Archives: Solution Manual

Problem 18-6B (45 minutes) Part 1 Instructor note: Use the equation in Exhibit 18.12 Break-even in dollar sales = Fixed costs / Contribution margin ratio Existing Strategy: = $950,000 / 55%* = $1,727,273 (rounded to the next dollar) New Strategy: […]

Problem 18-7A (50 minutes) Part 1 BREAK–EVEN ANALYSIS ASSUMING USE OF SAME MATERIALS Step 1: Compute break-even in composite units—Use equation in Exhibit 18.29 Break-even in composite units = Fixed costs/Contribution margin per composite unit = $250,000 / $122* = […]

Exercise 18-25 (10 minutes) 1. Degree of operating leverage = Total contribution margin Pretax income = $432,000/$108,000 = 4.0 2. If sales decrease by 5%, then pretax income will decrease by 4.0 x 5%, or 20%. This means pretax income […]

Exercise 18-6 (20 minutes) The scatter diagram and line of estimated cost behavior appear below. Selecting 0 and 2,400 units sold as the activity levels yields $2,500 as the estimate of fixed costs and the following estimate of variable costs […]

Chapter 18 Cost Behavior and Cost-Volume-Profit Analysis QUESTIONS 1. A variable cost is one that varies proportionately with the volume of activity. For example, direct materials and direct labor (when the workers are paid for completed units) are treated as […]

Chapter Outline C. Sensitivity Analysisknowing the effects of changing some estimates used in CVP analysis by substituting new estimated amounts (in total or per unit as appropriate) in the related formula can be helpful in making predictions. Can also use […]

Problem 17-5B (concluded) 5. Pup Tent Pop-Up Tent Selling price $65.00 $200.00 Manufacturing cost per unit 58.46 113.87 Gross profit per unit $ 6.54 $ 86.13 Both product lines are profitable without any cost cutting. The ABC cost assignment method […]

Problem 17-5A (concluded) 4. Mixing & Cooking ($4,500 + $11,250)/1,500 MH $10.50/MH Product testing $112,500/600 batches $187.50/batch Machine calibration $250,000/400 production runs $625/run Labeling & Defects ($12,000 + $6,000)/120,000 cases $0.15/case Recipe formulation $90,000/45 focus groups $2,000/group Heat, light and […]

Exercise 17–16 (15 minutes) 1. Overhead rate: €630,000/270,400 DLH = €2.33/DLH Wine glasses: 254,000 DLH x €2.33/DLH = €591,820 €591,820/211,000 units = €2.80/unit Vases: 16,400 DLH x €2.33/DLH = €38,212 €38,212/17,000 units = €2.25/unit 2. Overhead rate: €630,000/1,000 set–ups = […]

CHAPTER 17 ACTIVITY-BASED COSTING AND ANALYSIS Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish among the plant wide overhead rate method, the departmental overhead rate method, and the activity-based […]

Ethics Challenge — BTN 16-3 MEMORANDUM TO: FROM: DATE: SUBJECT: Instructor note: The student’s solution will vary depending on the industry, product, and process chosen. It will also depend on the sources obtained. The memorandum should initially identify an industry […]

Comprehensive Problem (Continued) Part 4 (Using weighted-average) General ledger accounts Raw Materials Inventory Acct. No. 132 Date Explanation Debit Credit Balance June 30 Balance 25,000 (a) Purchases 125,000 150,000 (b) Usage 62,440 87,560 Work in Process Inventory Acct. No. 133 […]

Problem 16-5B (Concluded) Cost per EUP Direct Materials Conversion Costs incurred this period ……………… $ 112,500 $ 616,000 ÷ EUP ……………………………………………. ÷ 232,500 ÷ 226,000 Cost per EUP (rounded) …………………… $0.484 per EUP $2.726 per EUP Cost assignment and reconciliation […]

Problem 16-7A (Concluded) Part 3 If equivalent units of production for a production department’s ending inventory for October are understated, then total equivalent units of production is also understated. This means the cost per equivalent unit for October is overstated […]

Problem 16-3A (75 minutes) Part 1 Weighted average Units Fast Co. – units Units in Beg. inventory 30,000 Beg. Inv 30,000 Units started 140,000 Started 140,000 Units in ending inventory (20,000) 170,000 150,000 Trfr-out Units transferred out 150,000 End. Inv […]

Exercise 16–19 (Continued) Key to solution of flowchart (1) Beginning work in process in punching $ 7,500 Direct materials added $ 60,000 Direct labor added 12,000 Factory overhead added 15,000 Total manufacturing costs added 87,000 Total costs in process in […]

Exercise 16–11 (continued) 2. Cost assignment and reconciliation – FIFO Cost of 60,000 units from beginning inventory Beginning inventory $ 167,066 Materials to complete (24,000 EUP x $2.58 per EUP) 61,920 Conversion to complete (36,000 EUP x $2.16 per EUP) […]

Quick Study 16-23 (10 minutes) 1. Raw Materials Inventory ……………………………………….. 62,000 Cash ……………………………………………………………….. 62,000 Purchase of raw materials inventory. 2. Work in Process Inventory ………………………………..….. 50,000 Raw Materials Inventory ………………………………….. 50,000 Direct materials used in production. Quick Study 16-24 (10 […]

Problem 15–5B (Continued) j. The ending balance in Factory Overhead is computed as: Actual Factory Overhead Miscellaneous overhead ………….. $36,800 Indirect materials …………………….. 864 Indirect labor …………………………… 12,000 Total actual factory overhead …… 49,664 Factory overhead applied …………… 50,400 Overapplied […]

Problem 15–2B (Continued) Part 3 (Concluded) * Raw materials inventory Balance per trial balance ………………………………………………………. $26,000 Less: Amounts recorded for Jobs 603 and 604 ………….………………. (12,200) Less: Indirect materials …………………………………………….………… (2,100) Ending balance ……………………………………………………….………………….. $11,700 ** Work in process inventory […]

Problem 15-4A (35 minutes) Part 1 a. Predetermined overhead rate = = = 60% b. Overhead costs charged to jobs Direct Applied Job No. Labor Overhead (60%) 201 ………………………………………………………………. $ 604,000 $ 362,400 202 ………………………………………………………………. 563,000 337,800 203 ………………………………………………………………. 298,000 […]

PROBLEM SET A Problem 15-1A (80 minutes) Part 1 Total manufacturing costs and the costs assigned to each job 306 307 308 April Total From March Direct materials …………………. $ 29,000 $ 35,000 Direct labor ………………….……. 20,000 18,000 Applied overhead* […]

Exercise 15-7 (30 minutes) 1. Cost of direct materials used Beginning raw materials inventory………………………………..…………. $ 43,000 Plus purchases …………………………………………………………….…………. 210,000 Raw materials available ………………………………………………..…….. 253,000 Less ending raw materials inventory …………………………….…………. (52,000) Total raw materials used ………………………………………………………. 201,000 Less indirect […]

VISUAL #15–1 Tracing Product Costs Through a Cost Accounting System Work in Process Finished Goods Materials Inventory Inventory Inventory (1) Buy Send (2) (2) Direct (7) Goods (7) Cost of (8) Goods (Cr. A/P) materials material completed Finished Sold to […]

CHAPTER 15 JOB ORDER COSTING AND ANALYSIS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe important features of job order production. 10, 11, 12, 13 15-1, 15-14 15-1 15-1, 15-2, […]

Problem 14-4B (40 minutes) Part 1 Unit and dollar amounts of raw materials inventory in blades Beginning inventory, December 31, 2014 2,500 $20 $50,000 Purchases during 2015 45,000 20 900,000 Inventory available for production 47,500 20 950,000 Less: Inventory transferred […]

Problem 14-3A (Continued) Part 2 LEONE COMPANY Income Statement For Year Ended December 31, 2015 Sales …………………………………………………………………..… $4,462,500 Cost of goods sold Finished goods inventory, December 31, 2014 ……… $ 167,350 Cost of goods manufactured ……………………………..… 1,935,650 Goods available for […]

Exercise 14-12 (25 minutes) Account Balance Sheet Income Statement Schedule of COGM Overhead Report Accounts receivable………………………..  Computer supplies used in office …….  Beginning finished goods inventory  Beginning work in process inventory ……………………………………..  Cash……………………………………………….  Depreciation expense—Factory […]

EXERCISES Exercise 14-1 (10 minutes) Primary Information Source Financial Managerial Financial Managerial Managerial Managerial Financial Managerial 5. Plan the budget for next quarter 6. Measure profitability of an individual store 7. Prepare financial reports according to GAAP 8. Determine location […]

Chapter 14 Managerial Accounting Concepts and Principles QUESTIONS 1. The managerial accountant plays an important role in preparing the information necessary for effective planning and control decisions. One example is the budget, which is a quantitative expression of a company’s […]

CHAPTER 14 MANAGERIAL ACCOUNTING CONCEPTS AND PRINCIPLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the purpose and nature of, and the role of ethics in, managerial accounting. 1, 2, […]

SERIAL PROBLEM — SP 13 Serial Problem — SP 13, Business Solutions (45 minutes) 1. Gross margin with services revenue Gross margin = Total revenue – Cost of goods sold = $44,000 – $14,052 = $29,948 Gross margin ratio = […]

Problem 13-2B (60 minutes) Part 1 Current ratio: December 31, 2015: $54,860 / $22,370 = 2.5 to 1 December 31, 2014: $32,660 / $19,180 = 1.7 to 1 December 31, 2013: $36,300 / $16,500 = 2.2 to 1 Part 2 […]

Problem 13-2A (Concluded) Part 3 KORBIN COMPANY Balance Sheet Data in Trend Percents December 31, 2015, 2014, and 2013 2015 2014 2013 Assets Current assets ……………………………. 101.24% 73.29% 100.00% Long-term investments ………………. 0.00 12.66 100.00 Plant assets, net …………………………. 166.67 […]

Exercise 13-8 (25 minutes) 1. Days’ sales uncollected 2015: x 365 = 48.5 days 2014: x 365 = 42.9 days $673,500 $62,500 2. Accounts receivable turnover 2015: = 8.9 times 2014: = 9.4 times $532,000 3. Inventory turnover 2015: = […]

Comparative Analysis — BTN 12-2 1. Apple’s cash flow on total assets ratio ($ millions) Current Year = Operating cash flows/Average total assets = $53,666 / [($207,000 + $176,064)/2] = $53,666 / $191,532 = 28.0% Prior Year = Operating cash […]

Problem 12-3B (Continued) Part 2 Gazelle Corporation’s dividend payments of $53,600 represent 34% of the $158,100 net income for the year, and 41% of cash inflow provided by operations of $130,200. Further analysis reveals that investing activities used a modest […]

Problem 12-4AA (60 minutes) FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Year Ended December 31, 2015 December 31, 2014 Analysis of Changes December 31, 2015 Debit Credit Balance sheet—debits Cash ……………………………………………..…. $ 73,500 $ 49,800 Accounts receivable ……………………..…. […]

Exercise 12-12B (continued) Notes (1) Sales ………………………………………………………………………………………………… $678,000 Less increase in accounts receivable ……………………………………………….… (14,000) Cash received from customers …………………………………………………………… $664,000 (2) Cost of goods sold …………………………………………………………………………..… $411,000 Less decrease in inventory ………………………………………………………………… (22,700) Purchases ……………………………………………………………………………………….… 388,300 Plus decrease in […]

Quick Study 12-19 (Concluded) Part 2 The company’s operating cash flows are negative, $(1,750). This is not a good omen. However, much of this is attributed to a huge increase in inventory. Thus, an assessment of the saleable nature of […]

Chapter 12 Reporting Cash Flows QUESTIONS 1. The purpose of the cash flow statement is to report all major cash receipts (inflows) and cash payments (outflows) during a period. It helps users to answer questions such as:  How does […]

CHAPTER 12 REPORTING CASH FLOWS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish between operating, investing, and financing activities, and describe how noncash investing and financing activities are disclosed 1, […]

Reporting in Action — BTN 11-1 (All shares in thousands.) 1. As of September 28, 2013, the shares of common stock issued and outstanding are 899,213 (see balance sheet). As of September 29, 2012, the number of shares of common […]

Problem 11-2B (Concluded) Part 2 BALTHUS CORP. Statement of Retained Earnings For Year Ended December 31, 2016 Retained earnings, December 31, 2015 ………………………. $2,160,000 Plus net income ………………………………………………………… 1,072,000 3,232,000 Less: Cash dividends declared …………………………………. (740,000) Treasury stock reissuances …………………………….. […]

Exercise 11–18 (Concluded) Part 2 ALEXANDER CORPORATION Statement of Retained Earnings For Year Ended December 31, 2016 Retained earnings, December 31, 2015 ……………………… $340,000 Plus net income ………………………………………………………. 52,000 392,000 Less: Cash dividends declared…………………………..……… (99,900) Treasury stock reissuances* ……………………………. (1,500)* […]

Exercise 11-3 (15 minutes) 1. Cash ………………………………………………………………………. 35,000 Common Stock, $5 Par Value* ……………………………. 20,000 Paid–In Capital in Excess of Par Value, Common Stock** …………………………………………….. 15,000 Issued common stock for cash. *4,000 shares x $5 per share = $20,000 **$35,000 […]

CHAPTER 11 CORPORATE REPORTING AND ANALYSIS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify characteristics of corporations and their organization. 1, 2, 3, 4 11-1 11-1 11-5 C2. Explain characteristics […]

Taking It to the Net — BTN 10-5 1. Home Depot’s long–term liabilities as of February 2, 2014, follow: Long-term debt, excluding current installments …………. $14,691 million Other long-term liabilities ………………………………………….. 2,042 million Deferred income taxes ………………………………………………. 514 million 2 […]

Problem 10–10BB (Concluded) Part 4 2015 June 30 Bond Interest Expense ………………………….. 24,680 Premium on Bonds Payable ………………….………. 4,570 Cash ……………………………………………….……… 29,250 To record six months’ interest and premium amortization. 2015 Dec. 31 Bond Interest Expense ………………………….. 24,452 Premium on […]

Problem 10-4B (Concluded) Part 3 2015 June 30 Bond Interest Expense ………………………….. 13,101 Premium on Bonds Payable ………………….………. 1,299 Cash ……………………………………………….……… 14,400 To record six months’ interest and premium amortization. 2015 Dec. 31 Bond Interest Expense ………………………….. 13,101 Premium on […]