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To Accompany

Managerial Accounting

Creating Value in a Dynamic Business Environment

7th Edition McGraw-Hill/Irwin 2008

by Ronald W. Hilton

CHAPTER 1 No key figures. CHAPTER 2 E 2-24 E 2-25 E 2-26 E 2-29 E 2-30 E 2-31 E 2-33 P 2-38 P 2-39 P 2-40 P 2-41 P 2-42 P 2-42 P 2-43 P 2-44 P 2-51 P 2-55 P 2-57 C 2-60 1. 2. 2. (f) (o) 2. 2. 2. 1. 1. 2. 2. 6. 2. 1. a. d. Beginning inventory of finished goods, case I: $84,000 Total compensation: $720 Total overtime premium: $20 Cost of goods sold: $820,000 $77,000 $110 Cost per call, February: $ .27 Annual differential cost: $33,000 Cost of goods manufactured: $913,200 Direct material used: $40,000 Net income: $168,000 Net income, case A: $110,000 Total prime costs: $2,680,000 Manufacturing overhead: $534,000 Cost of goods sold: $580,000 Total cost of wages: $608 Direct material, 20x2 forecast: $3,600,000 $370 Output of 20,000 bottles, profit: $26,000 60,000 copies

a.

2

000 Predetermined overhead rate: 130% of direct labor cost Cost of goods sold: $15. 1.000 Purchases: $336. 1.CHAPTER 3 E 3-24 E 3-27 E 3-28 E 3-29 E 3-30 E 3-31 E 3-32 E 3-33 E 3-34 E 3-35 E 3-37 P 3-42 P 3-43 P 3-45 P 3-46 P 3-47 P 3-48 P 3-49 P 3-50 P 3-52 P 3-53 P 3-55 P 3-56 P 3-57 P 3-58 P 3-59 P 3-60 P 3-61 C 3-62 C 3-63 1.575 Predetermined overhead rate: $21 per direct-labor hour Total actual overhead: $33. 4.000 Total cost: $7.000 Predetermined overhead rate: $13.30 per hour Overapplied overhead: $11. 3.900 Income (loss): $(1. 1. 3. c. 1.392.000 Cost of goods manufactured: $348. 12/31: 13.000 Overhead: 9.400 Actual manufacturing overhead: $4.000 Applied manufacturing overhead: $750.44 per hour (rounded) Cost of job 77: $200.000 chicken volume: $ . 1.000 Underapplied overhead: $16.470 Cost of goods manufactured: $643.100 Net income: $7.000 Underapplied overhead: $6.100 Predetermined overhead rate: $12 per hour Finished-goods inventory increased by $203. 3.000 Total budgeted overhead (departments A and B): $800. 4. 2.050 $80. 2.675 Underapplied overhead for November: $4.500 Finished-goods inventory.770. 2.600 euros Total manufacturing costs: $175. 2. 3. 1. 1. 1. 3. 4.43 per chicken (rounded) Cost of goods manufactured: $665.500.625) Total cost of job T81: $34. Predetermined overhead rate at 300.000 Departmental overhead rate. 1. 5.530 Predetermined overhead rate: $20 per machine hour Cost of goods sold (adjusted for underapplied overhead): $1.000 Ending work-in-process inventory is carried at a cost of $153. 1.100 Gross margin: $63. 6.000 Manufacturing overhead applied in December: $90.000 Cost of goods manufactured: $2. 2. 6. 4. Department A: $26 per direct-labor hour Overhead assigned to advanced system line: $517.968. 1. 3.800 3 .300 Traceable costs: $2. 7.000 Predetermined rate: $4.309. 6. 1. 2.

5. 4.000 Costs per equivalent unit. 2. 3.00 Total cost transferred in from the Assembly Department: $70.77 Total equivalent units. b.900 Conversion cost per unit in department II: $10.686 1.000 Costs per equivalent.00 Finished-Goods inventory (debit): $400.950 Costs per equivalent unit. 2.700 Cost of goods completed and transferred out of the Grading Department during November: $352. 2. conversion: 71.500 Cost of the ending work-in-process inventory: $324.10 Total cost of October 31 work in process: $4. total: $570 Costs per equivalent unit. 2. colored glass sheet: $76. direct material: $5.000 gallons 6.CHAPTER 4 E 4-16 E 4-18 E 4-19 E 4-20 E-4-21 E 4-22 E 4-23 E 4-24 E 4-25 E 4-26 P 4-27 P 4-28 P 4-29 P 4-30 P 4-31 P 4-32 P 4-33 P 4-34 P 4-35 P 4-36 P 4-37 P 4-38 P 4-39 P 4-40 P 4-41 C 4-42 C 4-43 3.00 per unit Cost of an etched.750 Total cost of July 31 work in process: $202. 4. reflective ceralam housings: $200. 1. 2.43 Work-in-Process inventory (credit): $1. 2.25 per sheet Unit cost. 3.000 Costs per equivalent unit. 750. total: $4. 2. total: $11.300 Total product cost. conversion: 226.000 Overhead applied: $379.00 Cost of goods completed and transferred out during September: $520.080 Cost of goods completed and transferred out of the Saturating Department during November: $433.500 Total cost of returns in process on February 28: £14. 1.000 Cost of the June 30 work-in-process inventory: $34. 2.000 Units completed and transferred out during the year: 125. direct material: 110. direct material: $11.000 Cost remaining in February 28 work in process: $25.100 Total product cost.902. 4 .600 Total equivalent units.250 Weighted-average unit cost of completed leather belts: $6.143. conversion: 2. 5. 3. 1. 2.250 Cost of goods completed and transferred out during November: $306.60 Equivalent units.000 Total cost of May 31 work-in-process: $167.000 Cost remaining in ending work-in-process inventory: direct material: $123. deluxe model: $207. 1.000 equivalent units Total equivalent units. professional: $35.

2. 6.040 Activity-based application rate. 1. information systems services: $387.25 per machine hr. Material-handling cost per lens: $500 The traditional product-costing system undercosts the Satin Sheen product line. 3. P 5-46 C 5-48 5.73 Traditional system undercosts Deluxe Model by $222. product G: $141.900 The total contribution margin expected from the PC board: $2.67 Reported product costs. standard: $157 The manufactured cost of a standard unit: $181 Machine-related costs for REG line: $135. 3.16 Total Material-Handling Department costs: $288. 2. under an activity-based costing approach: $7. income: $22. 1. 3. 3. 4. 2.75 New target price.46 per pound of Kona Pool rate.25 Total cost. 1.431.000 Using activity-based costing. 3.600 reduction in material-handling costs allocated to government contracts The cumulative dollar impact of the recommended change in allocating material-handling department costs: $234. 1.000 There is a $74.346 Tuff Stuff unit cost: $28.557.500 Predetermined overhead rate: $31. Standard Model: $437. cost with overhead assigned on direct-labor hours: $37. Tuff Stuff: $4. the total contribution margin expected from the TV board: $2.90 Cost distortion per unit for ADV line: overcosted by $8. 3. P 5-44 1. 3. 2. New target price. under ABC.75 per unit Product cost based on an activity-based costing system. Heavy-Duty Model: $248. P 5-41 P 5-42 P 5-43 2.00 Fabricating cost per unit. odds: $605.100 New product cost. product T: $163. Unit cost per plate: $260. ft.50 Product costs based on activity-based costing system. 2. 1. 2. b. staff support: $720 per client Billings. for GMT line: $663.000 Total cost per unit.360.85 Type A manufacturing overhead cost: $160 per unit The manufactured cost of a type A cabinet: $243. 2.400 Total cost. plant-related costs: $50 per sq.CHAPTER 5 E 5-21 E 5-22 E 5-30 P 5-32 P 5-33 P 5-35 P 5-36 P 5-37 P 5-38 P 5-39 P 5-40 3. 5.93 per unit (rounded) Ruff Stuff unit costs. 2.74 P 5-45 5 . royal: $4. with respect to quality-control costs by $525 Total cost per order size (small): $185. 4.50 E-commerce consulting. activity-based costing system. 4. 2.

operating profit: $(18. 1. 6. 4.25 per unit Total cost. RM-13: $(113. 1. 4.000) CHAPTER 6 E 6-31 P 6-34 P 6-35 P 6-37 P 6-39 P 6-40 P 6-41 P 6-42 3.80 per hr.540. 1. Target price: $125 Annual savings from JIT system: $357.000 Total cost.500 Net cash savings: $43.000 Estimated before-tax dollar savings: $37. Pool rate: $100 per shipment Operating income. Traditional system undercosts product W by: $120. 1.CHAPTER 5 (continued) C 5-50 C 5-51 3.000 Tele-Install. software: $327. JR-14.000) 6 . estimated 20x2 product cost: $1. 1.000 Predetermined overhead rate: $74. Trace Telecom: $7.000 Gross margin.

2.81X.00X.000 square feet: $496. utility cost: $1.010 Variable cost per unit of activity: $1. 2. 7 . maintenance cost: $12. 3.000 Fixed cost: $150 Minimum bid for a 200-person cocktail party: $4.000 + $3.00 Cost prediction at 300 hours of operation. 1.600 Cost prediction at the 22. 3. where X denotes thousands of passengers Variable utility cost per hour: $2. 1.250 Energy cost: $22. high-low method. where X denotes the number of patients for the month b. 4.CHAPTER 7 E 7-24 E 7-25 E 7-30 E 7-33 E 7-34 P 7-36 P 7-37 P 7-38 P 7-40 P 7-41 P 7-42 P 7-43 P 7-44 P 7-45 P 7-47 C 7-48 C 7-49 C 7-50 2.25 Total incremental variable overhead: $3.600 flights: $22.750r Monthly cost of flight service = $9.671 + $7.943 + $. 2. 1.000-mile activity level. variable administrative cost per patient: $10 Total monthly administrative cost = $2.00 Total monthly cost: $9.667 + $545X.650 tons: $823.400 Cost prediction for 1. 3.500 Cost prediction at 590 hours of activity. 2. 3. 2.995 Fixed-cost component: $12.89 per unit of activity C: $1. 4.285 Administrative cost = $7.100 Variable maintenance cost: $9 per hour Total cost for 1. maintenance cost: $4. production crew: $5. 5. 2. 3.628 Total variable cost per 1. where X denotes the number of patients High-low method. 4.567. 5. December cost predictions. 6.

model no.500 units Required sales dollars to break even: $19. regular model: 27. 3.000 units Commissions will total: $535. 2. 6. 3.400 Break-even point: 32.40 (rounded) Break-even point (in units): 17.000 c.000) Service revenue required to earn target after-tax income of $48.500 tubs New break-even point (in units): 19. 2. 3. 2.500 units Weighted-average unit contribution margin: $13. 3. 2.00 Variable cost per ton: $275 per ton Dollar sales required to earn target net profit: $1.000 units Decrease in operating income: $(1. break-even point in units: 210.400 components The team must play 4 games to break even Safety margin: $160. 3.491. 2.000 Sales units required to earn income of $180. 2.CHAPTER 8 E 8-23 E 8-24 E 8-25 E 8-26 E 8-27 E 8-28 E 8-29 E 8-31 E 8-32 E 8-33 P 8-34 P 8-35 P 8-36 P 8-37 P 8-38 P 8-39 P 8-40 P 8-41 P 8-42 P 8-43 P 8-44 P 8-45 P 8-46 P 8-47 P 8-48 P 8-49 P 8-50 P 8-51 P 8-52 C 8-53 4. 2. 3.000.125 units New contribution-margin ratio: .000 Operating leverage factor (at $2.980 Safety margin: $1. Break-even sales revenue: $62. 3.400) Total unit sales to break even: 162.094. 2. 3. 2. 2. 6.600 Plan B break-even point: 2.000 Net income: $280. 1. a. 5. 8 . 1. 3.500 Contribution-margin ratio: .167. 2.50 Decrease in net income: $30. 2. 2. 2.000: 54. 4399: $1.200 units Operating leverage factor.000 units Old contribution-margin ratio: .000 Break-even point (in units) for the mountaineering model: 10.000 units Net income. 1. 1.000 Contribution margin: $(100.308 Contribution margin per patient-day: $200 Increase in revenue: $540.000 Computer-assisted manufacturing system.500 tubs Volume at which both machines produce the same profit: 37. 2.000: $1.000 Break-even point (in units): 80.500 units Total fixed expenses: $1.000 sales level): 4. 2. 3.2 Number of sales units required to earn target net profit: 140. 3.692.5 New break-even point (in units): 4.000. plan A: 1.208 Margin of safety: $4. 2. 1.140. 2.000.35 Weighted-average unit contribution margin: $162.000 units Break-even sales volume.

CHAPTER 8 (continued) C 8-54 C 8-55 1.000 Break-even point: $500.000 New contribution-margin ratio: . after-tax profit: $204. Oakley must sell 2. b. 2. 3. In order to achieve its after-tax profit objective. Alternative (3). 1.500 units.15 9 .

645. 1.000 Production budget. 1. 3.464. entire year: $5.634. 1.000 Net income: $1.5% Total cash receipts. 4. 5. 7.000 sales level: $102. 2.000) Net income: $160. entire year: $1.125 Budgeted cash collections for December: $208. 2. 6. 7.820 Production required (units).576 Required short-term borrowing: $(100. 1. entire year: 254.605. 5. 7. 5. 2. 1.000 Cost of purchases (paperboard): $97.656 Total sales revenue.000 Total raw-material purchases during third quarter: $2. May: $378. units to be produced. 1. April: $9. 8.030 Total cash disbursements.000 Total cash payments for direct labor.000 sets Planned direct-labor cost. 6. Payments of accounts payable during 20x1: (1.000 Total direct-labor cost for the quarter: $470. entire year: $936.500 Total assets: $9.040 Increase in cost of raw material: $100.000 Expected cash balance. management consulting: $245.100. total manufacturing overhead: $1.000 euros) Required production during the year: 450.000 Conversion cost budget: $245. heavy coils: 41.500 Predetermined overhead rate: $40 per hour Increase in sales: 11. 1.880 Total cash receipts at $100.337. 2. first quarter: $1. August 31: $21. 4.600 Total compensation.213. June: $2.000 Planned production. 1. 10. 4.850.150.000 December 31 inventory: 1.700 P 9-44 P 9-45 C 9-48 10 .785.000 units Total collections in fourth quarter from credit sales in fourth quarter: $230.155 Faculty needed: 672 Total cash disbursements.000 Ending cash balance.000 Cost of goods sold: $3.250 Operating income: $179. S frames. 3.000 Total overhead: $148. 3. first quarter: $1. 2. June: 15. 4.000 Manufacturing overhead budget for 20x0. 2. 2.000 Total direct professional labor cost: $144.000 Cost of metal strips to be purchased. 2. 2. February: $121.100.650.900 units Total cash disbursements.CHAPTER 9 E 9-22 E 9-24 E 9-25 E 9-26 E 9-27 E 9-29 E 9-30 E 9-31 P 9-32 P 9-33 P 9-34 P 9-35 P 9-36 P 9-38 P 9-39 P 9-40 P 9-42 P 9-43 2.367.000 Total sales revenue: $1.

total bonus awarded for the year: $6. 11 .000 U Delivery cycle time: 22 days Cost of goods sold (debit): $22. 1. 4. quantity variance. 1.20 Charter Division.400 Direct-labor rate variance: $645 unfavorable Standard material cost: $28. b.300 Direct-material quantity variance: $750 favorable Direct-material price variance: $540 unfavorable Direct-labor efficiency variance: $495. P 10-60 C 10-62 2.000 drums Direct material.62 Total standard cost per 10-gallon batch: $30. A: $2. 3. C 10-63 1.000 U To close variances into Cost of Goods Sold (CGS): $5. 1.500 Construction Dept. 2. 2. 1.000 hr Total of all variances for the month: $1. 1.000 Direct-material quantity variance.00 favorable Total material and labor variances: $902.200 hours Direct-material price variance: $750 favorable Direct-material quantity variance: $300 U Total standard cost of direct material in July.000 Direct-labor rate variance: $35. Direct-labor efficiency variance: $8.CHAPTER 10 E 10-28 E 10-29 E 10-32 E 10-33 E 10-36 E 10-38 E 10-40 P 10-42 P 10-44 P 10-45 P 10-46 P 10-47 P 10-48 P 10-50 P 10-51 P 10-52 P 10-56 P 10-57 P 10-58 P 10-59 1. 4.600 Total standard hours allowed: 37. 1. b. 2. Construction Dept: $6.50 favorable Direct-labor rate variance: $47. 1. labor class III: $800 U Total standard unit cost: $8. 2. 1.000 unfavorable Actual material cost: $194.025 unfavorable Direct-labor efficiency variance: $4.500 U Direct labor.510 F 2. 1. 2. (mixers): 2. 3.900 U Direct-material price variance (debit): $1.343 F Direct-material quantity variance: $16. Finishing Dept: $7. 3.900 Actual output (in drums): 1. 2.770 (debit to CGS) Direct-material price variance: $1.625 favorable Direct-labor efficiency variance. standard material cost: $48. actual hours.

650. 1.000: $93. P 11-49 P 11-50 P 11-51 5.100 unfavorable Fixed overhead cost: $324.10 Budgeted overhead cost for July: $11. 1. d.000 Sales-volume variance: $12. flexible budget: $1.000 Case B: 1.000 (positive or “unfavorable”) Cost of goods sold (debit): $97. actual: $59. 11. 1.000 euros Actual production in units: 24.000 Efficiency variance: $60. f. 38. flexible budget: $78. 2. 14.00 per hour Case B: $18. 2.060 Medical assistants. 3.00 per unit Variable manufacturing overhead: $6. 1. variable overhead: $18.000 per month Medical assistants.800 Variable-overhead efficiency variance: $8.000 unfavorable Actual variable-overhead rate: $3.000 Fixed overhead applied to work in process: $25. P 11-47 P 11-48 3. 5.000 units Total variable expenses. Variable-overhead efficiency variance: $60.400 $11 per machine hour Standard variable-overhead rate per machine hour: $10.065 Advertising. 30. 1.850 F Direct material used: $20.000 Flexible budget. actual: $13.100 Total variable expenses.000 U Applied fixed overhead: $108. 2.000 Direct-labor efficiency variance: $13. 12 .000 unfavorable Cost of goods sold (debit): $218. 2.000 patient days: 90.500 unfavorable Fixed-overhead budget variance: $1. 5. 1.000 unfavorable Variable-overhead spending variance: $173. a. variable overhead: $240.856 F Variable-overhead spending variance: $2.000 Total standard hours: 2. activity level (air miles).000 Total overhead cost: $60. 2. 1. 2.020 Variable-overhead spending variance: $20.310 F Variable-overhead is underapplied by $42. 8.10 per machine hour Variable-overhead efficiency variance: $10. 3. 5.000 U Flexible budget.400 Operating income.400 Contribution margin.000 4.CHAPTER 11 E 11-22 E 11-23 E 11-24 E 11-26 E 11-27 E 11-28 E 11-30 E 11-31 E 11-32 E 11-33 E 11-34 P 11-35 P 11-36 P 11-38 P 11-39 P 11-40 P 11-41 P 11-42 P 11-43 P 11-44 P 11-45 4.300 Fixed-overhead volume variance: $240.25 per unit Supervisory salaries: $36. 1.000 Operating income: $122. flexible budget variance: $45.400 U Case A: $7. 2. budget: $11.100 Variable electricity cost.

CHAPTER 12 E 12-31 E 12-32 E 12-33 E 12-35 P 12-42 1.250 Segment profit margin. Boston store: $91. flexible budget. General Medicine: $71. August: $582. 3.000 Direct-material price variance. Olentangy store: $845.000 Rocky Mountain General Hospital. a. 1.900 Profit margin traceable to segment.CHAPTER 11 (continued) P 11-51 P 11-52 P 11-53 C 11-54 8.000 U C 11-55 4.250 Actual variable-overhead rate: $6. 10.000 Profit margin controllable by segment manager. Cost of goods sold (debit): $14.000 unfavorable Sales price variance: $456. Banquets & catering. e. Las Vegas: $161.275 Portland store’s net income for May: $12.000 U Actual fixed overhead: $43. 2. 13 . Metro: $400.30 per hr Applied fixed overhead: $36. C 12-52 1. liberal arts: $36.000 P 12-43 P 12-44 1. 165: $439.000 U Variable-overhead spending variance: $75.700 Facilities. 2. h. flexible budget.000 Net income.3 P 12-46 C 12-51 1. total cost. no. 7.130 Sales volume variance: $50. total: $133.000 U Sales-price variance: $45. March: $650 Admissions. Canada: $421. 1. P 12-45 2.560 Total quality costs.000 Appraisal costs: $42.375 Operating income (loss).

b. 5. economic value added: $(12. P 13-43 1. income after tax: $36. C 13-50 2. 5.CHAPTER 13 E 13-26 E 13-27 E 13-28 E 13-29 E 13-33 E 13-34 E 13-35 P 13-37 P 13-38 P 13-40 P 13-41 P 13-42 Residual income: $1. 2. 3. P 13-47 4.5% Year 1.000 Residual income.0972 Atlantic Division. P 13-44 1. 1.00 German operation. contribution margin: $275 U. 2.500 Unit contribution margin. 2.1056 The weighted-average cost of capital: .000 Increase in net income before taxes: $132.000 Current residual income of the Northeast Division: $148.00 1.000 Income: $150. P 13-49 2.200) Transfer price: $65 Produce diode and sell externally. 3. RLI: $120. 3.000 Weighted-average cost of capital: . economic value added: $4.000 ROI: 25% Year 2. operation.000 Capital turnover: 80% Weighted-average cost of capital: . income after tax: $24. 2.000 Increase in net income before taxes for Interglobal Industries: $312. Mining Division: $15. P 13-46 2.800.200. C 13-51 1.S. P 13-45 1.00 Total contribution margin.181. division A: $240. LDP: $6 Net savings if TCH-320 is produced using an HDP: $112.114 Construction Division. a.416 million Residual income: $615. 14 .000 ROI: 10% Transfer price: $300 Profit per unit in special order: $65 Residual income. ROI based on net book value: 12. C 13-52 2. residual income (based on net book value): $5. P 13-48 2.

2. 1. 2. P 14-59 3.750 Total contribution margin: $55. E-gauge: $19.50 Quantity of component B81 to be purchased: 4. product M07: $93 Total contribution margin: $113. 1. 1. 3. 1.500 Cost of replacing the 1.440) Total revenue from further processing $460. Enhanced Model.00 The objective function value at the optimal solution: $132 total contribution margin Cost savings per machine hour if manufactured.250 Unit contribution.00 a. $200 Income (loss) from closure: $(12.500 Contribution margin. blender: $4 Net contribution to profit: $34. total: $810. 1. tackle boxes: $26. 1.40 Improvement in contribution margin: $236. 1.4 P 14-61 2. RL: $10. 15 . P 14-60 3. P 14-58 2.000 Contribution margin at the optimal solution: $4.700p Unit contribution margin.000 Contribution from sale to Kaytell: $53.800) Contribution margin per direct-labor hour.250 Costs to be avoided by purchasing (ABC analysis).500 Contribution margin. Deluxe Model: $12 Savings if purchased from Marley: $(15.000 kilograms to be used in the special order: 8. 2. 2.000 Incremental contribution margin: $42. Profit on ice cream counter: $6.050 Unit contribution margin. 2. 2.30 Contribution per hour. uno: $3.945 Total variable cost per unit: $10.CHAPTER 14 E 14-33 E 14-37 E 14-41 E 14-43 E 14-44 P 14-45 P 14-46 P 14-47 P 14-48 P 14-50 P 14-51 P 14-52 P 14-53 P 14-54 P 14-55 P 14-56 P 14-57 1. C 14-63 a. C 14-62 1.000 units Increase in monthly cost: $23. 2. 2.848 Accepting the special order will result in a total additional contribution margin of $37.

900 Pharsalia Electronics’ current profit on sales is 10 percent Total price of job: $77. 2. Of the five candidate prices listed. 3. 2. 3. 2.00 The order will boost Graydon’s net income by: $27. 1.000 Total bid price: $14.90 Predetermined overhead rate: $10 per direct-labor hour Price. $900 is the optimal price Profit: 79.520.950 Target profit: $2. 4. 1. 2. C 15-48 2.25% Allocated fixed selling and administrative cost: $40 Material component of price: $8. 5.CHAPTER 15 E 15-30 E 15-32 E 15-34 E 15-35 E 15-37 P 15-38 P 15-39 P 15-40 P 15-41 P 15-42 P 15-43 P 15-44 P 15-45 P 15-46 P 15-47 3. 1.80 Contribution margin. 3. C 15-49 2.736 Total incremental profit: $552. 1. Standard: $350 Variable overhead rate: $5. 16 .000p Markup percentage: 131.40 a. Advanced Model: $588.600 Bid price: $29.000 Required cost reduction: $24 Maximum allowable cost: $76. 1. 2.

605) Initial cost of investment: $(429.440) Present value of annual benefits: $361.110 Nominal interest rate: . 20x3.000) Computer expert’s salary and fringe benefits (after-tax): $(56.419 Annuity discount factor: 4.155 Present value of depreciation tax shield.125 The increase in annual before-tax sales revenue could fall to: $34. after-tax cash outflow: $22.968 Salary expense. P 16-53 P 16-54 P 16-55 P 16-56 1. 1.037 Payback period: 2.10 (rounded) Payback period.200) Net present value of excess cash outflows with interior stations: $(2.000) Total after-tax cash inflow (years 20x2.840 2.400 Book value: $11.134 Profitability index for 8%: 1. 1.236 Net present value: $37.410 Old machine. 20x4): $910.07 Net present value with 10% discount rate: $7. 2. 1. mall restaurant: 8 years Accounting rate of return (ARR) using initial investment: . profitability index: 1. net present value: $(494. present value of tax shield: $72. net present value: $25.440 Computer-controlled printing press. 1.098 Total after-tax cash flow.700 Downtown restaurant. 2. (a) (b) (a) 1.360 Mall restaurant.270.200) Net present value: $239. 1. 17 .270.CHAPTER 16 E 16-26 E 16-28 E 16-29 E 16-30 E 16-32 E 16-33 E 16-34 E 16-35 E 16-36 E 16-37 E 16-38 E 16-39 P 16-40 P 16-41 P 16-42 P 16-43 P 16-44 P 16-45 P 16-46 P 16-47 P 16-48 P 16-49 P 16-50 P 16-51 P 16-52 3. 20x1: $(964.000) Net present value: $68. MACRS accelerated depreciation: $24.25 years Net present value: $15.126 Total initial cash outflow: $(312. 2. Net present value using 10% discount rate: 193 euros Net present value using 8% discount rate: $25.000) Tax effect of gain on sale: $(15. 1.32 (or 32%) Net present value: $1. 2. 1.829 Difference in NPV of costs: $(2. 1.600 Initial cost of investment: $429.

000) Initial cost if the minibuses are purchased: $(231.250) Net present value: $47.CHAPTER 16 (continued) P 16-57 P 16-58 C 16-59 4. P 16-60 1.780 Acquisition cost of minibuses: $(216. 1.359 18 . 3. Time 0 cash outflow: $(188.204 Time 0 cash outflow: $(188.000) Present value of incremental annual cash flows: $129. 5.000) Net present value: $56.

absorption costing: $41.000 units Total standard variable cost: $39 Net income: $320.500 Variable costing.800 Net income: $51. 2. end of year 1: $10. Inventoriable costs under absorption costing: $520. year 1: $485. throughput costing: $4.500 Standard absorption cost per case is $42 Variable costing.500 Total sales revenue minus total costs expensed across both years. 2. 2. 2. 2.500. 2.500 Cost of goods sold.000 Absorption costing.000 Difference in reported income: $675. 5. $20. absorption costing income statement: $52. 3. 5.200 Operating income.000 Difference between cost of goods sold on the 4th quarter absorptioncosting income statement. 1.CHAPTER 17 E 17-14 E 17-15 E 17-16 E 17-17 E 17-18 E 17-19 P 17-21 P 17-22 P 17-23 P 17-24 P 17-25 P 17-26 P 17-27 P 17-28 P 17-29 P 17-30 2. 2. variable costing income statement: $17.667 units Inventoriable costs under variable costing: $575. P 17-33 C 17-34 2.000 Predetermined fixed-overhead rate: $21 per unit Difference in fixed overhead expensed under absorption and variable costing: $2.000 Net income. year 1.475. 2.500. year 1: $27. 2.000 Increase in inventory (in units): 5. 3. 3.500 Fixed overhead rate per unit: $110 Break-even point: 14. 5.500 Operating income.000 Net income: $200. 1. b. 19 . finished-goods inventory.000 Net income: $25. a.000 Contribution margin per unit: $22 Projected net income for the year under absorption costing: $178. a. year 2: $20.800. P 17-31 P 17-32 4. 1.000 Total cost: $644. 2. year 2.000 Break-even point: 25. year 2: $145. operating income.000 Cost of goods sold under absorption costing: $1.000 b.000 Applied fixed overhead: $1. 1.000 Net income: $263.800 Year-end inventory. and variable manufacturing cost on the 4th quarter variable-costing income statement: $2. a.000 units Budgeted variable manufacturing costs: $3.000 Total contribution margin: $320. 2.500 Cost of goods sold. 1. reported income for year 2. 1. 2. b. a. b. 4. 1. 2.

HR department. 2.926. c.000 Kappa. allocation of joint cost: $13.848 (rounded). etching: $10. b. where M denotes the “total” cost of the Maintenance Department Service department costs allocated to Etching: $192.000 Allocation of joint cost.111 CBL. VX-4: $900.000 Yummies.000 Incremental revenue: $160.889 HR department cost allocated to CAD: $12.551 (rounded). separable cost of processing: $88. b. a.50 HR department cost allocated to deposit: $114.500 Fixed costs.000 Library cost allocated to sciences: $259. 2.44 per MH HTP-3. allocated to machining: $37. molding: $37. sales value at split-off point: $200.000 M = $100.602 (rounded) Maintenance department costs allocated to finishing: $87.650 Incremental revenue less incremental cost: $ . 1. where H denotes the “total” cost of the HR Department Total fixed cost allocated to internal medicine: $151. 1. 3. 20 .918 Juice.55 per direct-labor hour Rate.000 Crummies. b. 1.160 Total joint cost: $210. allocation of joint cost: $18. net realizable value: $200. Library cost allocated to liberal arts: $360. 1. relative proportion: 40% Ultrasene. C 18-35 2.000 Additional processing costs per gallon: $2.000 MSB.000 Variable costs: H = $17.000 1.647 Overhead rate per hour. 1. joint cost allocation: $9.500 Computing department cost allocated to deposit: $144. 2.200 Computing department cost allocated to loan: $94. net realizable value: $20. CAD. 3.000 Ultrasene. where H denotes the “total” cost of the HR Department Total variable cost allocated to orthopedics: $29. 2. slices: $30.000 Resoline. 3. 1.500 Variable costs. 2.000 Plantwide overhead rate: $20.167 HR department cost allocated to assembly: $138. 3.000. 3.705 H = $59. allocation of joint cost: $225. net realizable value: $17.33 (rounded) Omega.CHAPTER 18 E 18-15 E 18-16 E 18-17 E 18-18 E 18-20 E 18-21 E 18-22 E 18-23 P 18-24 P 18-25 P 18-26 P 18-27 P 18-28 P 18-29 P 18-30 P 18-31 P 18-32 P 18-33 P 18-34 1. 1. 3. 3. net realizable value: $1.000 Joint cost allocation. C 18-36 1. 2. allocated to assembly: $117.

400 Reorder point: 400 canisters 21 .APPENDIX I No key figures. Case C.854.000 per year You need to accumulate $1. 1.900 APPENDIX III E III-3 E III-4 E III-5 E III-6 E III-8 1. 3.400 Minimum total annual costs (ordering costs + holding costs): $2. APPENDIX II E II-7 E II-9 3. 1. You need to invest $12. 1. EOQ: 40 Safety stock: 15 tons Total annual cost of ordering and storing XL-20: $2.

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