Monthly Archives: June 2013

Extreme Camping Company manufactures three sizes of extreme weather tents—small (S), medium (M), and large (L)

ACCOUNTING Extreme Camping Company manufactures three sizes of extreme weather tents—small (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M, … Continue reading

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Costello Industries Inc. manufactures only one product

ACCOUNTING Costello Industries Inc. manufactures only one product. For the year ended December 31, 2012, the contribution margin increased by $19,800 from the planned level of $888,800. The president of Costello Industries Inc. has expressed some concern about such a … Continue reading

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The demand for solvent, one of numerous products manufactured by Hipp Industries Inc., has dropped sharply because of recent competition from a similar product

ACCOUNTING The demand for solvent, one of numerous products manufactured by Hipp Industries Inc., has dropped sharply because of recent competition from a similar product. The company’s chemists are currently completing tests of various new formulas, and it is anticipated … Continue reading

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The budget director of Outdoor Chef Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month

ACCOUNTING The budget director of Outdoor Chef Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for May 2012 is summarized as follows: a. Estimated … Continue reading

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Dimaggio Sports Equipment, Inc. is considering a switch to level production

ACCOUNTING Dimaggio Sports Equipment, Inc. is considering a switch to level production. Cost efficiencies would occur under level production, and after-tax costs would decline by $35,000, but inventory would increase by $400,000. Dimaggio would have to finance the extra inventory … Continue reading

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Mr. Paul Promptly is a very cautious businessman. His supplier offers trade credit terms of 3/10, net 70

ACCOUNTING Mr. Paul Promptly is a very cautious businessman. His supplier offers trade credit terms of 3/10, net 70. Mr. Promptly never takes the discount offered, but he pays his suppliers in 60 days rather than the 70 days allowed … Continue reading

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Leekee Shipyards has a new barnacle removing product for ocean going vessels

ACCOUNTING Leekee Shipyards has a new barnacle removing product for ocean going vessels. The company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants to make a return on investment of 20% … Continue reading

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Thurman Munster, the owner of Adams Family RVs, is considering the addition of a service center his lot

ACCOUNTING Thurman Munster, the owner of Adams Family RVs, is considering the addition of a service center his lot. The building and equipment are estimated to cost $1,100,000 and both the building and equipment will be depreciated over 10 years … Continue reading

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Princess Cruise Lines has the following service departments; concierge, valet, and maintenance

ACCOUNTING Princess Cruise Lines has the following service departments; concierge, valet, and maintenance. Expense for these departments are allocated to Mediterranean and Trans-Atlantic cruises. Expenses for the departments are totaled (both variable and fixed components are combined) and as follows: … Continue reading

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Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.38

ACCOUNTING Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.38. (a) What is the break-even point per month in sales? (b) What level of sales is needed for … Continue reading

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