Monthly Archives: October 2016

As the CEO of Middling Hardware Company, you examined the following measures

As the CEO of Middling Hardware Company, you examined the following measures of the performance of three divisions (in thousands of dollars): 1. Calculate for each division the rate of return on net assets and the economic profit based on … Continue reading

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The Jeske Company had the following financial results for two recent fiscal

The Jeske Company had the following financial results for two recent fiscal years (in millions): .:. 1. Suppose that Jeske’s cost of capital is 11.5%. Compute the company’s EVA for years 1 and 2. Assume definitions of after-tax operating income … Continue reading

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Hopkins Community Hospital operates an outpatient clinic in a town several miles

Hopkins Community Hospital operates an outpatient clinic in a town several miles from the main hospital. For several years the clinic has struggled just to break even. The clinic’s financial budget for 20X7 is shown below:   .:. On the … Continue reading

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The Lucerne Chocolate Company uses standard costs and a flexible budget to control

The Lucerne Chocolate Company uses standard costs and a flexible budget to control its manufacture of fine chocolates. The purchasing agent is responsible for material price variances, and the production manager is responsible for all other variances. Operating data for … Continue reading

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Sunset Company’s unit costs of manufacturing and selling a given item at the planned

Sunset Company’s unit costs of manufacturing and selling a given item at the planned activity level of 20,000 units per month are as follows: Manufacturing costs Direct materials ………………. $4.30 Direct labor ……………………. 0.95 Variable overhead …………….. 1.10 Fixed overhead … Continue reading

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Kister Electronics had a fixed factory overhead budget for 20X0 of $72 million

Kister Electronics had a fixed factory overhead budget for 20X0 of $72 million. The company planned to make and sell 9 million units of a particular communications device. All variable manufacturing costs per unit were $18. The budgeted income statement … Continue reading

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The Drosselmeier Corporation, located in Munich, makes Christmas nutcrackers

The Drosselmeier Corporation, located in Munich, makes Christmas nutcrackers and has an annual plant capacity of 2,400 product units. Suppose its predicted operating results (in euros) for the year are as follows: Production and sales of 2,000 units, total sales … Continue reading

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Dell Case. Published income statements use the absorption-costing basis

Dell Case. Published income statements use the absorption-costing basis—after all, that is the method that is acceptable for use under GAAP. But the absorption-costing statement might not really provide the information that management needs to make future decisions because it … Continue reading

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On January 1, 2014, Alter Company had Accounts Receivable $154,000

On January 1, 2014, Alter Company had Accounts Receivable $154,000, Notes Receivable of $12,000; and Allowance for Doubtful Accounts of $13,200.  The note receivable is from Hartwig Company.  It is a 4-month, 9% note dated December 31, 2013.  Alter Company … Continue reading

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At December 31, 2013, Dustin Company reported this information on its balance sheet

At December 31, 2013, Dustin Company reported this information on its balance sheet. Account receivable                                          $960,000 Less:  Allowance for doubtful accounts              78,000 During 2014, the company had the following transactions related to receivables. 1)    Sales on account                                                                      $3,600,000 2)    Sales … Continue reading

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