MULTIPLE CHOICE
1. CVP analysis requires costs to be categorized as _______. (Points : 1)
2. According to CVP analysis, a company could never incur a loss that exceeded its total _______. (Points : 1)
3. CVP analysis is based on concepts from _______. (Points : 1)
4. Which of the following factors is involved in studying cost-volume-profit relationships? (Points : 1)
5. After the level of volume exceeds the break-even point _______. (Points : 1)
6. The method of cost accounting that lends itself to break-even analysis is _______. (Points : 1)
7. Given the following notation, what is the break-even sales level in units?
SP = selling price per unit, FC = total fixed cost, VC = variable cost per unit
(Points : 1)
8. To compute the break-even point in units, which of the following formulas is used? (Points : 1)
9. Below is an income statement for Thompson Company. Based on the cost and revenue structure on the income statement, below, what was Thompson's break-even point in dollars?
Sales $400,000
Variable costs (125,000)
Contribution margin $275,000
Fixed costs (200,000)
Profit before taxes $ 75,000
(Points : 1)
10. Unique Company manufactures a single product. In the prior year, the company had sales of $90,000, variable costs of $50,000, and fixed costs of $30,000. Unique expects its cost structure and sales price per unit to remain the same in the current year, however total sales are expected to increase by 20 percent. If the current year projections are realized, net income should exceed the prior year's net income by _______. (Points : 1)
11. Which of the following is not a characteristic of relevant costing information? It is _______. (Points : 1)
12. Relevant costs are _______. (Points : 1)
13. If a cost is irrelevant to a decision, the cost could not be _______. (Points : 1)
14. A cost is sunk if it _______. (Points : 1)
15. In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the _______. (Points : 1)
16. The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is _______. (Points : 1)
17. In a make or buy decision, the opportunity cost of capacity could _______. (Points : 1)
18. When a scarce resource, such as space, exists in an organization, the criterion that should be used to determine production is _______. (Points : 1)
19. Fixed costs are ignored in allocating scarce resources because _______. (Points : 1)
20. The minimum selling price that should be acceptable in a special order situation is equal to total _______. (Points : 1)
Click here for the solution: CVP analysis requires costs to be categorized as
Showing posts with label Analysis. Show all posts
Showing posts with label Analysis. Show all posts
Monday, October 26, 2015
An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below
ACC 557 Week 1 Assignment
E1-8 An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below. Each increase and decrease in stockholders’ equity is explained.
Cash Accounts Office Accounts Stockholders’ _ Receivable _ Supplies _ Equipment _ Payable _ Equity
1. _$15,000 _$15,000 Investment
2. _2,000 _$5,000 _$3,000
3. _750 _$750
4. _4,600 _$3,700 _8,300 Service Revenue
5. _1,500 _1,500
6. _2,000 _2,000 Dividends
7. _650 −650 Rent Expense
8. _450 _450
9. _4,900 _4,900 Salaries Expense
10. _500 −500 Utilities Expense
Instructions
(a) Describe each transaction that occurred for the month.
(b) Determine how much stockholders’ equity increased for the month.
(c) Compute the amount of net income for the month.
Click here for the solution: An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below
E1-8 An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below. Each increase and decrease in stockholders’ equity is explained.
Cash Accounts Office Accounts Stockholders’ _ Receivable _ Supplies _ Equipment _ Payable _ Equity
1. _$15,000 _$15,000 Investment
2. _2,000 _$5,000 _$3,000
3. _750 _$750
4. _4,600 _$3,700 _8,300 Service Revenue
5. _1,500 _1,500
6. _2,000 _2,000 Dividends
7. _650 −650 Rent Expense
8. _450 _450
9. _4,900 _4,900 Salaries Expense
10. _500 −500 Utilities Expense
Instructions
(a) Describe each transaction that occurred for the month.
(b) Determine how much stockholders’ equity increased for the month.
(c) Compute the amount of net income for the month.
Click here for the solution: An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below
Wednesday, October 14, 2015
An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp
An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using the four major classifications listed to the right.
a. Payment of interest on notes payable
b. Exchange of land for patent
c. Sale of building at book value
d. Payment of dividends
e. Depreciation
f. Receipt of dividends on investment in stock
g. Receipt of interest on notes receivable
h. Issuance of capital stock
i. Amortization of patent
j. Issuance of bonds for land
k. Purchase of land
l. Conversion of bonds into common stock
m. Loss on sale of land
n. Retirement of bonds
Click here for the solution: An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp
a. Payment of interest on notes payable
b. Exchange of land for patent
c. Sale of building at book value
d. Payment of dividends
e. Depreciation
f. Receipt of dividends on investment in stock
g. Receipt of interest on notes receivable
h. Issuance of capital stock
i. Amortization of patent
j. Issuance of bonds for land
k. Purchase of land
l. Conversion of bonds into common stock
m. Loss on sale of land
n. Retirement of bonds
Click here for the solution: An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp
A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below
E3-4 A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below. Each increase and decrease in stockholders’ equity is explained.
Instructions
(a) Describe each transaction.
(b) Determine how much stockholders’ equity increased for the month.
(c) Compute the net income for the month.
Click here for the solution: A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below
Instructions
(a) Describe each transaction.
(b) Determine how much stockholders’ equity increased for the month.
(c) Compute the net income for the month.
Click here for the solution: A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below
Thursday, September 24, 2015
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp
ACC 560 Week 9 Assignment
E13-2 An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
(a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in stock.
(g) Receipt of interest on notes receivable.
(h) Issuance of capital stock.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into common stock.
(m) Loss on sale of land.
(n) Retirement of bonds.
Instructions
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
Click here for the solution: An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp
E13-2 An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
(a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in stock.
(g) Receipt of interest on notes receivable.
(h) Issuance of capital stock.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into common stock.
(m) Loss on sale of land.
(n) Retirement of bonds.
Instructions
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
Click here for the solution: An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp
Friday, September 18, 2015
Jill's Bike: Given the following balance sheet, complete a horizontal analysis
2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jill’s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands) 2011 2010 Difference Percentage
Assets
Current Assets
Cash and Equivalents $72 $94
Accounts Receivable, net 122 104
Inventory 288 232
Total Current Assets 482 430
Property, Plant and Equipment 638 358
Total Assets $1,120 $788
Liabilities
Current Liabilities
Accounts Payable $242 $148
Accrued Liabilities 48 66
Total Current Liabilities 290 214
Long-Term Liabilities 346 208
Total Liabilities 636 422
Stockholders’ Equity
Common Stock 70 60
Retained Earnings 414 306
Total Stockholders’ Equity 484 366
Total Liabilities and
Stockholders’ Equity $1,120 $788
Click here for the solution: Record the following transactions using the accounting equation
Jill’s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands) 2011 2010 Difference Percentage
Assets
Current Assets
Cash and Equivalents $72 $94
Accounts Receivable, net 122 104
Inventory 288 232
Total Current Assets 482 430
Property, Plant and Equipment 638 358
Total Assets $1,120 $788
Liabilities
Current Liabilities
Accounts Payable $242 $148
Accrued Liabilities 48 66
Total Current Liabilities 290 214
Long-Term Liabilities 346 208
Total Liabilities 636 422
Stockholders’ Equity
Common Stock 70 60
Retained Earnings 414 306
Total Stockholders’ Equity 484 366
Total Liabilities and
Stockholders’ Equity $1,120 $788
Click here for the solution: Record the following transactions using the accounting equation
The management discussion and Analysis section of an annual report addresses corporate performance for the year
The management discussion and Analysis section of an annual report
addresses corporate performance for the year, and sometimes uses
financial ratios to support its claims.
Address: www.ibm.com/investor/tools/index,phtml or go to www.wiley.com/college/wegandt
Steps
1. From IBM's Investor Tools, choose Investment Guides.
2. Choose Guide to Annual Reports.
3. Choose Anatomy of an Annual Report.
Instructions
Using the information from the above site, answers the following questions.
(a) What are the optional elements that are often included in an annual report?
(b) What are the elements of an annual report that are required by the SEC?
(c) Describe the contents of the Management Discussion.
(d) Describe the contents of the Auditors' Report.
(e) Describe the contents of the selected Financial Data.
Click here for the solution: The management discussion and Analysis section of an annual report addresses corporate performance for the year
Address: www.ibm.com/investor/tools/index,phtml or go to www.wiley.com/college/wegandt
Steps
1. From IBM's Investor Tools, choose Investment Guides.
2. Choose Guide to Annual Reports.
3. Choose Anatomy of an Annual Report.
Instructions
Using the information from the above site, answers the following questions.
(a) What are the optional elements that are often included in an annual report?
(b) What are the elements of an annual report that are required by the SEC?
(c) Describe the contents of the Management Discussion.
(d) Describe the contents of the Auditors' Report.
(e) Describe the contents of the selected Financial Data.
Click here for the solution: The management discussion and Analysis section of an annual report addresses corporate performance for the year
Friday, September 11, 2015
How do accounting principles affect financial statement analysis?
14. How do accounting principles affect financial statement analysis?
Click here for the solution: How do accounting principles affect financial statement analysis?
Click here for the solution: How do accounting principles affect financial statement analysis?
Why are ratios and trends used in financial analysis
1. Why are ratios and trends used in financial analysis?
Click here for the solution: Why are ratios and trends used in financial analysis
Click here for the solution: Why are ratios and trends used in financial analysis
Wednesday, September 2, 2015
In a decision analysis situation, which one of the following costs is not likely to contain a variable cost component?
MULTIPLE CHOICE
1) In a decision analysis situation, which one of the following costs is not likely to contain a variable cost component? (CMA adapted, 6/96)
2) You have been asked to help a student health center determine which costs will vary with the number of students who come to the health center. The health center employs one doctor, three nurses, and several other employees. How would you classify (1) the nurse's salary and (2) film and other materials used in radiology to give X-rays to students? The nurse’s salary would be considered a ______, while the film and other materials would be considered a ______.
3) Given the following information:
Sales $5,000
Fixed Expenses 2,000
Variable Expenses 1,750
What would expected net income be if the company experienced a 10 percent increase in fixed costs and 10 percent increase in sales volume?
4) Pete's Pizza Place wishes to determine which of its costs will vary with the number of pizzas made. The Pizza Place has four pizza makers and ten other employees who take orders from customers and perform other tasks. The four pizza makers and the other employees are paid an hourly wage. How would one classify (1) the wages paid to the pizza makers and other employees and (2) materials (e.g., cheeses, sauce, etc.) used to make the pizza? The employees’ wages would be considered a ______, while the materials to make the pizza are a ______.
5) Which of the following statements is (are) true?
(1). An asset is a cost that will be matched with revenues in a future accounting period.
(2). Opportunity costs are recorded as intangible assets in the current accounting period.
6) If the fixed costs for a product decrease and the variable costs (as a percentage of sales dollars) decrease, what will be the effect on the contribution margin ratio and the breakeven point respectively? The contribution margin ratio will _____ and the breakeven point will _____.
7) Which of the following activities would not be considered a value-added activity?
8) The development of just-in-time (JIT) methods of production focused on
9) The field of accounting that depends on generally accepted accounting principles (GAAP) is called
10) Inventoriable costs:
Click here for the solution: In a decision analysis situation, which one of the following costs is not likely to contain a variable cost component?
1) In a decision analysis situation, which one of the following costs is not likely to contain a variable cost component? (CMA adapted, 6/96)
2) You have been asked to help a student health center determine which costs will vary with the number of students who come to the health center. The health center employs one doctor, three nurses, and several other employees. How would you classify (1) the nurse's salary and (2) film and other materials used in radiology to give X-rays to students? The nurse’s salary would be considered a ______, while the film and other materials would be considered a ______.
3) Given the following information:
Sales $5,000
Fixed Expenses 2,000
Variable Expenses 1,750
What would expected net income be if the company experienced a 10 percent increase in fixed costs and 10 percent increase in sales volume?
4) Pete's Pizza Place wishes to determine which of its costs will vary with the number of pizzas made. The Pizza Place has four pizza makers and ten other employees who take orders from customers and perform other tasks. The four pizza makers and the other employees are paid an hourly wage. How would one classify (1) the wages paid to the pizza makers and other employees and (2) materials (e.g., cheeses, sauce, etc.) used to make the pizza? The employees’ wages would be considered a ______, while the materials to make the pizza are a ______.
5) Which of the following statements is (are) true?
(1). An asset is a cost that will be matched with revenues in a future accounting period.
(2). Opportunity costs are recorded as intangible assets in the current accounting period.
6) If the fixed costs for a product decrease and the variable costs (as a percentage of sales dollars) decrease, what will be the effect on the contribution margin ratio and the breakeven point respectively? The contribution margin ratio will _____ and the breakeven point will _____.
7) Which of the following activities would not be considered a value-added activity?
8) The development of just-in-time (JIT) methods of production focused on
9) The field of accounting that depends on generally accepted accounting principles (GAAP) is called
10) Inventoriable costs:
Click here for the solution: In a decision analysis situation, which one of the following costs is not likely to contain a variable cost component?
Tuesday, July 7, 2015
(Present Value Analysis) James Hardy recently rejected a $20,000,000, five-year contract with the Vancouver Seals
PROBLEM 9-1. Present Value Analysis [LO 1, 5] James Hardy recently rejected a $20,000,000, five-year contract with the Vancouver Seals. The contract offer called for an immediate signing bonus of $5,000,000 and annual payments of $3,000,000. To sweeten the deal, the president of player personnel for the Seals has now offered a $22,000,000, five-year contract. This contract calls for annual increases and a balloon payment at the end of five years.
Year 1 $ 3,000,000
Year 2 3,100,000
Year 3 3,200,000
Year 4 3,300,000
Year 5 3,400,000
Year 5 balloon payment 6,000,000
Total $22,000,000
Required
Suppose you are Hardy’s agent and you wish to evaluate the two contracts using a required rate of return of 12 percent. In present value terms, how much better is the second contract?
Click here for the solution: (Present Value Analysis) James Hardy recently rejected a $20,000,000, five-year contract with the Vancouver Seals
Year 1 $ 3,000,000
Year 2 3,100,000
Year 3 3,200,000
Year 4 3,300,000
Year 5 3,400,000
Year 5 balloon payment 6,000,000
Total $22,000,000
Required
Suppose you are Hardy’s agent and you wish to evaluate the two contracts using a required rate of return of 12 percent. In present value terms, how much better is the second contract?
Click here for the solution: (Present Value Analysis) James Hardy recently rejected a $20,000,000, five-year contract with the Vancouver Seals
Monday, July 6, 2015
A tabular analysis of the transactions made during August 2010 by Witten Company during its first month of operation
E3-4 A tabular analysis of the transactions made during August 2010 by Witten Company during its first month of operation.
Assets = Liabilities + Stockholders' Equity
Office Accounts Common Retained Earnings
Cash + A/R + Supp. + Equip. = Payable + Stock + Rev. - Exp. - Div.
1. +$20,000 +$20,000 Com. Stock
2. -1,000 +$5,000 +$4,000
3. -750 +$750
4. +4,400 +$5,400 +$9,800 Serv. Rev.
5. -1,500 -1,500
6. -2,000 -$2,000 Div.
7. -800 -$ 800 Rent Exp.
8. +450 -450
9. -3,000 -3,000 Sal. Exp.
10. +500 -500 Util. Exp.
Hint: Analyze transaction and compare net income (SO 1)
Instructions
(a) describe each transaction
(b) Determine how much stockholder's equity increased for the month
(c) Compute the net income for the month
Click here for the solution: A tabular analysis of the transactions made during August 2010 by Witten Company during its first month of operation
Assets = Liabilities + Stockholders' Equity
Office Accounts Common Retained Earnings
Cash + A/R + Supp. + Equip. = Payable + Stock + Rev. - Exp. - Div.
1. +$20,000 +$20,000 Com. Stock
2. -1,000 +$5,000 +$4,000
3. -750 +$750
4. +4,400 +$5,400 +$9,800 Serv. Rev.
5. -1,500 -1,500
6. -2,000 -$2,000 Div.
7. -800 -$ 800 Rent Exp.
8. +450 -450
9. -3,000 -3,000 Sal. Exp.
10. +500 -500 Util. Exp.
Hint: Analyze transaction and compare net income (SO 1)
Instructions
(a) describe each transaction
(b) Determine how much stockholder's equity increased for the month
(c) Compute the net income for the month
Click here for the solution: A tabular analysis of the transactions made during August 2010 by Witten Company during its first month of operation
Saturday, June 20, 2015
(Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information
Exercise 24-4 (E24-4) (Ratio Computation and Analysis; Liquidity) As
loan analyst for Utrillo Bank, you have been presented the following
information.
AND SO ON
Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. Inasmuch as your bank has reached its quota for loans of this type, only one of these requests is to be granted.
Instructions
Which of the two companies, as judged by the information given above, would you recommend as the better risk and why? Assume that the ending account balances are representative of the entire year.
Click here for the solution: (Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information
AND SO ON
Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. Inasmuch as your bank has reached its quota for loans of this type, only one of these requests is to be granted.
Instructions
Which of the two companies, as judged by the information given above, would you recommend as the better risk and why? Assume that the ending account balances are representative of the entire year.
Click here for the solution: (Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information
Wednesday, June 17, 2015
(Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract
ACC 421 Week 3
Exercise 18-5 (E18-5) (Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Beth Botsford uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2007, follow.
Balance Sheet
Accounts receivable—construction contract billings $21,500
Construction in progress $65,000
Less: Contract billings 61,500
Cost of uncompleted contract in excess of billings 3,500
Income Statement
Income (before tax) on the contract recognized in 2007 $18,200
Instructions
(a) How much cash was collected in 2007 on this contract?
(b) What was the initial estimated total income before tax on this contract?
Click here for the solution: (Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract
Exercise 18-5 (E18-5) (Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Beth Botsford uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2007, follow.
Balance Sheet
Accounts receivable—construction contract billings $21,500
Construction in progress $65,000
Less: Contract billings 61,500
Cost of uncompleted contract in excess of billings 3,500
Income Statement
Income (before tax) on the contract recognized in 2007 $18,200
Instructions
(a) How much cash was collected in 2007 on this contract?
(b) What was the initial estimated total income before tax on this contract?
Click here for the solution: (Analysis of Percentage-of-Completion Financial Statements) In 2007, Beth Botsford Construction Corp. began construction work under a 3-year contract
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