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108.The following are all quantitative capital budgeting techniques except a.annual rate of return technique. b.cost-volume-profit technique. c.discounted cash flow technique. d.cash payback technique. 109.A company's cost of capital refers to the a.rate management expects to pay on all borrowed and equity funds. b.total cost of a capital project. c.cost of printing and registering common stock shares. d.rate of return.
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148.Accounting's contribution to the decision-making process occurs in all of the following steps except to a.identify the problem and assign responsibility. b.determine possible courses of action. c.review results of the decision. d.make a decision. 149.It costs Galiente Company $46 per unit ($27 variable and $19 fixed) to produce its product, which normally sells for $58.
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Ex. 203 Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the tune-up1.0 hour Hourly wage rate$16 Payroll taxes10% of wage rate Setup and downtime10% of actual.
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Ex. 223 Adam Corporation prepared the following variance report. ADAM CORPORATION Variance Report—Purchasing Department for Week Ended January 9, 2016 Type ofQuantityActualStandardPrice MaterialsPurchased Price    Price   Variance      Explanation Brown? lbs.$5.25$5.00$6,000 ?Price increase Green8,000 oz.?  3.25  1,600 URush order White22,000 units$0.45?     660 FBought larger quantity Ex. 223(Cont.) Instructions Fill in the appropriate amounts or letters for the question marks in the report. .
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11.An opportunity cost is the potential benefit obtained by using resources in an alternative course of action. 12.If an incremental make or buy analysis indicates that it is cheaper to buy rather than make an item, management should always make the decision to choose the lowest cost alternative. 13.In a sell or.
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Ex. 173 Jim-Mate Company supplies schools with floor mattresses to use in physical education classes. Jim-Mate has received a special order from a large school district to buy 700 mats at $55 each. Acceptance of the special order will not affect fixed costs but will result in $1,500 of shipping costs. For.
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128.JP Company is considering two capital investment proposals. Estimates regarding each project are provided below: 53.8903.7913.6963.605 64.4864.3554.2314.111 a.20 years. b.10 years. c.5 years. d.4 years. 129.JP Company is considering two capital investment proposals. Estimates regarding each project are provided below: 53.8903.7913.6963.605 64.4864.3554.2314.111 a.5%. b.10%. c.25%. d.50%. 130.JP Company is considering two capital investment proposals. Estimates regarding each project are provided below: 53.8903.7913.6963.605 64.4864.3554.2314.111 a.$600,802. b.$802. c.$100,000. d.$178,900. 131.JP Company is considering.
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Ex. 227 The following information was taken from the annual manufacturing overhead cost budget of Cinnamon Manufacturing: Variable manufacturing overhead costs$186,000 Fixed manufacturing overhead costs$124,000 Normal production level in direct labor hours62,000 Normal production level in units31,000 During the year, 30,000 units were produced, 64,000 hours were worked, and the actual manufacturing overhead costs were $322,000..
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COMPLETION STATEMENTS               229.A ________________ is expressed as a unit amount, whereas a _________________ is expressed as a total amount.               230.Standards which represent optimum performance under perfect operating conditions are called _______________ standards, but most companies use _________________ standards which are rigorous but attainable.               231.In developing a standard cost for direct.
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aEx. 220 North Coast Manufacturing provided the following information about its standard costing system for 2016: Standard DataActual Data Labor2 hrs. @ $21 per hr.Produced9,000 units Budgeted fixed overhead$100,000Labor worked17,000 hrs. costing $340,000 Budgeted variable overhead$30 per unitActual overhead$375,000 Budgeted production10,000 units North Coast applies fixed overhead at $10 per unit produced. Instructions Determine the amounts of the.
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Ex. 204 Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo: Standard QuantityStandard.
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Ex. 214 Flagstaff, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9,450, of which the variable portion was $0.50.
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BRIEF Exercises BE 160 Bayonette Inc. is considering Plan 1 which is estimated to have sales of $60,000 and costs of $22,500.  The company currently has sales of $57,000 and costs of $21,500. Instructions Compare plans using incremental analysis. BE 161 Brigg Enterprises produces miniature parasols. Each parasol consists of $1.20 of variable costs and $.90.
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Ex. 207 Seacoast Company provided the following information about its standard costing system for 2016: Standard DataActual Data Materials10 lbs. @ $4 per lbs.Produced4,000 units Labor3 hrs. @ $21 per hr.Materials purchased50,000 lbs. for $215,000 Budgeted production3,500 unitsMaterials used41,000 lbs. Labor worked11,000 hrs. costing $220,000 Instructions Calculate the labor price variance and the labor quantity variance. Ex. 208 Lumberman.
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Ex. 206 The following direct materials data pertain to the operations of Wright Co. for the month of December. Standard materials price$5.00 per pound Actual quantity of materials purchased and used16,500 pounds Ex. 206(Cont.) The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December.
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118.The annual rate of return method is based on a.accounting data. b.time value of money data. c.market values. d.replacement values. 119.A company projects an increase in net income of $180,000 each year for the next five years if it invests $900,000 in new equipment. The equipment has a five-year life and an estimated salvage value.
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Exercises Ex 201 Sonic, Inc. is planning to produce 2,500 units of product in 2016. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor. Instructions (a)Compute the budgeted amounts for 2016 for direct materials.
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68.Each of the following is a disadvantage of buying rather than making a component of a company's product except that a.quality control specifications may not be met. b.the outside supplier could increase prices significantly in the future. c.profitable product lines may be dropped. d.the supplier may not deliver on time. 69.Nelson Manufacturing Company can make.
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138.Which one of the following is correct? a.Cash flows are used to calculate the internal rate of return. b.Accrual income is used to calculate the payback period. c.Cash flows are used to calculate the annual rate of return. d.Accrual income is used to calculate the net present value. 139.If a company's required minimum rate of.
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aEx. 226 Presented below is a flexible manufacturing budget for Ganem Manufacturing, which manufactures fine timepieces: Activity Index: Standard direct labor hours 2,8003,2003,6004,000 Variable costs Indirect materials$  5,600$  6,400$  7,200$  8,000 Indirect labor3,2203,6804,1404,600 Utilities    7,280    8,320    9,360  10,400 Total variable16,10018,40020,70023,000 Fixed costs Supervisory salaries1,0001,0001,0001,000 Rent    3,000    3,000    3,000    3,000 Total fixed    4,000    4,000    4,000    4,000 Total costs$20,100$22,400$24,700$27,000 aEx. 226(Cont.) The company applies the overhead on.
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a169.If the standard hours allowed are less than the standard hours at normal capacity, a.the overhead volume variance will be unfavorable. b.variable overhead costs will be underapplied. c.the overhead controllable variance will be favorable. d.variable overhead costs will be overapplied. a170.Which of the following statements about overhead variances is false? a.Standard hours allowed are used in.
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TRUE-FALSE STATEMENTS 1.An important step in management's decision-making process is to determine and evaluate possible courses of action. 2.In making decisions, management ordinarily considers both financial and nonfinancial information. 3.In incremental analysis, total variable costs will always change under alternative courses of action, and total fixed costs will always remain constant. 4.Accountants are mainly.
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aEx. 222 Jackson Manufacturing planned to produce 20,000 units of product and work at the 60,000 direct labor hours level of activity for 2016. Manufacturing overhead at this level of activity and the predetermined overhead rate are as follows: Predetermined Overhead Rate per Direct Labor Hour Variable manufacturing overhead$300,000$5 Fixed manufacturing overhead  120,000  2 Total manufacturing overhead$420,000$7 At.
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Ex. 212 Hector Company has developed the following standard costs for its product for 2016: HECTOR COMPANY Standard Cost Card Product A Cost ElementStandard Quantity×Standard Price=Standard Cost Direct materials4 pounds$3$12 Direct labor3 hours824 Manufacturing overhead3 hours4  12 $48 The company expected to produce 30,000 units of Product A in 2017 and work 90,000 direct labor hours. Actual results for 2017 are.
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48.Which of the following is not a true statement? a.Incremental analysis might also be referred to as differential analysis. b.Incremental analysis is the same as CVP analysis. c.Incremental analysis is useful in making decisions. d.Incremental analysis focuses on decisions that involve a choice among alternative courses of action. 49.Incremental analysis would not be appropriate for a.a.
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21.In deciding on the future status of an unprofitable segment, management does not usually consider the effect of elimination on related product lines. 22.Capital budgeting decisions usually involve large investments and can have a significant impact on a company's future profitability. 23.The annual rate of return technique requires dividing a project's annual.
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Ex. 219 The following direct labor data pertain to the operations of Murray Industries for the month of November: Standard labor rate$15.00 per hr. Actual hours incurred9,000 The standard cost card shows that 2.5 hours are required to complete one unit of product. The actual labor rate incurred exceeded the standard rate by 10%..
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MATCHING 239.Match the items in the two columns below by entering the appropriate code letter in the space provided.               A.              Variances              F.              Materials price variance               B.              Standard costs              G.              Labor quantity variance               C.              Standard cost accounting system              aH.Overhead controllable variance               D.              Normal standards              aI.              Overhead volume variance               E.              Ideal standards              J.             .
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Ex. 224 Pepper Industries uses a standard cost accounting system. During March, 2016, the company reported the following manufacturing variances: Materials price variance$1,600F Materials quantity variance2,400U Labor price variance600U Labor quantity variance2,200U Overhead controllable500F Overhead volume3,000U In addition, 15,000 units of product were sold at $18 per unit. Each unit sold had a standard cost of $14. Selling.
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88.The focus of a sell or process further decision is a.incremental revenue. b.incremental cost. c.both incremental revenue and incremental cost. d.neither incremental revenue nor incremental cost. 89.TAD Company gathered the following data about the three products that it produces: a.Product Alpha b.Product Beta c.Product Delta d.Products Alpha and Delta 90.A company decided to replace an old machine with a new.
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98.Oscar Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: a.$15,000 b.$20,000 c.$(5,000) d.$(50,000) 99.Sardine Kitchen Company produces three sizes of crock pots: small, medium, and large. A condensed segmented income statement for a recent period follows: a.$47,000 b.$13,000 c.$8,000 d.$55,000 100.Sardine Kitchen Company produces three versions of crock pots:.
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Ex. 205 The following direct labor data pertain to the operations of Pearce Corp. for the month of November: Actual labor rate$12.25 per hr. Actual hours used18,000 Standard labor rate$12.00 per hr. Standard hours allowed17,100 Ex. 205(Cont.) Instructions Prepare a matrix and calculate the labor variances. Price VarianceQuantity Variance Total Labor Variance .
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BE 195 In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. Glazier’s predetermined overhead rate is $5.00 per direct labor hour. Instructions Compute the total manufacturing overhead variance. aBE 196 Overhead data for Glazier Inc. are.
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Ex. 218 Aztec, Inc.'s standard labor cost of producing one unit of product is 2 hours at the rate of $14.00 per hour. During February, 52,000 hours of labor are incurred at a cost of $13.80 per hour to produce 25,000 units of product. Instructions (a)Compute the labor price and labor quantity variances. a(b)Journalize.
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Ex. 216 More Hits Company manufactures aluminum baseball bats that it sells to university athletic departments. It has developed the following per unit standard costs for 2016 for each baseball bat: Manufacturing       Direct Materials  Direct Labor           Overhead   Standard Quantity2 Pounds (Aluminum)1/2 hour1/2 hour Standard Price$4.00$10.00$6.00 Unit Standard Cost$8.00$5.00$3.00 In 2016, the company planned to produce 120,000.
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Ex. 211 Platt Company produces one product, a putter called PAR-putter. Platt uses a standard cost system and determines that it should take one hour of direct labor to produce one PAR-putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity.
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Ex. 210 Purvis Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $2 per pound)$12 Direct labor (2 hours at $12 per hour)$24 During the month of April, the company manufactures 300 units and incurs the following actual costs. Direct.
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S-A E  243 What are the four perspectives used in the balanced scorecard? Discuss the nature of each, and how the perspectives are linked. S-A E  244(Ethics) Fulmar Manufacturing Co. is the manufacturer of miniature models, especially of automobiles with historical interest. The company is developing new standard costs. Patrick Webb suggests that.
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78.Lean Foods produces a variety of snack products, including fried pork rinds. The cost of one batch of pork rinds is below: a.$3.00 per batch b.$4.00 per batch c.$18.00 per batch d.$13.00 per batch 79.Karpentry Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is.
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a179.The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing. a.$1,680 U. b.$6,160 U. c.$7,840 U. d.$22,400 U. 180.All of the following are advantages of standard costs except they a.facilitate management planning. b.are useful in setting selling prices. c.simplify costing in inventories. d.increase net income. 181.Standards based on the optimum level of performance under perfect.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  240 (a)  Explain the similarities and differences between standards and budgets. (b)  Contrast the accounting for standard and budgets. S-A E  241 Star Industries computes variances as a basis for evaluating the performance of managers responsible for controlling costs. For several months, the labor quantity variance has been unfavorable. Briefly.
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aEx. 225 Howard, Inc. developed the following standards for 2016: Howard, Inc. Standard Cost Card Cost ElementsStandard Quantity×Standard Price=Standard Cost Direct materials5 pounds$  5$25 Direct labor1 hour$1818 Manufacturing overhead1 hour$10  10 $53 The company planned to produce 120,000 units of product and work at the 120,000 direct labor level of activity in 2016. The company uses a standard cost.
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Ex. 213 Dart Company developed the following standard costs for its product for 2016: DART COMPANY Standard Cost Card Cost ElementsStandard Quantity×Standard Price=Standard Cost Direct materials4 pounds$  5$20 Direct labor2 hours1020 Variable overhead2 hours48 Fixed overhead2 hours2    4 $52 The company expected to work at the 120,000 direct labor hours level of activity and produce 60,000 units of product. Actual results.
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Exercises Ex. 171 FromZetherz Company produced and sold 50,000 units of product and is operating at 80% of plant capacity. Unit information about its product is as follows: Sales Price$68 Variable manufacturing cost$42 Fixed manufacturing cost ($600,000 ÷ 50,000)  12  54 Profit per unit$14 The company received a proposal from a Danish company to buy 10,000 units.
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Ex. 172 Good Cabin Company manufactures cappuccino makers. For the first ten months of 2016, the company reported the following operating results while operating at 80% of plant capacity: Sales (500,000 units)$90,000,000 Cost of goods sold  54,000,000 Gross profit36,000,000 Operating expenses  24,000,000 Net income$12,000,000 An analysis of costs and expenses reveals that variable cost of goods sold.
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BRIEF Exercises BE 191 Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will be 100,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor. Instructions Compute the estimates for (a) a standard.
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MULTIPLE CHOICE QUESTIONS 38.A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to a.assign responsibility for the decision. b.provide relevant revenue and cost data about each course of action. c.determine the amount of money that should be spent on a project. d.decide which actions that management should consider. 39.Which.
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