Archives: Solution Manual

CHAPTER 1 Introduction to Cost Management COLLABORATIVE LEARNING EXERCISE SOLUTION 1. and 2. Potential questions Queen Isabella might have asked during the eight-month voyage follow. (F) refers to a financial accounting type of question; (CM) refers to a cost management […]

CHAPTER 1 INTRODUCTION TO COST MANAGEMENT Chapter 1 can be covered on the first day of class. Students should understand what cost management is and how it is changing over time. This chapter is also a good place to introduce […]

Fixed costs Cost of goods sold (1) 63,200 63,200 65,700 192,100 Selling and administrative (2) 49,000 34,000 24,000 107,000 Total fixed costs 112,200 97,200 89,700 299,100 Income (loss) from operations ($32,200) $132,800 $142,800 $243,400 (1) Division’s fixed cost of goods […]

E26-4 Use incremental analysis for make-or-buy decision Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate […]

CHAPTER 26 SOLUTIONS TO EXERCISES—SET B EXERCISE 26-1B (a) Reject Order Accept Order Net Income Effect Variable overhead ($1.00) Fixed overhead Sales commissions Net income -0- -0- -0- $ -0- (4,000) (6,000) -0- $ 1,200 (4,000) (6,000) -0- $ 1,200 […]

Weygandt, Accounting Principles, 12e, Chapter Twenty Six Solutions to Challenge Exercises Solution to CE26-1 (a) Reject Order Accept Order Net Income Increase (Decrease) Revenues (15,000 X $7.60) Cost of goods sold Operating expenses Net income $0 0 0 $0 $114,000 […]

CHAPTER 26 INCREMENTAL ANALYSIS AND CAPITAL BUDGETING Learning Objectives 1. DESCRIBE MANAGEMENT’S DECISION-MAKING PROCESS AND INCREMENTAL ANALYSIS. 2. ANALYZE THE RELEVANT COSTS IN VARIOUS DECISIONS INVOLVING INCREMENTAL ANALYSIS. 3. CONTRAST ANNUAL RATE OF RETURN AND CASH PAYBACK IN CAPITAL BUDGETING. […]

COMPREHENSIVE PROBLEM (Continued) (j) Estimated number of helmets sold in December 2017 = 8,000 helmets (good Christmas sales!) Projected wholesale selling price = $40 per helmet (k) Breakeven point in dollars: Sales dollars at the breakeven point = Variable costs […]

EXERCISE 26-10 (a) 1. Cash payback period: $190,000 ÷ $50,000 = 3.8 years. 2. Annual rate of return: $12,000 ÷ [($190,000 + $0) ÷ 2] = 12.63%. EXERCISE 26-11 (a) Project Capital Investment ÷ Net Annual Cash Flows* = Internal […]

CHAPTER 26 Incremental Analysis and Capital Budgeting ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems 1. Describe management’s decision-making process and incremental analysis. 1, 2, 3, 4 1, 2 1 1 2. Analyze the relevant […]

26-1 SOLUTION Chapter 26 Waterways Continuing Problem WCP26 (a) (1) NET PRESENT VALUE Buy New Backhoes Time Period Cash Flow 8% Discount Rate Present Value Equipment purchase 0 ($ 200,000) 1 $ (200,000) (2) PAYBACK METHOD Cost of Capital Investment […]

CHAPTER 26 SOLUTIONS TO PROBLEMS: SET B PROBLEM 26–1B (a) Reject Order Accept Order Net Income Increase (Decrease) Revenues (10,000 X $30) Cost of goods sold Selling and administrative expenses Net income $0 0 0 $0 $300,000 240,000 25,000 $ […]

(11,000 X$2.30 ) minus ( 11,000 X $2.10 ) =$25,300 minus $23,100 = $2,200 U (11,000 X $2.10 ) minus ( 10,000 X $2.10 ) =$23,100 minus $21,000 = $2,100 U ( 14,400 X $8.40 ) minus ( 15,000 X […]

E25-2 Compute standard materials costs Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,000 ounces of grape concentrate at $0.06 per […]

SOLUTIONS TO EXERCISES—SET C PROBLEM 25-1C (a) Total materials variance: ( AQ X AP ) (20,500 X $4.90) $100,450 – – ( SQ X SP ) (19,600* X $5.00) $98,000 = $2,450 U *9,800 X 2 Materials price variance: ( […]

CHAPTER 25 SOLUTIONS TO EXERCISES—SET B EXERCISE 25-1B (a) Direct materials: (2,000 X 2.5) X $5 = $25,000 Direct labor: (2,000 X 1/2) X $18 = $18,000 Overhead: $18,000 X 70% = $12,600 (b) Direct materials: 2.5 X $5 = […]

Besler Building 3,800 4,000 $80.00 16,000 F High quality paint/needed less Cartwright Building 4,500 4,200 $80.00 24,000 U Inexperienced worker/wasted paint Total quantity variance $28,000 U Besler Building 3,800 $78.50 $80.00 5,700 F Paint cheaper than standard cost Cartwright Building […]

TWO-SEMESTER SEQUENCE SYLLABI Two-semester sequence assuming three one–hour sessions per week, and forty–five sessions a semester. Two in-term exams and a final exam are scheduled. FIRST SEMESTER Meetings Reading Homework Assignments Week 1 1 Introduction None 2 Chapter 1, pp. […]

CHAPTER 25 STANDARD COSTS AND BALANCED SCORECARD Learning Objectives 1. DESCRIBE STANDARDS COST. 2. DETERMINE DIRECT MATERIALS VARIANCES. 3. DETERMINE DIRECT LABOR AND TOTAL MANUFACTURING OVERHEAD VARIANCES. 4. PREPARE VARIANCE REPORTS BALANCED SCORECARD. *5. APPROACH TO PERFORMANCE EVALUATION. *6. IDENTIFY […]

*PROBLEM 25–7A Overhead controllable variance: Actual Overhead $80,700 – – Overhead Budgeted $78,800 [(7,680* X $7.50) + $20,000] = $3,100 U *(4,800 X 1.6 hours) Overhead volume variance: Fixed Overhead Rate $2.50/hr. X X Normal Capacity Hours (8,000 – – […]

EXERCISE 25–15 URBAN CORPORATION Variance Report – Purchasing Department For Week Ended January 9, 2017 Type of Materials Quantity Purchased Actual Price Standard Price Price Variance Explanation Rogue 11 Storm 17 Beast 29 27,500 lbs. 7,000 oz. 22,000 units. $5.20 […]

CHAPTER 25 Standard Costs and Balanced Scorecard ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems 1. Describe standard costs. 1, 2, 3, 4, 5, 6, 7, 8 1, 2, 3 1 1, 2, 3, 4, […]

25-1 SOLUTION Chapter 25 Waterways Continuing Problem WCP25 (a) Materials Price Variance Actual Quantity x Actual Price less Actual Quantity x Standard Price Material Lbs per unit X Price per lb. Metal 1.00 X $0.58 = $0.58 Plastic .75 X […]

CHAPTER 25 SOLUTIONS TO PROBLEMS: SET B (a) Total materials variance: ( AQ X AP ) (20,000 X $5.95) $119,000 – – ( SQ X SP ) (19,400* X $6.00) $116,400 = $2,600 U *9,700 X 2 Materials price variance: […]

P24-3A Prepare flexible manufacturing overhead budget Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the company’s Assembling Department is as follows. Difference Favorable F Budget Actual Unfavorable U Variable costs Direct materials $48,000 $47,000 $1,000 […]

E24-3 Prepare flexible manufacturing overhead budget Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows. $1.00 0.70 0.40 Fixed overhead costs per month are […]

EXERCISE 24-18B Jets: ROI = Controllable margin ÷ Average operating assets 15% = Controllable margin ÷ $25,000,000 Controllable margin = $25,000,000 X 15% = $3,750,000 Contribution margin = Controllable margin + Controllable fixed costs = $3,750,000 + $2,000,000 = $5,750,000 […]

CHAPTER 24 SOLUTIONS TO EXERCISES—SET B EXERCISE 24-1B (a) MONICA COMPANY Selling Expense Report For March By Month Year–to–Date Month Budget Actual Difference Budget Actual Difference January $31,000 $29,000 $2,000 F $ 31,000 $ 29,000 $2,000 F February $37,000 $38,500 […]

Weygandt, Accounting Principles, 12e, Chapter Twenty Four Solutions to Challenge Exercises Solution CE24-1 (a) Jennings Outdoor Company Winter Sports Department Flexible Budget Report For the Month Ended November 30, 2017 Difference Favorable F Budget at Actual Costs at Unfavorable U […]

CHAPTER 24 BUDGETARY CONTROL AND RESPONSIBILITY ACCOUNTING Learning Objectives 1. DESCRIBE BUDGETARY CONTROL AND STATIC BUDGET REPORTS. 2. PREPARE FLEXIBLE BUDGET REPORTS. 3. APPLY RESPONSIBILITY ACCOUNTING TO COST AND PROFIT CENTERS. 4. EVALUATE PERFORMANCE IN INVESTMENT CENTERS. Copyright © 2015 […]

PROBLEM 24–5A (a) OPTIMUS COMPANY Home Division Responsibility Report For the Year Ended December 31, 2017 (in thousands of dollars) Difference Budget Actual Favorable F Unfavorable U Contribution margin Controllable direct fixed costs Cost of goods sold Selling and administrative […]

EXERCISE 24-8 (a) RENSING GROOMERS Flexible Budget Activity level Direct labor hours 550 600 700 Variable costs: Grooming supplies ($5) $ 2,750 $ 3,000 $ 3,500 Direct labor ($14) 7,700 8,400 9,800 Overhead ($1) 550 600 700 Total variable costs […]

CHAPTER 24 Budgetary Control and Responsibility Accounting ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems 1. Describe budgetary control and static budget reports. 1, 2, 3, 4, 5 1, 2 1, 2, 8,4, […]

24-1 SOLUTION Chapter 24 Waterways Continuing Problem WCP 24 (a) Waterways Corporation Manufacturing Overhead Flexible Budget For the Month of March Production in units 115,500 116,500 117,500 118,500 119,500 Variable costs Indirect materials($.06/unit a) $ 6,930 $ 6,990 $ 7,050 […]

CHAPTER 24 SOLUTIONS TO PROBLEMS: SET B PROBLEM 24–1B (a) SPEIER COMPANY Flexible Monthly Manufacturing Overhead Budget Assembly Department For the Year 2017 Repairs ($.15) Utilities ($.10) Lubricants ($.05) Total variable costs ($.80) 2,700 1,800 900 14,400 3,000 2,000 1,000 […]

Selling and administrative expenses 1,178,000 Income from operations 834,040 Interest expense 100,000 Income before income tax 734,040 Income tax expense (30%) 220,212 Net income $513,828 Direct labor 1/4 hour 18.00 4.50 Manufacturing overhead 5.63 ( 125% of direct labor cost) […]

E23-2 Prepare a sales budget for 2 quarters Edington Electronics Inc. produces and sells two models of pocket calculators, XQ-103 and XQ-104. The calculators sell for $15 and $25 respectively. Because of the intense competition Edington faces, management budgets sales […]

EXERCISE 23-18B AVANTE DENTAL CLINIC Cash Budget For the Two Quarters Ending June 30, 2017 1st Quarter 2nd Quarter Total cash available …………………………………………. Less: Disbursements Professional salaries …………………………….. Overhead costs …………………………………….. Selling and administrative costs ……………. Equipment purchase …………………………….. Payment […]

CHAPTER 23 SOLUTIONS TO EXERCISES—SET B EXERCISE 23–1B JARGON ELECTRONICS INC. Sales Budget For the Six Months Ending June 30, 2017 Quarter 1 Quarter 2 Six Months Product Units Selling Price Total Sales Units Selling Price Total Sales Units Selling […]

Weygandt, Accounting Principles, 12e, Chapter Twenty Three Solutions to Challenge Exercises Solution CE23-1 (a) Martin Company Cash Budget For the months ending February 2017 January February Beginning cash balance $ 135,000 $ 69,500 Add: Receipts Collections from customers 246,500 435,000 […]

CHAPTER 23 BUDGETARY PLANNING Learning Objectives 1. STATE THE ESSENTIALS OF EFFECTIVE BUDGETING AND THE COMPONENTS OF THE MASTER BUDGET. 2. PREPARE BUDGETS FOR SALES, PRODUCTION AND DIRECT MATERIALS. 3. PREPARE BUDGETS FOR DIRECT LABOR, MANUFACTURING OVERHEAD, AND SELLING AND […]

PROBLEM 23-4A (Continued) (b) COLTER COMPANY Cash Budget For the Two Months Ending February 28, 2017 January February Notes receivable …………………………. Sale of securities ………………………… Total receipts ………………………. 15,000 341,000 6,000 378,000 Beginning cash balance ……………………………. Add: Receipts Collections from […]

EXERCISE 23-9 RODRIQUEZ, INC. Direct Labor Budget For the Year Ending December 31, 2017 Quarter 1 2 3 4 Year Total required direct labor hours Direct labor cost per hour Total direct labor cost 30,000 X $16 $480,000 37,500 X […]

CHAPTER 23 Budgetary Planning ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems 1. State the essentials of effective budgeting and the components of the master budget. 1, 2, 3, 4, 5, 6, 7, 8, 9, […]

23-1 SOLUTION Chapter 23 Waterways Continuing Problem WCP23 (a) Sales budget Waterways Corporation Sales Budget For the first quarter of 2017 First Quarter January February March Quarter Expected unit sales 113,333 112,500 116,667 342,500 (b) Production budget Waterways Corporation Production […]

CHAPTER 23 SOLUTIONS TO PROBLEMS: SET B PROBLEM 23–1B MERCER FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2017 Quarter Six Months 1 2 Unit selling price ………………….. Total sales …………………………… X $63 $2,520,000 X $63 […]

E22-6 Compute break-even point The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows. Salaries $5,900 per month […]

CHAPTER 22 SOLUTIONS TO EXERCISES—SET B EXERCISE 22-1B (a) Maintenance Costs: $4,500 – $2,900 800 – 400 = $1,600 400 = $4 variable cost per machine hour 800 Machine Hours 400 Machine Hours Less: Variable costs 800 X $4 400 […]

Contribution margin ratio = $52/$100 = 52% Break even in dollars = Fixed costs / Contribution margin ratio = $3,224 / .52 = $6,200 Variable costs per student = $48 (no change) Contribution margin per student = $52 (no change) […]

CHAPTER 22 COST-VOLUME-PROFIT Learning Objectives 1. EXPLAIN VARIABLE, FIXED, AND MIXED COSTS AND THE RELEVANT RANGE. 2. APPLY THE HIGH-LOW METHOD TO DETERMINE THE COMPONENTS OF MIXED COSTS. 3. PREPARE A CVP INCOME STATEMENT TO DETERMINE CONTRIBUTION MARGIN. 4. COMPUTE […]