Archives: Solution Manual

Problem 24-6B (Concluded) Part 5 While the total cash flows are identical to those in Problem 24-5B, the cash flows are reversed, with the largest cash flows coming in the early years of the project. This will shorten the payback […]

PROBLEM SET B Problem 24-1B (50 minutes) Part 1 Annual straight-line depreciation = = $70,000 Part 2 Net Net Cash Income Flow Expected annual sales of new product ………………..… $1,150,000 $1,150,000 Expected annual costs of new product Direct materials ………………………………………………..… […]

Problem 24-1A (Continued) Part 4 Accounting rate of return = = 21.56% * Average investment Asset cost ………………………………………………………………..…….. $480,000 Final year’s book value ……………………………………………..…….. 20,000 Sum ……………………………………………………………………………….. $500,000 Average (Sum /2) ………………………………………………………. $250,000 Part 5 Present Value of Net Cash […]

Exercise 24-5 (20 minutes) a. Payback period = = = 2.21 years where Annual after-tax income ………………………………………………………. $150,000 Plus depreciation* …………………………………………………………….….. 85,000 Annual net cash flow ………………………………………………………..….. $235,000 *Annual depreciation = = $85,000 b. Payback period = = = 3.62 […]

CHAPTER 24 CAPITAL BUDGETING AND INVESTMENT ANALYSIS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Analytical objectives: A1. Analyze a capital investment project using break-even time. 24 24-15 24-16 24-5, 24-6 Procedural objectives: P1. […]

SERIAL PROBLEM — SP 23 Serial Problem, Business Solutions (50 minutes) Desks Chairs Selling price per unit ……………………………………………………… $ 1,125 $ 375 Variable costs per unit …………………………………………………… 500 200 Contribution margin per unit ………………………………..………… $ 625 $ 175 Direct labor […]

Problem 23-3B (30 minutes) Part 1 INCREMENTAL COST OF MAKING TH1 Variable costs: Direct materials (400,000 units x $1.20 per unit) ………………………….. $ 480,000 Direct labor (400,000 units x $1.50 per unit) ………………………….. 600,000 Variable overhead (2,400,000* x 25%) …………………………………..………… […]

Problem 23-4A (30 minutes) Alternative 1: Sell to a second-hand shop Incremental revenue (5,000 x $6.00) …………………………………………. $ 30,000 Incremental cost ……………………………………………………………………… 0 Incremental income …………………………………………………………………. $ 30,000 Alternative 2: Disassemble and sell to a recycler Incremental revenue (5,000 x […]

Exercise 23-6 (15 minutes) Scrap Rework Sale of scrapped/reworked units ……………..…… $55,000 $187,000 Less out–of-pocket costs to rework ………….…… Less opportunity cost of not making new units (22,000 @ $2.50) ……………………………..…… —- —- (99,000) (55,000) Total ………………………………………………………. $55,000 $ 33,000 […]

Chapter 23 Relevant Costing for Managerial Decisions QUESTIONS 1. The five steps are: (1) define the decision task, (2) identify alternative courses of action, (3) collect relevant information and evaluate each alternative, (4) select the preferred course of action, and […]

CHAPTER 23 RELEVANT COSTING FOR MANAGERIAL DECISIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe the importance of relevant costs for short-term decisions. 23-1,23-2, 23-3, 23-4, 23-5, 23-7, 23-8 23-5 […]

Reporting in Action — BTN 22-1 1. Apple revenues by product line ($ in millions) September 28, 2013 September 29, 2012 September 24, 2011 Total revenues ……………………………………… $170,910 $156,508 $108,249 iPhone* (53%) ………………………………….…… 90,583 82,949 57,373 iPad and iPod (21%) […]

Problem 22-2B (Continued) (ii) Allocate the $400,000 to each floor based on its percent of market value Floor Market Value % of Total Allocated Cost Cost per Sq. Ft. First floor ………………..………… $300,000 60% $240,000 $32.00 Second floor ……………………… 150,000 […]

Problem 22-2A (Continued) Value–based costs are allocated to departments in two steps (i) Compute market value of each floor Floor Square Footage Value per Sq. Ft. Total First floor ………………..………… 4,000 $30 $120,000 Second floor ……………………… 4,000 20 80,000 Total […]

Exercise 22-11 (20 minutes) (1) Investment center Operating income Average assets* Return on investment Beverage ……………….…. $349 $2,628 13.28% Cheese ………………….…. 634 4,428 14.32% (2) Investment center Operating income Sales Profit margin Beverage ……………….…. $349 $2,681 13.02% Cheese ………………….…. 634 […]

Quick Study 22–19 (5 minutes) Average invested assets = (€12,888 + €13,099) / 2 = €12,944 (rounded) Return on investment (assets) = €3,385 / €12,944 = 26.05% (rounded) ©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor […]

Chapter 22 Performance Measurement and Responsibility Accounting QUESTIONS 1. Many companies are divided into departments when they become too large to be effectively managed as single units. This division into departments is often needed so that the responsibilities for the […]

CHAPTER 22 PERFORMANCE MEASUREMENT AND RESPONSIBILITY ACCOUNTING Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish between direct and indirect expenses and identify bases for allocating indirect expenses to departments […]

Problem 21-6BA (45 minutes) Part 1 June 30* Work in Process Inventory ………………………….. 130,000 Direct Materials Quantity Variance ……….…………………. 5,000 Direct Materials Price Variance ………………………….. 1,500 Raw Materials Inventory ………………………….. 123,500 To record materials costs, including the favorable quantity and […]

Problem 21-2B (60 minutes) Part 1 TOHONO COMPANY Flexible Budget Performance Report For Year Ended December 31, 2015 Flexible Actual Budget Results Variances* Sales (24,000 units) …………………….. $3,600,000 $3,648,000 $48,000 F Variable costs Direct materials ………………………… 1,440,000 1,400,000 40,000 F […]

Problem 21-3A (Continued) Part 4 Direct labor variances Preliminary computations Actual hours used: 30,500 hours (given) Standard hours: 15,000 units x 2 hrs./unit = 30,000 hours Actual rate: $17.25/hr. (given) Standard rate: $17.00/hr. (given) Direct labor cost variances Actual units […]

Exercise 21-22 (25 minutes) Preliminary calculations: Variable overhead rate per DL hour = $32,000/32,000 = $1 per hour Fixed overhead rate per DL hour = $48,000/32,000 = $1.50 per hour Standard number of DL hours = 9,000 units x 4 […]

Exercise 21-15 (25 minutes) Part 1 Direct materials price variance: Actual cost of direct materials used (16,000 x $4.05) ……………….………… $ 64,800 Actual quantity used x Standard price (16,000 x $4.00) ……………………… 64,000 Direct materials price variance (unfavorable) ………………………….. $ […]

EXERCISES Exercise 21-1 (20 minutes) Item Cost a. Bike frames Variable b. Screws for assembly Variable c. Repair expense for tools (If these costs are only remotely related to volume, they may be better classified as fixed) Variable d. Direct […]

Chapter 21 Flexible Budgets and Standard Costs QUESTIONS 1. Fixed budget performance reports have limited usefulness because they do not reflect differences in revenues and variable costs that can occur simply because actual volume is different from budgeted volume. This […]

Chapter Outline Appendix 21A I. Expanded Overhead Variances A. Computing Overhead Cost Variancesassume predetermined rate is based on relation between standard overhead and standard labor hours. 1. Framework uses classifications of overhead costs as either variable or fixed 2. Exhibit […]

CHAPTER 21 FLEXIBLE BUDGETS AND STANDARD COSTS Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Define standard costs and explain how standard cost information is useful for management by exception […]

Serial Problem — SP 20 Serial Problem, Business Solutions (50 minutes) Part 1 BUSINESS SOLUTIONS Budgeted Income Statements For Months of April, May, and June April May June Sales* ………………………………………………… $69,600 $75,550 $81,500 Cost of goods sold**………………………….. 54,000 57,750 61,500 […]

Problem 20-6B (50 minutes) SONY STEREO Cash Budgets For April, May, and June April May June Beginning balance …………………………………… $ 3,000 $ 53,000 $ 44,000 Cash receipts Collection on accounts receivable* ………… 136,000 210,000 290,200 Receipts from bank loan ………………………… […]

Problem 20-2B (continued) (2) A1 MANUFACTURING Cash Budget For July, August, and September July August Sept. Beginning cash balance* …………………….… $12,900 $12,600 $24,371 Cash receipts (from part 1) ………………….… 59,680 66,840 74,200 Total cash available ……………………………… 72,580 79,440 98,571 Cash […]

Problem 20-7A (Continued) Part 4 Cash payments on product purchases (for June and July) From purchases in Total % Paid June July May …………………………………….….. $308,000 40% $123,200 June ……………………………………….. 638,000 60 382,800 …………………………………..….. 40 $255,200 July …………………………………….….. 523,600 60 ________ […]

Problem 20-4A (130 minutes) Part 1 ZIGBY MANUFACTURING Sales Budgets April, May, and June 2015 Budgeted Units Budgeted Unit Price Budgeted Total Dollars April 2015 ………………………………………………….…. 20,500 $23.85 $ 488,925 May 2015 …………………………………………………..…. 19,500 23.85 465,075 June 2015 ………………………………………………….…. 20,000 […]

Exercise 20–30 (continued) CASTOR, INC. Cash Receipts Budget For April, May, and June April May June Sales …………………………………………………..… $32,000 $40,000 $24,000 Less ending accts. receivable (50%) ……… 16,000 20,000 12,000 Cash receipts from Cash sales (50% of sales) …………………..… 16,000 […]

Exercise 20-22 (30 minutes) Mike’s Motors Corp. Cash Budget For July, August, and September July August September Beginning cash balance $34,000 $30,000 $30,000 Cash receipts 85,000 111,000 150,000 Total cash available 119,000 141,000 180,000 Cash disbursements (113,000) (99,900) (127,400) Interest […]

Exercise 20-9 (15 minutes) 1. RAD CO. Direct Labor Budget For April, May, and June April May June Budgeted production (units)………………..… 442 570 544 Direct labor hours per unit …………………..… x 0.50 x 0.50 x 0.50 Total labor hours needed […]

Quick Study 20-19 (10 minutes) GUITAR SHOPPE Cash Receipts Budget For Month Ended September 30 Cash receipts from September cash sales (40% x $170,000) ………… $ 68,000 Collection of prior month’s receivables (60% x $150,000)…………….. 90,000 Total cash receipts …………………………………………………………………….. […]

Chapter 20 Master Budgets and Performance Planning QUESTIONS 1. A budget helps managers control and monitor a business by 1) communicating plans to employees, 2) coordinating the activities of different parts of the organization, and 3) providing a basis for […]

Chapter Outline 1. Selling Expense Budget a. Based on sales volume (either dollars or units depending how rate is given) b. Plan listing the type and amounts of selling expenses expected during budget period. c. Created to provide sufficient selling […]

CHAPTER 20 MASTER BUDGETS AND PERFORMANCE PLANNING Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe the importance and benefits of budgeting and the process of budget administration. 1, 2, […]

Serial Problem, Business Solutions (Continued) Prepaid Insurance Acct. No. 128 Date Explanation PR Debit Credit Balance Oct. 5 2,220 2,220 Prepaid Rent Acct. No. 131 Date Explanation PR Debit Credit Balance Oct. 2 3,300 3,300 Office Equipment Acct. No. 163 […]

Problem 2-3B (Continued) Common Stock Acct. No. 307 Date Explanation PR Debit Credit Balance Nov. 1 G1 45,000 45,000 Dividends Acct. No. 319 Date Explanation PR Debit Credit Balance Nov. 28 G1 5,300 5,300 Services Revenue Acct. No. 403 Date […]

PROBLEM SET B Problem 2-1B (90 minutes) Part 1 Sept. 1 Cash …………………………………………………. 101 38,000 Office Equipment ………………………………. 163 15,000 Common Stock…………………………… 307 53,000 Owner invested in the business for stock. 2 Prepaid Rent …………………………………….. 131 9,000 Cash ………………………………………….. 101 […]

Problem 2-3A (90 minutes) Part 1 Mar. 1 Cash …………………………………………………….. 101 150,000 Office Equipment …………………………………. 163 22,000 Common Stock ……………………………… 307 172,000 Owner invested cash and equipment for stock. 2 Prepaid Rent ………………………………………… 131 6,000 Cash ……………………………………………… 101 6,000 Prepaid […]

Exercise 2-21 (15 minutes) a. The debit column is correctly stated because the erroneous debit (to Accounts Payable) is deducted from an account with a (larger assumed) credit balance. b. The credit column is understated by $37,900 because Accounts Payable […]

Exercise 2-8 (30 minutes) Cash Photography Equipment Aug. 1 6,500 Aug. 2 2,100 Aug. 1 33,500 20 3,331 5 880 31 675 Common Stock Balance 6,176 Aug. 1 40,000 Office Supplies Photography Fees Earned Aug. 5 880 Aug. 20 3,331 […]

CHAPTER 2 ACCOUNTING FOR BUSINESSTRANSACTIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the steps in processing transactions and the role of source documents. 3, 6, 9 2-1 2-1 2-6 […]

Problem 19-3B (30 minutes) Part 1 Yes, it is possible for the company to report a net income by increasing its production to 300,000 lbs. and storing the excess inventory. The following absorption costing income statement shows this. CHEM-MELT Income […]

Exercise 19-10 (15 minutes) Reconciliation of variable costing income to absorption costing income: Year 1 Year 2 Year 3 Variable costing income……………………….…. $110,000 $114,400 $118,950 Fixed overhead in ending inventory* …….……………………. 3,000 1,750 2,000 Fixed overhead in beginning inventory* .………………………… […]

EXERCISES Exercise 19-1 (15 minutes) Part 1 Cost per unit of finished goods using absorption costing: Direct materials ………………………………………………………………………. $15 per unit Direct labor ………………………………………………………………………….…. 16 per unit Variable overhead ($80,000/20,000 units) …………………………………. 4 per unit Fixed overhead ($160,000/20,000 units) […]

CHAPTER 19 VARIABLE COSTING AND PERFORMANCE REPORTING Student Learning Objectives and Related Assignment Materials* Student Learning Objectives Discussion Questions Quick Studies Exercises Problems** (A & B set) Beyond the Numbers Conceptual objectives: C1. Describe how absorption costing can result in […]