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Problem-1 – Mcgraw-hill connect accounting chapter 11 answers
Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company’s planning budget for May appears below:
| Puget Sound Divers | |
| Planning Budget | |
| For the Month Ended May 31 | |
| Budgeted diving-hours (q) | $200 |
| Revenue ($430.00q) | $86,000 |
| Expenses: | |
| Wages and salaries ($11,400 + $128.00q) | $37,000 |
| Supplies ($6.00q) | $1,200 |
| Equipment rental ($2,200 + $25.00q) | $7,200 |
| Insurance ($4,000) | $4,000 |
| Miscellaneous ($530 + $1.42q) | $814 |
| Total expense | $50,214 |
| Net operating income | $35,786 |
During May, the company’s actual activity was 190 diving-hours.
Problem-2 – Mcgraw-hill connect managerial accounting answers chapter 11
Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company’s planning budget for July appears below:
| Flight Café | |
| Planning Budget | |
| For the Month Ended July 31 | |
| Budgeted meals (q) | $24,000 |
| Revenue ($3.80q) | $91,200 |
| Expenses: | |
| Raw materials ($2.10q) | $50,400 |
| Wages and salaries ($6,400 + $0.20q) | $11,200 |
| Utilities ($2,000 + $0.05q) | $3,200 |
| Facility rent ($4,000) | $4,000 |
| Insurance ($2,700) | $2,700 |
| Miscellaneous ($800 + $0.10q) | $3,200 |
| Total expense | $74,700 |
| Net operating income | $16,500 |
In July, 25,000 meals were actually served. The company’s flexible budget for this level of activity appears below:
| Flight Café | |
| Flexible Budget | |
| For the Month Ended July 31 | |
| Budgeted meals (q) | $25,000 |
| Revenue ($3.80q) | $95,000 |
| Expenses: | |
| Raw materials ($2.10q) | $52,500 |
| Wages and salaries ($6,400+ $0.20q) | $11,400 |
| Utilities ($2,000 + $0.05q) | $3,250 |
| Facility rent ($4,000) | $4,000 |
| Insurance ($2,700) | $2,700 |
| Miscellaneous ($800 + $0.10q) | $3,300 |
| Total expense | $77,150 |
| Net operating income | $17,850 |
Problem-3 – Mcgraw hill accounting chapter 9 answers
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,000 pounds of oysters in August. The company’s flexible budget for August appears below:
| Quilcene Oysteria | |
| Flexible Budget | |
| For the Month Ended August 31 | |
| Actual pounds (q) | $7,000 |
| Revenue ($4.25q) | $29,750 |
| Expenses: | |
| Packing supplies ($0.40q) | $2,800 |
| Oyster bed maintenance ($3,500) | $3,500 |
| Wages and salaries ($2,500 + $0.45q) | $5,650 |
| Shipping ($0.70q) | $4,900 |
| Utilities ($1,290) | $1,290 |
| Other ($440 + $0.01q) | $510 |
| Total expense | $18,650 |
| Net operating income | $11,100 |
The actual results for August appear below:
| Quilcene Oysteria | |
| Income Statement | |
| For the Month Ended August 31 | |
| Actual pounds | $7,000 |
| Revenue | $27,000 |
| Expenses: | |
| Packing supplies | $2,970 |
| Oyster bed maintenance | $3,360 |
| Wages and salaries | $6,060 |
| Shipping | $4,630 |
| Utilities | $1,100 |
| Other | $1,130 |
| Total expense | $19,250 |
| Net operating income | $7,750 |
Required:
Calculate the company’s revenue and spending variances for August. (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.)
Problem-4
Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 83 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:
| Fixed Cost per Month | Cost per Cruise | Cost per Passenger | |
| Vessel operating costs | $6,000 | $471 | $3 |
| Advertising | $2,400 | ||
| Administrative costs | $5,900 | $31 | $2 |
| Insurance | $3,900 |
For example, vessel operating costs should be $6,000 per month plus $471.00 per cruise plus $3.20 per passenger. The company’s sales should average $32.00 per passenger. In July, the company provided 56 cruises for a total of 3,100 passengers.
Required:
Prepare the company’s flexible budget for July.
Problem-5
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:
| Fixed Cost per Month | Cost per Car Washed | |
| Cleaning supplies | $0.80 | |
| Electricity | $1,300.00 | $0.09 |
| Maintenance | $0.15 | |
| Wages and salaries | $4,800.00 | $0.30 |
| Depreciation | $8,500.00 | |
| Rent | $2,200.00 | |
| Administrative expenses | $1,300.00 | $0.04 |
For example, electricity costs are $1,300 per month plus $0.09 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.70 per car washed.
The actual operating results for August are as follows:
| Lavage Rapide | |
| Income Statement | |
| For the Month Ended August 31 | |
| Actual cars washed | $8,200 |
| Revenue | $56,370 |
| Expenses: | |
| Cleaning supplies | $6,980 |
| Electricity | $1,999 |
| Maintenance | $1,455 |
| Wages and salaries | $7,590 |
| Depreciation | $8,500 |
| Rent | $2,400 |
| Administrative expenses | $1,524 |
| Total expense | $30,448 |
| Net operating income | $25,922 |
Required:
Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August. (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.)
Problem-6
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 3,300 helmets, using 2,178 kilograms of plastic. The plastic cost the company $14,375.
According to the standard cost card, each helmet should require 0.59 kilograms of plastic, at a cost of $7.00 per kilogram.
Required:
- What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,300 helmets?
- What is the standard materials cost allowed (SQ × SP) to make 3,300 helmets?
- What is the materials spending variance?
- What is the materials price variance and the materials quantity variance?
Problem-7
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 6,500 of these meals using 3,200 direct labor-hours. The company paid its direct labor workers a total of $36,800 for this work, or $11.50 per hour.
According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $11.00 per hour.
Required:
- What is the standard labor-hours allowed (SH) to prepare 6,500 meals?
- What is the standard labor cost allowed (SH × SR) to prepare 6,500 meals?
- What is the labor spending variance?
- What is the labor rate variance and the labor efficiency variance?
Problem-8
Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:
| Standard Quantity | Standard Price | Standard Cost | |
| Direct materials | $2.00 | $21.00 | $42.00 |
| Direct labor | $0.90 | $12.00 | $10.80 |
| Variable manufacturing overhead | $0.90 | $2.00 | $1.80 |
| Total standard cost per unit | $54.60 |
During November, the following activity was recorded related to the production of Fludex:
- Materials purchased, 10,000 ounces at a cost of $197,000.
- There was no beginning inventory of materials; however, at the end of the month, 2,550 ounces of material remained in ending inventory.
- The company employs 24 lab technicians to work on the production of Fludex. During November, they each worked an average of 170 hours at an average pay rate of $11.50 per hour.
- Variable manufacturing overhead is assigned to Fludexon the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,800.
- During November, the company produced 3,700 units of Fludex.
Required:
For direct materials:
- Compute the price and quantity variances.
- The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract?
For direct labor:
- Compute the rate and efficiency variances.
- In the past, the 24 technicians employed in the production of Fludex consisted of 6 senior technicians and 18 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued?
- Compute the variable overhead rate and efficiency variances.
Problem-9 – chapter 9 Mcgraw-hill solutions
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
| Division | ||
| Osaka | Yokohama | |
| Sales | $10,000,000 | $30,000,000 |
| Net operating income | $700,000 | $2,700,000 |
| Average operating assets | $2,000,000 | $15,000,000 |
Required:
- For each division, compute the return on investment (ROI) in terms of margin and turnover.
- Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division.
- Is Yokohama’s greater amount of residual income an indication that it is better managed?
Problem-10
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
| Division A | Division B | Division C | |
| Sales | $16,000,000 | $36,000,000 | $20,800,000 |
| Average operating assets | $3,200,000 | $7,200,000 | $5,200,000 |
| Net operating income | $752,000 | $576,000 | $540,800 |
| Minimum required rate of return | 9% | 9.50% | 10.40% |
Required:
- Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.
- Compute the residual income (loss) for each division.
- Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.
- If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?
- If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?
Problem-11
DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.
| Month | ||||
| 1 | 2 | 3 | 4 | |
| Throughput time (days) | ? | ? | ? | ? |
| Delivery cycle time (days) | ? | ? | ? | ? |
| Manufacturing cycle efficiency (MCE) | ? | ? | ? | ? |
| Percentage of on-time deliveries | 91% | 86% | 82% | 78% |
| Total sales (units) | 3030 | 2900 | 2752 | 2649 |
Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:
| Average per Month (in days) | ||||
| 1 | 2 | 3 | 4 | |
| Move time per unit | 0.9 | 0.7 | 0.9 | 0.9 |
| Process time per unit | 2.9 | 2.8 | 2.7 | 2.6 |
| Wait time per order before start of production | 19 | 20.8 | 23 | 24.8 |
| Queue time per unit | 4.4 | 5.1 | 5.9 | 6.8 |
| Inspection time per unit | 0.7 | 0.9 | 0.9 | 0.7 |
Required:
1-a. Compute the throughput time for each month.
1-b. Compute the delivery cycle time for each month.
1-c. Compute the manufacturing cycle efficiency (MCE) for each month.
2. Evaluate the company’s performance over the last four months.
3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.
3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.
Problem-12
Prepare the journal entries to record the following transactions on Pharoah Company’s books using a perpetual inventory system.
(a) On March 2, Pharoah Company sold $934,300 of merchandise to Cullumber Company, terms 2/10, n/30. The cost of the merchandise sold was $508,200.
(b) On March 6, Cullumber Company returned $107,900 of the merchandise purchased on March 2. The cost of the merchandise returned was $60,600.
(c) On March 12, Pharoah Company received the balance due from Cullumber Company.