But it has concerns about whether its spending is higher than desired. As part of the annual review process, management would like to analyze data to create some visuals that better illustrate its performance over the year. The accounting department compiled the

But it has concerns about whether its spending is higher than desired. As part of the annual review process, management would like to analyze data to create some visuals that better illustrate its performance over the year. The accounting department compiled the

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 5PA: Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an...

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Toronto Business Associates, a division of Maple Leaf Services Corporation, offers management and computer consulting services to clients throughout Canada and the northwestern United States. The division specializes in website development and other Internet applications. The corporate management at Maple Leaf Services is pleased with the performance of Toronto Business Associates for the first nine months of the current year and has recommended that the division manager, Richard Howell, submit a revised forecast for the remaining quarter, as the division has exceeded the annual plan year-to-date by 20 percent of operating income. An unexpected increase in billed hour volume over the original plan is the main reason for this increase in income. The original operating budget for the first three quarters for Toronto Business Associates follows. TORONTO BUSINESS ASSOCIATES 20x1 Operating Budget 1st Quarter 2nd Quarter 3rd Quarter Total for FirstThree Quarters Revenue:…
In 20x5, Major Company initiated a full-scale, quality improvement program. At the end of the year, Jack Aldredge, the president, noted with some satisfaction that the defects per unit of product had dropped significantly compared to the prior year. He was also pleased that relationships with suppliers had improved and defective materials had declined. The new quality training program was also well accepted by employees. Of most interest to the president, however, was the impact of the quality improvements on profitability. To help assess the dollar impact of the quality improvements, the actual sales and the actual quality costs for 20x4 and 20x5 are as follows by quality category: All prevention costs are fixed (by discretion). Assume all other quality costs are unit-level variable. Required: 1. Compute the relative distribution of quality costs for each year and prepare a pie chart. Do you believe that the company is moving in the right direction in terms of the balance among the quality cost categories? Explain. 2. Prepare a one-year trend performance report for 20x5 (compare the actual costs of 20x5 with those of 20x4, adjusted for differences in sales volume). How much have profits increased because of the quality improvements made by Major Company? 3. Estimate the additional improvement in profits if Major Company ultimately reduces its quality costs to 2.5 percent of sales revenues (assume sales of 10 million).
Malone Industries has been in business for five years and has been very successful. In the past year, it expanded operations by buying Hot Metal Manufacturing for a price greater than the value of the net assets purchased. In the past year, the customer base has expanded much more than expected, and the companys owners want to increase the goodwill account. Your CPA firm has been hired to help Malone prepare year-end financial statements, and your boss has asked you to talk to Malones managers about goodwill and whether an adjustment can be made to the goodwill account. How do you respond to the owners and managers?
How much sales revenue and net income would you expect PolicePrep to have in the next fiscal year (i.e., 12 months from July, 2003 to June, 2004; see Exhibit 5 on pg. 15). Please explain how you arrived at your answer. Note that Exhibit 5 covers 1 year, with the first column reporting 6 months data from July-Dec 02’ and the next two columns reporting data on the quarterly basis for Jan-Mar 03’ and Apr-Jun 03’)? If you don’t know what EBITDA stands for, please see: http://en.wikipedia.org/wiki/Earnings_before_interest,_taxes,_depreciation_and_amortization
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Show in excel format - 9. The sales for Re - Works Inc., a company that fabricates iron fencing from recycled metals, are all on account. For the first three months of the year, Re - Works management expects the following sales: A table shows Re - Works Inc's sales for January ($120,000), February ($130,000) and March ($140,000). Based on past collection patterns, management expects the following: A table shows Re - Works Inc's collection patterns in the month of February showing month of sale (10%), month after sale (50%), and the remainder - second month after sale (40%). Also, based on past experience, management forecasts that 5 percent of accounts receivable will be uncollectible and will eventually be written off. What are the expected cash receipts for March? 10. With the same sales forecasts as in question 9, Re - Works Inc. management would like to implement some changes to credit policy and credit terms that they believe would change the collection pattern going forward and…
The 100-room Delavan Inn's past three years of room sales for April are as follows: Rooms Room Year Sold ADR Revenues 20X1 2,100 $45 $94,500 20X2 2,130 47 100,110 20X3 2,160 49 105,840 Analyze the past performance and project sales for April 20X4. Assume that the trends of rooms sold and ADR continue for April of 20X4.
Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.
In 20x4, Tru-Delite Frozen Desserts, Inc., instituted a quality improvement program. At the end of 20x5, the management of the corporation requested a report to show the amount saved by the measures taken during the year. The actual sales and quality costs for 20x4 and 20x5 are as follows: Tru-Delites management believes that quality costs can be reduced to 2.5 percent of sales within the next five years. At the end of 20x9, Tru-Delites sales are projected to grow to 750,000. The projected relative distribution of quality costs at the end of 20x9 is as follows: Required: 1. Profits increased by what amount due to quality improvements made in 20x5? 2. Prepare a long-range performance report that compares the quality costs incurred at the end of 20x5 with the quality cost structure expected at the end of 20x9. 3. Are the targeted costs in the year 20x9 all value-added costs? How would you interpret the variances if the targeted costs are value-added costs? 4. What would be the profit increase in 20x9 if the 2.5 percent performance standard is met in that year?