80. Salespeople work 160 hours a month (four weeks at 40

> A firm that purchases electric power from the local utility is considering the alternative of generating its own electricity. The current cost of obtaining the firm’s electricity from its local utility is $42,000 per year. The cost of a steam generator (

> Mastich Counters manufactures a material used to fabricate kitchen counters. It is a very durable, high-fashion, and expensive product that is installed in luxury homes. The manufacturing process is complicated and requires highly skilled employees, supe

> Pyramid Products manufactures a large number of home and commercial cleaning products at its plant in Oshkosh, Wisconsin. This plant, which employs about 450 people, produces floor waxes, cleaners, bathroom and kitchen cleaners, aerosol air fresheners, d

> Specialized Surgical Instruments (SSI) manufactures four surgical implants. SSI uses an absorption costing system to allocate manufacturing overhead to its four products. Direct labor hours are used as the allocation base. The annual budgeted overhead ra

> Barry’s Fashions operates a Downtown Store and a Mall Store. Both department stores use three centralized, corporate service departments (human resources, maintenance, and information management). The following table summarizes the allo

> Adrian and Pells (AP) is an advertising agency that uses flexible budgeting for both planning and control. One of its clients, Troika Toys, asked AP to prepare an ad campaign for a new toy. AP’s contract with Troika calls for paying AP

> Serviflow manufactures products that move and measure various fluids, ranging from water to high viscosity polymers, corrosive or abrasive chemicals, toxic substances, and other difficult pump in media. The Supply Division, a profit center, manufactures

> Suppose you are the manager of a mortgage department at a savings bank. Under the state usury law, the maximum interest rate allowed for mortgages is 10 percent compounded annually. Required: a. If you granted a $50,000 mortgage at the maximum rate for 3

> Talor Chemical Company is a highly diversified chemical processing company. The company manufactures swimming pool chemicals, chemicals for metal processing companies, specialized chemical compounds for other companies, and a full line of pesticides and

> Toby Manufacturing produces three different products in the same plant and uses a job order costing system to estimate product costs. A flexible budget is used to forecast overhead costs. Total budgeted fixed factory overhead is $450,000 and variable ove

> The telecom division of Kothari Inc. produces and sells 100,000 line modulators. Half of the modulators are sold externally at $150 per unit, and the other half are sold internally at variable manufacturing costs plus 10 percent. Kothari uses variable co

> It is frequently argued that for empowerment to work, managers must “let go of control” and learn to live with decisions that are made by their subordinates. Evaluate this argument.

> William Company owns and operates a nationwide chain of movie theaters. The 500 properties in the William chain vary from low-volume, small-town, single-screen theaters to high-volume, big-city, multiscreen theaters. The management is considering install

> Amalfi Texts specializes in printing textbooks for high school science classes. Publishing companies like McGraw-Hill contract with authors to prepare the manuscript, which is then copyedited and typeset. Amalfi receives the typeset manuscript electronic

> Ferguson Metals is a decentralized mining, smelting, and metals company with three divisions: mining, lead, and copper. The mining division owns the ore mine that produces the lead and copper that occur in the vein. Mining removes the ore, crushes it, an

> Grove City Broadcasting owns and operates a radio station and a television station in Grove City. Both stations are located in the same building and are operated as separate profit centers with separate managers, who are evaluated based on station profit

> BFR is a ship-building firm that has just won a government contract to build 10 high-speed patrol boats for the Coast Guard for drug interdiction and surveillance. Besides building ships for the government, BFR has a commercial vessel division that desig

> Old Rosebud is a Kentucky horse farm that specializes in boarding thoroughbred breeding mares and their foals. Customers bring their breeding mares to Old Rosebud for delivery of their foals and after-birth care of the mare and foal. Recent changes in th

> Wujo is a Shanghai company that designs high-end software to enhance and edit digital images. Its software, EzPhoto, is more powerful and easier to use than Adobe Photoshop, but sells at a much lower price. Currently, EzPhoto is written in Chinese for th

> A home identical to yours in your neighborhood sold last week for $150,000. Your home has a $120,000 assumable, 8 percent mortgage (compounded annually) with 30 years remaining. An assumable mortgage is one that the new buyer can assume at the old terms,

> Eastern University faces a shortage of parking spaces and charges for parking. For nearby parking (e.g., behind the business school), faculty and staff pay $180 per year. Parking in lots Z and B, which are north and south of the campus and involve about