Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 20E
To determine
Recognize the nonvalue-added activities from the given information and explain the manner in which the nonvalue-added activities can be eliminated.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Current Attempt in Progress
Riverbed Company manufactures equipment. Riverbed's products range from simple automated machinery to complex systems
containing numerous components. Unit selling prices range from $ 200,000 to $ 1,500,000 and are quoted inclusive of installation.
The installation process does not involve changes to the features of the equipment and does not require proprietary information
about the equipment in order for the installed equipment to perform to specifications. Riverbed has the following arrangement with
Winkerbean Inc.
Winkerbean purchases equipment from Riverbed for a price of $ 1,100,000 and contracts with Riverbed to install the
equipment. Riverbed charges the same price for the equipment irrespective of whether it does the installation or not. Using
market data, Riverbed determines installation service is estimated to have a standalone selling price of $ 46,000. The cost of
the equipment is $580,000.
Winkerbean is obligated to pay Riverbed the $ 1,100,000…
Question
The Mandalorian Company has two divisions, Production and Marketing. Production manufactures Beskar Head Armour for Knights of the Old Republic, which it sells to both the Marketing Division and to other retailers (the latter under a different brand name). Marketing operates several small armour stores in shopping centers throughout Corruscant. Marketing sells both Beskar Head Armour and other brands.
Relevant facts for Production are as follows:
Sales Price to Outsiders.............................................................$28.50 per Pcs
Variable Cost to Produce...........................................................$18.00 per Pcs
Fixed Costs ................................................................................$100,000 per Month
The following data pertain to the sale of Mandalorian Company Beskar Head Armour by Marketing:
Marketing is operating far below its capacity.
Sales…
CVP Analysis: Sales-Revenue Approach, Pricing, After-Tax Target Income
Mahan Consulting is a service organization that specializes in the design, installation, and servicing of mechanical, hydraulic, and pneumatic systems. For example, some manufacturing firms, with machinery that cannot be turned off for servicing, need some type of system to lubricate the machinery during use. To deal with this type of problem for a client, Mahan designed a central lubricating system that pumps lubricants intermittently to bearings and other moving parts.
The operating results for the firm for the previous year are as follows:
Sales
$974,880
Less: Variable expenses
534,234
Contribution margin
$440,646
Less: Fixed expenses
264,300
Operating income
$176,346
In the coming year, Mahan expects variable costs to increase by 4 percent and fixed costs to increase by 3 percent.
Required:
1. What is the contribution margin ratio for the previous year? Enter your answer as a decimal value…
Chapter 10 Solutions
Survey Of Accounting
Ch. 10 - 1. What are some differences between financial and...Ch. 10 - 2. What does the value-added principle mean as it...Ch. 10 - 4. How does product costing used in financial...Ch. 10 - 5. What does the statement costs can be assets or...Ch. 10 - 6. Why are the salaries of production workers...Ch. 10 - 7. How do product costs affect the financial...Ch. 10 - 8. What is an indirect cost? Provide examples of...Ch. 10 - 9. How does a product cost differ from a selling,...Ch. 10 - 10. Why is cost classification important to...Ch. 10 - 11. What is cost allocation? Give an example of a...
Ch. 10 - 13. What are some of the common ethical conflicts...Ch. 10 - 14. What costs should be considered in determining...Ch. 10 - 15. What is a just-in-time (JIT) inventory system?...Ch. 10 - Prob. 14QCh. 10 - Prob. 15QCh. 10 - Prob. 16QCh. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - Prob. 19QCh. 10 - Prob. 1ECh. 10 - Exercise 1-2A Identifying product versus selling,...Ch. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Exercise 1-6A Identifying product versus SGA costs...Ch. 10 - LO 1-3 Exercise 1-7A Recording product versus SGA...Ch. 10 - Prob. 8ECh. 10 - LO 1-4 Exercise 1-9A Upstream, midstream, and...Ch. 10 - Prob. 10ECh. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Cost of goods manufactured and sold The following...Ch. 10 - Prob. 15ECh. 10 - Exercise 1-14A Using JIT to minimize waste and...Ch. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Problem 1-19A Characteristics of financial versus...Ch. 10 - Prob. 22PCh. 10 - Problem 1-21A Effect of product versus period...Ch. 10 - Problem 1-22A Product versus SGA costs The...Ch. 10 - Prob. 25PCh. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 1ATCCh. 10 - Prob. 2ATCCh. 10 - Prob. 3ATCCh. 10 - Prob. 4ATCCh. 10 - Ethical Dilemma Product cost versus selling and...
Knowledge Booster
Similar questions
- Required information Skip to question [The following information applies to the questions displayed below.] Federated Manufacturing Incorporated (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 13,800 units of part 23–6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly; it is expanding its production and now wants to increase its purchases of part 23–6711 to 18,800 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon. The commercial division can buy part 23–6711 from Advanced Micro Incorporated or from Admiral Electric, a customer of the industrial division now purchasing 840 units…arrow_forward! Required information [The following information applies to the questions displayed below.] Bid Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses the vendor based on price. Once the plastic is received, it is inspected to ensure that it is suitable for production. Plastic that is deemed unsuitable is disposed of. The controller at Kinnear collected the following information on purchases for the past year: Total purchases (tons) Plastic discarded Tappan 5,000 200 Hill 7,500 375 The purchasing manager has just received bids on an order for 330 tons of plastic from both Tappan and Hill. Tappan bid $2,112 and Hill bid $2,109 per ton. Required: a. Assume all else remains the same. What bid by Tappan would make Kinnear indifferent between buying from Tappan or Hill? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] Federated Manufacturing Inc. (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 11,400 units of part 23–6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly. The commercial division is expanding its production and now wants to increase its purchases of part 23–6711 to 16,400 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon. The commercial division can buy part 23–6711 from Advanced Micro Inc. or from Admiral Electric, a customer of the industrial division now purchasing 720…arrow_forward
- Q3: ABC steel plant industry plans to manufacture a product. The product needs a special component. The industry has reviewed that the special component can be produced in the plant or bought in. An investment is required to start the production of the component for which two mutually exclusive projects A and B representing different production processes are available. The alternative option is to buy in from another company representing project C. The details of projects A and B are given in Table 3: (i) Using the information from table 3 and Discount Cash Flow criteria, calculate Pay Back Period (PBP), Account Rate of Return (ARR), Net Present Value (NPV) and Internal Rate Return (IRR) for project A & Project B if the industry plans to sale the unit cost of RO 350. (ii) Using the annual cost data from table 3, determine which project incurs less cost if the industry considers producing 7,500 units per year. (iii) Using the table 3, determine the Break-Even quantity and margin of…arrow_forwardLAWN WIZARD INC. (MANUAL SYSTEM WITH STAND-ALONE PC SUPPORT) Law Wizard Inc. (LWI) is a manufacturer of a range of walk-behind gasoline lawnmowers, which it markets to garden centers and home improvement centers. LWI employs a batch production process whose inventory management, production planning, and accounting procedures consist of a combination of manual activities supported by stand-alone (non-networked) PC technology. The company is experiencing production delays and cost overruns. Its CEO has hired your firm to review its procedures and make recommendations for improving its operations. The batch production process is initiated by receipt of individual customer orders, which are grouped together in batches for manufacturing. The production planning and control clerk enters the orders into the digital production schedule from his department PC and prints two hard-copy work orders. He sends one of these to cost accounting and the other to the production department. The production department supervisor enters the work order into a PC application. The system automatically creates an open work order record and prints the hard-copy move tickets and materials requisitions. The supervisor distributes the move tickets and two copies of the purchase requisitions to each work center invoked in the production process. Work center employees exchange the material requisitions for assembly parts and other materials needed to complete the batch. If additional parts or materials are needed beyond the standard quantity, the supervisor issues additional material requisitions. As the production is completed in each work center, employees record their labor time for each batch on hard-copy job cards, which they send to cost accounting along with the move ticket. Finally, upon completion of the batch, the supervisor closes the open work order file. The storekeeping clerk files one copy of the material requisition in the department and updates the raw materials inventory file from the computer in his office. The manager then sends the second copy of the material requisition to cost accounting. At the end of the day, the manager prepares a hard-copy journal voucher and sends it to the general ledger department. The cost accounting clerk receives the work order and sets up a WIP account for the batch. Throughout the production period, the clerk also receives move tickets, job tickets, and materials requisitions, which she uses to post to WIP. At the end of each day, the cost accounting clerk prepares a hard-copy journal voucher, which she sends to general ledger department. The journal voucher reflects the total value of WIP and transfers to finished good inventory. The general ledger clerk receives the journal vouchers, posts to the appropriate GL accounts, and files the journal vouchers in the department. Required a. Create a system flowchart of the existing system. b. What risks exist in the system as it is currently designed? c. Describe the changes needed to reduce the risks.arrow_forwardRequired information [The following information applies to the questions displayed below.] Armstrong Corporation manufactures bicycle parts. The company currently has a $19,700 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for $7,200, or modified for $10,200 and sold for $20,700. Required: 1. Identify the relevance of the data given in the exercise to the decision about what to do with the obsolete parts. Current sales value for unmodified parts Sales value for modified parts Modification costs Current book value of inventory Prev 1 2 of 6 Next >arrow_forward
- Knowledge Check 01 Which of the following factors should be considered when deciding whether to keep a product line or drop it? (Select all that apply) Check All That Apply Opportunity costs of using the production facility currently being used for the product line Revenues generated by the product line Variable costs incurred in manufacturing the product Direct fixed costs associated with the product line Common fixed costs allocated to the product line Research and development costs spent on designing the product linearrow_forwardQuestion 1. "Country paints Ltd" have developed a new patented paint system "Rustaway" which is to be used in order to provide protection and visual appearance enhancement to steel products around the home such as railings, door handles, gates etc. This product expands on their current range of paints for garden wooden items. A project has been initiated which look to produce the "Rustaway" paint at volume. This will require a new mixing and dispensing machine to be purchased at a cost of £25,000, with a staff cost of £6000 per quarter and a materials cost of £1000 per quarter. Initially Country paints Ltd plan to put aside enough cash from their reserves to pay for the project. The product will be sold direct to the public (direct sales) and through paint retailers (Credit sales) Table Q1 shows partial cash forecast for the receipts has been made by the management of Country Paints Ltd for the next 2 years (8 quarters) Table Q1: Receipts element of the cash forecast Qtr 1 Receipts…arrow_forwardMaking outsourcing decisions Cool Systems manufactures an optical switch that it uses in its final product. The switch has the following manufacturing costs per unit: Another company has offered to sell Cool Systems the switch for $15.00 per unit. If Cool Systems buys the switch from the outside supplier, the idle manufacturing facilities cannot be used for any other purpose, yet none of the fixed costs are avoidable.</p><p>Prepare an outsourcing analysis to determine whether Cool Systems should make or buy the switch.arrow_forward
- Internal Control Cases UTICA LIGHTING COMPANY (CENTRALIZED SYSTEM WITH DISTRIBUTED TERMINALS) Utica Lighting Company (ULC) is a manufacturer of outdoor lighting systems for patios, walkways, and public areas. It markets its product to landscaping companies and local municipalities. ULC employs a centralized computer system with distributed terminals in the various departments. Recently the company has been having manufacturing delays and cost overruns. ULC has hired your auditing firm to assess its operations and internal control procedures. ULCs conversion cycle is triggered by a report from the finished goods warehouse. The warehouse clerk periodically reviews the inventory records in a search for low-stock items. When the quantity on hand of an inventory item in the finished goods warehouse falls below its pre-established minimum, the warehouse clerk sends a digital inventory status report from the warehouse terminal to production planning and control advising them to schedule a production batch run for the item in question. Upon receipt of the report the production planning and control department clerk accesses the digital bill of materials and the routing sheet files for the items to be produced and adds the production details to the digital production schedule. The system automatically adds a record to the open work order file and sends a digital work order to the work center supervisors terminal and to the cost accounting clerks terminal. The work center supervisor accesses the work order from his terminal and prints hard-copy move tickets and material requisitions for each stage in the production process. Production employees take the materials requisitions to the storekeeper and secure the components, subassemblies, and raw materials needed to perform their production tasks. If excess materials beyond the standard amount are needed, the supervisor prepares additional materials requisitions. The employees also complete job time tickets after each stage in the process to reflect the time spent on the job. When the employees complete their tasks, they send the move tickets and time tickets to the cost accounting department. The storekeeper receives the materials requisitions and releases the materials into production. He then updates the raw material inventory records and sends the requisition to cost accounting. When inventories of component parts and raw materials fall to their reorder points, the storekeeper prepares purchase orders and sends them to the respective vendors. Vendors deliver raw material inventories directly to the storeroom, at which time the storeroom clerk inspects them and updates the digital raw materials subsidiary ledger. Each day the storekeeper prepares a journal voucher and posts to the general ledger raw material control account. The cost accounting clerk receives the digital work order and initiates a new WEP account for the batch. During the production process, the clerk receives hard-copy move tickets, materials requisitions, and job tickets from the work centers, which the clerk uses to update WIP account. When production is complete, the clerk closes the WIP account for the batch and transfers it to the finished good inventory subsidiary ledger. At the days end, the cost accounting clerk prepares a digital journal voucher reflecting the WIP status and any transfers from WIP to finished goods inventory. The clerk then posts the journal voucher to the WEP and FG general ledger control accounts. Required a. Prepare a data flow diagram of the current system. b. Prepare a system flowchart of the existing system. c. Describe the internal control weaknesses.arrow_forwardQuestion III – Operations Costing Sign It! makes outdoor advertising signs which it sells to advertising companies. The company uses operation costing and manufactures their outdoor signs in four operations. In the Cutting operation, the signs are cut into the correct size from large, unfinished sheets they acquire from an outside supplier. In Finishing, the edges are smoothed and a magnetic metal surface is added. In Framing, the signs are inserted into a metal frame and stand. In Packaging, the signs are inspected and packaged. Not all signs are framed as some customers prefer to insert the sign into their own frames. During January of the current year, the following conversion costs will be incurred by the company: Cutting Finishing Framing Packaging $280,000 $130,200 $84,000 $56,000 Sign It! computes conversion cost rates per unit each month. In January, the company will manufacture 70,000 signs, 20,000 of which will NOT be framed. Details of two…arrow_forward#2 Which of the following would be an example of a research and development expenditure eligible for the R&D credit? a. Marketing research for a new project. b. Research to technologically improve an existing product. c. Research to alter design after commercial production has begun. d. Research to adapt existing component to a large customer's personal requirements. e. Routine testing for quality control of an existing product. Neearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,