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Accounting Expert Answers & Study Resources : Page 445

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MULTIPLE CHOICE 21.Which of the following is not an example of a long-term decision? A.Changing product mix. B.Dropping products. C.Expanding operations. D.Purchasing inventory. E.All of the above are examples of long-term decisions. 22.The allocation rate is calculated by: A.Dividing the costs in the cost pool by the denominator volume. B.Dividing the costs in the cost pool by the overhead.

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  • MULTIPLE CHOICE 21.Which of the following not an example of a
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Problems 1.Betty’s Boutique sells hand-crafted jewelry.  Betty sells her jewelry for $40, a 300% markup.  Her annual sales range from $30,000 to $40,000, with sales for the current year expected to be $34,000.  Fixed costs generally are $17,000.   Required: a.Betty anticipates sales of $40,000 next year.  Calculate her expected profit for the current.

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  • Problems 1.Betty’s Boutique sells hand-crafted jewelry.  Betty sells her jewelry for
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3.The initial cash outlay and cash flow projections are presented below for new equipment that Outdoor Sports, Inc. is evaluating.  Outdoor Sports is considering manufacturing a new line of laser rangefinders: Initial Cash Outlay $1,500,000 Annual Net cash inflows  Years 1 -5 $450,000 Salvage value $100,000 Outdoor Sports uses a cost of capital of 12 percent for.

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  • 3.The initial cash outlay and cash flow projections presented below
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TRUE/FALSE 1.Changing a product mix is an example of a short-term decision. 2.Capacity costs are controllable over the long-term. 3.While profit margin is the appropriate measure of value for short-term decisions, contribution margin is the appropriate measure for long-term decisions. 4.Some firms refer to the overhead rate as the burden because they charge, or.

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  • TRUE/FALSE 1.Changing a product mix an example of a short-term decision. 2.Capacity
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11.What is the fixed cost spending variance? 12.Each variable cost variance can be decomposed into two variances. What are these variances? 13.What is an input price variance? 14.What is an input quantity variance? 15.What is the function of a budget-reconciliation report? 16.What are the three primary reasons variances occur? 17.What are the three main rules to.

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  • 11.What the fixed cost spending variance? 12.Each variable cost variance can
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r Problems 1.It is important to understand the reasons for capital budgeting. Required: Enter the identifying letters in the blanks below to indicate the term that best matches each description. A Capital budgeting F Lumpy resource B Cost of capital G Present value C Discounting H Real option analysis D Discount rate I Salvage value E Initial outlay J Time value of money a._____ The rate of return employed to compute the present value of.

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  • r Problems 1.It important to understand the reasons for capital budgeting. Required: Enter
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Problems 1.It is important to understand the elements of an activity-based costing (ABC) system. Required: Enter the identifying letters in the blanks below to indicate the term that best matches each description. A Activity F Facility-level activities B Activity-based costing G Practical capacity C Activity-based management H Product-/customer-level activities D Batch-level activities I Product planning E Business process J Profit margin a._____ Activities that are required to sustain the business. b._____ Using information from ABC systems to.

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  • Problems 1.It important to understand the elements of an activity-based costing
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  61.Why do managers care about the costs allocated to their individual departments? A.Managers’ performance evaluations frequently depend on their unit’s performance more than overall firm performance. B.The cost allocated is an integral part of the department’s reported profit. C.Carefully chosen allocation methods can induce desired behavior. D.Carefully chosen allocation methods can dissuade undesired behavior. E.All.

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  •   61.Why do managers care about the costs allocated to their
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61.As to customer-level profit analysis, batch-level costs relate to: A.Customers’ order volume. B.Tailoring a product to customers’ desires. C.Customers’ frequency of ordering or order size. D.Warehousing of customers’ desires. E.All of the above are batch-level costs. 62.Which of the following is not a characteristic of low-profit customers? A.Small order size. B.Demand immediate deliveries. C.Predictable ordering patterns. D.Frequent sales force contact. E.All.

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  • 61.As to customer-level profit analysis, batch-level costs relate to: A.Customers’ order
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21.Regardless of the method used to evaluate long-lived resources, firms need to consider one very important factor:  present value. 22.Net cash flows typically equal accounting income. 23.Taxes affect both the amount and timing of cash flows. 24.Depreciation offers a tax shield that reduces the cash outflow associated with tax payments. 25.U.S. tax laws only.

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  • 21.Regardless of the method used to evaluate long-lived resources, firms
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31.Pizzeria Gallery specializes in pizza making and delivery.  The company uses activity-based costing for all overhead costs using the following data: Overhead costs: Wages$48,000 Administrative$62,000 Total$110,000 Resources are consumed as follows: Activity Cost Pools Pizza MakingDeliveryOther Wages & Salaries65%20%15% Administrative20%30%50% Activity for the year is: Activity Cost PoolActivity Pizza Making19,000 orders Delivery17,000 deliveries The total overhead cost per delivery according to the activity-based costing.

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  • 31.Pizzeria Gallery specializes in pizza making and delivery.  The company
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  31.The following information is available for the Downtown Furniture Company which produces two types of tables. OakCherryTotal Sales volume (units)500300800 Revenue$80,000$78,000$158,000 Variable Costs Direct materials$5,000$7,000$12,000 Direct labor$17,000$22,000$39,000 Contribution Margin$58,000$49,000$107,000 Fixed Costs Manufacturing$25,500 Administrative$31,000 Profit Before Tax$50,500 A.$15,500 B.$18,600 C.$31,000 D.$11,625 32.The following information is available for the Downtown Furniture Company which produces two types of tables. OakCherryTotal Sales volume (units)500300800 Revenue$80,000$78,000$158,000 Variable Costs Direct materials$5,000 $8,000 $13,000 Direct labor$17,000$21,000$38,000 Contribution Margin$58,000$49,000$107,000 Fixed Costs Manufacturing$40,000 Administrative$33,000 Profit Before.

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  •   31.The following information available for the Downtown Furniture Company which
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TRUE/FALSE 1.Profit margin equals a product’s gross margin less the cost of capacity resources needed to support its production. 2.Profit margin is the appropriate measure for evaluating long-term profitability. 3.When allocating capacity costs to products, controllable and non-controllable cost pools need to be allocated to cost objects. 4.Activity-based costing (ABC) is an approach to.

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  • TRUE/FALSE 1.Profit margin equals a product’s gross margin less the cost
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Exercises 1.Garnet’s Gym is a fitness and aerobic center located in Atlanta, Georgia. The following table reports Garnet’s master budget and actual results for the most recent year:    Master Budget Actual Results Membership fee (per member) $500 $550 Number of members 5,000 4,000 Variable cost (per member) $200 $200 Fixed costs $1,200,000 $1,200,000   With regard to the discrepancies between the budgeted and actual membership fee.

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  • Exercises 1.Garnet’s Gym a fitness and aerobic center located in Atlanta,
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60.Consider the following facts – do not consider the impact of income taxes: Initial cost of equipment    $45,000 Estimated life     5 years Salvage value     $5,000 Annual cash inflows     $15,000 Estimated cost of capital    8% The net present value of the equipment is: A.$14,895 B.$18,300 C.$63,300 D.$59,895 61.Consider the following facts – do not consider the impact of income taxes: Initial cost of.

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  • 60.Consider the following facts – do not consider the impact
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Short Answer 1.What is the appropriate measure of value for long-term decisions? 2.What is the difference between a contribution margin and a profit margin? 3.What are the two approaches for estimating the controllable cost of capacity resources over the long term? 4.Describe the direct estimation method for estimating controllable capacity costs. List one advantage.

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  • Short Answer 1.What the appropriate measure of value for long-term decisions? 2.What
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8.What is cross-subsidization? 9.List three ways in which a company can improve profitability using ABC data. 10.What are the two key customer-planning decisions that companies face? 11.What are the differences between product-level profit analysis and customer-level profit analysis? 12.List five characteristics of customers that are “high cost-to-serve” customers. List five characteristics of customers that.

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  • 8.What cross-subsidization? 9.List three ways in which a company can improve
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  51.In the month of December the Valhalla Company produced 28,000 units and sold 30,000 units.  Under absorption costing: A.Fixed manufacturing costs will be “released” from inventory and therefore net operating income will be lower than it would under variable costing B.Fixed selling & administrative costs will be “released” from inventory and therefore.

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  •   51.In the month of December the Valhalla Company produced 28,000
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Exercises 1.The University Credit Union (UCU) has engaged your services to determine the cost of its various activities. The following data are available for a representative branch. Process Deposits Process Checks Balance Inquiries Other Activities Total Cost Tellers 30% 40% 10% 20% $150,000 Assistant Manager 10% 10% 5% 75% $75,000 Managers 2% 3% 5% 90% $90,000 The average branch processes 600,000 deposits and 1,250,000 check transactions each year. Required: Compute the cost per deposit and the cost to process a check. 2.The QwikFill.

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  • Exercises 1.The University Credit Union (UCU) has engaged your services to
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