Managerial Accounting

wily_plus_managerial_accounting.docx

Home >Business & Finance homework help >Accounting homework help >Managerial Accounting

Exercise 18-1

Financial information for Sinead Inc. is presented below.

	December 31, 2013	December 31, 2012
Current assets	$123,920	$100,970
Plant assets (net)	394,340	328,550
Current liabilities	89,510	70,740
Long-term liabilities	129,370	87,560
Common stock, $1 par	166,530	116,400
Retained earnings	132,850	154,820

Prepare a schedule showing a horizontal analysis for 2013 using 2012 as the base year. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.3%.)

SINEAD INC. Condensed Balance Sheets December 31
			Increase or (Decrease)
	2013	2012	Amount	Percentage
Assets
Current Assets	$123,920	$100,970	$	%
Plant Assets (net)	394,340	328,550		%
Total assets	$518,260	$429,520	$	%
Liabilities
Current Liabilities	$89,510	$70,740	$	%
Long-term Liabilities	129,370	87,560		%
Total liabilities	218,880	158,300		%
Stockholders' Equity
Common Stock, $1 par	166,530	116,400		%
Retained Earnings	132,850	154,820		%
Total stockholders' equity	299,380	271,220		%
Total liabilities and stockholders' equity	$518,260	$429,520	$	%

Exercise 18-2

Operating data for Krystal Corporation are presented below.

	2013	2012
Net sales	$747,550	$596,800
Cost of goods sold	466,890	393,490
Selling expenses	123,640	70,370
Administrative expenses	56,450	54,540
Income tax expense	30,120	25,260
Net income	70,450	53,140

Prepare a schedule showing a vertical analysis for 2013 and 2012. (Round all answers to 1 decimal place, e.g. 48.5%.)

KRYSTAL CORPORATION Condensed Income Statements For the Years Ended December 31
	2013	2012
	Amount	Percent	Amount	Percent
Net sales	$747,550	%	$596,800	%
Cost of goods sold	466,890	%	393,490	%
Gross margin	280,660	%	203,310	%
Selling expenses	123,640	%	70,370	%
Administrative expenses	56,450	%	54,540	%
Total operating expenses	180,090	%	124,910	%
Income before income taxes	100,570	%	78,400	%
Income taxes expense	30,120	%	25,260	%
Net income	$70,450	%	$53,140	%

Comparative statement data for Lionel Company and Barrymore Company, two competitors, appear below. All balance sheet data are as of December 31, 2013, and December 31, 2012.

	Lionel Company	Barrymore Company
	2013	2012	2013	2012
Net sales	$1,576,018		$339,804
Cost of goods sold	1,008,289		240,939
Operating expenses	300,593		78,336
Interest expense	8,640		2,920
Income tax expense	54,924		6,370
Current assets	320,222	$314,105	83,452	$ 78,542
Plant assets (net)	519,420	498,249	139,245	125,702
Current liabilities	64,200	74,053	34,295	28,136
Long-term liabilities	107,950	90,407	28,915	25,879
Common stock, $10 par	496,000	496,000	120,000	120,000
Retained earnings	171,492	151,894	39,487	30,229

Warning

Don't show me this message again for the assignment

Cancel

(a)

Prepare a vertical analysis of the 2013 income statement data for Lionel Company and Barrymore Company in columnar form. (Round percentages to 1 decimal place, e.g. 12.1%.)

Condensed Income Statement For the Year Ended December 31, 2013
	Lionel Company	Barrymore Company
	Dollars	Percent	Dollars	Percent
	$	%	$	%
		%		%
		%		%
		%		%
		%		%

		%		%
		%		%
		%		%
	$	%	$	%

Problem 18-2A

The comparative statements of Larker Tool Company are presented below.

LARKER TOOL COMPANY Income Statement For the Years Ended December 31
	2013	2012
Net sales	$1,818,550	$1,747,770
Cost of goods sold	1,007,430	973,740
Gross profit	811,120	774,030
Selling and administrative expense	513,100	474,200
Income from operations	298,020	299,830
Other expenses and losses
Interest expense	18,080	14,010
Income before income taxes	279,940	285,820
Income tax expense	80,510	76,850
Net income	$ 199,430	$ 208,970

LARKER TOOL COMPANY Balance Sheets December 31
Assets	2013	2012
Current assets
Cash	$60,940	$64,870
Short-term investments	69,730	49,980
Accounts receivable (net)	117,930	102,100
Inventory	123,140	114,700
Total current assets	371,740	331,650
Plant assets (net)	597,060	518,860
Total assets	$968,800	$850,510
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$160,110	$145,780
Income taxes payable	42,620	41,460
Total current liabilities	202,730	187,240
Bonds payable	204,100	204,100
Total liabilities	406,830	391,340
Stockholders’ equity
Common stock ($5 par)	276,000	300,000
Retained earnings	285,970	159,170
Total stockholders’ equity	561,970	459,170
Total liabilities and stockholders’ equity	$968,800	$850,510

All sales were on account. Compute the following ratios for 2013. (Weighted-average common shares in 2013 were 55,700.) (Round Earnings per share to 2 decimal places, e.g.1.65, and all others to 1 decimal place, e.g. 6.8 or 6.8% .)

(a)	Earnings per share	$
(b)	Return on common stockholders’ equity		%
(c)	Return on assets		%
(d)	Current ratio		:1
(e)	Acid-test ratio		:1
(f)	Receivables turnover		times
(g)	Inventory turnover		times
(h)	Times interest earned		times
(i)	Asset turnover		times
(j)	Debt to total assets		%

Brief Exercise 19-1

Complete the following comparison table between managerial and financial accounting.

	Financial Accounting	Managerial Accounting
Primary users

Types of reports

Frequency of reports

Purpose of reports

Content of reports

Verification

Brief Exercise 19-2 (Essay)

The Sarbanes-Oxley Act of 2002 (SOX) has important implications for the financial community. Explain two implications of SOX.

Brief Exercise 19-3

Identify which of the following statements best describes the functions of the management of an organization.

(a)				requires management to look ahead and to establish objectives. A key objective of management is to add value to the business

(b)				involves coordinating the diverse activities and human resources of a company to produce a smooth-running operation. This function relates to the implementation of planned objectives.

(c)				is the process of keeping the activities on track. Management must determine whether goals are being met and what changes are necessary when there are deviations.

Determine whether each of the following costs should be classified as direct materials (DM), direct labor (DL), or manufacturing overhead (MO).

(a)				Frames and tires used in manufacturing bicycles.

(b)				Wages paid to production workers.

(c)				Insurance on factory equipment and machinery.

(d)				Depreciation on factory equipment.

Problem 19-1A

Fabila Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 11,350 helmets per month (80% of its full capacity). Fabila’s monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment		$7,380
Insurance on factory building		1,720
Raw materials (plastics, polystyrene, etc.)		79,630
Utility costs for factory		500
Supplies for general office		100
Wages for assembly line workers		40,700
Depreciation on office equipment		860
Miscellaneous materials (glue, thread, etc.)		2,120
Factory manager’s salary		5,690
Property taxes on factory building		550
Advertising for helmets		14,610
Sales commissions		7,050
Depreciation on factory building		1,400

(a) Prepare an answer sheet. Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.

	Product Costs
Cost Item	Direct Materials	Direct Labor	Manufacturing Overhead	Period Costs
Rent on factory equipment	$	$	$	$
Insurance on factory building
Raw materials
Utility costs for factory
Supplies for general office
Wages for assembly line workers
Depreciation on office equipment
Miscellaneous materials
Factory manager’s salary
Property taxes on factory building
Advertising for helmets
Sales commissions
Depreciation on factory building
	$	$	$	$

(b) Compute the cost to produce one helmet. (Round answer to 2 decimal places, e.g. 1.25.)

The cost to produce one helmet

Brief Exercise 21-1

Mendez Manufacturing (a) purchases $45,200 of raw materials on account, and (b) it incurs $51,060 of factory labor costs. Journalize the two transactions on March 31 assuming the labor costs are not paid until April. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
a.

b.

List Of Accounts

Close

Brief Exercise 21-1

Accounts Payable Accounts Receivable Cash Cost of Goods Sold Factory Labor Factory Wages Payable Finished Goods Inventory Manufacturing Overhead Raw Materials Inventory Salaries and Wages Payable Sales Work in Process - Assembly Work in Process - Blending Work in Process - Canning Work in Process - Cooking Work in Process - Cutting Work in Process - Finishing Work in Process - Machining Work in Process - Mixing Work in Process - Packaging

Brief Exercise 21-2

Mendez Manufacturing (a) purchases $38,050 of raw materials on account, (b) and it incurs $54,970 of factory labor costs. Supporting records show that the Assembly Department used $27,030 of raw materials and $26,450 of the factory labor, and the Finishing Department used the remainder. Journalize the assignment of the costs to the processing departments on March 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
(a)


(b)

List Of Accounts

Close

Brief Exercise 21-2

Brief Exercise 21-3

Mendez Manufacturing (a) purchases $45,580 of raw materials on account, (b) and it incurs $51,930 of factory labor costs. Supporting records show that the Assembly Department used $25,230 of raw materials and $25,880 of the factory labor, and the Finishing Department used the remainder. Manufacturing overhead is assigned to departments on the basis of 190% of labor costs. Journalize the assignment of overhead to the Assembly and Finishing Departments. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

List Of Accounts

Close

Brief Exercise 21-3

Brief Exercise 22-4

Moines Company accumulates the following data concerning a mixed cost, using miles as the activity level.

	Miles Driven	Total Cost		Miles Driven	Total Cost
January	8,940	$14,180	March	9,440	$16,018
February	7,710	13,250	April	9,140	14,460

Compute the variable and fixed cost elements using the high-low method. (Round Variable cost to 2 decimal places, e.g. $1.37)

Variable cost per mile		$
Fixed cost		$

Brief Exercise 22-5

Determine the missing amounts. (Round Contribution Margin Ratio to 0 decimal places, e.g. 32%)

	Unit Selling Price	Unit Variable Costs	Contribution Margin per Unit	Contribution Margin Ratio
1.	$300	$198	$		%
2.	$300	$	$117		%
3.	$	$	$270	27	%

Brief Exercise 22-9

Sylvia Manufacturing Inc. had sales of $2,425,260 for the first quarter of 2012. In making the sales, the company incurred the following costs and expenses.

	Variable	Fixed
Cost of goods sold	$763,520	$538,840
Selling expenses	90,570	56,950
Administrative expenses	83,020	63,050

Prepare a CVP income statement for the quarter ended March 31, 2012.

SYLVIA MANUFACTURING INC. Income Statement For the Quarter Ended March 31, 2012
		$

	$









		$

Exercise 22-5

In the month of June, Bonita Beauty Salon gave 3,330 haircuts, shampoos, and permanents at an average price of $30. During the month, fixed costs were $18,600 and variable costs were 60% of sales.

Warning

Don't show me this message again for the assignment

Cancel

(a)

Determine the contribution margin in dollars, per unit, and as a ratio. (Round the contribution ratio to 0 decimal places, e.g. 27%)

Contribution Margin in Dollars	$
Contribution Margin Per Unit	$
Contribution Margin Ratio		%

Exercise 23-3

Ernst and Anderson, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Auditing	2,030	1,580	2,060	2,290
Tax	2,950	2,370	2,190	2,380
Consulting	1,610	1,610	1,610	1,610

Average hourly billing rates are: auditing $84, tax $88, and consulting $101. Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

ERNST AND ANDERSON, CPAs Sales Revenue Budget For the Year Ending December 31, 2012
	Quarter 1		Quarter 2
Dept.	Billable Hours	Billable Rate	Total Rev.	Billable Hours	Billable Rate	Total Rev.
Auditing		$	$		$	$
Tax
Consulting
Totals			$			$

ERNST AND ANDERSON, CPAs Sales Revenue Budget For the Year Ending December 31, 2012
Dept.	Quarter 3		Quarter 4
	Billable Hours	Billable Rate	Total Rev.	Billable Hours	Billable Rate	Total Rev.
Auditing		$	$		$	$
Tax
Consulting
Totals			$			$

ERNST AND ANDERSON, CPAs Sales Revenue Budget For the Year Ending December 31, 2012
Year
Dept.	Billable Hours	Billable Rate	Total Rev.
Auditing		$	$
Tax
Consulting
Totals			$

Exercise 23-5

Paseo Industries has adopted the following production budget for the first 4 months of 2013.

Month	Units	Month	Units
January	10,160	March	5,490
February	8,280	April	3,680

Each unit requires 5 pounds of raw materials costing $2 per pound. On December 31, 2012, the ending raw materials inventory was 9,310 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month’s production requirements. Prepare a direct materials purchases budget by month for the first quarter.

PASEO INDUSTRIES Direct Materials Purchases Budget For the Quarter Ending March 31, 2013
	January	February	March



:

:

	$	$	$
	$	$	$

Exercise 23-8

Tye Company is preparing its manufacturing overhead budget for 2012. Relevant data consist of the following. Units to be produced (by quarters): 11,200, 11,900, 16,900, 16,100. Direct labor: Time is 1.4 hours per unit. Variable overhead costs per direct labor hour: Indirect materials $0.6; indirect labor $1.2; and maintenance $0.4. Fixed overhead costs per quarter: Supervisory salaries $35,600; depreciation $17,000; and maintenance $11,300. Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round overhead rate to 2 decimal places, e.g. $2.58)

TYE COMPANY Manufacturing Overhead Budget For the Year Ending December 31, 2012
	Quarter
	1	2	3	4	Year
Variable costs:
	$	$	$	$	$



Fixed costs:




	$	$	$	$	$

Exercise 23-13

Blue Lagoon Corporation is projecting a cash balance of $31,155 in its December 31, 2011, balance sheet. Blue Lagoon’s schedule of expected collections from customers for the first quarter of 2012 shows total collections of $179,582. The schedule of expected payments for direct materials for the first quarter of 2012 shows total payments of $40,707. Other information gathered for the first quarter of 2012 is: sale of equipment $3,867, direct labor $69,922, manufacturing overhead $35,411, selling and administrative expenses $45,196 and purchase of securities $12,292. Blue Lagoon wants to maintain a balance of at least $24,984 cash at the end of each quarter. Prepare a cash budget for the first quarter.

BLUE LAGOON CORPORATION Cash Budget For the Quarter Ended March 31, 2012
		$
Add:




Less:










		$