Accounting Chapter 22 Customer feedback on sustainability reputation

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

Exercise 22-17 (20 minutes)

Performance measure Perspective

1.

Cash flow from operations …………………………..

Financial

2.

Percentage of ground crew trained ………………

Innovation and learning

3.

Return on investment ………………………………….

Financial

4.

Market value ………………………………………………..

Financial

5.

Safety violations per mile flown

Internal process

6.

Customer complaints …………………………………..

Customer

7.

Innovation and learning

8.

Time airplane is on ground between flights ….

Internal process

9.

Airplane miles per gallon of fuel …………………..

Internal process

Revenue per seat …………………………………………

Financial

Cost of leasing airplanes ……………………………..

Financial

Exercise 22-18 (15 minutes)

Performance measure Perspective

1.

CO2 emissions ……………………………………………..

Internal process

2.

Number of solar panels installed ………………….

Internal process

3.

Gallons of water used ………………………………….

Internal process

4.

Customer

5.

Pounds of recyclable packaging used ………….

Internal process

6.

Pounds of trash diverted from landfill …………..

Internal process

7.

Financial

8.

Number of sustainability trainings held ………..

Innovation and learning

9.

Cubic feet of natural gas used ……………………..

Internal process

Innovation and learning

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

1372

Exercise 22–19 (15 minutes)

1. $200 per trailer.

If the Trailer division is currently operating at full capacity, its manager

2. $80 to $200 per trailer.

If the Trailer division is currently producing 20,000 trailers and the

Exercise 22–20 (15 minutes)

1.

Current year:

Days’ sales in accounts receivable ….

$𝟏𝟖,𝟔𝟖𝟓

$𝟐𝟐𝟎,𝟏𝟖𝟔 𝐱 𝟑𝟔𝟓

31 days

Days’ sales in inventory …………………..

18 days

+

Days’ payable outstanding ………………

$𝟏𝟑𝟗,𝟗𝟗𝟖 𝐱 𝟑𝟔𝟓

12 days

Prior year:

Days’ sales in accounts receivable …..

$𝟏𝟓,𝟕𝟐𝟔

$𝟐𝟎𝟓,𝟎𝟎𝟎 𝐱 𝟑𝟔𝟓

28 days

Days’ payable outstanding ……………….

24 days

–

2. No. The company did not manage cash more effectively in the current

year. The cash conversion cycle increased from 21 days to 37 days.

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

1373

Exercise 22–21 (10 minutes)

1.

Days’ sales in accounts receivable …

$𝟏𝟕,𝟖𝟕𝟒

$𝟐𝟑𝟑,𝟎𝟎𝟕 𝐱 𝟑𝟔𝟓

28 days

Days’ sales in inventory ………………….

13 days

+

Days’ payable outstanding ……………..

–

2. No. The company is not more efficient than its competitor in managing

Exercise 22-22A (20 minutes)

Preliminary calculations

Land cost ……………….

$4,000,000

Improvements …………

3,500,000

Total cost of lots ……..

$7,500,000

Lots

Quantity

Price

Total

Canyon …………………….

450

$ 55,000

$24,750,000

Hilltop ………………………

150

Allocated cost—value basis of allocation: $7,500,000

Sales

% of

Allocated

Value

Total

Cost

Canyon section ……….

$24,750,000

60%

$4,500,000

Totals ………………….

$41,250,000

$7,500,000

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

1374

Exercise 22-23A (10 minutes)

Allocate $60,000 total cost to each type of milk and compute gross profit

Joint Products

Sales

Value

Percent of

Total

Allocated

Cost

Gross

Profit

Whole milk ………….

$ 25,000

25%

$15,000

$10,000

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

1375

PROBLEM SET A

Problem 22-1A (40 minutes)

Part 1

Responsibility Accounting Performance Report

Manager, Camper Department

For Year Ended December 31

Controllable Costs

Budgeted

Actual

Over (Under) Budget

Direct materials …………………

$195,000

$194,200

$ (800)

(300)

Part 2

Responsibility Accounting Performance Report

Manager, Trailer Department

For Year Ended December 31

Controllable Costs

Budgeted

Actual

Over (Under) Budget

Direct materials …………………

$275,000

$273,200

$(1,800)

Direct labor ……………………….

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

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Problem 22-1A (Continued)

Part 3

Responsibility Accounting Performance Report

Plant Manager, Indiana Plant

For Year Ended December 31

Controllable Costs

Budgeted

Actual

Over (Under) Budget

Department manager salaries …

$ 95,000

$ 97,500

$ 2,500

Building rent ……………………….

15,000

14,000

(1,000)

25,000

23,000

(2,000)

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

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Problem 22-2A (30 minutes)

Part 1

Average indirect expense = $80,000 / 4,000 sq. ft. = $20 per sq. ft.

Indirect expenses are assigned to the two departments as follows.

Department

Square Feet

Rate

Total

Housewares. …………….

2,200

$20

$44,000

Part 2

Allocate $45,000 of rent using square feet occupied

Square Feet

Percent of Total

Cost Allocated

Housewares ………………….

2,200

55%

$24,750

Total …………………………..

4,000

100%

$45,000

Allocate $25,000 of advertising using percentage of sales

Sales

Percent of Total

Cost Allocated

Housewares ………………….

$180,000

36%

$ 9,000

Total …………………………..

$500,000

100%

$25,000

Allocate $10,000 of insurance using value of insured assets

Assets Insured

Percent of Total

Cost Allocated

Housewares ………………….

$ 40,000

40%

$ 4,000

Total …………………………..

$10,000

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

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Problem 22-3A (25 minutes)

Garcia Company

Departmental Contribution to Overhead

For Year Ended December 31

Phone

Earbuds

Combined

Sales ………………………………………………

$130,000

$55,000

$185,000

Cost of goods sold ………………………….

63,700

34,100

97,800

1,500

300

1,800

to overhead …………………………………

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

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Problem 22-4A (20 minutes)

Part 1

Allocation of $6,000 of utilities expense

Department

Square Feet

Percent of Total

Cost Allocated

Clothes ………..

28,000

70%

$ 4,200

Total ……………

Department

Employees

Percent of Total

Cost Allocated

Clothes ………..

Shoes ………….

Part 2

DIAZ COMPANY

Departmental Income Statements

For Year Ended December 31

Clothes

Shoes

Sales …………………………………………….

$800,000

$450,000

Cost of goods sold ………………………..

497,000

291,000

Gross profit …………………………..………

303,000

159,000

125,000

1380

A

Problem 22-5AA (20 minutes)

Part 1

Preliminary calculation

Tree pruning and care ……………

$405,000

Picking, sorting, and grading ….

202,500

Total joint costs …………………….

$607,500

Allocation of $607,500 joint costs on the basis of sales values

Grade

Sales Value

Percent of Total

Allocated Cost

No. 1 …………….

$450,000

48.0%

$291,600

$937,500

$607,500

Part 2

Gross profit computation

Grade

Sales Value

Allocated Cost

Gross Profit

No. 1 …………….

$450,000

$291,600

$158,400

$937,500

$607,500

$330,000

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

1381

PROBLEM SET B

Problem 22-1B (40 minutes)

Part 1

a.

Responsibility Accounting Performance Report

Manager, Refrigerator Department

For Month Ended April 30

Controllable Costs

Budgeted

Actual

Over (Under) Budget

Direct materials ………………….

$400,000

$385,000

$(15,000)

Direct labor ………………………..

b.

Responsibility Accounting Performance Report

Manager, Dishwasher Department

For Month Ended April 30

Controllable Costs

Budgeted

Actual

Over (Under) Budget

Direct materials ………………….

$200,000

$202,000

$ 2,000

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

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Problem 22-1B (Continued)

c.

Responsibility Accounting Performance Report

Plant Manager, Chicago Plant

For Month Ended April 30

Controllable Costs

Budgeted

Actual

Over (Under) Budget

Department manager salaries….

$ 104,000

$ 101,500

$ (2,500)

Part 2

Refrigerator department manager best controlled costs.

Refrigerator department manager did best at controlling costs and meeting

the budget; spending $6,800 under budget.

Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 22

1383

Problem 22-2B (30 minutes)

Part 1

Average indirect expense = $92,000 / 4,000 sq. ft. = $23 per sq. ft.

Indirect expenses are assigned to the two departments as follows.

Department

Square Feet

Rate

Total

Part 2

Allocate $50,000 of rent using square feet occupied

Square Feet

Percent of Total

Cost Allocated

Clothing ………………………..

2,400

60%

$30,000

Total …………………………..

4,000

100%

Allocate $30,000 of advertising using percentage of sales

Sales

Percent of Total

Cost Allocated

Clothing ………………………..

$240,000

40%

$12,000

Total …………………………..

$600,000

100%

$30,000

Allocate $12,000 of insurance using value of insured assets

Assets Insured

Percent of Total

Cost Allocated

Clothing ………………………..

$ 36,000

30%

$ 3,600

Total …………………………..

$12,000