Alydar, Inc., manufactures and sells automotive tools through three divisions: Eastern, Southern, and International

Problem 18.37
Operating Income for Segments

Alydar, Inc., manufactures and sells automotive tools through three divisions: Eastern, Southern, and International. Each division is evaluated as a profit center. Data for each division for last year are as follows:

Alydar, Inc., had corporate administrative expenses equal to $585,000; these were not allocated to the divisions.

Required:

1. Prepare a segmented income statement for Alydar, Inc., for last year.

2. Which of the divisions is the least profitable?

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Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc

Exercise 18.20
Pricing Strategy, Sales Variances

Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.

At the end of the year, actual sales revenue for Product R and Product S was $3,075,000 and $3,254,000, respectively. The actual price charged for Product R was $25 and for Product S was $20. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $540,000 for this product.

Required:

1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.

2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?

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Otero Fibers, Inc., specializes in the manufacture of synthetic fibers that the company

Exercise 18.18

Cost-Based Pricing

Otero Fibers, Inc., specializes in the manufacture of synthetic fibers that the company uses in many products such as blankets, coats, and uniforms for police and firefighters. Otero has been in business since 1985 and has been profitable every year since 1993. The company uses a standard cost system and applies overhead on the basis of direct labor hours.

Otero has recently received a request to bid on the manufacture of 800,000 blankets scheduled for delivery to several military bases. The bid must be stated at full cost per unit plus a return on full cost of no more than 10 percent after income taxes. Full cost has been defined as including all variable costs of manufacturing the product, a reasonable amount of fixed overhead, and reasonable incremental administrative costs associated with the manufacture and sale of the product. The contractor has indicated that bids in excess of $30 per blanket are not likely to be considered.

In order to prepare the bid for the 800,000 blankets, Andrea Lightner, cost accountant, has gathered the following information about the costs associated with the production of the blankets.

Required:

1. Calculate the minimum price per blanket that Otero Fibers could bid without reducing the company’s operating income. If required, round your calculations and final answer to the nearest cent.

2. Using the full-cost criteria and the maximum allowable return specified, calculate Otero Fibers’ bid price per blanket. For computation of the allowable return, round the before-tax rate of return to two decimal places (for example,15.468% rounds to 15.47%). Round your final answer to the nearest cent.

3. Without prejudice to your answer to Requirement 2, assume that the price per blanket that Otero Fibers calculated using the cost-plus criteria specified is greater than the maximum bid of $30 per blanket allowed. Which of the items listed is not a factor that Otero Fibers should consider before deciding whether or not to submit a bid at the maximum acceptable price of $30 per blanket. (CMA adapted)

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During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota)

Exercise 18.16
Variable Costing, Absorption Costing

During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,000 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 38,200 scoops. Fixed overhead was applied at $0.75 per unit produced. Fixed overhead was underapplied by $2,900. This fixed overhead variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the year’s operations are as follows (on an absorption-costing basis):

Required:

1. Calculate the cost of the firm’s ending inventory under absorption costing. In your computations, round the unit cost to five decimal places. Round your final answer to the nearest dollar.
What is the cost of the ending inventory under variable costing? In your computations, round the unit cost to five decimal places. Round your final answer to the nearest dollar.

2. Prepare a variable-costing income statement. Round the unit cost to five decimal places when determining the variable cost of goods sold.

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Flaherty, Inc., has just completed its first year of operations (A+ Guaranteed)

Exercise18.15
Absorption and Variable Costing with Over- and Underapplied Overhead

Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:

Actual fixed overhead was $12,000 less than budgeted fixed overhead. Budgeted variable overhead was $5,000 less than the actual variable overhead. The company used an expected actual activity level of 12,000 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold.

1. Compute the unit cost using (a) absorption costing and (b) variable costing. If required, round your answers to the nearest cent.
2. Prepare an absorption-costing income statement.
3. Prepare a variable-costing income statement.

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Iliff, Inc., produces and sells two types of countertop ovens

Exercise 18.6

Contribution Margin Variance

Iliff, Inc., produces and sells two types of countertop ovens—the toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.

Required:

1. Calculate the contribution margin variance.

2. What if actual units sold of the convection oven increased? How would that affect the contribution margin variance?
What if actual units sold of the convection oven decreased? How would that affect the contribution margin variance?

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Pattison Products, Inc., began operations in October and manufactured 40,000 units

Exercise 18.3

Absorption Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs:

Total fixed factory overhead is $280,000 per month. During October, 38,400 units were sold at a price of $24, and fixed marketing and administrative expenses were $130,500.

Required:
1. Calculate the cost of each unit using absorption costing.

2. How many units remain in the ending inventory?

What is the cost of ending inventory using absorption costing?

3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October.
4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of the ending inventory?

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Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments

Exercise 18.1

Markup on Cost, Job Pricing

Ventana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventana’s income statement for last year is as follows:

Ventana wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year.

Required:

1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? Round your answer to the nearest whole percentage value. For example, 15.6% rounds to 16% and should be entered as “16″ in the answer box.

2. A customer orders draperies and shades for a remodeling job. The job will have the following costs:

What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.)

3. What if Ventana wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? Round your answer to the nearest whole percentage value. For example, 15.6% rounds to 16% and should be entered as “16″ in the answer box.
% of direct materials cost
What is the bid price Ventana will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.)

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San Mateo Optics, Inc., specializes in manufacturing lenses

Problem 18.30
Absorption- and Variable-Costing Income Statements

San Mateo Optics, Inc., specializes in manufacturing lenses for large telescopes and cameras used in space exploration. As the specifications for the lenses are determined by the customer and vary considerably, the company uses a job-order costing system.

Manufacturing overhead is applied to jobs on the basis of direct labor hours, utilizing the absorption- or full-costing method. San Mateo�s predetermined overhead rates for 2015 and 2016 were based on the following estimates.

hmcc03h_ch14_p18-30q1.jpg

Jim Cimino, San Mateo�s controller, would like to use variable (direct) costing for internal reporting purposes as he believes statements prepared using variable costing are more appropriate for making product decisions. In order to explain the benefits of variable costing to the other members of San Mateo�s management team, Cimino plans to convert the company�s income statement from absorption costing to variable costing. He has gathered the following information for this purpose, along with a copy of San Mateo�s 2015 and 2016 comparative income statement.

hmcc03h_ch14_p18-30q.jpg

For both years, all administrative expenses were fixed, while a portion of the selling expenses resulting from an 8 percent commission on net sales was variable. San Mateo reports any over or underapplied overhead as an adjustment to the cost of goods sold.

Required:


1.
For the year ended December 31, 2016, prepare the revised income statement for San Mateo Optics, Inc., utilizing the variable-costing method. Be sure to include the contribution margin on the revised income statement. Enter all answers as positive amounts.

2. Which of the listed items is not an advantage of using variable costing rather than absorption costing?

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DEVRY MGMT340 WEEK 8 FINAL EXAM (A+ Guaranteed)

DEVRY MGMT340 WEEK 8 FINAL EXAM

Question 1. (TCO 1) When developing information systems, an organization could use:

an information technology services firm.
open-source software.
cloud computing.
in-house development.
all of the above.

Question 2. (TCO 1) The practice of turning over responsibility of some or all of an organization’s information systems applications and operations to an outside firm is referred to as:

realignment.
downsizing.
outsourcing.
time sharing.
system reassignment and deployment.

Question 3. (TCO 2) Identifying, assessing, and managing the risks and day-to-day changes that occur during a project best defines which of the following project manager activities?

Conflict management
Risk and change management
Team management
Customer relations
Technical problem solving

Question 4. (TCO 2) Which of the following is NOT a project management phase?

Closing down the project
Planning the project
Executing the project
Initiating a project
Implementing the project

Question 5. (TCO 2) Which of the following would be classified as an intangible cost?

Hardware costs
Labor costs
Employee morale
Operational costs
Internet service setup fee

Question 6.(TCO 2) The primary deliverable from the project identification and selection phase is:

a context data flow diagram.
at least three substantively different system design strategies for building the replacement information system.
the development of a new version of the software and new versions of all design documents.
an entity relationship diagram.
a schedule of specific IS development projects.

Question 7.(TCO 3) The term that refers to systems development projects bogged down in an abundance of analysis work is:

information overload.
analysis paralysis.
analysis overload.
information abundance.
disruptive analysis.

Question 8.(TCO 3) Good interview guidelines consist of:

phrasing the question to illicit the correct response.
typing your notes within two weeks of the interview.
establishing expectation levels about the new system.
seeking a variety of perspectives from the interviews.
using as much time as you need.

Question 9. (TCO 3) The search for, and implementation of, radical change in business processes to achieve breakthrough improvements in products and services best defines:

joint application design.
rapid application development.
structured programming.
business process reengineering.
disruptive design.

Question 10.(TCO 3) The purpose of requirements structuring is to:

enable the analysts to gather information on what the system should do from as many sources as possible.
enable the analysts to develop a baseline project plan quickly.
enable the large amount of information gathered during requirements determination to be organized.
enable the analysts to identify several feasible alternatives.

Question 11.(TCO 4) The diagram that shows the scope of the system, indicating what elements are inside and outside the system, is called a:

context diagram.
level-2 diagram.
referencing diagram.
representative diagram.
decomposition diagram.

Question 12.(TCO 5) The number of instances of entity B that can (or must) be associated with each instance of entity A refers to:

cardinality.
domain.
ternary occurrence.
participation level.
join level.

Question 13. (TCO 6) Shaping alternative system design strategies involves:

enumerating different potential implementation environments.
proposing different ways to source or acquire the various sets of capabilities for the different implementation environments.
dividing requirements into different sets of capabilities.
all of the above.
none of the above.

Question 14. (TCO 7) Which of the following are general guidelines for displaying tables and lists?

All columns and rows should have meaningful labels.
Place a blank line between every five rows in long columns.
Use the same family of typefaces within and across displays and reports.
Allow white space on printed reports for the user to write notes.
All of the above are guidelines for displaying tables and lists.

Question 15. Question : (TCO 7) Which of the following is a guideline for displaying text?

Use double spacing if space permits.
Do not hyphenate words between lines.
Left-justify text and leave a ragged right margin.
Display text in mixed upper and lowercase and use conventional punctuation.
All of the above are guidelines for displaying text.

Question 16. Question : (TCO 7) Reversing the sequence of one or more characters in a field is called:

transposing.
transcripting.
appending.
truncating.
hashing.

Question 17.(TCO 8) A notation that allows the modeler to specify, visualize, and construct the artifacts of software systems, as well as business models, best defines:

Unified Modeling Language.
Structured English.
pseudocode.
logic modeling.
structured design.

Question 18.(TCO 8) Benefits of the object-oriented modeling approach include:

the ability to tackle more challenging problem domains.
improved communication among users, analysts, designers, and programmers.
reusability of analysis, design, and programming results.
increased consistency among the models developed during object-oriented analysis, design, and programming.
all of the above.

Question 19.(TCO 9) System documentation that is part of the program source code or is generated at compile time best defines:

system documentation.
user documentation.
internal documentation.
external documentation.
embedded documentation.

Question 20 (TCO 9) User testing of a completed information system using simulated data refers to:

acceptance testing.
alpha testing.
beta testing.
system testing.
stub testing.

Question 1. (TCO 1) Describe the role of a systems analyst.

Question 2. (TCO 2) Discuss the six major categories of feasibility.

Question 3. (TCO 3) Identify and describe the traditional methods for determining requirements.

Question 4. (TCO 4) What is gap analysis? Why is gap analysis useful?

Question 5. (TCO 5) Contrast data modeling to process modeling and logic modeling.

Question 6. (TCO 6) Suppose that an analysis team did not generate alternative design strategies for consideration by a project steering committee or client. What might the consequences be of having only one design strategy? What might happen during the oral presentation of project progress if only one design strategy is offered?

Question 7. (TCO 7) Describe the three-step process for designing dialogues.

Question 8. (TCO 8) What is meant by Agile Methodologies? Identify the three key principles that the Agile Methodologies share.

Question 9. (TCO 9) Describe four types of installation.

Question 10. (TCO 9) Describe four types of maintenance.

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