COPYRIGHT PAGE. Published by: Flat World Knowledge, Inc th St NW Washington, DC 20036

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1 COPYRIGHT PAGE Published by: Flat World Knowledge, Inc th St NW Washington, DC by Flat World Knowledge, Inc. All rights reserved. Your use of this work is subject to the License Agreement available here No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement. Flat World Knowledge, Inc 1

2 Chapter 1 Problem 49 a. Direct materials placed in production: $90,000 c. Cost of goods sold: $855,000 Problem 50 b. Cost of goods manufactured: $2,385,000 c. Cost of goods sold: $2,565,000 Problem 51 b. Cost of goods manufactured: $4,770,000 d. Gross profit: $2,460,000 Problem 52 a. Direct materials placed in production: $135,000 d. Gross profit: $615,000 Flat World Knowledge, Inc 2

3 Chapter 2 Problem 32 c. Manufacturing overhead balance: $27,400 credit Problem 33 d. Manufacturing overhead underapplied by $37,500 Problem 34 a. Job 1 total product cost: $4,200 d. Gross profit: $2,870 Problem 35 a. Job 3 total product cost: $30,950 c. Job 1 gross profit: $11,960 Problem 36 d. Total Work in Process: $5,610 Problem 37 a. Job 2 total product cost: $2,300 Problem 38 a. Manufacturing overhead overapplied by $90,000 Problem 39 b. Debit cost of goods sold $60,000 Comprehensive Case 43 c. Credit manufacturing overhead $120,000 d. Gross profit: $1,110,000 Comprehensive Case 44 c. Credit cost of goods sold $21,000 d. Gross profit: $386,000 Flat World Knowledge, Inc 3

4 Chapter 3 Problem 40 b. (2) Regular monitor total product cost: $ c. (3) Premium monitor total product cost: $ Problem 41 b. (1) Plantwide allocation rate: 300% of direct labor costs d. ABC table profit: $164 per unit Problem 42 b. Total overhead applied: $252,800 c. Debit WIP Inventory $252,800 Problem 43 b. Total overhead allocated to student loans: $21,125 d. Total cost per auto loan: $ Problem 44 a. (1) Plantwide allocation rate: 110% of direct labor costs b. (3) Residential profit: $165,750 Problem 45 c. Debit WIP Inventory $17,735 Problem 46 a. Personnel costs allocated to Finishing: $700,000 Problem 47 a. Employee costs allocated to Sanding: $1,000,000 Skill-Building Case 52 b. Basic sailboat profit per unit: $ Comprehensive Case 54 d. Credit cost of goods sold $16,925 e. Gross profit: $77,925 Flat World Knowledge, Inc 4

5 Chapter 4 Problem 31 a. Step 3 total equivalent cost per unit: $2.797 Problem 32 a. Step 3 direct materials cost per equivalent unit: $0.448 Problem 33 a. Step 3 total cost per equivalent unit: $0.718 c. (1) Debit WIP Inventory Milling $45,000 Comprehensive Case 38 b. Step 3 total cost per equivalent unit: $ Comprehensive Case 39 b. Direct materials cost per equivalent unit: $ Flat World Knowledge, Inc 5

6 Chapter 5 Problem 41 a. (4) V; (9) F b. (3) F; (7) V Problem 42 b. Estimated total cost: $180,000 c. Contribution margin: $150,000 Problem 43 a. Cost equation: Y = $192,862 + $57.14X d. High-low method total cost: $267,144 Problem 44 a. Cost equation: Y = $30,678 + $364.86X d. Regression analysis total cost: $157,240 Problem 45 c. Cost equation: Y = $75,403 + $2,536.77X e. Operating profit: $27,023 Problem 46 c. Estimated total cost: $717,445 Skill-Building Case 49 a. Estimated operating income: $2,355 Comprehensive Case 51 a. (2) Cost equation: Y = $464,110 + $48.12X b. (2) Cost equation: Y = $564,110 + $48.12X Flat World Knowledge, Inc 6

7 Chapter 6 Problem 51 b. Target profit: 14,167 e. Margin of safety: 2,000 units g. Operating loss ($60,000) Problem 52 a. Break-even point: 25,000 units d. Target profit: $26,250,000 f. Margin of safety: $45,000,000 Problem 53 b. Target profit: $26,785,715 Problem 54 b. (1) Break-even point: 27,174 units d. Operating profit: $216,000 g. Target profit: $1,948,814 Problem 55 a. Break-even point: $800,000 d. Operating profit: $470,000 Problem 56 a. Weighted average CM: $11.20 c. (1) Target profit: 102,679 units h. (2) Operating profit: $410,000 Problem 57 a. (2) Operating profit: $800,000 b. (1) Operating profit: $560,000 c. (2) Operating profit: $1,190,000 Skill-Building Case 59 a. (2) Break-even point: 5,000 units c. (2) Operating profit: $1,800,000 Skill-Building Case 60 a. Option (1): Operating profit, $158,500 Option (3): Operating loss, ($54,500) Comprehensive Case 63 e. (1) Break-even point: $1,235,154 f. Operating profit: $243,622 Flat World Knowledge, Inc 7

8 Chapter 7 Problem 48 d. Savings from outsourcing: $35,000 Problem 49 c. Cost increase from outsourcing: ($2,500) Problem 50 c. Loss from dropping product line: ($5,500) Problem 51 c. Loss from dropping product line: ($65,000) Problem 52 c. Profit from dropping customer: $7,500 e. Loss from dropping customer: $(8,250) Problem 53 c. Loss from dropping customer: ($500) e. Profit from dropping customer: $1,500 Problem 54 b. Profit increase from accepting special order: $875,000 Problem 55 d. Profit increase from accepting special order: $10,000 Problem 56 a. Target cost: $240 Problem 57 c. CM per labor hour, Cello: $ Problem 58 b. Salmon profit: $18,000 Problem 59 a. Cherry profit: $7,000 Skill-Building Case 64 Higher profit from rejecting special order: $20,000 Comprehensive Case 66 a. Making pianos internally saves $84,000 Comprehensive Case 67 c. Loss from dropping product lines: ($55,000) Flat World Knowledge, Inc 8

9 Chapter 8 Problem 41 a. NPV for equipment B: $23,524 Problem 42 a. NPV: $11,829 c. Payback period: 4 years, 10 months Problem 43 a. IRR: percent Problem 44 b. IRR is between 18 and 20 percent Problem 45 a. IRR: percent Problem 46 a. NPV: $27,932 d. Payback period: 4 years, 9 months Problem 47 a. NPV: ($153,568) Flat World Knowledge, Inc 9

10 Chapter 9 Problem 38 b. 2 nd quarter units to be produced: 6,500 c. 1st quarter cost of materials to be purchased: $46,320 Problem 39 b. 3rd quarter units to be produced: 89,350 d. 2nd quarter direct labor cost: $118,440 Problem 40 a. 3rd quarter cash payments for S&A: $391,000 b. 4th quarter net income: $96,600 Problem 41 a. 1 st quarter total cash collections: $1,970,000 b. 2 nd quarter total cash payments: ($1,263,900) Problem 43 b. 1st quarter merchandise to be purchased: $244,000 d. 2nd quarter net income: $145,000 g. Total assets: $1,135,200 Skill-Building Case 46 2nd quarter sales revenue: $11,000,000 1st quarter units to be produced: 44,550 Comprehensive Case 48 a. 4th quarter sales revenue: $270,000 c. 3rd quarter net income: $48,840 e. 1st quarter ending cash balance: $49,840 f. Total assets: $438,272 Comprehensive Case 49 a. 2nd quarter units to be produced: 112,250 3rd quarter cash payments for overhead: $1,136,775 c. 2nd quarter net income: $4,026,000 f. Total assets: $31,005,760 Comprehensive Case 50 b. Net income: $7,400,000 Flat World Knowledge, Inc 10

11 Chapter 10 Problem 45 a. Materials quantity variance: ($6,000) favorable b. Labor rate variance: ($13,000) favorable Problem 46 a. Fixed overhead spending variance: $15,000 unfavorable Problem 47 a. Dr. RM Inventory 390,000 Cr. Materials Price Variance 39,000 Cr. Accounts Payable 429,000 Problem 48 a. Materials price variance: ($33,000) favorable c. Variable overhead efficiency variance: ($34,800) favorable g. Dr. WIP Inventory 2,030,000 Cr. Materials Qty. Variance 40,600 Cr. RM Inventory 2,070,600 Problem 49 a. Fixed overhead production volume variance: $32,200 unfavorable Problem 50 a. Materials quantity variance: $66,000 unfavorable b. Labor rate variance: $30,800 unfavorable f. Fixed overhead spending variance: $126,000 unfavorable Problem 51 c. Dr. WIP Inventory 1,161,600 Cr. Mfg. Overhead 1,161,600 Problem 52 a. Product testing spending variance: $50,000 unfavorable Comprehensive Case 58 a. Materials price variance: ($22,000) favorable b. Labor efficiency variance: ($8,000) favorable c. Variable overhead spending variance: $37,000 unfavorable Comprehensive Case 59 b. Labor rate variance: $1,900 unfavorable c. Variable overhead efficiency variance: $2,000 unfavorable Flat World Knowledge, Inc 11

12 Chapter 11 Problem 38 b. Clothing Division net income: $168,000 d. Accessories Division residual income: $172,000 Problem 39 a. Clothing Division ROI: percent c. Accessories Division residual income: $192,000 Problem 40 d. Cast Division ROI: percent e. (1) Fly Division ROI: percent e. (3) Cast Division residual income: $705,000 Problem 41 a. Football Division average operating assets: $24,475 b. Football Division ROI: percent Problem 42 c. IT Division residual income: $104 Problem 43 a. Strings Division EVA: $9,800 Problem 45 a. Optimal transfer price: $50 Skill-Building Case 50 Tools Division profit margin ratio: 17.2 percent Comprehensive Case 51 a. Year 2 ROI: percent b. Year 2 revised ROI: 9.21 percent Comprehensive Case 52 a. Year 2 ROI: percent b. Year 2 residual income: $682,000 Flat World Knowledge, Inc 12

13 Chapter 12 Problem 36 (5) Financing activity (7) Operating activity Problem 37 a. Cash provided by operating activities: $114,000 Problem 38 a. Cash used by financing activities: ($41,000) Problem 39 a. Cash used by investing activities: ($30,000) Problem 40 a. Cash provided by operating activities: $16,000 c. (2) Capital expenditure ratio: 1.60 Problem 41 a. Cash provided by investing activities: $17,000 c. (1) Operating cash flow ratio: 0.62 Problem 42 a. Cash provided by financing activities: $101,000 c. Cash used by operating activities: ($83,000) Flat World Knowledge, Inc 13

14 Chapter 13 Problem 35 a. Net income decreased 1.9 percent b. Total assets increased 7.8 percent d net income is 5.3 percent of net sales Problem 36 a. (3) Return on assets: 8.1 percent b. (2) Quick ratio: 1.12 to 1 Problem 37 a. (2) Debt to equity: 2.79 to 1 b. (1) Market capitalization: $14.5 billion Problem 38 a. Net income increased 33.3 percent e. (1) Gross margin ratio: 59.4 percent Problem 39 a. (4) Inventory turnover ratio: 6.50 times b. (1) Debt to assets: 0.53 to 1 Problem 40 b cash and cash equivalents are 4.5 percent of total assets Problem 41 e. (4) Return on common shareholders equity: 19.6 percent e. (5) Earnings per share: $5.07 per share Problem 42 a. (3) Receivables turnover ratio: times b. (3) Times interest earned: times Skill-Building Case 49 Profit margin ratio: 4.80 percent Current ratio: 1.08 to 1 Market capitalization: $65.0 billion Skill-Building Case 50 Operating income increased 35.7 percent Comprehensive Case 51 a. Profit margin ratio: 20.9 percent; Quick ratio: 1.2 to 1; Debt to equity: 0.65 to 1 Comprehensive Case 52 b. Quick ratio (revised): 0.90 to 1 Flat World Knowledge, Inc 14