Problem 16-18 Using Net Present Value and Internal Rate of Return to Evaluate Investment Opportunities
Sophia Sweeny, the president of Sweeny Enterprises, is considering two
investment opportunities. Because of limited resources, she will be able
to invest in only one of them. Project A is to purchase a machine that
will enable factory automation; the machine is expected to have a useful
life of four years and no salvage value. Project B supports a training
program that will improve the skills of employees operating the current
equipment. Initial cash expenditures for Project A are $300,000 and for
Project B are $120,000. The annual expected cash inflows are $94,641 for
Project A and $39,507 for Project B. Both investments are expected to
provide cash flow benefits for the next four years. Sweeny Enterprise's
cost of capital is 8 percent.
Required
A. Compute the net present value of each project. Which project should be adopted based on the net present value approach?
B. Compute the approximate internal rate of return of each project.
Which one should be adopted based on the internal rate of return
approach?
C. Compare the net present value approach with the internal rate of
return approach. Which method is better in the given circumstances? Why?
Check:
a. NPV of A: $13,463.01
b. Rate of Return of B: 12%
Click here for the solution: Sophia Sweeny, the president of Sweeny Enterprises, is considering two investment opportunities
Friday, May 29, 2015
4-2A Use the percentage method to compute the federal income taxes to withhold from the wages or salaries of each employee
4-2A Use the percentage method to compute the federal income taxes to withhold from the wages or salaries of each employee.
Employee No.
Employee Name
Marital Status
No. of Withholding
Allowances Gross Wage or Salary
Amount
to Be Withheld
1 Amorosa, A. M 4 $1,610 weekly
2 Finley, R. S 0 825 biweekly
3 Gluck, E. S 5 9,630 quarterly
4 Quinn, S. M 8 925 semimonthly
5 Treave, Y. M 3 1,975 monthly
Click here for the solution: 4-2A Use the percentage method to compute the federal income taxes to withhold from the wages or salaries of each employee
Employee No.
Employee Name
Marital Status
No. of Withholding
Allowances Gross Wage or Salary
Amount
to Be Withheld
1 Amorosa, A. M 4 $1,610 weekly
2 Finley, R. S 0 825 biweekly
3 Gluck, E. S 5 9,630 quarterly
4 Quinn, S. M 8 925 semimonthly
5 Treave, Y. M 3 1,975 monthly
Click here for the solution: 4-2A Use the percentage method to compute the federal income taxes to withhold from the wages or salaries of each employee
4-4A Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees
4-4A Eaton Enterprises uses the wage-bracket method to determine federal
income tax withholding on its employees. Find the amount to withhold
from the wages paid each employee.
Employee
Marital Status
No. of Withholding Allowances
Payroll Period
W = Weekly
S = Semimonthly
M = Monthly
D = Daily
Wage
Amount to Be Withheld
Hal Bower M 1 W $1,350
Ruth Cramden S 1 W 590
Gil Jones S 3 W 675
Teresa Kern M 6 M 4,090
Ruby Long M 2 M 2,730
Katie Luis M 8 S 955
Susan Martin S 1 D 96
Jim Singer S 4 S 2,610*
Martin Torres M 4 M 3,215
* Must use percentage method.
Click here for the solution: 4-4A Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees
Employee
Marital Status
No. of Withholding Allowances
Payroll Period
W = Weekly
S = Semimonthly
M = Monthly
D = Daily
Wage
Amount to Be Withheld
Hal Bower M 1 W $1,350
Ruth Cramden S 1 W 590
Gil Jones S 3 W 675
Teresa Kern M 6 M 4,090
Ruby Long M 2 M 2,730
Katie Luis M 8 S 955
Susan Martin S 1 D 96
Jim Singer S 4 S 2,610*
Martin Torres M 4 M 3,215
* Must use percentage method.
Click here for the solution: 4-4A Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees
4-6A Damerly Company (a California employer) wants to give holiday bonus check of $250 to each employee
4-6A Damerly Company (a California employer) wants to give holiday bonus
check of $250 to each employee. Since it wants the check amount to be
$250, it will need to gross-up the amount of the bonus. Calculate the
withholding taxes and the gross amount of the bonus to be made to John
Rolen if his cumulative earning for the year are $46,910. Besides being
subject to social security taxes and federal income tax (supplemental
rate), a 6% California income tax must be withheld on supplemental
payments.
Click here for the solution: 4-6A Damerly Company (a California employer) wants to give holiday bonus check of $250 to each employee
Click here for the solution: 4-6A Damerly Company (a California employer) wants to give holiday bonus check of $250 to each employee
2-45 (Profitability opportunity cost) Dawson Company produces and sells 80,000 boxes of specialty foods each year
2-45 (Profitability opportunity cost) Dawson Company produces and sells
80,000 boxes of specialty foods each year. Each box contains the same
assortment of food. The company has computed the following annual costs.
Cost Item Total Costs
Variable Production costs $400,000
Fixed Production costs 480,000
Variable selling costs 320,000
Fixed selling and admin costs 200,000
Total costs $1,400,000
Dawson normally charges $25 per box. A new distributor has offered to purchase 8,000 boxes at a special price of $22 per box. Dawson will incur additional packaging costs of $1 per box to complete this order.
* A) Suppose Dawson has a surplus capacity to produce 8,000 more boxes. What will be the effect on Dawson's income if it accepts this order?
* B) Suppose that instead of having surplus capacity to produce 8,000 more boxes. Dawson has surplus capacity to produce only 3,000 more boxes. What will be the effect on Dawson's income if it accepts the new order for 8,000 boxes?
Click here for the solution: 2-45 (Profitability opportunity cost) Dawson Company produces and sells 80,000 boxes of specialty foods each year
Cost Item Total Costs
Variable Production costs $400,000
Fixed Production costs 480,000
Variable selling costs 320,000
Fixed selling and admin costs 200,000
Total costs $1,400,000
Dawson normally charges $25 per box. A new distributor has offered to purchase 8,000 boxes at a special price of $22 per box. Dawson will incur additional packaging costs of $1 per box to complete this order.
* A) Suppose Dawson has a surplus capacity to produce 8,000 more boxes. What will be the effect on Dawson's income if it accepts this order?
* B) Suppose that instead of having surplus capacity to produce 8,000 more boxes. Dawson has surplus capacity to produce only 3,000 more boxes. What will be the effect on Dawson's income if it accepts the new order for 8,000 boxes?
Click here for the solution: 2-45 (Profitability opportunity cost) Dawson Company produces and sells 80,000 boxes of specialty foods each year
3-38 (Job cost sheet, markup, single rate versus departmental rates) Modern Metalworks Company has two departments, milling and assembly
3-38 (Job cost sheet,
markup, single rate versus departmental rates) Modern Metalworks Company
has two departments, milling and assembly. The company uses a job
costing system that employs a single, plantwide support cost driver rate
to apply support costs to jobs on the basis of direct labor hours. That
is, the plantwide cost driver rate is computed by dividing plantwide
support costs by total plantwide direct labor hours. The following
estimates are for October: Support costs- Milling $120,000, Assembly
$160,000 Direct Labor Hours- Milling, 8000, Assembly 12000 Machine
Hours- 12000, Assembly 6000 The following information pertains to job
714, which was started and completed during October: Direct Labor hours-
Milling 10, Assembly 40 Machine hours- Milling 18, Assembly 8 Direct
materials costs- Milling $800, Assembly $50 Direct labor costs- $100,
Assembly $600
Click here for the solution: 3-38 (Job cost sheet, markup, single rate versus departmental rates) Modern Metalworks Company has two departments, milling and assembly
a. Prepare a job cost sheet for job 714
b. Assume next that instead of using a single, plantwide support cost
driver rate, the company uses machine hours as the cost driver for the
application of support costs in the milling department, and it uses
direct labor hours as the cost driver in the assembly department.
Prepare a job cost sheet for job 714.
c. Using the costs you computed in (a) and (b), determine the bid price
that Modern Metalworks will quote if it uses a 25% markup on total
manufacturing cost.
Click here for the solution: 3-38 (Job cost sheet, markup, single rate versus departmental rates) Modern Metalworks Company has two departments, milling and assembly
1-20 (Role of financial information for continuous improvement) Consider an organization that has empowered its employees, asking them to improve the quality, productivity, and responsiveness of their processes that involve repetitive work
1-20 (Role of financial information for continuous improvement) Consider
an organization that has empowered its employees, asking them to
improve the quality, productivity, and responsiveness of their processes
that involve repetitive work. This work could arise in a manufacturing
setting, such as assembling cars or producing chemicals, or in a service
setting, such as processing invoices or responding to customers’ orders
and requests. Clearly the workers would benefit from feedback on the
quality (defect, yields) and process times. Be specific about the types
of financial information that would be helpful and the specific
decisions or actions that could be made better by supplementing physical
and operational information with financial information.
Click here for the solution: 1-20 (Role of financial information for continuous improvement) Consider an organization that has empowered its employees, asking them to improve the quality, productivity, and responsiveness of their processes that involve repetitive work
Click here for the solution: 1-20 (Role of financial information for continuous improvement) Consider an organization that has empowered its employees, asking them to improve the quality, productivity, and responsiveness of their processes that involve repetitive work
1-21 (Ethical Issues) You are employed as a senior manager in an insurance organization
1-21 (Ethical Issues) You are employed as a senior manager in an
insurance organization. On of your responsibilities is to randomly
review claims for reimbursement that have been submitted by people who
have traveled on the organization's behalf. By chance you have pulled a
falsified claim that was submitted by Andrew one of your closest
friends. You decide to confront your friend with your findings.Andrew
knowing that you are friends replies "Sure the claim contains false
items. Everybody does it and it is almost expected. Stunned by his
confession you tell him that he has to resubmit an accurate claim.
Andrew responds "Look, I don't feel like I get paid enough in this lousy
organization, this is my way of getting back a few extra dollars each
month. You know how they have been working all of us to death after the
layoff, am entitled to this and I refuse to resubmit the claim
A) What do you think of Andrew's argument?
B) Should you have approached him differently?
C) What should you do know and why?
D) How might the company's control system be designed to foster high ethical standards regarding reimbursement claims and other issues?
Click here for the solution: 1-21 (Ethical Issues) You are employed as a senior manager in an insurance organization
A) What do you think of Andrew's argument?
B) Should you have approached him differently?
C) What should you do know and why?
D) How might the company's control system be designed to foster high ethical standards regarding reimbursement claims and other issues?
Click here for the solution: 1-21 (Ethical Issues) You are employed as a senior manager in an insurance organization
Wednesday, May 27, 2015
2-41 (Multiple Breakeven Points) In September 2006, Capetini Capacitor Company sold capacitors to its distributors for 250.00 per capacitor
2-41 (Multiple Breakeven Points) In September 2006, Capetini Capacitor
Company sold capacitors to its distributors for 250.00 per capacitor.
The sales level of 3,000 capacitors a month was less than the
single-shift capacity of 4,400 capacitors at its plant located in San
Diego. Variable production costs were $100.00mper capacitor, and fixed
production costs were 200,000 per month. In addition, variable selling
and distribution support costs are $20.00 per capacitor, and fixed
selling and distribution support costs are $62500.00 per month. At the
suggestion of the marketing department, In October 2006 Capetini reduced
the sales price to $200.00and increased the monthly advertising budget
by $17,500. Sales are expected to increase to 6,800 capacitors per
month. If the demand exceeds the single-shift capacity of 4,400
capacitors, the plant needs to be operated in two shifts. Two shift
operation will increase monthly fixed production costs to 310,000.
a) Determine the contribution margin per capital in September 2006
b) Determine the sales level in number of capacitors at which the profit-to-share ratio would be 10% in September 2006.
c) Determine the two breakeven points for October 2006
d) Determine the sales level in number of capacitors at which the profit-to-sales ratio in October is the same as the actual profit-to-share ratio in September. Is there more than one possible sales level at which the equality would occur?
Click here for the solution: 2-41 (Multiple Breakeven Points) In September 2006, Capetini Capacitor Company sold capacitors to its distributors for 250.00 per capacitor
a) Determine the contribution margin per capital in September 2006
b) Determine the sales level in number of capacitors at which the profit-to-share ratio would be 10% in September 2006.
c) Determine the two breakeven points for October 2006
d) Determine the sales level in number of capacitors at which the profit-to-sales ratio in October is the same as the actual profit-to-share ratio in September. Is there more than one possible sales level at which the equality would occur?
Click here for the solution: 2-41 (Multiple Breakeven Points) In September 2006, Capetini Capacitor Company sold capacitors to its distributors for 250.00 per capacitor
3-33 (Job costing for services) The Hillman Company sells and services lawn mowers snow blowers and other equipment
3-33 (Job costing for services) The Hillman Company sells and services
lawn mowers snow blowers and other equipment. The service department
uses job order cost system to determine costs of each job, such as oil
changes, tune-ups, and repairs. The department assigns conversion costs
through a cost driver rate on the basis of direct labor hours. The cost
driver rate additionally includes a markup of 25% on the job’s
conversion costs in order to provide a reasonable profit for Hillman.
The customer’s invoice itemizes prices for parts and labor, where the
stated labor rate is the department’s cost driver rate that includes
direct labor cost, assigned overhead costs, and the 25% markup on
conversion costs. Hillman Company’s service department estimated the
following information for 2006. Salaries of mechanics $120,000 Fringe
benefits 54,000 General and administrative 18,000 Depreciation 42,000
Billable direct labor hours 4,500
a. Determine Hillman Company’s service department’s cost driver rate to be used to assign conversion costs on the basis of billable direct labor hours.
b. Job 254 required $47.40 of materials and 0.7 direct labor hours. Determine the price changed for job 254.
Click here for the solution: 3-33 (Job costing for services) The Hillman Company sells and services lawn mowers snow blowers and other equipment
a. Determine Hillman Company’s service department’s cost driver rate to be used to assign conversion costs on the basis of billable direct labor hours.
b. Job 254 required $47.40 of materials and 0.7 direct labor hours. Determine the price changed for job 254.
Click here for the solution: 3-33 (Job costing for services) The Hillman Company sells and services lawn mowers snow blowers and other equipment
4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
Click here for the solution: 4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
COST POOLS ACTIVITY COSTS COST DRIVERS
Machine setup $360,000 6,000 setup hours
Materials handling 100,000 50,000 pounds of material
Electric power 40,000 80,000 kilowatt-hours
The following information pertains to the production of V203 and G179
ITEM V203 G179
Number of units produced 5,000 15,000
Direct materials cost $25,000 $33,000
Direct labor cost $14,000 $16,000
Number of setup hours 120 150
Pounds of material used 5,000 10,000
Kilowatt-hours 2,000 3,000
Determine the unit cost for each of the two products using activity-based costing.
Click here for the solution: 4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
4-27 (Assigning marketing, distribution, and selling expenses to customers) Tetra Company’s cost system assigns marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue
4-27 (Assigning marketing, distribution, and selling expenses to
customers) Tetra Company’s cost system assigns marketing, distribution,
and selling expenses to customers using a rate of 33% of sales revenue.
The new controller has discovered that Tetra’s customers differ greatly
in their ordering patters and interaction with Tetra’s sales force.
Because the controller believes Tetra’s cost system does not accurately
assign marketing, distribution, and selling expenses to customers, she
developed an activity-based costing system to assign these expenses to
customers. She then identified the following marketing, distribution,
and selling costs for two customers, Ashton and Brown: ASHTON BROWN
Sales representative $9,000 $42,000 Service customers 15,000 110,000
Handle customer orders 1,000 12,000 Ship to customers 24,000 72,000 The
following additional information is available: ASHTON BROWN Sales
$430,000 $350,000 Cost of goods sold 220,000 155,000 a. Using the
current cost system’s approach of assigning marketing, distribution, and
selling expenses to customers using a rate of 33% of sales revenue,
determines the operating profit associated with Ashton and with Brown.
b. Using the activity-based costing information provided, determine the
operating profit associated with Ashton and with Brown. c. Which of the
two methods produced more accurate assignments of marketing,
distribution, and selling expenses to customers? Explain.
Click here for the solution: 4-27 (Assigning marketing, distribution, and selling expenses to customers) Tetra Company’s cost system assigns marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue
Click here for the solution: 4-27 (Assigning marketing, distribution, and selling expenses to customers) Tetra Company’s cost system assigns marketing, distribution, and selling expenses to customers using a rate of 33% of sales revenue
4-31 (Product profitability analysis, unused capacity, traditional activity-based costing) Northpack Inc., has recently expanded its line of backpacks to include high-quality, lightweight hiker backpacks
4-31 (Product profitability analysis, unused
capacity, traditional activity-based costing) Northpack Inc., has
recently expanded its line of backpacks to include high-quality,
lightweight hiker backpacks. This new model uses more expensive material
and takes longer to produce. While a basic school backpack can be cut
and sewn together in 30 minutes, a hiker backpack takes 45 minutes to
cut and sew together. The school model is produced in batches of 1,000
packs, while the hiker model is produced in batches of 100 packs. Each
batch of the school model requires 1 hour of inspection time, and each
batch of the hiker model requires 2 hours of inspection time. Using
direct labor hours to allocate manufacturing support costs (which in
this company include ordering and packaging costs), product
profitability is analyzed as follows: ITEM SCHOOL BACKPACKS HIKER
BACKPACKS Sales 15.00 $30.00 Less: Direct materials 3.00 10.00 Direct
labor 5.00 7.50 Manufacturing support 4.00 6.00 Gross margin $3.00 $6.50
Selling and administrative 1.00 2.00 Profit $2.00 $4.50 Sales volume
90,000 6,000 Jens Schmit, the controller at Northpack, believes that
activity based costing may be a more accurate way of measuring the costs
of the two models. He has traced manufacturing support costs to the
following activity pools and determined the practical capacity levels of
the associated activity drivers Activity activity Costs Act. Driver
Sch. Mod Hiker Mod Cutting Machines 52,000 Machine hours 9,000 1,125
Sewing Machines 163,300 Direct Labor Hours 45,000 4,500 Packaging-order
8,300 Number of Orders 450 200 related Packaging- volume 150,000 Number
of items 90,000 6,000 Orders 14,000 Number of orders 450 200 Inspections
8,400 Hours of inspection ? ? Total $396,000 Selling and administrative
expenses are $102,000 fixed business-sustaining costs. Customers pay
actual shipping charges, which are not included in these figures. a. The
method of assigning costs to individual products does not affect the
total manufacturing supports costs. Only the amounts assigned to
individual products change. Explain why Jens should care about how
support costs are assigned to individual products. B Using activity
based costing, calculate the cost per unit for each of the two models
and analyze their profitability. c. How might managers use the activity
based costing information to enhance the company’s profitability?
Consider pricing changes and process changes among your suggestions d.
Suppose that practical capacity remains as described earlier but that
demand for the school model is on 85,000 units, while demand for the
hiker model remains at 6,000 units. For the school model, the cutting
machine hours are now 8,500 and the number of orders is 425. Calculate
the cost per unit for each of the two models and prepare an income
statement similar to Exhibit 4-7 but also showing the cost of unused
capacity for each activity. What actions might management take to deal
with the unused capacity highlighted in your analysis?
Click here for the solution: 4-31 (Product profitability analysis, unused capacity, traditional activity-based costing) Northpack Inc., has recently expanded its line of backpacks to include high-quality, lightweight hiker backpacks
Click here for the solution: 4-31 (Product profitability analysis, unused capacity, traditional activity-based costing) Northpack Inc., has recently expanded its line of backpacks to include high-quality, lightweight hiker backpacks
6-38 (Client mix decision) Loren Lee, a financial planner contacts and meets with local individuals to assist with financial planning and investments in Loren’s employer's investment service company
6-38 (Client mix decision) Loren Lee, a financial
planner contacts and meets with local individuals to assist with
financial planning and investments in Loren’s employer's investment
service company. Loren receives no fee for financial planning advice,
but in addition to his salary, he receives commissions on client
investments in the investment services company. Commission rates vary
across different investment products. Loren's employer pays office and
phone costs and also reimburses Loren for business-related travel.
Satisfied clients have recommended Loren to their friends, and Loren now
finds himself with more clients than he can handle in the 40 hours per
week he would like to work. To analyze where to most profitably spend
his time, Loren has classified his current set of customers into the
three groups listed. The hours devoted per customer include direct
contact time, travel time, and research and follow-up time for the
clients. Loren will introduce clients he is unable to serve to one of
his colleagues. A B C Average invest in comp products per month $900
$600 $200 Hours devoted per customer per month 3 1.5 05 Average
commission percentage 6% 5% 4% Current number of customers 20 60 120
Clients in group A are generally interested in hearing about new
investment products that Loren's company is offering and will usually
invest sizable amounts in new products after meeting with Loren or
conversing with him on the phone. clients in group B will also invest
but generally in smaller amounts than clients in group A. Clients in
group C appreciate meeting with Loren because of the excellent advice he
provides in planning for retirement and other future expenses but have
little discretionary income to invest. Group C clients also generally
invest in products with a low commission rate for Loren. However, Loren
maintains contact with these clients because he anticipates they will
become more profitable as their careers develop. a. Based on the data
given, what client mix will maximize Loren's monthly commissions
assuming he works 160 hours per month. b. What other factors should
Loren consider as he makes his decisions about his client mix?
Click here for the solution: 6-38 (Client mix decision) Loren Lee, a financial planner contacts and meets with local individuals to assist with financial planning and investments in Loren’s employer's investment service company
Click here for the solution: 6-38 (Client mix decision) Loren Lee, a financial planner contacts and meets with local individuals to assist with financial planning and investments in Loren’s employer's investment service company
3-43 (Process costing equivalent units, product cost) The information below pertains to October production at Zippy Company's bottling plant, which produces and bottles sports drinks
3-43 (Process costing equivalent units, product
cost) The information below pertains to October production at Zippy
Company's bottling plant, which produces and bottles sports drinks. Each
unit consists of a case of 12 bottles.
Units Materials Conversion
Work in progress Oct 1 2,000 70% complete 60% complete
Started in October 10,000
To Account for 12,000
Completed and transferred out 8,000 100% complete 100% complete
Work in progress Oct 30 4,000 40% compete 25% complete
Accounted for 12,000
Costs beg of Oct $1,050 $3,240
Added during Oct 8,200 22,620
To be accounted for $9,250 $25,860
* a) Using the weighted-average method, determine the number of equivalent units of production for materials and conversion during October.
* b) Determine the cost per equivalent unit for materials and conversion for October and the total cost per equivalent unit.
* c) Determine whether the cost per equivalent unit for materials and conversion increased or decreased from the previous month.
Also compute the cost of goods completed and Transferred out and cost of WIP ending inventory.
Click here for the solution: 3-43 (Process costing equivalent units, product cost) The information below pertains to October production at Zippy Company's bottling plant, which produces and bottles sports drinks
Units Materials Conversion
Work in progress Oct 1 2,000 70% complete 60% complete
Started in October 10,000
To Account for 12,000
Completed and transferred out 8,000 100% complete 100% complete
Work in progress Oct 30 4,000 40% compete 25% complete
Accounted for 12,000
Costs beg of Oct $1,050 $3,240
Added during Oct 8,200 22,620
To be accounted for $9,250 $25,860
* a) Using the weighted-average method, determine the number of equivalent units of production for materials and conversion during October.
* b) Determine the cost per equivalent unit for materials and conversion for October and the total cost per equivalent unit.
* c) Determine whether the cost per equivalent unit for materials and conversion increased or decreased from the previous month.
Also compute the cost of goods completed and Transferred out and cost of WIP ending inventory.
Click here for the solution: 3-43 (Process costing equivalent units, product cost) The information below pertains to October production at Zippy Company's bottling plant, which produces and bottles sports drinks
ACC 561 Question 13-49 Variances
ACC 561 Question 13-49, Variances, on p. 622
Study Appendix 13. Consider the following data regarding factory overhead:
Variable Fixed
Budget for actual hours of input $45,000 $70,000
Applied 41,000 64,800
Budget for standard hours allowed
for actual output achieved ? ?
Actual incurred 48,500 68,500
Using the above data, fill in the following blanks with the variance amounts. Use F for favorable or U for unfavorable for each variance.
Total Overhead Variable Fixed
1. Spending variance ______ ______ ______
2. Efficiency variance ______ ______ ______
3. Production-volume variance ______ ______ ______
4. Flexible-budget variance ______ ______ ______
5. Underapplied overhead ______ ______ ______
Click here for the solution: ACC 561 Question 13-49 Variances
Study Appendix 13. Consider the following data regarding factory overhead:
Variable Fixed
Budget for actual hours of input $45,000 $70,000
Applied 41,000 64,800
Budget for standard hours allowed
for actual output achieved ? ?
Actual incurred 48,500 68,500
Using the above data, fill in the following blanks with the variance amounts. Use F for favorable or U for unfavorable for each variance.
Total Overhead Variable Fixed
1. Spending variance ______ ______ ______
2. Efficiency variance ______ ______ ______
3. Production-volume variance ______ ______ ______
4. Flexible-budget variance ______ ______ ______
5. Underapplied overhead ______ ______ ______
Click here for the solution: ACC 561 Question 13-49 Variances
Tuesday, May 26, 2015
ACC 561 Question 13-48, Overhead Variances (Rivera Company)
ACC 561 Question 13-48, Overhead Variances, on p. 622
Study Appendix 13. Consider the following data for the Rivera Company:
Factory Overhead
Fixed Variable
Actual incurred $14,200 $13,300
Budget for standard hours allowed
for output achieved 12,500 11,000
Applied 11,600 11,000
Budget for actual hours of input 12,500 11,400
From the above information, fill in the blanks below. Be sure to mark your variances F for favorable
and U for unfavorable.
a. Flexible-budget variance $______ Fixed $______ Variable $______
b. Production-volume variance $______ Fixed $______ Variable $______
c. Spending variance $______ Fixed $______ Variable $______
d. Efficiency variance $______ Fixed $______ Variable $______
Click here for the solution: ACC 561 Question 13-48, Overhead Variances (Rivera Company)
Study Appendix 13. Consider the following data for the Rivera Company:
Factory Overhead
Fixed Variable
Actual incurred $14,200 $13,300
Budget for standard hours allowed
for output achieved 12,500 11,000
Applied 11,600 11,000
Budget for actual hours of input 12,500 11,400
From the above information, fill in the blanks below. Be sure to mark your variances F for favorable
and U for unfavorable.
a. Flexible-budget variance $______ Fixed $______ Variable $______
b. Production-volume variance $______ Fixed $______ Variable $______
c. Spending variance $______ Fixed $______ Variable $______
d. Efficiency variance $______ Fixed $______ Variable $______
Click here for the solution: ACC 561 Question 13-48, Overhead Variances (Rivera Company)
ACC 561 Question 13-45 Variable and Absorption Costing (Chan Manufacturing Company)
ACC 561 Question 13-45, Variable and Absorption Costing, on p. 621
Chan Manufacturing Company data for 20X7 follow: Sales: 12,000 units at $17 each Actual production 15,000 units Expected volume of production 18,000 units Manufacturing costs incurred Variable $120,000 Fixed 63,000 Nonmanufacturing costs incurred Variable $ 24,000 Fixed 18,000
Chan Manufacturing Company data for 20X7 follow: Sales: 12,000 units at $17 each Actual production 15,000 units Expected volume of production 18,000 units Manufacturing costs incurred Variable $120,000 Fixed 63,000 Nonmanufacturing costs incurred Variable $ 24,000 Fixed 18,000
1. Determine operating income for 20X7, assuming the firm uses the
variable-costing approach to product costing. (Do not prepare a
statement.)
2. Assume that there is no January 1, 20X7, inventory; no variances are
allocated to inventory; and the firm uses a “full absorption” approach
to product costing. Compute (a) the cost assigned to December 31, 20X7,
inventory; and (b) operating income for the year ended December 31,
20X7. (Do not prepare a statement.)
Click here for the solution: ACC 561 Question 13-45 Variable and Absorption Costing (Chan Manufacturing Company)
Monday, May 11, 2015
ACC 561 Question 13-B3 (Comparison of Variable Costing and Absorption Costing) Youngstown Manufacturing
ACC 561 Question 13-B3, Comparison of Variable Costing and Absorption Costing, on p. 617
Consider the following information pertaining to a year’s operations of Youngstown Manufacturing:
Units sold 1,400
Units produced 1,600
Direct labor $4,200
Direct materials used 3,500
Fixed manufacturing overhead 2,200
Variable manufacturing overhead 300
Selling and administrative expenses (all fixed) 700
Beginning inventories 0
Contribution margin 5,600
Direct-material inventory, end 800
There are no work-in-process inventories.
1. What is the ending finished-goods inventory cost under absorption costing?
2. What is the ending finished-goods inventory cost under variable costing?
Click here for the solution: ACC 561 Question 13-B3, Comparison of Variable Costing and Absorption Costing Youngstown Manufacturing
Consider the following information pertaining to a year’s operations of Youngstown Manufacturing:
Units sold 1,400
Units produced 1,600
Direct labor $4,200
Direct materials used 3,500
Fixed manufacturing overhead 2,200
Variable manufacturing overhead 300
Selling and administrative expenses (all fixed) 700
Beginning inventories 0
Contribution margin 5,600
Direct-material inventory, end 800
There are no work-in-process inventories.
1. What is the ending finished-goods inventory cost under absorption costing?
2. What is the ending finished-goods inventory cost under variable costing?
Click here for the solution: ACC 561 Question 13-B3, Comparison of Variable Costing and Absorption Costing Youngstown Manufacturing
3-46 (Job bid price, direct, sequential, and reciprocal allocations) Small Pump Manufacturer
3-46 (Job bid price, direct, sequential, and reciprocal allocations)
Small Pump Manufacturer Service Departments Production Departments Item
Maintenance Power Casting Assembly Support Costs $750,000 $450,000
$150,000 $110,000 Machine Hours 0 80000 80000 40000 Kilowatt-hours 40000
0 200000 160000 Direct Labor Hours 0 0 100000 60000 Management
allocates maintenance department costs using machine hours Management
allocates power deptepartment costs using kilowatt hours Separate cost
driver rates are determined on machine hours basis for casting dept and
on direct labor hours basis for assembly dept 1 machine hour per pump
manufacture in casting department .5 labor hours to assemble pump in
assembly dept Direct labor and material costs = $32.00 per pump
Potential Sell: 2 year contract to purchase 1000 pumps every month Add
25% markup to full manufacturing cost to determine bid BID PRICE for. a)
Direct Method b) Sequential Method begins by allocating maintenance
department costs c) Reciprocal Method
Click here for the solution: 3-46 (Job bid price, direct, sequential, and reciprocal allocations) Small Pump Manufacturer
Click here for the solution: 3-46 (Job bid price, direct, sequential, and reciprocal allocations) Small Pump Manufacturer
4-8A The names of the employees of Cox Security Systems and their regular salaries are shown in the following payroll register
4-8A The names
of the employees of Cox Security Systems and their regular salaries are
shown in the following payroll register. Note that Hall and Short are
paid monthly on the last payday, while all others are paid weekly.
In addition to the regular salaries the company pays an annual bonus based on the amount of earnings for the year. For the current year the bonus amounts to 8% of the annual salary paid to each employee. The bonus is to be paid along with the regular salaries on December 24, but the amount of the bonus and the amount of the regular salary will be shown separately on each employee's earnings statement. Assume that all employees received their regular salary during the entire year.
Click here for the solution: 4-8A The names of the employees of Cox Security Systems and their regular salaries are shown in the following payroll register
In addition to the regular salaries the company pays an annual bonus based on the amount of earnings for the year. For the current year the bonus amounts to 8% of the annual salary paid to each employee. The bonus is to be paid along with the regular salaries on December 24, but the amount of the bonus and the amount of the regular salary will be shown separately on each employee's earnings statement. Assume that all employees received their regular salary during the entire year.
Prepare the payroll for the pay period ending December 24, showing the
following for each employee. Use the wage-bracket method to withhold
federal income tax from the regular salaries. Withhold a flat 25% on the
annual bonus. Total salaries and bonuses are subject to a 2% state
income tax and a 1% city income tax.
Click here for the solution: 4-8A The names of the employees of Cox Security Systems and their regular salaries are shown in the following payroll register
Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter
ACC 421 Week Two (Week 2)
Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter.
1. Economic entity assumption 5. Historical cost principle 9. Materiality
2. Going concern assumption 6. Matching principle 10. Industry practices
3. Monetary unit assumption 7. Full disclosure principle 11. Conservatism
4. Periodicity assumption 8. Cost-benefit relationship
Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter.
1. Economic entity assumption 5. Historical cost principle 9. Materiality
2. Going concern assumption 6. Matching principle 10. Industry practices
3. Monetary unit assumption 7. Full disclosure principle 11. Conservatism
4. Periodicity assumption 8. Cost-benefit relationship
Instructions
Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a letter more than once.
(a) Allocates expenses to revenues in the proper period.
(b) Indicates that market value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.)
(c) Ensures that all relevant financial information is reported.
(d) Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.)
(e) Anticipates all losses, but reports no gains.
(f) Indicates that personal and business record keeping should be separately maintained.
(g) Separates financial information into time periods for reporting purposes.
(h) Permits the use of market value valuation in certain specific situations.
(i) Requires that information significant enough to affect the decision of reasonably informed users should be disclosed. (Do not use full disclosure principle.)
(j) Assumes that the dollar is the “measuring stick” used to report on financial performance.
Click here for the solution: Exercise 2-4 (E2-4) (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter
ACC 561 EXCEL Application Exercise 12-59, Allocating Costs Using Direct and Step-Down Methods
ACC 561
EXCEL Application Exercise 12-59, Allocating Costs Using Direct and Step-Down Methods, on p. 584
Goal: Create an Excel spreadsheet to allocate costs using the direct method and the stepdownmethod. Use the results to answer questions about your findings.
Scenario: Antonio Cleaning has asked you to help them determine the best method for
allocating costs from their service departments to their producing departments. Additional
background information for your spreadsheet appears in Fundamental Assignment Material
12-B2. Exhibit 12-4 on page 532 illustrates the types of calculations that are used for
allocating costs using the direct method and the step-down method.
When you have completed your spreadsheet, answer the following questions:
1. What are the total costs for the Residential department using the direct method?
What are the total costs for the Commercial department using the direct method?
2. What are the total costs for the Residential department using the step-down method?
3. What are the total costs for the Commercial department using the step-down method?
4. Which method would you recommend that Antonio Cleaning use to allocate their
service departments’ costs to their producing departments? Why?
Step-by-Step:
1. Open a new Excel spreadsheet.
2. In column A, create a bold-faced heading that contains the following:
Row 1: Chapter 12 Decision Guideline
Row 2: Dallas Cleaning
Row 3: Cost Allocations from Service Departments to Producing Departments
Row 4: Today’s Date
3. Merge and center the four heading rows across columns A through H.
4. In row 7, create the following bold-faced, center-justified column headings:
Column B: Personnel
Column C: Administrative
Column D: Residential
Column E: Commercial
Column F: Total Res/Comm
Column G: Total Admin/Res/Comm
Column H: Grand Total
5. Change the format of the column headings in row 7 to permit the titles to be displayed
on multiple lines within a single cell.
Alignment tab: Wrap Text: Checked
Note: Adjust column widths so that headings use only two lines.
Adjust row height to ensure that row is same height as adjusted headings.
6. In column A, create the following row headings:
Row 8: Direct Department Costs
Row 9: Number of Employees
Skip 2 rows
Note: Adjust the width of column A to 27.14.
7. In column A, create the following bold-faced, underlined row heading:
Row 12: Direct Method:
8. In column A, create the following row headings:
Row 13: Direct Department Costs
Row 14: Personnel Allocation
Row 15: Administrative Allocation
Row 16: Total Costs
Skip 2 rows
9. In column A, create the following bold-faced, underlined row heading:
Row 19: Step-down Method:
10. In column A, create the following row headings:
Row 20: Direct Department Costs
Row 21: Step 1—Personnel Allocation
Row 22: Step 2—Administrative Allocation
Row 23: Total Costs
11. Use data from Fundamental Assignment 12-B2 to enter the amounts in columns B
through E for rows 8, 9, 13, and 20.
12. Use the appropriate calculations to do the totals in row 8 for columns F and H.
Use the appropriate calculations to do the totals in row 9 for columns F and G.
13. Use the appropriate formulas to allocate the costs from the service departments to the
producing departments using each of the methods.
14. Use the appropriate calculations to do the totals in columns B through E and in column H,
rows 16 and 23.
15. Format amounts in columns B through H, rows 8, 13, 16, 20, and 23 as
Number tab: Category: Accounting
Decimal: 0
Symbol: $
16. Format the amount in columns B through E, rows 14, 15, 21, and 22 as
Number tab: Category: Accounting
Decimal: 0
Symbol: None
17. Change the format of the total costs amounts in columns B through E, rows 16 and 23,
to display a top border, using the default line style.
Border tab: Icon: Top Border
18. Change the format of the amounts in row 9, columns B through G to center justified
Click here for the solution: ACC 561 EXCEL Application Exercise 12-59, Allocating Costs Using Direct and Step-Down Methods
ACC 561 3-38, Mixed Cost, Choosing Cost Drivers, and High-Low and Visual-Fit Methods
ACC 561
Question 3-38, Mixed Cost, Choosing Cost Drivers, and High-Low and Visual-Fit Methods, on p. 121-122
Cedar Rapids Implements Company produces farm implements. Cedar Rapids is in the process of measuring its manufacturing costs and is particularly interested in the costs of the manufacturing maintenance activity, since maintenance is a significant mixed cost. Activity analysis indicates that maintenance activity consists primarily of maintenance labor setting up machines using certain supplies. A setup consists of preparing the necessary machines for a particular production run of a product. During setup, machines must still be running, which consumes energy. Thus, the costs associated with maintenance include labor, supplies, and energy. Unfortunately, Cedar Rapid’s cost accounting system does not trace these costs to maintenance activity separately. Cedar Rapids employs two fulltime maintenance mechanics to perform maintenance. The annual salary of a maintenance mechanic is $25,000 and is considered a fixed cost. Two plausible cost drivers have been suggested: “units produced” and “number of setups.” Data had been collected for the past 12 months and a plot made for the cost driver—units of production. The maintenance cost figures collected include estimates for labor, supplies, and energy. Cory Fielder, controller at Cedar Rapids, noted that some types of activities are performed each time a batch of goods is processed rather than each time a unit is produced. Based on this concept, he has gathered data on the number of setups performed over the past 12 months. The plots of monthly maintenance costs versus the two potential cost drivers follow on page 122.
1. Find monthly fixed maintenance cost and the variable maintenance cost per driver unit using the visual-fit method based on each potential cost driver. Explain how you treated the April data.
2. Find monthly fixed maintenance cost and the variable maintenance cost per driver unit using the high-low method based on each potential cost driver.
3. Which cost driver best meets the criteria for choosing cost functions? Explain.
Click here for the solution: ACC 561 3-38, Mixed Cost, Choosing Cost Drivers, and High-Low and Visual-Fit Methods
Cedar Rapids Implements Company produces farm implements. Cedar Rapids is in the process of measuring its manufacturing costs and is particularly interested in the costs of the manufacturing maintenance activity, since maintenance is a significant mixed cost. Activity analysis indicates that maintenance activity consists primarily of maintenance labor setting up machines using certain supplies. A setup consists of preparing the necessary machines for a particular production run of a product. During setup, machines must still be running, which consumes energy. Thus, the costs associated with maintenance include labor, supplies, and energy. Unfortunately, Cedar Rapid’s cost accounting system does not trace these costs to maintenance activity separately. Cedar Rapids employs two fulltime maintenance mechanics to perform maintenance. The annual salary of a maintenance mechanic is $25,000 and is considered a fixed cost. Two plausible cost drivers have been suggested: “units produced” and “number of setups.” Data had been collected for the past 12 months and a plot made for the cost driver—units of production. The maintenance cost figures collected include estimates for labor, supplies, and energy. Cory Fielder, controller at Cedar Rapids, noted that some types of activities are performed each time a batch of goods is processed rather than each time a unit is produced. Based on this concept, he has gathered data on the number of setups performed over the past 12 months. The plots of monthly maintenance costs versus the two potential cost drivers follow on page 122.
1. Find monthly fixed maintenance cost and the variable maintenance cost per driver unit using the visual-fit method based on each potential cost driver. Explain how you treated the April data.
2. Find monthly fixed maintenance cost and the variable maintenance cost per driver unit using the high-low method based on each potential cost driver.
3. Which cost driver best meets the criteria for choosing cost functions? Explain.
Click here for the solution: ACC 561 3-38, Mixed Cost, Choosing Cost Drivers, and High-Low and Visual-Fit Methods
Case 9-42: Comprehensive Master Budget, Borrowing, Acquisition of Automated Material-Handling System
Case 9-42: Comprehensive Master Budget, Borrowing, Acquisition of Automated Material-Handling System
AND SO ON
Check Figures:
1. Sales in Account, First Quarter: $2,184,600
3. Purchases, First Quarter: $2,103,640
5. Cash Receipts, First Quarter: $2,734,060
7. Net Income: $321,312
Click here for the solution: Case 9-42: Comprehensive Master Budget, Borrowing, Acquisition of Automated Material-Handling System
Saturday, May 9, 2015
P3-6 Presented below are the trial balance and the other information related to Carlos Beltran, a consulting engineer
Problem 3-6 (P3-6) Presented below are the trial balance and the other information related to Carlos Beltran, a consulting engineer.
AND SO ON
Instructions
(a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2007. (Omit explanations.)
(b) Prepare an income statement for 2007, a classified balance sheet, and a statement of owner’s equity. Carlos Beltran withdrew $17,000 cash for personal use during the year.
Click here for the solution: P3-6 Presented below are the trial balance and the other information related to Carlos Beltran, a consulting engineer
AND SO ON
Instructions
(a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2007. (Omit explanations.)
(b) Prepare an income statement for 2007, a classified balance sheet, and a statement of owner’s equity. Carlos Beltran withdrew $17,000 cash for personal use during the year.
Click here for the solution: P3-6 Presented below are the trial balance and the other information related to Carlos Beltran, a consulting engineer
(ACC 561 EXCEL Application Exercise 2-65 CVP and Break-Even) Phonetronix is a small manufacturer of telephone and communications devices
ACC 561
4. Individual Assignment: Practice Text Exercises
• Complete the following problem sets from the Introduction to Management Accounting text:
EXCEL Application Exercise, CVP and Break-Even, on p. 89
2-65 CVP and Break-Even
Goal: Create an Excel spreadsheet to perform CVP analysis and show the relationship between price, costs, and break-even points in terms of units and dollars. Use the results to answer questions about your findings.
Scenario: Phonetronix is a small manufacturer of telephone and communications devices. Recently, company management decided to investigate the profitability of cellular phone production. They have three different proposals to evaluate. Under all the proposals, the fixed costs for the new phone would be $110,000. Under proposal A, the selling price of the new phone would be $99 and the variable cost per unit would be $55. Under proposal B, the selling price of the phone would be $129 and the variable cost would remain the same.
Under proposal C, the selling price would be $99 and the variable cost would be $49.
When you have completed your spreadsheet, answer the following questions:
1. What are the break-even points in units and dollars under proposal A?
2. How did the increased selling price under proposal B impact the break-even points in
units and dollars compared to the break-even points calculated under proposal A?
3. Why did the change in variable cost under proposal C not impact the break-even points
in units and dollars as significantly as proposal B did?
Step-by-Step:
1. Open a new Excel spreadsheet.
2. In column A, create a bold-faced heading that contains the following:
Row 1: Chapter 2 Decision Guideline
Row 2: Phonetronix
Row 3: Cost-Volume-Profit (CVP) Analysis
Row 4: Today’s Date
3. Merge and center the four heading rows across columns A through D.
4. In Row 7, create the following bold-faced, right-justified column headings:
Column B: Proposal A
Column C: Proposal B
Column D: Proposal C
Note: Adjust cell widths when necessary as you work.
5. In Column A, create the following row headings:
Row 8: Selling price
Row 9: Variable cost
Row 10: Contribution margin
Row 11: Contribution margin ratio
Skip a row
Row 13: Fixed cost
Skip a row
Row 15: Break-even in units
Skip a row
Row 17: Break-even in dollars
6. Use the scenario data to fill in the selling price, variable cost, and fixed cost amounts
for the three proposals.
7. Use the appropriate formulas from this chapter to calculate contribution margin,
contribution margin ratio, break-even in units, and break-even in dollars.
8. Format all amounts as:
Number tab: Category: Currency
Decimal places: 0
Symbol: None
Negative numbers: Red with parenthesis
9. Change the format of the selling price, contribution margin, fixed cost, and break-even
in dollars amounts to display a dollar symbol.
10. Change the format of both contribution margin headings to display as indented:
Alignment tab: Horizontal: Left (Indent)
Indent: 1
11. Change the format of the contribution margin amount cells to display a top border,
using the default line style.
Border tab: Icon: Top Border
12. Change the format of the contribution margin ratio amounts to display as a percentage
with two decimal places.
Number tab: Category: Percentage
Decimal places: 2
13. Change the format of all break-even headings and amounts to display as bold-faced.
14. Activate the ability to use heading names in formulas under Tools ? Options:
Calculation tab: Check the box: Accept labels in formulas
15. Replace the cell-based formulas with “word-based” equivalents for each formula used
in Proposal A.
Example: Contribution margin for proposal B would be:
= (‘Selling price’ ‘Proposal B’) - (‘Variable cost’ ‘Proposal B’)
Note: The tic marks used in the example help avoid naming errors caused by data having similar titles (i.e., “contribution
margin” and “contribution margin ratio”). The parentheses help clarify groupings.
Help: Ask the Answer Wizard about “Name cells in a workbook.”
Select “Learn about labels and names in formulas” from the right-hand panel.
16. Save your work to a disk, and print a copy for your files.
Click here for the solution: (ACC 561 EXCEL Application Exercise 2-65 CVP and Break-Even) Phonetronix
4. Individual Assignment: Practice Text Exercises
• Complete the following problem sets from the Introduction to Management Accounting text:
EXCEL Application Exercise, CVP and Break-Even, on p. 89
2-65 CVP and Break-Even
Goal: Create an Excel spreadsheet to perform CVP analysis and show the relationship between price, costs, and break-even points in terms of units and dollars. Use the results to answer questions about your findings.
Scenario: Phonetronix is a small manufacturer of telephone and communications devices. Recently, company management decided to investigate the profitability of cellular phone production. They have three different proposals to evaluate. Under all the proposals, the fixed costs for the new phone would be $110,000. Under proposal A, the selling price of the new phone would be $99 and the variable cost per unit would be $55. Under proposal B, the selling price of the phone would be $129 and the variable cost would remain the same.
Under proposal C, the selling price would be $99 and the variable cost would be $49.
When you have completed your spreadsheet, answer the following questions:
1. What are the break-even points in units and dollars under proposal A?
2. How did the increased selling price under proposal B impact the break-even points in
units and dollars compared to the break-even points calculated under proposal A?
3. Why did the change in variable cost under proposal C not impact the break-even points
in units and dollars as significantly as proposal B did?
Step-by-Step:
1. Open a new Excel spreadsheet.
2. In column A, create a bold-faced heading that contains the following:
Row 1: Chapter 2 Decision Guideline
Row 2: Phonetronix
Row 3: Cost-Volume-Profit (CVP) Analysis
Row 4: Today’s Date
3. Merge and center the four heading rows across columns A through D.
4. In Row 7, create the following bold-faced, right-justified column headings:
Column B: Proposal A
Column C: Proposal B
Column D: Proposal C
Note: Adjust cell widths when necessary as you work.
5. In Column A, create the following row headings:
Row 8: Selling price
Row 9: Variable cost
Row 10: Contribution margin
Row 11: Contribution margin ratio
Skip a row
Row 13: Fixed cost
Skip a row
Row 15: Break-even in units
Skip a row
Row 17: Break-even in dollars
6. Use the scenario data to fill in the selling price, variable cost, and fixed cost amounts
for the three proposals.
7. Use the appropriate formulas from this chapter to calculate contribution margin,
contribution margin ratio, break-even in units, and break-even in dollars.
8. Format all amounts as:
Number tab: Category: Currency
Decimal places: 0
Symbol: None
Negative numbers: Red with parenthesis
9. Change the format of the selling price, contribution margin, fixed cost, and break-even
in dollars amounts to display a dollar symbol.
10. Change the format of both contribution margin headings to display as indented:
Alignment tab: Horizontal: Left (Indent)
Indent: 1
11. Change the format of the contribution margin amount cells to display a top border,
using the default line style.
Border tab: Icon: Top Border
12. Change the format of the contribution margin ratio amounts to display as a percentage
with two decimal places.
Number tab: Category: Percentage
Decimal places: 2
13. Change the format of all break-even headings and amounts to display as bold-faced.
14. Activate the ability to use heading names in formulas under Tools ? Options:
Calculation tab: Check the box: Accept labels in formulas
15. Replace the cell-based formulas with “word-based” equivalents for each formula used
in Proposal A.
Example: Contribution margin for proposal B would be:
= (‘Selling price’ ‘Proposal B’) - (‘Variable cost’ ‘Proposal B’)
Note: The tic marks used in the example help avoid naming errors caused by data having similar titles (i.e., “contribution
margin” and “contribution margin ratio”). The parentheses help clarify groupings.
Help: Ask the Answer Wizard about “Name cells in a workbook.”
Select “Learn about labels and names in formulas” from the right-hand panel.
16. Save your work to a disk, and print a copy for your files.
Click here for the solution: (ACC 561 EXCEL Application Exercise 2-65 CVP and Break-Even) Phonetronix
(Problem 10-20 Service Versus Manufacturing Companies) Mazzel Company began operations on January 1, 2008, by issuing common stock for $33,000 cash
Problem 10-20 Service Versus Manufacturing Companies
Mazzel Company began operations on January 1, 2008, by issuing common stock for $33,000 cash. During 2008, Mazzel received $39,000 cash from revenue and incurred costs that required $66,000 of cash payments.
Required
Prepare an income statement, balance sheet, and statement of cash flows for Mazzel for 2008, under each of the following independent scenarios.
a. Mazzel is a promoter of rock concerts. The $66,000 was paid to provide a rock concert that produced the revenue.
b. Mazzel is in the car rental business. The $66,000 was paid to purchase automobiles. The automobiles were purchased on January 1, 2008, had four-year useful lives and no expected salvage value. Mazzel uses straight-line depreciation. The revenue was generated by leasing the automobiles.
c. Mazzel is a manufacturing company. The $66,000 was paid to purchase the following items.
AND SO ON
Check:
a. Net loss: $27,000
b. Total assets: $55,500
c. Net income: $11,225
Click here for the solution: Mazzel Company began operations on January 1, 2008, by issuing common stock for $33,000 cash
Mazzel Company began operations on January 1, 2008, by issuing common stock for $33,000 cash. During 2008, Mazzel received $39,000 cash from revenue and incurred costs that required $66,000 of cash payments.
Required
Prepare an income statement, balance sheet, and statement of cash flows for Mazzel for 2008, under each of the following independent scenarios.
a. Mazzel is a promoter of rock concerts. The $66,000 was paid to provide a rock concert that produced the revenue.
b. Mazzel is in the car rental business. The $66,000 was paid to purchase automobiles. The automobiles were purchased on January 1, 2008, had four-year useful lives and no expected salvage value. Mazzel uses straight-line depreciation. The revenue was generated by leasing the automobiles.
c. Mazzel is a manufacturing company. The $66,000 was paid to purchase the following items.
AND SO ON
Check:
a. Net loss: $27,000
b. Total assets: $55,500
c. Net income: $11,225
Click here for the solution: Mazzel Company began operations on January 1, 2008, by issuing common stock for $33,000 cash
ACC 225 Week Nine (Week 9) Solution
ACC 225
Week Nine (Week 9) Solution
Final Project: Comprehensive Problem-Perpetual
• Resources: Appendix A, Fundamental Accounting Principles, p. 301, and Appendix C
• Due Date: Day 7 [Individual] forum
• Complete the Comprehensive Problem-Perpetual. In this project, follow the steps of the accounting cycle to process given transactions in a business environment. Then, synthesize special journals, a trial balance, financial statements, and a post-closing trial balance.
• Use the spreadsheet in Appendix C available on aXcess to complete the problems. Be sure to use the tabs labeled P07C and Given P07C.
• Post your answers as an attachment.
Colo Company
Click here for the solution: ACC 225 Week Nine (Week 9) Solution
Final Project: Comprehensive Problem-Perpetual
• Resources: Appendix A, Fundamental Accounting Principles, p. 301, and Appendix C
• Due Date: Day 7 [Individual] forum
• Complete the Comprehensive Problem-Perpetual. In this project, follow the steps of the accounting cycle to process given transactions in a business environment. Then, synthesize special journals, a trial balance, financial statements, and a post-closing trial balance.
• Use the spreadsheet in Appendix C available on aXcess to complete the problems. Be sure to use the tabs labeled P07C and Given P07C.
• Post your answers as an attachment.
Colo Company
Click here for the solution: ACC 225 Week Nine (Week 9) Solution
ACC 225 Week Eight (Week 8) Solution
ACC 225
Week Eight (Week 8) Solution
CheckPoint: Internal Control and Bank Reconciliations
• Resource: Fundamental Accounting Principles, pp. 335 and 336
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 8-6 on p. 335, and Exercises 8-3 and 8-4 on p. 336.
• Post your answers as an attachment.
Assignment: Internal Control and Bank Reconciliations
• Resource: Fundamental Accounting Principles, pp. 338 and 339
• Due Date: Day 7 [Individual] forum
• Complete Problems 8-1A, 8-3A, and 8-4A (including the Analysis Component) on pp. 338-339. When responding to the cases in 8-1A, be sure to think critically about each case. Identify the principles of internal control that has been violated, and give an explanation of why you think that principle has been violated. Identify the consequences of the actions described in the cases. Make a recommendation for what the business should do to ensure adherence to principles of internal control.
• Use the spreadsheet in Appendix B available on aXcess to complete Problem 8-4A. Be sure to use the tabs labeled SP08-04A and Given P08-04A
Click here for the solution: ACC 225 Week Eight (Week 8) Solution
CheckPoint: Internal Control and Bank Reconciliations
• Resource: Fundamental Accounting Principles, pp. 335 and 336
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 8-6 on p. 335, and Exercises 8-3 and 8-4 on p. 336.
• Post your answers as an attachment.
Assignment: Internal Control and Bank Reconciliations
• Resource: Fundamental Accounting Principles, pp. 338 and 339
• Due Date: Day 7 [Individual] forum
• Complete Problems 8-1A, 8-3A, and 8-4A (including the Analysis Component) on pp. 338-339. When responding to the cases in 8-1A, be sure to think critically about each case. Identify the principles of internal control that has been violated, and give an explanation of why you think that principle has been violated. Identify the consequences of the actions described in the cases. Make a recommendation for what the business should do to ensure adherence to principles of internal control.
• Use the spreadsheet in Appendix B available on aXcess to complete Problem 8-4A. Be sure to use the tabs labeled SP08-04A and Given P08-04A
Click here for the solution: ACC 225 Week Eight (Week 8) Solution
ACC 225 Week Seven (Week 7) Solution
ACC 225
Week Seven (Week 7) Solution
CheckPoint: Accounting Information Systems and Special Journals
• Resource: Fundamental Accounting Principles, pp. 289, 290, and 291
• Due Date: Day 5 [Individual] forum
• Complete Quick Study questions QS 7-1 and QS 7-3 on p. 289, and Exercises 7-1, 7-4, 7-7, and 7-10 on pp. 290-291.
Click here for the solution: ACC 225 Week Seven (Week 7) Solution
CheckPoint: Accounting Information Systems and Special Journals
• Resource: Fundamental Accounting Principles, pp. 289, 290, and 291
• Due Date: Day 5 [Individual] forum
• Complete Quick Study questions QS 7-1 and QS 7-3 on p. 289, and Exercises 7-1, 7-4, 7-7, and 7-10 on pp. 290-291.
Click here for the solution: ACC 225 Week Seven (Week 7) Solution
ACC 561 Question 2-61, CVP in a Modern Manufacturing Company
ACC 561
4. Individual Assignment: Practice Text Exercises
• Complete the following problem sets from the Introduction to Management Accounting text:
Question 2-61, CVP in a Modern Manufacturing Company, on p. 87
A division of Hewlett-Packard Company changed its production operations
from one where a large labor force assembled electronic components to
an automated production facility dominated by computer-controlled
robots. The change was necessary because of fierce competitive
pressures. Improvements in quality, reliability, and flexibility of
production schedules were necessary just to match competition. As a
result of the change, variable costs fell and fixed costs increased, as
shown in the following assumed budgets:4. Individual Assignment: Practice Text Exercises
• Complete the following problem sets from the Introduction to Management Accounting text:
Question 2-61, CVP in a Modern Manufacturing Company, on p. 87
Old Production Operation Old Production Operation
Unit variable cost
Material $0.88 $0.88
Labor $1.22 0.22
Total per unit $2.10 $1.10
Monthly fixed costs
Rent and depreciation 450,000.00 $875,000.00
Supervisory labor 80,000.00 175,000.00
Other 50,000.00 90,000.00
Total per month $580,000.00 $1,140,000.00
Expected volume is 600,000 units per month, with each unit selling for $3.10 Capacity is 800,000 units.
1. Compute the budgeted profit as the expected volume of 600,000 units under both the old and the new production environments.
2. Compute the budgeted break-even point under both the old and the new production environments.
3 .Discuss the effect on profits if volume falls to 500,000 units under both the old and the new production environments.
4 .Discuss the effect on profits if volume increases to 700,000 units under both the old and the new production environments.
5 .Comment on the riskiness of the new operation versus the old operation.
Click here for the solution: ACC 561 Question 2-61, CVP in a Modern Manufacturing Company
ACC 225 Week Six (Week 6) Solution
ACC 225 Week Six (Week 6) Solution
CheckPoint: Computing Inventory Balances and Lower of Cost or Market
• Resource: Fundamental Accounting Principles, pp. 247-249
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 6-1 on p. 247 and Exercises 6-1 and 6-5 on pp. 248 and 249.
Assignment: Estimating Inventory and Preparing Multiple-Step and Single-Step Income Statements
• Resource: Fundamental Accounting Principles, pp. 251 and 256
• Due Date: Day 7 [Individual] forum
• Complete Problems 5-4A on p. 212, 6-1A on p. 251, and 6-6B and 6-7B on p. 256.
• Post your answers as an attachment.
Click here for the solution: ACC 225 Week Six (Week 6) Solution
CheckPoint: Computing Inventory Balances and Lower of Cost or Market
• Resource: Fundamental Accounting Principles, pp. 247-249
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 6-1 on p. 247 and Exercises 6-1 and 6-5 on pp. 248 and 249.
Assignment: Estimating Inventory and Preparing Multiple-Step and Single-Step Income Statements
• Resource: Fundamental Accounting Principles, pp. 251 and 256
• Due Date: Day 7 [Individual] forum
• Complete Problems 5-4A on p. 212, 6-1A on p. 251, and 6-6B and 6-7B on p. 256.
• Post your answers as an attachment.
Click here for the solution: ACC 225 Week Six (Week 6) Solution
ACC 225 Week Five (Week 5) Solution
ACC 225 Week Five (Week 5) Solution
Discussion Question 2
• Due Date: Day 4 [Main] forum
• Post your response to the following: Read the BTN5-3 Ethics Challenge on p. 218 of the text. Discuss the ethics of what Amy is doing. Are there any consequences to her actions? How does the store account for Amy’s returns?
CheckPoint: Inventory Systems and Calculating Revenues, Expenses, and Income
• Resource: Fundamental Accounting Principles, pp. 206, 208, and 209.
• Due Date: Day 5 [Individual] forum
• Complete Quick Study question QS 5-8 on p. 206 and Exercises 5-9 and 5-13 on pp. 208-209.
• Post your answers as an attachment.
Discussion Question 2
• Due Date: Day 4 [Main] forum
• Post your response to the following: Read the BTN5-3 Ethics Challenge on p. 218 of the text. Discuss the ethics of what Amy is doing. Are there any consequences to her actions? How does the store account for Amy’s returns?
CheckPoint: Inventory Systems and Calculating Revenues, Expenses, and Income
• Resource: Fundamental Accounting Principles, pp. 206, 208, and 209.
• Due Date: Day 5 [Individual] forum
• Complete Quick Study question QS 5-8 on p. 206 and Exercises 5-9 and 5-13 on pp. 208-209.
• Post your answers as an attachment.
Click here for the solution: ACC 225 Week Five (Week 5) Solution
Friday, May 1, 2015
ACC 225 Week Four (Week 4) Solution
ACC 225 Week Four (Week 4) Solution
CheckPoint: Preparing Balance Sheets and Statements
• Resource: Fundamental Accounting Principles, pp. 156 and 159
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 4-2 on p. 156 and Exercises 4-4 and 4-5 on p. 159.
• Post your answers as an attachment.
Assignment: Preparing Entries and Statements
• Resources: Fundamental Accounting Principles, pp. 165-167
• Due Date: Day 7 [Individual] forum
• Complete Problems 4-5A and 4-6A. When responding to the analysis component of 4-5A, be sure to think critically about the possible errors that are described. In your answer, be sure to carefully analyze the worksheet as if the errors were made and present the evidence for your explanation. Identify the consequences of the errors and describe their impact on the financial statements. Explain whether the error is likely to be discovered when completing the worksheet.
• Post your answers as an attachment.
CheckPoint: Preparing Balance Sheets and Statements
• Resource: Fundamental Accounting Principles, pp. 156 and 159
• Due Date: Day 4 [Individual] forum
• Complete Quick Study question QS 4-2 on p. 156 and Exercises 4-4 and 4-5 on p. 159.
• Post your answers as an attachment.
Assignment: Preparing Entries and Statements
• Resources: Fundamental Accounting Principles, pp. 165-167
• Due Date: Day 7 [Individual] forum
• Complete Problems 4-5A and 4-6A. When responding to the analysis component of 4-5A, be sure to think critically about the possible errors that are described. In your answer, be sure to carefully analyze the worksheet as if the errors were made and present the evidence for your explanation. Identify the consequences of the errors and describe their impact on the financial statements. Explain whether the error is likely to be discovered when completing the worksheet.
• Post your answers as an attachment.
Click here for the solution: ACC 225 Week Four (Week 4) Solution
The General's Favorite Fishing Hole - Period 1
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition and 20th Edition
PERIOD 1
The Account Cycle
Bob Night opened "The General's Favorite Fishing Hole". The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below.
The General's Favorite Fishing Hole Chart of Account.
Assets Revenues
101 cash 401 Registration fees
142 Office Supplies
144 Food Supplies Expenses
145 Prepaid Insurance 511 Wages Expense
181 Fishing Boat 521 Rent Expense
181.1 Accum. Depr-Fishing Boats 523 Office Supplice Expense
524 Food Supplice Expense
Liabilities 525 Telephone Expense
202 Account Payable 533 utilities Expense
219 Wages Payable 535 Insurance Expense
536 pastage Expense
Owner's Equuity 542 Depr. Exp-Fishing Boats
311 Bob Night Payable
312 Bob Night Drawing
313 Income Summary
The following transactions took place during April 20--
April
1 Night invested cash in the business $90,000.
1 Paid insurance premium for camping season, 9,000.
2 Paid rent for lodge and campgrounds for the month of April, $40,000.
2 Deposited registration fee, $35,000
2 Purchase ten fishing boats on account for $60,000. The boats have estimated useful
lives of five years, at which time they will be donated to a local day camp. Arrangement
were made to pay for the boats in July.
3 Purchase food supplies from Acme Super Market on account, $7,000.
5 Purchase office supplies from Gordon Office Supplies on account, $500.
7 Deposited registration fee, $38,600.
10 Purchased food supplies from Acme Super Market on account, $8,200
10 Paid wages to fishing guides, $10,000
14 Deposited registration fees, $30,500
16 Purchased food supplies from Acme Super Market on account, $9,000
17 Paid wages to fishing guides, $10,000
18 Paid postage , $150.
21 Deposited registration fees, $35,600
24 Purchased food supplies from Acme Super Market on account, $8,500
24 Paid wages to fishing guides, $10,000
28 Deposited registration fees, $32,000.
29 Paid wages to fishing guides, $10,000
30 Purchased food supplies from Acme Super Market on account, $6,000.
30 Paid Acme Super market on account ,$32,700.
30 Paid utilities bill, $2,000.
30 Paid telephone bill, $1,200.
30 Bob Night withdrew cash for personal use, $6,000
Adjustment information for the end of April is provided below.
a Office supplies remaining on hand, $100.
b Food supplies remaining on hand, $8,000.
c Insurance expired during the month of April, $1,500.
d Depreciation on the fishing boatsfor the month of April, $1,000.
e Wages earned , but not yet paid, at the end of April, $500.
Required:
1 Enter the above transactions in a general journal. Enter transactions from April 1-5 on pages 1, April 7-8 on page 2, April 21-29 and the first two entries for April 30 on page 3, and the remain entries for April 30 on page 4.
2 Post the entries to the general ledger.(if you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general leger accounts).
3 Prepare a trial balance on a work sheet.
4 Complete the work sheet.
5 Prepare the income statement.
6 Prepare the statement of owner's equity
7 Prepare the balance sheet.
8 Journalise the adjusting entries (page 5)
9 Post the adjusting entries to the general ledger.
10 Journalise the closing entries (page 5 and 6)
11 Post the closing entries to the general ledger.
12 Prepare a post-closing trial balance.
PERIOD 1
The Account Cycle
Bob Night opened "The General's Favorite Fishing Hole". The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below.
The General's Favorite Fishing Hole Chart of Account.
Assets Revenues
101 cash 401 Registration fees
142 Office Supplies
144 Food Supplies Expenses
145 Prepaid Insurance 511 Wages Expense
181 Fishing Boat 521 Rent Expense
181.1 Accum. Depr-Fishing Boats 523 Office Supplice Expense
524 Food Supplice Expense
Liabilities 525 Telephone Expense
202 Account Payable 533 utilities Expense
219 Wages Payable 535 Insurance Expense
536 pastage Expense
Owner's Equuity 542 Depr. Exp-Fishing Boats
311 Bob Night Payable
312 Bob Night Drawing
313 Income Summary
The following transactions took place during April 20--
April
1 Night invested cash in the business $90,000.
1 Paid insurance premium for camping season, 9,000.
2 Paid rent for lodge and campgrounds for the month of April, $40,000.
2 Deposited registration fee, $35,000
2 Purchase ten fishing boats on account for $60,000. The boats have estimated useful
lives of five years, at which time they will be donated to a local day camp. Arrangement
were made to pay for the boats in July.
3 Purchase food supplies from Acme Super Market on account, $7,000.
5 Purchase office supplies from Gordon Office Supplies on account, $500.
7 Deposited registration fee, $38,600.
10 Purchased food supplies from Acme Super Market on account, $8,200
10 Paid wages to fishing guides, $10,000
14 Deposited registration fees, $30,500
16 Purchased food supplies from Acme Super Market on account, $9,000
17 Paid wages to fishing guides, $10,000
18 Paid postage , $150.
21 Deposited registration fees, $35,600
24 Purchased food supplies from Acme Super Market on account, $8,500
24 Paid wages to fishing guides, $10,000
28 Deposited registration fees, $32,000.
29 Paid wages to fishing guides, $10,000
30 Purchased food supplies from Acme Super Market on account, $6,000.
30 Paid Acme Super market on account ,$32,700.
30 Paid utilities bill, $2,000.
30 Paid telephone bill, $1,200.
30 Bob Night withdrew cash for personal use, $6,000
Adjustment information for the end of April is provided below.
a Office supplies remaining on hand, $100.
b Food supplies remaining on hand, $8,000.
c Insurance expired during the month of April, $1,500.
d Depreciation on the fishing boatsfor the month of April, $1,000.
e Wages earned , but not yet paid, at the end of April, $500.
Required:
1 Enter the above transactions in a general journal. Enter transactions from April 1-5 on pages 1, April 7-8 on page 2, April 21-29 and the first two entries for April 30 on page 3, and the remain entries for April 30 on page 4.
2 Post the entries to the general ledger.(if you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general leger accounts).
3 Prepare a trial balance on a work sheet.
4 Complete the work sheet.
5 Prepare the income statement.
6 Prepare the statement of owner's equity
7 Prepare the balance sheet.
8 Journalise the adjusting entries (page 5)
9 Post the adjusting entries to the general ledger.
10 Journalise the closing entries (page 5 and 6)
11 Post the closing entries to the general ledger.
12 Prepare a post-closing trial balance.
Click here for the solution: The General's Favorite Fishing Hole - Period 1
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