Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 11, Problem 47P
WoodCrafts, Inc. is a manufacturer of furniture for specialty shops throughout the Northeast and has an annual sales volume of $12 million. The company has four major product lines: bookcases, magazine racks, end tables, and bar stools. Each line is managed by a production manager. Since production is spread fairly evenly over the 12 months of operation. Sara McKinley, WoodCrafts’ controller, has pre pared an annual budget divided into 12 periods for monthly reporting purposes.
WoodCrafts uses a standard-costing system and applies variable
While distributing the monthly reports at the meeting, McKinley remarked to Clark, “We need to talk about getting your division back on track. Be sure to see me after the meeting.”
Clark had been so convinced that his division did well in November that McKinlcy’s remark was a real surprise. He spent the balance of the meeting avoiding the looks of his fellow managers and trying to figure out what could have gone wrong. The monthly performance report was no help.
Required:
- 1. a. Identify three weaknesses in WoodCrafts, Inc.’s monthly Bookcase Production Performance Report.
b. Discuss the behavioral implications of Sara McKinley’s remarks to Steve Clark during the meeting.
- 2. WoodCrafts, Inc. could do a better job of reporting monthly performance to the production managers.
- a. Recommend how the report could be improved to eliminate weaknesses, and revise it accordingly.
- b. Discuss how the recommended changes in reporting are likely to affect Steve Clark’s behavior.
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Carner Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:• Sales are budgeted at $370,000 for November, $360,000 for December, and $340,000 for January.• Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible.• The cost of goods sold is 70% of sales.• The company purchases 30% of its merchandise in the month prior to the month of sale and 70% in the month of sale. Payment for merchandise is made in the month following the purchase.• Other monthly expenses to be paid in cash are $24,600.• Monthly depreciation is $17,000.• Ignore taxes. The net income for December would be:
Carner Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:• Sales are budgeted at $370,000 for November, $360,000 for December, and $340,000 for January.• Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible.• The cost of goods sold is 70% of sales.• The company purchases 30% of its merchandise in the month prior to the month of sale and 70% in the month of sale. Payment for merchandise is made in the month following the purchase.• Other monthly expenses to be paid in cash are $24,600.• Monthly depreciation is $17,000.• Ignore taxes. TThe cash balance at the end of December would be:
Carner Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:• Sales are budgeted at $370,000 for November, $360,000 for December, and $340,000 for January.• Collections are expected to be 85% in the month of sale, 13% in the month following the sale, and 2% uncollectible.• The cost of goods sold is 70% of sales.• The company purchases 30% of its merchandise in the month prior to the month of sale and 70% in the month of sale. Payment for merchandise is made in the month following the purchase.• Other monthly expenses to be paid in cash are $24,600.• Monthly depreciation is $17,000.• Ignore taxes. The accounts receivable balance, net of uncollectible accounts, at the end of December would be:
Chapter 11 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 11 - Distinguish between static and flexible budgets.Ch. 11 - Explain the advantage of using a flexible budget.Ch. 11 - Why are flexible overhead budgets based on...Ch. 11 - Distinguish between a columnar and a formula...Ch. 11 - Show, using T-accounts, how production overhead is...Ch. 11 - How have advances in manufacturing technology...Ch. 11 - What is the interpretation of the...Ch. 11 - Jeffries Companys only variable-overhead cost is...Ch. 11 - What is the interpretation of the...Ch. 11 - Distinguish between the interpretations of the...
Ch. 11 - What is the fixed-overhead budget variance?Ch. 11 - What is the correct interpretation of the...Ch. 11 - Describe a common but misleading interpretation of...Ch. 11 - Draw a graph showing budgeted and applied fixed...Ch. 11 - What types of organizations use flexible budgets?Ch. 11 - What is the conceptual problem of applying fixed...Ch. 11 - Distinguish between the control purpose and the...Ch. 11 - Why are fixed-overhead costs sometimes called...Ch. 11 - Draw a graph showing both budgeted and applied...Ch. 11 - Give one example of a plausible activity base to...Ch. 11 - Explain how an activity-based flexible budget...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - Refer to the data in the preceding exercise. Use...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - The following data are the actual results for...Ch. 11 - Evening Star, Inc. produces binoculars of two...Ch. 11 - The controller for Rainbow Childrens Hospital,...Ch. 11 - You recently received the following note from the...Ch. 11 - You brought your work home one evening, and your...Ch. 11 - Refer to DCdesserts.coms activity-based flexible...Ch. 11 - Montoursville Control Company, which manufactures...Ch. 11 - Prob. 33ECh. 11 - The following data pertain to Aurora Electronics...Ch. 11 - Calgary Paper Company produces paper for...Ch. 11 - Gibralter Insurance Company uses a flexible...Ch. 11 - Country time Studios is a recording studio in...Ch. 11 - Newark Plastics Corporation developed its overhead...Ch. 11 - Johnson Electrical produces industrial ventilation...Ch. 11 - Fall City Hospital has an outpatient clinic....Ch. 11 - Maxwell Company uses a standard cost accounting...Ch. 11 - Mark Fletcher, president of SoftGro, Inc., was...Ch. 11 - LawnMate Company manufactures power mowers that...Ch. 11 - For each of the following independent Cases A and...Ch. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - WoodCrafts, Inc. is a manufacturer of furniture...Ch. 11 - Rutherford Wheel and Axle, Inc. has an automated...Ch. 11 - Chillco Corporation produces containers of frozen...Ch. 11 - Montreal Scholastic Supply Company uses a...Ch. 11 - College Memories, Inc. publishes college...Ch. 11 - While Mountain Sled Company manufactures childrens...Ch. 11 - Cleveland Computer Accessory Company (CCAC)...Ch. 11 - Prob. 54CCh. 11 - Prob. 55C
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