3-35 Predicting Costs
Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs:
1. Fuel costs of driving vehicles, $0.20 per mile, driven 17,000 miles per month
2. Equipment rental cost, $6,000 per piece of equipment per month for seven pieces for three
months
3. Ambulance and EMT personnel cost for a soccer tournament, $1,200 for each 250 tournament participants; the tournament is expecting 2,400 participants
4. Purchasing department cost, $7,500 per month plus $4 per material order processed at 4,000 orders in one month
Click here for the solution: Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs
Showing posts with label Given. Show all posts
Showing posts with label Given. Show all posts
Friday, April 15, 2016
Monday, October 26, 2015
(Surmise Company) The comparative balance sheets for 2011 and 2010 are given below for Surmise Company
P 21-14 Statement of cash flows; indirect method; limited information
The comparative balance sheets for 2011 and 2010 are given below for Surmise Company. Net income for 2011 was $50 million.
Surmise Company
Comparative Balance sheets
December 31, 2011 and 2010
($In millions)
2011 2010
Assets
Cash $45 $40
Accounts receivable 92 96
Less: Allowance for uncollectible accounts (12) (4)
Prepaid expense 8 5
Inventory 145 130
Long-term investment 80 40
Land 100 100
Buildings and equipment 411 300
Less: Accumulated depreciation (142) (120)
Patent 16 17
$743 $604
Liabilities
Account payable $17 $32
Accrued liabilities (2) 10
Notes payable 35 0
Lease liability 111 0
Bonds payable 65 125
Shareholder’s equity
Common Stock 60 50
Paid-in capital-excess of par 245 205
Retained earnings 212 182
$743 $604
Required:
Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2011. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for change in some account balances. A spreadsheet or T-account analysis will be helpful.
Click here for the solution: The comparative balance sheets for 2011 and 2010 are given below for Surmise Company
The comparative balance sheets for 2011 and 2010 are given below for Surmise Company. Net income for 2011 was $50 million.
Surmise Company
Comparative Balance sheets
December 31, 2011 and 2010
($In millions)
2011 2010
Assets
Cash $45 $40
Accounts receivable 92 96
Less: Allowance for uncollectible accounts (12) (4)
Prepaid expense 8 5
Inventory 145 130
Long-term investment 80 40
Land 100 100
Buildings and equipment 411 300
Less: Accumulated depreciation (142) (120)
Patent 16 17
$743 $604
Liabilities
Account payable $17 $32
Accrued liabilities (2) 10
Notes payable 35 0
Lease liability 111 0
Bonds payable 65 125
Shareholder’s equity
Common Stock 60 50
Paid-in capital-excess of par 245 205
Retained earnings 212 182
$743 $604
Required:
Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2011. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for change in some account balances. A spreadsheet or T-account analysis will be helpful.
Click here for the solution: The comparative balance sheets for 2011 and 2010 are given below for Surmise Company
The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
P 21-11 Prepare a statement of cash flows; direct method
The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also.
AND SO ON
Additional information from the accounting records:
a. During 2011, $6 million of customer accounts were written off as uncollectible.
b. Investment revenue includes Arduous Company's $6 million share of the net income of Demur Company, an equity method investee.
c. Treasury bills were sold during 2011 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
d. A machine originally costing $70 million that was one-half depreciated was rendered unusable by a rare flood. Most major components of the machine were unharmed and were sold for $17 million.
e. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $3 million.
f. The preferred stock of Tory Corporation was purchased for $25 million as a long-term investment.
g. Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller.
h. A building was acquired by a 15-year capital lease; present value of lease payments, $82 million. i. $60 million of bonds were retired at maturity. j. In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
k. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million.
Required:
Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2011. Present cash flows from operating activities by the direct method. (A reconciliation schedule is not required.)
Click here for the solution: The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also.
AND SO ON
Additional information from the accounting records:
a. During 2011, $6 million of customer accounts were written off as uncollectible.
b. Investment revenue includes Arduous Company's $6 million share of the net income of Demur Company, an equity method investee.
c. Treasury bills were sold during 2011 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
d. A machine originally costing $70 million that was one-half depreciated was rendered unusable by a rare flood. Most major components of the machine were unharmed and were sold for $17 million.
e. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $3 million.
f. The preferred stock of Tory Corporation was purchased for $25 million as a long-term investment.
g. Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller.
h. A building was acquired by a 15-year capital lease; present value of lease payments, $82 million. i. $60 million of bonds were retired at maturity. j. In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
k. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million.
Required:
Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2011. Present cash flows from operating activities by the direct method. (A reconciliation schedule is not required.)
Click here for the solution: The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
Saturday, October 17, 2015
Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios
Integrative—Complete ratio analysis
Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios for the most recent year. (Assume a 365-day year.) Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.
Click here for the solution: Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios
Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios for the most recent year. (Assume a 365-day year.) Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.
Click here for the solution: Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios
Wednesday, October 14, 2015
Given the following information, prepare a statement of cash flows
Given the following information, prepare a statement of cash flows
Increase in accounts receivable $25
Increase in inventories 30
Operating income 75
Interest expense 25
Increase in accounts payable 25
Dividends 15
Increase in common stock 20
Increase in net fixed assets 23
Depreciation expense 12
Income taxes 17
Beginning cash 20
Click here for the solution: Given the following information, prepare a statement of cash flows
Increase in accounts receivable $25
Increase in inventories 30
Operating income 75
Interest expense 25
Increase in accounts payable 25
Dividends 15
Increase in common stock 20
Increase in net fixed assets 23
Depreciation expense 12
Income taxes 17
Beginning cash 20
Click here for the solution: Given the following information, prepare a statement of cash flows
Friday, October 9, 2015
Selected sales and operating data for three divisions of three different companies are given below
Selected sales and operating data for three divisions of three different companies are given below:
Division X Division Y Division Z
Sales $900,000 $750,000 $600,000
Average operating assets $600,000 $150,000 $200,000
Net operating income $54,000 $30,000 $10,000
Minimum required rate of return 10% 16% 8%
a. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. Show computations
b. Compute the residual income for each division. Show computations
c. Under which of these methods would they accept an opportunity with a 15% return. Show computations and details
Click here for the solution: Selected sales and operating data for three divisions of three different companies are given below
Division X Division Y Division Z
Sales $900,000 $750,000 $600,000
Average operating assets $600,000 $150,000 $200,000
Net operating income $54,000 $30,000 $10,000
Minimum required rate of return 10% 16% 8%
a. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. Show computations
b. Compute the residual income for each division. Show computations
c. Under which of these methods would they accept an opportunity with a 15% return. Show computations and details
Click here for the solution: Selected sales and operating data for three divisions of three different companies are given below
Sunday, September 27, 2015
Data pertaining to job cost sheets for Reyes Tool & Die are given in BE15-3 and BE15-4
BE 15-5 Data pertaining to job cost sheets for Reyes Tool & Die are given in BE15-3 and BE15-4. Prepare the job cost sheets for each of the three jobs. (Note: You may omit the column for manufacturing overhead).
Data given in BE15-3 and 15-4:
BE 15-3 In January, Reyes Tool & Die requisitions raw materials for production as follows: Job 1 $900, Job 2 $1,200, Job 3 $700, and general factory use $600.
BE 15-4 During January, time tickets show that the factory labor of $5,000 was used as follows: Job 1 $1,200, Job 2 $1,600 Job 3 $1,400, and general factory use $800.
Click here for the solution: Data pertaining to job cost sheets for Reyes Tool & Die are given in BE15-3 and BE15-4
Data given in BE15-3 and 15-4:
BE 15-3 In January, Reyes Tool & Die requisitions raw materials for production as follows: Job 1 $900, Job 2 $1,200, Job 3 $700, and general factory use $600.
BE 15-4 During January, time tickets show that the factory labor of $5,000 was used as follows: Job 1 $1,200, Job 2 $1,600 Job 3 $1,400, and general factory use $800.
Click here for the solution: Data pertaining to job cost sheets for Reyes Tool & Die are given in BE15-3 and BE15-4
Friday, September 25, 2015
The comparative balance sheets for 2006 and 2005 are given below for Surmise Company
The comparative balance sheets for 2006 and 2005 are given below for Surmise Company. Net Income for 2006 was $50 million.
Surmise Company Comparative Balance Sheets Dec. 31, 2006 and 2005 ($ in millions)
------------------------2006---------------------2005--------
ASSETS:
Cash $45 $40
Accounts Receivable 92 96
Less: Allowance for Uncollectible accounts (12) (4)
Prepaid expense 8 5
Inventory 145 130
Long term Investment 80 40
Land 100 100
Buildings & Equipments 411 300
less: Accumulated Depreciation (142) (120)
Patent 16 17
Total $743 $604
LIABILITIES:
Accounts Payable $17 $32
Accrued Liabilities (2) 10
Notes payable 35 0
Lease Liability 111 0
Bonds Payable 65 125
SHAREHOLDER"S EQUITY:
Common Stock $60 $50
Paid in Capital - Excess of par 245 205
Retained Earnings 212 182
Total $743 $604
REQUIRED: Prepare the statement of cash flow of Surmise Company for the year ended December 31, 2006. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful.
Click here for the solution: The comparative balance sheets for 2006 and 2005 are given below for Surmise Company
Surmise Company Comparative Balance Sheets Dec. 31, 2006 and 2005 ($ in millions)
------------------------2006---------------------2005--------
ASSETS:
Cash $45 $40
Accounts Receivable 92 96
Less: Allowance for Uncollectible accounts (12) (4)
Prepaid expense 8 5
Inventory 145 130
Long term Investment 80 40
Land 100 100
Buildings & Equipments 411 300
less: Accumulated Depreciation (142) (120)
Patent 16 17
Total $743 $604
LIABILITIES:
Accounts Payable $17 $32
Accrued Liabilities (2) 10
Notes payable 35 0
Lease Liability 111 0
Bonds Payable 65 125
SHAREHOLDER"S EQUITY:
Common Stock $60 $50
Paid in Capital - Excess of par 245 205
Retained Earnings 212 182
Total $743 $604
REQUIRED: Prepare the statement of cash flow of Surmise Company for the year ended December 31, 2006. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful.
Click here for the solution: The comparative balance sheets for 2006 and 2005 are given below for Surmise Company
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
Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012
6. Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012.
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
Click here for the solution: Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
Click here for the solution: Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012
Sunday, September 6, 2015
Assuming a 360-day year, calculate what the average investment in inventory would be for a firm, given the following information in each case
16.13 (Ratio analysis) Assuming a 360-day year, calculate what the average investment in inventory would be for a firm, given the following information in each case.
a. The firm has sales of $600,000, a gross profit margin of 10 percent, and an inventory turnover ratio of 6.
b. The firm has a cost-of-goods-sold figure of $480,000 and an average age of inventory of 40 days.
c. The firm has a cost-of-goods-sold figure of $1.15 million and an inventory turnover rate of 5.
d. The firm has a sales figure of $25 million, a gross profit margin of 14 percent, and an average age inventory of 45 days.
Click here for the solution: Assuming a 360-day year, calculate what the average investment in inventory would be for a firm, given the following information in each case
a. The firm has sales of $600,000, a gross profit margin of 10 percent, and an inventory turnover ratio of 6.
b. The firm has a cost-of-goods-sold figure of $480,000 and an average age of inventory of 40 days.
c. The firm has a cost-of-goods-sold figure of $1.15 million and an inventory turnover rate of 5.
d. The firm has a sales figure of $25 million, a gross profit margin of 14 percent, and an average age inventory of 45 days.
Click here for the solution: Assuming a 360-day year, calculate what the average investment in inventory would be for a firm, given the following information in each case
Saturday, August 22, 2015
Refer to the information given in the preceding problem for Great Outdoze, Inc
8-30 Refer to the information given in the preceding problem for Great Outdoze, Inc. Assume that direct material is the only unit-level manufacturing cost. The company has committed its spending for direct labor and overhead (variable and fixed).
Required:
1. Calculate the product cost per sleeping bag under throughput costing.
2. Prepare an income statement for the year 20x4 using throughput costing.
3. Give an argument for and against throughput costing.
Check: 2. Throughput costing, gross margin: $1,980,000
Click here for the solution: Refer to the information given in the preceding problem for Great Outdoze, Inc
Required:
1. Calculate the product cost per sleeping bag under throughput costing.
2. Prepare an income statement for the year 20x4 using throughput costing.
3. Give an argument for and against throughput costing.
Check: 2. Throughput costing, gross margin: $1,980,000
Click here for the solution: Refer to the information given in the preceding problem for Great Outdoze, Inc
Monday, August 17, 2015
Imperial Jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party
Exercise 13-4 (Evaluating a Special Order) Imperial Jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $189.95 and its unit product cost is $149.00 as shown below:
Direct materials . . . . . . . . . . . . . . . . . . . . $ 84.00
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . 45.00
Manufacturing overhead . . . . . . . . . . . . . 20.00
Unit product cost . . . . . . . . . . . . . . . . . . . $149.00
Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $4.00 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing $2.00 per bracelet and would also require acquisition of a special tool costing $250 that would have no other use once the special order is completed. This order would have no effect on the company’s regular sales and the order could be fulfilled using the company’s existing capacity without affecting any other order.
Required:
What effect would accepting this order have on the company’s net operating income if a special price of $169.95 per bracelet is offered for this order? Should the special order be accepted at this price?
Click here for the solution: Imperial Jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party
Direct materials . . . . . . . . . . . . . . . . . . . . $ 84.00
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . 45.00
Manufacturing overhead . . . . . . . . . . . . . 20.00
Unit product cost . . . . . . . . . . . . . . . . . . . $149.00
Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $4.00 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing $2.00 per bracelet and would also require acquisition of a special tool costing $250 that would have no other use once the special order is completed. This order would have no effect on the company’s regular sales and the order could be fulfilled using the company’s existing capacity without affecting any other order.
Required:
What effect would accepting this order have on the company’s net operating income if a special price of $169.95 per bracelet is offered for this order? Should the special order be accepted at this price?
Click here for the solution: Imperial Jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party
Thursday, July 30, 2015
Sales budget data for Palermo Company are given in BE9-2
BE9-3: Sales budget data for Palermo Company are given in BE9-2. Management desires to have an ending finished goods inventory equal to 25% of the next quarter’s expected unit sales. Prepare a production budget by quarters for the first 6 months of 2014.
Click here for the solution: Sales budget data for Palermo Company are given in BE9-2
Click here for the solution: Sales budget data for Palermo Company are given in BE9-2
Data for Maris Company are given in BE10-1
BE10-2 Data for Maris Company are given in BE10-1. In the second quarter, budgeted sales were $380,000, and actual sales were $384,000. Prepare a static budget report for the second quarter and for the year to date.
Click here for the solution: Data for Maris Company are given in BE10-1
Click here for the solution: Data for Maris Company are given in BE10-1
Sunday, July 19, 2015
Jasmine Scents has been given two competing offers for short-term financing
E16–3 Jasmine Scents has been given two competing offers for short-term financing. Both offers are for borrowing $15,000 for 1 year. The first offer is a discount loan at 8%; the second offer is for interest to be paid at maturity at a stated interest rate of 9%. Calculate the effective annual rates for each loan and indicate which loan offers the better terms.
Click here for the solution: Jasmine Scents has been given two competing offers for short-term financing
Click here for the solution: Jasmine Scents has been given two competing offers for short-term financing
Tuesday, July 14, 2015
Given the information below, compute annualized returns
1. Given the information below, compute annualized returns
Asset Income Price change Initial price Time period
A $2 $6 $29 15 months
B 0 10 40 11months
C 50 70 30 7 years
D 3 -8 20 24 month
2. Given the information below, compute annualized returns:
Asset Purchase price Current price Income received Time period
A $20 $26 $2 75 weeks
B 15 18 0.40 3 month
C 150 130 0 2 years
D 3.50 3.00 0.20 8 months
Click here for the solution: Given the information below, compute annualized returns
Asset Income Price change Initial price Time period
A $2 $6 $29 15 months
B 0 10 40 11months
C 50 70 30 7 years
D 3 -8 20 24 month
2. Given the information below, compute annualized returns:
Asset Purchase price Current price Income received Time period
A $20 $26 $2 75 weeks
B 15 18 0.40 3 month
C 150 130 0 2 years
D 3.50 3.00 0.20 8 months
Click here for the solution: Given the information below, compute annualized returns
Tuesday, July 7, 2015
Given Robinson’s 2010 and 2011 financial information presented in problem 2 and 4
Given Robinson’s 2010 and 2011 financial information presented in problem 2 and 4,
a. Compute it’s operating and cash conversion cycle in each year.
b. What was Robinson’s net investment in working capital each year?
Click here for the solution: Given Robinson’s 2010 and 2011 financial information presented in problem 2 and 4
a. Compute it’s operating and cash conversion cycle in each year.
b. What was Robinson’s net investment in working capital each year?
Click here for the solution: Given Robinson’s 2010 and 2011 financial information presented in problem 2 and 4
Subscribe to:
Posts (Atom)