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Homework Help for Accounting (page 1816)

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Accounting
15-7 The president of a plastics company was quoted in a business journal as stating, "We haven't had a dollar of interest-paying debt in over 10 years. Not many companies can say that." As a stockholder in this company, how would you feel about its policy of not taking on debt?
Answered
23 Nov 2017
Accounting
EXERCISE 12-3 Make or Buy a Component [LO12-3] Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally:
Answered
21 Nov 2017
Accounting
EXERCISE 7-11 Second-Stage Allocation and Margin Calculations [LO7-4, L07-5] Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The company's activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Measure Activity Rate Activity Cost Pool Supporting direct labor ....... Batch processing ...... Order processing ....... ... Customer service ........... Number of direct labor-hours Number of batches Number of orders Number of customers $5.55 per direct labor-hour $107.00 per batch $275.00 per order $2,463.00 per customer The company just completed a single order from Interstate Trucking for 1.000 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.25 direct labor-hours. The selling price was $20 per unit, the direct materials cost was $8.50 per unit, and the direct labor cost was $6.00 per unit. This was Interstate Trucking's only order during the year. Required: Using Exhibit 7-12 as a guide, prepare a report showing the customer margin on sales to Interstate Trucking for the year.
Answered
22 Nov 2017
Accounting
PROBLEM 6-19 Variable Costing Income Statement; Reconciliation (L06-2, L06-3] During Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows: Sales (@$25 per unit) ........ Cost of goods sold (@$18 per unit) Year 1 $1,000,000 720,000 280,000 210,000 $ 70,000 Year 2 $1,250,000 900,000 350,000 230,000 $ 120,000 Gross margin ..... Selling and administrative expenses Net operating income ........... *$2 per unit variable: $130,000 fixed each year. The company's $18 unit product cost is computed as follows: Direct materials .......... Direct labor Variable manufacturing overhead .... Fixed manufacturing overhead ($270,000 = 45,000 units) .. Absorption costing unit product cost ........ Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder con- sists of depreciation charges on production equipment and buildings. Production and cost data for the two years are: Units produced.......... Units sold ............. Year 1 45,000 40,000 Year 2 45,000 50,000 Required: 1. Prepare a variable costing contribution format income statement for each year. 2. Reconcile the absorption costing and the variable costing net operating income figures for each year.
Answered
20 Nov 2017
Accounting
2-4 Distinguish between (a) a variable cost, (b) a fixed cost, and (c) a mixed cost.
Answered
21 Nov 2017
Accounting
EXERCISE 5-12 Multiproduct Break-Even Analysis (L05-9] Olongapo Sports Corporation distributes two premium golf balls—the Flight Dynamic and the Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Flight Dynamic Sure Shot $150,000 $250,000 80% 36% Total $400,000 Sales ......... CM ratio ....... Fixed expenses total $183,750 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. Carry computa- tions to one decimal place. 2. Compute the break-even point for the company based on the current sales mix. 3. If sales increase by $100,000 a month, by how much would you expect net operating income to increase? What are your assumptions?
Answered
20 Nov 2017
Accounting
1-1 How does managerial accounting differ from financial accounting?
Answered
18 Nov 2017
Accounting
EXERCISE 7-14 Calculating and Interpreting Activity-Based Costing Data [LO7-3, L07-4] Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first stage allocations of costs to the activity cost pools. The results appear below. Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners ........ Serving a diner ......... Serving drinks ..... Number of parties served Number of diners served Number of drinks ordered $33,000 $138,000 $24,000 6,000 parties 15,000 diners 10,000 drinks The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. A group of diners who ask to sit at the same table are counted as a party. Some costs, such as the costs of cleaning linen, are the same whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the number of diners served. Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $240,000 and that 15.000 diners had been served. Therefore, the average cost per diner was $16. Required: 1. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? a. A party of four diners who order three drinks in total. b. A party of two diners who do not order any drinks. c. A lone diner who orders two drinks. 2. Convert the total costs you computed in (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? a. A party of four diners who order three drinks in total. b. A party of two diners who do not order any drinks. c. A lone diner who orders two drinks. 3. Why do the costs per diner for the three different parties differ from each other and from the overall average cost of $16 per diner?
Answered
17 Nov 2017
Accounting
EXERCISE 2-1 Identifying Direct and Indirect Costs (L02-1] Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics. Required: For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate column. Cost Direct Cost Indirect Cost Ex. Catered food served to patients 1. The wages of pediatric nurses 2. Prescription drugs 3. Heating the hospital 4. The salary of the head of pediatrics 5. The salary of the head of pediatrics 6. Hospital chaplain's salary 7. Lab tests by outside contractor 8. Lab tests by outside contractor Cost Object A particular patient The pediatric department A particular patient The pediatric department The pediatric department A particular pediatric patient A particular patient A particular patient A particular department
Answered
17 Nov 2017
Accounting
EXERCISE 12-11 Make or Buy a Component (L012-3] Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials ..................... Direct labor ........................ Variable manufacturing overhead ....... Fixed manufacturing overhead .......... Total cost per part $ 3.60 10.00 2.40 9.00 $25.00 An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $80,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: Prepare computations showing how much profits will increase or decrease if the outside supplier's offer is accepted.
Answered
17 Nov 2017
Accounting
EXERCISE 5-3 Prepare a Profit Graph [L05-2] Jaffre Enterprises distributes a single product whose selling price is $16 and whose variable expense is $11 per unit. The company's fixed expense is $16,000 per month. Required: 1. Prepare a profit graph for the company up to a sales level of 4,000 units. 2. Estimate the company's break-even point in unit sales using your profit graph.
Answered
13 Nov 2017
Accounting
7-6 Why are there two stages of allocation in activity-based costing?
Answered
14 Nov 2017
Accounting
14-1 What is the purpose of a statement of cash flows?
Answered
13 Nov 2017
Accounting
EXERCISE 5-17 Break-Even and Target Profit Analysis (L05-4, L05-5, L05-6] Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $50 per unit. Variable expenses are $32 per stove, and fixed expenses associated with the stove total $108,000 per month. Required: 1. Compute the break-even point in unit sales and in dollar sales. 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? Why? (Assume that the fixed expenses remain unchanged.) 3. At present, the company is selling 8,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating con- ditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. 4. Refer to the data in (3) above. How many stoves would have to be sold at the new selling price to yield a minimum net operating income of $35,000 per month?
Answered
14 Nov 2017
Accounting
PROBLEM 2-21 Cost Classification (L02-1, LO2-3, L02-4] Listed below are costs found in various organizations. 1. Property taxes, factory. 2. Boxes used for packaging detergent produced by the company. 3. Salespersons' commissions 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. 8. Lubricants for production equipment. 9. Advertising costs. 10. Microchips used in producing calculators. 11. Shipping costs on merchandise sold. 12. Magazine subscriptions, factory lunchroom. 13. Thread in a garment factory. 14. Billing costs. 15. Executive life insurance. 16. Ink used in textbook production. 17. Fringe benefits, assembly-line workers. 18. Yarn used in sweater production. 19. Wages of receptionist, executive offices. Required: Prepare an answer sheet with column headings as shown below. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it would typically be treated as a direct cost or an indirect cost with respect to units of product. Three sample answers are provided for illustration. Variable or Fixed Selling Cost Administrative Cost Manufacturing (Product) Cost Direct Indirect Cost Item Direct labor ............. Executive salaries .. Factory rent ........... TI TI
Answered
12 Nov 2017
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