# Accounting Homework

#1

 Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 780 hours each month to produce 2,600 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials \$59,280 \$22.80 Direct labor \$7,332 2.82

 (based on direct labor-hours) \$1,560 0.60 \$26.22

 During August, the factory worked only 780 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month:
 Total Per Set of Covers Direct materials (8,910 yards) \$62,370 \$23.10 Direct labor \$8,112 3.00 Variable manufacturing overhead \$3,120 1.16 27.26

 At standard, each set of covers should require 3 yards of material. All of the materials purchased during the month were used in production.

#2

 Erie Company manufactures a small CD player called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate CD player are as follows:
 Standard Hours Standard Rate per Hour Standard Cost 24 minutes \$6 \$2.4 During August, 8,490 hours of direct labor time were needed to make 19,500 units of the Jogging Mate. The direct labor cost totaled \$50,091 for the month. Requirement 1: (a) What direct labor cost should have been incurred to make 19,500 units of the Jogging Mate? (Omit the “\$” sign in your response.) Standard direct labor cost \$

 (b) By how much does this differ from the cost that was incurred? (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Total variance \$ (Click to select)NoneUF

 Requirement 2: Break down the difference in cost from Requirement 1 above into a labor rate variance and a labor efficiency variance. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Labor rate variance \$ (Click to select)FUNone Labor efficiency variance \$ (Click to select)UNoneF

 Requirement 3: The budgeted variable manufacturing overhead rate is \$4.5 per direct labor-hour. During August, the company incurred \$44,148 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Variable Overhead Rate Variance \$ (Click to select)NoneUF Variable Overhead Efficiency Variance \$ (Click to select)UNoneF

#3

 Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
 Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 7.5  pounds \$2.9  per pound \$21.75 Direct labor 0.3  hours \$9.8  per hour \$2.94

 During the most recent month, the following activity was recorded: a. 20,650 pounds of material were purchased at a cost of \$2.7 per pound. b. All of the material purchased was used to produce 2,500 units of Zoom. c. 670 hours of direct labor time were recorded at a total labor cost of \$7,638.
 Requirement 1: Compute the direct materials price and quantity variances for the month. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).Input all amounts as positive values. Omit the “\$” sign in your response.) Materials price variance \$ (Click to select)UNoneF Materials quantity variance \$ (Click to select)NoneUF

 Requirement 2: Compute the direct labor rate and efficiency variances for the month. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).Input all amounts as positive values. Omit the “\$” sign in your response.)
 Labor rate variance \$ (Click to select)NoneFU Labor efficiency variance \$ (Click to select)UNoneF

#4

 Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy:

 Direct materials: 7 microns per toy at \$0.3 per micron Direct labor: 1.4 hours per toy at \$6.8 per hour

 During July, the company produced 4,900 Maze toys. Production data for the month on the toy follow:

 Direct materials: 71,000 microns were purchased at a cost of \$0.27 per micron. 28,125 of these microns were still in inventory at the end of the month. Direct labor: 7,160 direct labor-hours were worked at a cost of \$50,836.

 Requirement 1: Compute the direct materials price and quantity variances for July. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Round your answers to the nearest dollar amount. Omit the “\$” sign in your response.)

 Material price variance \$ (Click to select)NoneFU Material quantity variance \$ (Click to select)UFNone

#5

 Victoria Chocolates, Ltd., makes premium handcrafted chocolate confections in London. The owner of the company is setting up a standard cost system and has collected the following data for one of the company’s products, the Empire Truffle. This product is made with the finest white chocolate and various fillings. The data below pertain only to the white chocolate used in the product (the currency is stated in pounds denoted here as £):

 Material requirements, kilograms of white chocolate per dozen truffles 0.86 kilograms Allowance for waste, kilograms of white chocolate per dozen truffles 0.03 kilograms Allowance for rejects, kilograms of white chocolate per dozen truffles 0.02 kilograms Purchase price, finest grade white chocolate £10 per kilogram Purchase discount 3% of purchase price Shipping cost from the supplier in Belgium £0.25 per kilogram Receiving and handling cost £0.15 per kilogram

 Standard price £

 Requirement 2: Determine the standard quantity of white chocolate for a dozen truffles. (Round your answer to 2 decimal places.)

 Standard quantity kilograms
 Requirement 3: Determine the standard cost of the white chocolate in a dozen truffles. (Round your answer to 2 decimal places. Omit the “£” sign in your response.)

 Standard cost £

#6

 Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported:

 Inspection time 0.5 days Wait time (from order to start of production) 16.7 days Process time 2.8 days Move time 1.5 days Queue time 4.3 days

 Requirement 1: Compute the throughput time. (Round your answer to 1 decimal place.)

 Throughput time days
 Requirement 2: Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your answer to 2 decimal places.)

 Manufacturing cycle efficiency

 Throughput time %
 Requirement 4: Compute the delivery cycle time.(Round your answer to 1 decimal place.) Delivery cycle time days Requirement 5: If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Round your answer to 3 decimal places.)

 Manufacturing cycle efficiency

#7

 Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

 In the most recent month, 200,000 items were shipped to customers using 9,900 direct labor hours. The company incurred a total of \$30,195 in variable overhead costs.

 According to the company’s standards, 0.05 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is \$3.1 per direct labor−hour.
 (a) What variable overhead cost should have been incurred to fill the orders for the 200,000 items? (Omit the “\$” sign in your response.)

 (b) How much does this differ from the actual variable overhead cost? (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Total variable overhead variance \$ (Click to select)FUNone
 (C Break down the difference computed in Requirement 1 above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)

 Variable overhead rate variance \$ (Click to select)UNoneF Variable overhead efficiency variance \$ (Click to select)NoneUF

#8

 SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 7,000 of these meals using 1,430 direct labor-hours. The company paid these direct labor workers a total of \$14,658 for this work, or \$10.25 per hour.

 According to the standard cost card for this meal, it should require 0.21 direct labor-hours at a cost of \$10 per hour.
 (a) What direct labor cost should have been incurred to prepare 7,000 meals? (Omit the “\$” sign in your response)

 Direct labor cost \$

 (b) How much does this differ from the actual direct labor cost? (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Total direct labor variance \$ (Click to select)UNoneF
 (C Break down the difference computed in Requirement 1 above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)

 Labor rate variance \$ (Click to select)UNoneF Labor efficiency variance \$ (Click to select)UFNone

#9

 Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 37,000 helmets, using 22,940 kilograms of plastic. The plastic cost the company RM197,284. (The currency in Malaysia is the ringgit, which is denoted here by RM.) According to the standard cost card, each helmet should require 0.54 kilograms of plastic, at a cost of RM9 per kilogram. Requirement 1: (a) What cost for plastic should have been incurred to make 37,000 helmets? (Omit the “RM” sign in your response.)

 Cost incurred RM
 (b) How much greater or less is this than the cost that was incurred? (Omit the “RM” sign in your response.) Standard cost is (Click to select)greaterless by RM   than the actual cost incurred.

 Requirement 2: Break down the difference computed in Requirement 1 above into a materials price variance and a materials quantity variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “RM” sign in your response.)
 Materials price variance RM (Click to select)UFNone Materials quantity variance RM (Click to select)UNoneF

#10

 Companhia Bradesco, S.A., of Brazil, an industrial supply store chain, has two divisions. The company’s contribution format income statement segmented by divisions for last year is given below (the currency in Brazil is the real, denoted here by R): Division Total Company Plastics Glass Sales R3,499,900 R2,001,000 R1,498,900 Variable expenses 1,714,051 960,480 753,571 Contribution margin 1,785,849 1,040,520 745,329 Traceable fixed expenses: Advertising 609,200 297,000 312,200 Depreciation 226,300 113,000 113,300 Administration 434,959 210,000 224,959 Total 1,270,459 620,000 650,459 Division segment margin 515,390 R420,520 R94,870 Common fixed expenses 387,000 Net operating income R128,390 Top management doesn’t understand why the Glass Division has such a low segment margin when its sales are only 25 less than sales in the Plastics Division. Accordingly, management has directed that the Glass Division be further segmented into product lines. The following information is available on the product lines in the Glass Division: Glass Division Product Lines Flat Glass Auto Glass Specialty Glass Sales R503,000 701,900 294,000 Traceable fixed expenses: Advertising R80,400 R112,400 R119,400 Depreciation R24,900 R55,700 R32,700 Administration R29,600 R35,100 R41,700 Variable expenses as a percentage of sales 65% 39% 52% Analysis shows that R118,559 of the Glass Division’s administration expenses are common to the product lines. Requirement 1: Prepare a contribution format segmented income statement for the Glass Division with segments defined as product lines. (Negative amounts other than the expenses should be indicated by a minus sign. Omit the “R” sign in your response.)
 Product Line Glass Division Flat Glass Auto Glass Specialty Glass Sales R R R R Variable expenses Contribution margin Traceable fixed expenses: Advertising Depreciation Administration Total Product line segment margin R R R Common fixed expenses Administration Divisional segment margin R Requirement 2: Management is surprised by Specialty Glass’s poor showing and would like to have the product line segmented by market. The following information is available about the two markets in which Specialty Glass is sold:
 Specialty Glass Markets Domestic Foreign Sales R196,000 R98,000 Traceable fixed expenses: Advertising R39,600 R79,800 Variable expenses as a percentage of sales 43% 70% All of Specialty Glass’s depreciation and administration expenses are common to the markets in which the product is sold. Calculate the following for the Specialty Glass product line with segments defined as markets. (Negative amounts should be indicated by a minus sign. Omit the “R” sign in your response.)
 Domestic market segment margin R Foreign market segment margin R Product line segment margin R Requirement 3:
 (a) Refer to the statement prepared in (Requirement 1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A market study indicates that such a campaign would increase sales of Flat Glass by R200,000 or sales of Auto Glass by R146,000. The campaign would cost R29,000. Calculate the increased net operating income. (Omit the “R” sign in your response.) Flat Glass Auto Glass Net operating income R R (b) Which product line should be chosen? (Click to select)Auto Glass Flat Glass

#11

 Wingate Company, a wholesale distributor of videotapes, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows:

 Sales \$1,520,000 Variable expenses 544,600 Contribution margin 975,400 Fixed expenses 1,073,000 Net operating income (loss) -\$97,600

 In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:

 Division East Central West Sales \$460,000 \$600,000 \$460,000 Variable expenses as a percentage of sales 52% 21% 39% Traceable fixed expenses \$107,000 \$321,000 \$208,000

 Requirement 1: Prepare a contribution format income statement segmented by divisions, as desired by the president. (Input all amount as positive value except divisional segment loss and net operating loss which should be indicated with a minus sign. Omit the “\$” sign in your response.)

 Division Total Company East Central West Sales \$ \$ \$ \$ Variable expenses Contribution margin Traceable fixed expenses Divisional segment margin \$ \$ \$ Common fixed expenses not traceable to divisions Net operating (Click to select)incomeloss \$

 Requirement 2:

 (a) As a result of a marketing study, the president believes that sales in the West Division could be increased by 14% if monthly advertising in that division were increased by \$21,000. Compute the Incremental net operating income. (Negative amount should be indicated by a minus sign. Omit the “\$” sign in your response.)

 Incremental net operating income \$

 (b) Would you recommend the increased advertising? (Click to select)NoYes

#12

 Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. Assume that Minneapolis’ sales by major market are as follows: Market Minneapolis Medical Dental Sales \$510,000 100% \$340,000 100% \$170,000 100% Variable expenses 306,000 60% 221,000 65% 85,000 50% Contribution margin 204,000 40% 119,000 35% 85,000 50% Traceable fixed expenses 61,200 12% 17,000 5% 44,200 26% Market segment margin 142,800 28% \$102,000 30% \$40,800 24% Common fixed expenses not traceable to markets 15,300 3% Office segment margin \$127,500 25%

 The company would like to initiate an intensive advertising campaign in one of the two markets during the next month. The campaign would cost \$6,800. Marketing studies indicate that such a campaign would increase sales in the Medical market by \$59,500 or increase sales in the Dental market by \$51,000.
 Required: Determine the increase in net operating income in each market if the advertising campaign were to be initiated in that market. (Omit the “\$” sign in your response.) Medical Dental Increase in net operating income \$ \$

#13

 Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format income statement for the company’s most recent year is given below:

 Office Total Company Chicago Minneapolis Sales \$1,050,000 100% \$210,000 100% \$840,000 100% Variable expenses 567,000 54% 63,000 30% 504,000 60% Contribution margin 483,000 46% 147,000 70% 336,000 40% Traceable fixed expenses 235,200 22% 109,200 52% 126,000 15% Office segment margin 247,800 24% \$37,800 18% \$210,000 25% Common fixed expenses not traceable to offices 168,000 16% Net operating income \$79,800 8%
 Requirement 1: By how much would the company’s net operating income increase if Minneapolis increased its sales by \$105,000 per year? Assume no change in cost behavior patterns. (Omit the “\$” sign in your response.)

 Net operating income \$ Refer to the original data. Assume that sales in Chicago increase by \$70,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Round your percentage amounts to 2 decimal places. Input all amount as positive value. Omit the “\$” and “%” signs in your response.)

 Segments Total Company Chicago Minneapolis Amount % Amount % Amount % Sales \$ \$ \$ Variable expenses Contribution margin Traceable fixed expenses Office segment margin \$ \$ Common fixed expenses not traceable to segments Net operating income \$

#14

 Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

 Division A Division B Division C Sales \$5,100,000 \$9,000,000 \$8,600,000 Average operating assets \$1,590,000 \$5,900,000 \$1,500,000 Net operating income \$305,000 \$896,000 \$330,000 Minimum required rate of return 20% 23% 22% Requirement 1: Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places, e.g., .1234 as 12.34. Omit the “%” sign in your response.)

 ROI Division A % Division B % Division C %
 Compute the residual income for each division. (Leave no cells blank, be certain to enter “0” wherever required. Negative amounts should be indicated by a minus sign. Omit the “\$” sign in your response.)

 Division A Division B Division C Residual income \$ \$ \$

#15

 Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below (the currency is the Australian dollar, denoted here as \$): Division Queensland New South Wales Sales \$1,000,000 \$1,750,000 Average operating assets \$500,000 \$500,000 Net operating income \$90,000 \$105,000 Property, plant, and equipment (net) \$250,000 \$200,000

 Requirement 1: Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places. Omit the “%” sign in your response.)
 ROI Queensland % New South Wales %

 Requirement 2: Which divisional manager seems to be doing the better job?

(Click to select) New South WalesQueensland

#16

 Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow (in millions of yen, denoted by ¥): Division Osaka Yokohama Sales ¥8,500,000 ¥20,900,000 Net operating income ¥920,000 ¥2,570,000 Average operating assets ¥2,800,000 ¥8,300,000

 Requirement 1: For each division, compute the return on investment (ROI) in terms of margin and turnover. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)
 Osaka Yokohama Return on investment % %

 Requirement 2: Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 20%. Compute the residual income for each division. (Omit the “¥” sign in your response.)
 Osaka Yokohama Residual income ¥ ¥

 Requirement 3: Is Yokohama’s greater amount of residual income an indication that it is better managed?

(Click to select)YesNo

#17

 Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit \$10.00 \$33.00 Variable expenses per unit \$3.00 \$14.00 Traceable fixed expenses per year \$128,000 \$49,000

 Common fixed expenses in the company total \$111,000 annually. Last year the company produced and sold 38,500 units of Weedban and 21,000 units of Greengrow. Required: Prepare a contribution format income statement for the year segmented by product lines. (Input all amount as positive value. Omit the “\$” sign in your response.) Total Weedban Greengrow Sales \$ \$ \$ Variable expenses Contribution margin Traceable fixed expenses Product line segment margin \$ \$ Common fixed expenses not traceable to products Net operating income \$

#18

 Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 43,000 helmets, using 24,940 kilograms of plastic. The plastic cost the company RM189,544. (The currency in Malaysia is the ringgit, which is denoted here by RM.) According to the standard cost card, each helmet should require 0.5 kilograms of plastic, at a cost of RM8 per kilogram. Requirement 1: (a) What cost for plastic should have been incurred to make 43,000 helmets? (Omit the “RM” sign in your response.)

 Cost incurred RM
 (b) How much greater or less is this than the cost that was incurred? (Omit the “RM” sign in your response.) Standard cost is (Click to select)lessgreater by RM   than the actual cost incurred.

 Requirement 2: Break down the difference computed in Requirement 1 above into a materials price variance and a materials quantity variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “RM” sign in your response.)
 Materials price variance RM (Click to select)NoneFU Materials quantity variance RM (Click to select)UNoneF

#19

 SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 14,000 of these meals using 3,460 direct labor-hours. The company paid these direct labor workers a total of \$33,043 for this work, or \$9.55 per hour.

 According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of \$9.3 per hour. Requirement 1:
 (a) What direct labor cost should have been incurred to prepare 14,000 meals? (Omit the “\$” sign in your response)

 Direct labor cost \$

 (b) How much does this differ from the actual direct labor cost? (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Total direct labor variance \$ (Click to select)FNoneU Requirement 2: Break down the difference computed in Requirement 1 above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)

 Labor rate variance \$ (Click to select)NoneUF Labor efficiency variance \$ (Click to select)NoneUF

#20

 Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.

 In the most recent month, 170,000 items were shipped to customers using 6,700 direct labor hours. The company incurred a total of \$23,115 in variable overhead costs.

 According to the company’s standards, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is \$3.5 per direct labor−hour.
 Requirement 1: (a) What variable overhead cost should have been incurred to fill the orders for the 170,000 items? (Omit the “\$” sign in your response.)

 (b) How much does this differ from the actual variable overhead cost? (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Total variable overhead variance \$ (Click to select)FNoneU Requirement 2: Break down the difference computed in Requirement 1 above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)

 Variable overhead rate variance \$ (Click to select)NoneFU Variable overhead efficiency variance \$ (Click to select)UFNone

#21

 Management of Mittel Rhein AG of Köln, Germany, would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported:

 Inspection time 0.4 days Wait time (from order to start of production) 15.8 days Process time 2.7 days Move time 0.6 days Queue time 3.9 days

 Requirement 1: Compute the throughput time. (Round your answer to 1 decimal place.)

 Throughput time days
 Requirement 2: Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your answer to 2 decimal places.)

 Manufacturing cycle efficiency

 Throughput time %
 Requirement 4: Compute the delivery cycle time.(Round your answer to 1 decimal place.) Delivery cycle time days Requirement 5: If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Round your answer to 3 decimal places.)

 Manufacturing cycle efficiency

#22

 Victoria Chocolates, Ltd., makes premium handcrafted chocolate confections in London. The owner of the company is setting up a standard cost system and has collected the following data for one of the company’s products, the Empire Truffle. This product is made with the finest white chocolate and various fillings. The data below pertain only to the white chocolate used in the product (the currency is stated in pounds denoted here as £):

 Material requirements, kilograms of white chocolate per dozen truffles 0.74 kilograms Allowance for waste, kilograms of white chocolate per dozen truffles 0.02 kilograms Allowance for rejects, kilograms of white chocolate per dozen truffles 0.01 kilograms Purchase price, finest grade white chocolate £9 per kilogram Purchase discount 6% of purchase price Shipping cost from the supplier in Belgium £0.45 per kilogram Receiving and handling cost £0.1 per kilogram

 Standard price £

 Requirement 2: Determine the standard quantity of white chocolate for a dozen truffles. (Round your answer to 2 decimal places.)

 Standard quantity kilograms
 Requirement 3: Determine the standard cost of the white chocolate in a dozen truffles. (Round your answer to 2 decimal places. Omit the “£” sign in your response.)

 Standard cost £

#23

 Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy:

 Direct materials: 6 microns per toy at \$0.33 per micron Direct labor: 1.5 hours per toy at \$6.9 per hour

 During July, the company produced 4,600 Maze toys. Production data for the month on the toy follow:

 Direct materials: 73,000 microns were purchased at a cost of \$0.29 per micron. 38,500 of these microns were still in inventory at the end of the month. Direct labor: 7,300 direct labor-hours were worked at a cost of \$52,560.
 Requirement 1: Compute the direct materials price and quantity variances for July. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Round your answers to the nearest dollar amount. Omit the “\$” sign in your response.)

 Material price variance \$ (Click to select)NoneFU Material quantity variance \$ (Click to select)UNoneF

#24

 Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 7.5  pounds \$3  per pound \$22.5 Direct labor 0.3  hours \$10.4  per hour \$3.12

 During the most recent month, the following activity was recorded: a. 21,100 pounds of material were purchased at a cost of \$2.9 per pound. b. All of the material purchased was used to produce 2,600 units of Zoom. c. 700 hours of direct labor time were recorded at a total labor cost of \$8,610.
 Requirement 1: Compute the direct materials price and quantity variances for the month. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).Input all amounts as positive values. Omit the “\$” sign in your response.) Materials price variance \$ (Click to select)UNoneF Materials quantity variance \$ (Click to select)NoneFU

 Requirement 2: Compute the direct labor rate and efficiency variances for the month. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).Input all amounts as positive values. Omit the “\$” sign in your response.)
 Labor rate variance \$ (Click to select)UFNone Labor efficiency variance \$ (Click to select)UFNone

#25

 Erie Company manufactures a small CD player called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate CD player are as follows: Standard Hours Standard Rate per Hour Standard Cost 30 minutes \$5.4 \$2.7 During August, 10,220 hours of direct labor time were needed to make 19,400 units of the Jogging Mate. The direct labor cost totaled \$53,144 for the month. Requirement 1: (a) What direct labor cost should have been incurred to make 19,400 units of the Jogging Mate? (Omit the “\$” sign in your response.) Standard direct labor cost \$

 (b) By how much does this differ from the cost that was incurred? (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Total variance \$ (Click to select)UFNone

 Requirement 2: Break down the difference in cost from Requirement 1 above into a labor rate variance and a labor efficiency variance. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Labor rate variance \$ (Click to select)NoneUF Labor efficiency variance \$ (Click to select)NoneFU

 Requirement 3: The budgeted variable manufacturing overhead rate is \$4.5 per direct labor-hour. During August, the company incurred \$51,100 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (Indicate the effect of the variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Omit the “\$” sign in your response.)
 Variable Overhead Rate Variance \$ (Click to select)FNoneU Variable Overhead Efficiency Variance \$ (Click to select)NoneFU

#26

 Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 780 hours each month to produce 1,950 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials \$38,610 \$19.80 Direct labor \$6,942 3.56

 (based on direct labor-hours) \$2,340 1.20 \$24.56

 During August, the factory worked only 790 direct labor-hours and produced 2,100 sets of covers. The following actual costs were recorded during the month:
 Total Per Set of Covers Direct materials (6,510 yards) \$39,060 \$18.60 Direct labor \$7,900 3.76 Variable manufacturing overhead \$4,740 2.26 24.62

 At standard, each set of covers should require 3 yards of material. All of the materials purchased during the month were used in production.

#27

 Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit \$8.00 \$35.00 Variable expenses per unit \$2.90 \$10.00 Traceable fixed expenses per year \$135,000 \$50,000
 Common fixed expenses in the company total \$96,000 annually. Last year the company produced and sold 43,500 units of Weedban and 22,500 units of Greengrow. Required: Prepare a contribution format income statement for the year segmented by product lines. (Input all amount as positive value. Omit the “\$” sign in your response.) Total Weedban Greengrow Sales \$ \$ \$ Variable expenses Contribution margin Traceable fixed expenses Product line segment margin \$ \$ Common fixed expenses not traceable to products Net operating income \$

#28

 Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow (in millions of yen, denoted by ¥): Division Osaka Yokohama Sales ¥9,500,000 ¥19,600,000 Net operating income ¥930,000 ¥2,670,000 Average operating assets ¥2,800,000 ¥9,400,000

 Requirement 1: For each division, compute the return on investment (ROI) in terms of margin and turnover. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)
 Osaka Yokohama Return on investment % %

 Requirement 2: Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 13%. Compute the residual income for each division. (Omit the “¥” sign in your response.)
 Osaka Yokohama Residual income ¥ ¥

 Requirement 3: Is Yokohama’s greater amount of residual income an indication that it is better managed?

(Click to select)NoYes

#29

 Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below (the currency is the Australian dollar, denoted here as \$): Division Queensland New South Wales Sales \$1,000,000 \$1,350,000 Average operating assets \$250,000 \$750,000 Net operating income \$60,000 \$148,500 Property, plant, and equipment (net) \$260,000 \$220,000

 Requirement 1: Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places. Omit the “%” sign in your response.)
 ROI Queensland % New South Wales %

 Requirement 2: Which divisional manager seems to be doing the better job?

(Click to select) Queensland New South Wales

#30

 Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

 Division A Division B Division C Sales \$6,100,000 \$10,600,000 \$8,500,000 Average operating assets \$1,590,000 \$5,000,000 \$2,300,000 Net operating income \$291,000 \$894,000 \$276,000 Minimum required rate of return 10% 13% 12%

 Requirement 1: Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places, e.g., .1234 as 12.34. Omit the “%” sign in your response.)

 ROI Division A % Division B % Division C %
 Requirement 2: Compute the residual income for each division. (Leave no cells blank, be certain to enter “0” wherever required. Negative amounts should be indicated by a minus sign. Omit the “\$” sign in your response.)

 Division A Division B Division C Residual income \$ \$ \$

#31

 Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format income statement for the company’s most recent year is given below:

 Office Total Company Chicago Minneapolis Sales \$600,000 100% \$120,000 100% \$480,000 100% Variable expenses 324,000 54% 36,000 30% 288,000 60% Contribution margin 276,000 46% 84,000 70% 192,000 40% Traceable fixed expenses 134,400 22% 62,400 52% 72,000 15% Office segment margin 141,600 24% \$21,600 18% \$120,000 25% Common fixed expenses not traceable to offices 96,000 16% Net operating income \$45,600 8% Requirement 1: By how much would the company’s net operating income increase if Minneapolis increased its sales by \$60,000 per year? Assume no change in cost behavior patterns. (Omit the “\$” sign in your response.)

 Net operating income \$ Requirement 2: Refer to the original data. Assume that sales in Chicago increase by \$40,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Round your percentage amounts to 2 decimal places. Input all amount as positive value. Omit the “\$” and “%” signs in your response.)

 Segments Total Company Chicago Minneapolis Amount % Amount % Amount % Sales \$ \$ \$ Variable expenses Contribution margin Traceable fixed expenses Office segment margin \$ \$ Common fixed expenses not traceable to segments Net operating income \$

#32

 Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. Assume that Minneapolis’ sales by major market are as follows: Market Minneapolis Medical Dental Sales \$690,000 100% \$460,000 100% \$230,000 100% Variable expenses 414,000 60% 299,000 65% 115,000 50% Contribution margin 276,000 40% 161,000 35% 115,000 50% Traceable fixed expenses 82,800 12% 23,000 5% 59,800 26% Market segment margin 193,200 28% \$138,000 30% \$55,200 24% Common fixed expenses not traceable to markets 20,700 3% Office segment margin \$172,500 25%

 The company would like to initiate an intensive advertising campaign in one of the two markets during the next month. The campaign would cost \$9,200. Marketing studies indicate that such a campaign would increase sales in the Medical market by \$80,500 or increase sales in the Dental market by \$69,000.
 Required: Determine the increase in net operating income in each market if the advertising campaign were to be initiated in that market. (Omit the “\$” sign in your response.) Medical Dental Increase in net operating income \$ \$

#33

 Wingate Company, a wholesale distributor of videotapes, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows:

 Sales \$1,340,000 Variable expenses 513,200 Contribution margin 826,800 Fixed expenses 909,000 Net operating income (loss) -\$82,200

 In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:

 Division East Central West Sales \$310,000 \$570,000 \$460,000 Variable expenses as a percentage of sales 48% 26% 47% Traceable fixed expenses \$108,000 \$327,000 \$200,000

 Requirement 1: Prepare a contribution format income statement segmented by divisions, as desired by the president. (Input all amount as positive value except divisional segment loss and net operating loss which should be indicated with a minus sign. Omit the “\$” sign in your response.)

 Division Total Company East Central West Sales \$ \$ \$ \$ Variable expenses Contribution margin Traceable fixed expenses Divisional segment margin \$ \$ \$ Common fixed expenses not traceable to divisions Net operating (Click to select)lossincome \$

 Requirement 2:

 (a) As a result of a marketing study, the president believes that sales in the West Division could be increased by 16% if monthly advertising in that division were increased by \$25,000. Compute the Incremental net operating income. (Negative amount should be indicated by a minus sign. Omit the “\$” sign in your response.)

 Incremental net operating income \$

 (b) Would you recommend the increased advertising? (Click to select)YesNo

#34

 Companhia Bradesco, S.A., of Brazil, an industrial supply store chain, has two divisions. The company’s contribution format income statement segmented by divisions for last year is given below (the currency in Brazil is the real, denoted here by R): Division Total Company Plastics Glass Sales R3,502,600 R1,998,000 R1,504,600 Variable expenses 1,734,336 959,040 775,296 Contribution margin 1,768,264 1,038,960 729,304 Traceable fixed expenses: Advertising 607,800 296,000 311,800 Depreciation 233,000 118,000 115,000 Administration 419,864 210,000 209,864 Total 1,260,664 624,000 636,664 Division segment margin 507,600 R414,960 R92,640 Common fixed expenses 386,000 Net operating income R121,600 Top management doesn’t understand why the Glass Division has such a low segment margin when its sales are only 25 less than sales in the Plastics Division. Accordingly, management has directed that the Glass Division be further segmented into product lines. The following information is available on the product lines in the Glass Division: Glass Division Product Lines Flat Glass Auto Glass Specialty Glass Sales R499,000 699,600 306,000 Traceable fixed expenses: Advertising R80,300 R112,100 R119,400 Depreciation R25,300 R56,200 R33,500 Administration R30,100 R34,600 R41,700 Variable expenses as a percentage of sales 66% 41% 52% Analysis shows that R103,464 of the Glass Division’s administration expenses are common to the product lines. Requirement 1: Prepare a contribution format segmented income statement for the Glass Division with segments defined as product lines. (Negative amounts other than the expenses should be indicated by a minus sign. Omit the “R” sign in your response.)
 Product Line Glass Division Flat Glass Auto Glass Specialty Glass Sales R R R R Variable expenses Contribution margin Traceable fixed expenses: Advertising Depreciation Administration Total Product line segment margin R R R Common fixed expenses Administration Divisional segment margin R

 Requirement 2: Management is surprised by Specialty Glass’s poor showing and would like to have the product line segmented by market. The following information is available about the two markets in which Specialty Glass is sold:
 Specialty Glass Markets Domestic Foreign Sales R204,000 R102,000 Traceable fixed expenses: Advertising R39,700 R79,700 Variable expenses as a percentage of sales 43% 70% All of Specialty Glass’s depreciation and administration expenses are common to the markets in which the product is sold. Calculate the following for the Specialty Glass product line with segments defined as markets. (Negative amounts should be indicated by a minus sign. Omit the “R” sign in your response.)
 Domestic market segment margin R Foreign market segment margin R Product line segment margin R Requirement 3:
 (a) Refer to the statement prepared in (Requirement 1) above. The sales manager wants to run a special promotional campaign on one of the product lines over the next month. A market study indicates that such a campaign would increase sales of Flat Glass by R199,000 or sales of Auto Glass by R147,000. The campaign would cost R30,000. Calculate the increased net operating income. (Omit the “R” sign in your response.) Flat Glass Auto Glass Net operating income R R (b) Which product line should be chosen? (Click to select)Auto GlassFlat Glass

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