Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 22, Problem 1DC
1.
To determine
Prepare a
2.
To determine
Explain what should Ms. M do on the basis of financial considerations and give reason.
3.
To determine
Explain the nonfinancial factors that Ms. M would consider in her decision.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Each autumn, as a hobby, Anne Magnuson weaves cotton place mats to sell through 3 local craft shop. The mats sell for $20 per set of four. The shop charges a 10% commission and remits the net proceeds to Magnuson at the end of December. Magnuson has woven and sold 25 sets each year for the past two years. She has enough cotton in inventory to make another 25 sets. She paid $7 per set for the cotton. Magnuson uses a four-harness loom that she purchased for cash exactly two years ago. It is depreciated at the rate of $10 per month. The Accounts Payable balance relates to the cotton inventory and is payable by September 30.
Magnuson is considering buying an eight-harness loom so that she can weave more intricate patterns in linen. The new loom costs $1,000 and would be depreciated at $20 per month. Her bank has agreed to lend her $1,000 at 18% interest per year, with $200 payment of principal, plus accrued interest payable each December 31. Magnuson believes she can weave 15 linen place…
Magnuson is considering buying an eight-harness loom so that she can weave
with
more intricate patterns in linen. The new loom costs $1,000 and would be depreciated
$20 per month. Her bank has agreed to lend her $1,000 at 18% interest per year,
$200 payment of principal, plus accrued interest payable each December 31. Magnuson
believes she can weave 15 linen place mat sets in time for the Christmas rush if she does
not weave any cotton mats. She predicts that each linen set will sell for $50. Linen costs
$18 per set. Magnuson's supplier will sell her linen on credit, payable December 31.
Magnuson plans to keep her old loom whether or not she buys the new loom.
The balance sheet for her weaving business at August 31, 2016, is as follows:
Assets
Current Assets:
Cash
Inventory of cotton
Total Current Assets
Property, Plant, and Equipment:
Loom
Less: Accumulated Depreciation
Total PP&E
Total Assets
ANNE MAGNUSON, WEAVER
Balance Sheet
August 31, 2016
$25
175
200
500
(240)
260
$ 460
Current…
Natalia makes colorful beaded necklaces and sells them at a local farmer's market. Natalia currently
sells her necklaces for $40 each. She spends approximately $18 on the materials (beads, wire, and clasp)
and $2 on packaging for each necklace. She pays annual fixed costs of $4,180 ($3,500 for space at the
farmer's market, $180 for licenses and permits, and $500 annual depreciation on tent, display cases, and
signage).
a) How many necklaces does Natalia need to sell in 2021 to break even?
necklaces
b) How many necklaces does Natalia need to sell in 2021 to earn a profit of $25,000?
necklaces
c) Natalia's best guess is that she will sell 1,500 necklaces in 2021. If she's correct,
what is Natalia's expected 2021 profit?
d) Natalia estimates that if she reduces her selling price by 15% in 2021, she will sell 20% more necklaces.
What is Natalia's expected profit if she reduces her selling price by 15%?
Natalia estimates that if she instead increases her selling price by 15% in 2021, she…
Chapter 22 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. 22 - Managers are required to think about future...Ch. 22 - Prob. 2TICh. 22 - Managers use results to evaluate employees...Ch. 22 - Managers work with managers in other divisions.Ch. 22 - Prob. 5TICh. 22 - Match the budget types to the definitions.Ch. 22 - Prob. 7TICh. 22 - Prob. 8TICh. 22 - Prob. 9TICh. 22 - Prob. 10TI
Ch. 22 - Prob. 11TICh. 22 - Prob. 12TICh. 22 - Prob. 13TICh. 22 - Prob. 14TICh. 22 - Prob. 15TICh. 22 - Prob. 16TICh. 22 - A company can expect to receive which of the...Ch. 22 - A company prepares a five-year budget. This budget...Ch. 22 - Which of the following is the cornerstone of the...Ch. 22 - Prob. 4QCCh. 22 - Suppose Iron City manufactures cast iron skillets....Ch. 22 - Prob. 6QCCh. 22 - Use the following information to answer questions...Ch. 22 - The budgeted income statement is part of which...Ch. 22 - Prob. 9QCCh. 22 - Use the following information to answer questions...Ch. 22 - Suppose Mallcentral sells 1,000 hardcover books...Ch. 22 - Prob. 12QCCh. 22 - Information technology has made it easier for...Ch. 22 - Prob. 1RQCh. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - What is budgetary slack? Why might managers try to...Ch. 22 - Explain the difference between strategic and...Ch. 22 - Explain the difference between static and flexible...Ch. 22 - What is a master budget?Ch. 22 - In a manufacturing company, what are the three...Ch. 22 - Why is the sales budget considered the cornerstone...Ch. 22 - Prob. 10RQCh. 22 - What is the formula used to determine the amount...Ch. 22 - What are the two types of manufacturing overhead?...Ch. 22 - How is the predetermined overhead allocation rate...Ch. 22 - What is the capital expenditures budget?Ch. 22 - Prob. 15RQCh. 22 - What are the budgeted financial statements? How do...Ch. 22 - How does the master budget for a merchandising...Ch. 22 - What is the formula used to determine the amount...Ch. 22 - What budgets are included in the financial budget...Ch. 22 - What is sensitivity analysis? Why is it important...Ch. 22 - Budgeting benefits List the three key benefits...Ch. 22 - Budgeting types Consider the following budgets and...Ch. 22 - Preparing an operating budgetsales budget Brown...Ch. 22 - Preparing an operating budgetproduction budget...Ch. 22 - Preparing an operating budgetdirect materials...Ch. 22 - Preparing an operating budgetdirect labor budget...Ch. 22 - Preparing an operating budgetmanufacturing...Ch. 22 - Preparing an operating budgetcost of goods sold...Ch. 22 - Berry expects total sales of 359,000 in January...Ch. 22 - Preparing a financial budgetschedule of cash...Ch. 22 - Preparing a financial budgetcash budget Booth has...Ch. 22 - Prob. 12SECh. 22 - Preparing an operating budgetsales budget Trailers...Ch. 22 - Preparing an operating budgetinventory, purchases,...Ch. 22 - Victors expects total sales of 702,000 for January...Ch. 22 - Prob. 16SECh. 22 - Preparing a financial budgetcash budget Wilson...Ch. 22 - Victors expects total sales of 702,000 for January...Ch. 22 - Using sensitivity analysis in budgeting Refer to...Ch. 22 - Using sensitivity analysis in budgeting Riverbed...Ch. 22 - Prob. 21ECh. 22 - Preparing an operating budgetsales budget...Ch. 22 - Preparing an operating budgetsales and production...Ch. 22 - Preparing an operating budgetdirect materials,...Ch. 22 - Preparing an operating budgetcost of goods sold...Ch. 22 - Preparing a financial budgetschedule of cash...Ch. 22 - Prob. 27ECh. 22 - Preparing the financial budgetcash budget Use the...Ch. 22 - Preparing the financial budgetcash budget Hoppy...Ch. 22 - Preparing the financial budgetbudgeted balance...Ch. 22 - Preparing an operating budgetinventory, purchases,...Ch. 22 - Preparing an operating budgetselling and...Ch. 22 - Prob. 33ECh. 22 - Preparing a financial budgetcash budget,...Ch. 22 - Preparing a financial budgetcash budget You...Ch. 22 - Use the following June actual ending balances and...Ch. 22 - Using sensitivity analysis Rucker Company prepared...Ch. 22 - Preparing an operating budgetsales, production,...Ch. 22 - Preparing an financial budgetschedule of cash...Ch. 22 - Preparing a financial budgetbudgeted income...Ch. 22 - Completing a comprehensive budgeting...Ch. 22 - Preparing an operating budgetsales budget;...Ch. 22 - Preparing a financial budgetschedule of cash...Ch. 22 - Preparing a financial budgetbudgeted income...Ch. 22 - Prob. 45APCh. 22 - Prob. 46APCh. 22 - Preparing an operating budgetsales, production,...Ch. 22 - Prob. 48BPCh. 22 - Preparing a financial budgetbudgeted income...Ch. 22 - Completing a comprehensive budgeting...Ch. 22 - Prob. 51BPCh. 22 - Preparing a financial budgetschedule of cash...Ch. 22 - Prob. 53BPCh. 22 - Belton Printing Company of Baltimore has applied...Ch. 22 - Using sensitivity analysis Holly Company prepared...Ch. 22 - Prob. 57PCh. 22 - Before you begin this assignment, read the...Ch. 22 - Prob. 1DCCh. 22 - Patrick works for McGills Computer Repair, owned...
Knowledge Booster
Similar questions
- Patricia's Quilt Shoppe sells homemade Amish quilts. Patricia buys the quilts from local Amish artisans for $220 each, and her shop sells them for $370 each. She also pays a sales commission of 4% of sales revenue to her sales staff. Patricia leases her country-style shop for $800 per month and pays $1,600 per month in payroll costs in addition to the sales commissions. Patricia sold 95 quilts in February. Prepare Patricia's traditional income statement and contribution margin income statement for the month. Prepare the traditional income statement for the month. Patricia's Quilt Shoppe Income Statement For the Month Ended February 28 Less: Less: Aarrow_forwardAlice is a high school teacher who enjoys knitting. She knits scarves and sweaters and sells them in a local boutique. Alice spends 10 to 15 hours a week knitting the scarves and sweaters. Alice had sales of $6,000 and expenses of $10,000 related to knitting and selling the goods. Alice's $10,000 of expenses consisted of $800 of interest expense and $1,600 in property taxes for her building and tools, $3,000 in supplies, and $4,600 in depreciation charges. How would Alice's income and expenses be reported on her tax return if her knitting activity is characterized as a hobby in 2019?arrow_forwardJason owns a fish shop where he sells an exotic variety of tuna fish which he imports from Japan.Jason refrigerates the fish in a cold storage facility near his shop that charges him a fixed annual fee of $1000 and variable charge of $5 per day for each fish container that is stored.Every morning, Jason brings fish from the cold storage to his shop for sale. Jason estimates that he incurs $10,000 electricity cost each year on refrigerating the fish inside his own shop.Jason incurs the following ordering costs:Delivery charges of $10,000 per deliveryImport duties of $300 per cartonCustom fees of $200 per orderImport license fee of $150 per annumJason currently imports fish by placing one order of 20 cartons every month. Each carton costs $2,000.Jason is wondering if he can save inventory costs by adopting EOQ model.a) Calculate the current annual total inventory costsb) Calculate the economic order quantityc) Calculate the annual total inventory costs if EOQ is usedarrow_forward
- Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie’s current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes: Description Retail Price Cost Employee Price Specialized road bike $ 7,400 $ 5,100 $ 5,920 Rocky Mountain mountain bike 4,200 3,500 3,360 Trek road bike 4,700 4,200 3,290 Yeti mountain bike 4,200 3,120 3,360 What amount is Jarvie required to include in taxable income from these purchases?arrow_forwardJarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie's current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes: Description Retail Price Cost Employee Price Specialized road bike $ 7,200 $ 4,900 $ 5,040 Rocky Mountain mountain bike 5,200 3,750 4,160 Trek road bike 3,300 2,760 2,310 Yeti mountain bike 3,300 2,900 2,640 Required: What amount is Jarvie required to include in taxable income from these purchases? What amount of deductions is Bad Dog allowed to claim from these transactions?arrow_forwardHow do you answer this question? Roxy the candle maker Roxy makes and sells scented candles in her shop and on-line. She also caters for functions such as parties, weddings etc. The candles cost $5 to make, and sell for $12. Roxy buys in the raw materials the month before she sells the candles. She pays a deposit of 20% when she orders and the rest the following month At the start of the year she owed $1,000 to supplier for the previous month Her customers pay 75% in the month of purchase and 25% the following month She pays rent of $1,000 on the shop in cash during the month before it is due She pays cash wages of $500 a month during the month Her other running costs are $900 a month, but this includes $200 for depreciation of the candle making machine In month 4 in the forthcoming year she intends to invest $5,000…arrow_forward
- Jordan opens her own custom sign business where she sells a sign for $80 a piece. She has been able to sell 20 signs per month. Her costs of materials to make the signs is $15 and she is paying sales tax of $4 per sign. In addition, she purchased online ads for $300 per month and pays for printing of $100 per month. To be able to run the business, Jordan has reduced her hours so her salary fell from $3,000 per month to $2,600 per month and she no longer rents out the studio apartment at her home for $500 per month. Calculate the below for Jordan's monthly financial statement. Total Sales Revenue Total Explicit Cost Accounting Profit Total Implicit Cost Total Economic Profitarrow_forwardJason owns a fish shop where he sells an exotic variety of tuna fish which he imports fromJapan. Jason refrigerates the fish in a cold storage facility near his shop that charges him avariable charge of $5 per day for each fish container that is stored. In addition the coldstorage charges a fixed annual fee of $1000. Every morning, Jason brings fish from the coldstorage to his shop for sale. Jason estimates that he incurs $10,000 electricity cost each yearon refrigerating the fish inside his own shop.Jason incurs the following ordering costs: Delivery Charges of $10,000 per delivery, andCustom Fees of $200 per order.Jason currently imports fish by placing one order of 20 cartons every month, which is themonthly demand of this tuna fish at his shop. Each carton costs $2,000.Jason is wondering if he can save inventory costs by adopting EOQ model.a)- Calculate the current annual total inventory holding cost and annual total ordering costb)- Calculate the economic order quantityc)-…arrow_forwardStaci Valekbegan dabbling in pottery several years ago as a hobby. Her work is quite creative, and it has been so popular with friends and others that she has decided to quit her job with an aerospace company and manufacture pottery full time. The salary from Staci’s aerospace job is $3,800 per month. Staci will rent a small building near her home to use as a place for manufacturing the pottery. The rent will be $500 per month. She estimates that the cost of clay and glaze will be $2 for each finished piece of pottery. She will hire workers to produce the pottery at a labor rate of $8 per pot. To sell her pots, Staci feels that she must advertise heavily in the local area. An advertising agency states that it will handle all advertising for a fee of $600 per month. Staci’s brother will sell the pots; he will be paid a commission of $4 for each pot sold. Equipment needed to manufacture the pots will be rented at a cost of $300 per month. Staci has already paid the legal and fi ling fees…arrow_forward
- It costs Homer's Manufacturing $0.65 to produce baseballs and Homer sells them for $4.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $16,000 a month rent for his factory and store, and also pays $81,000 a month to his staff in addition to the commissions. Homer sold 69,500 baseballs in June. If Homer prepares a traditional income statement for the month of June, what would be his gross profit? Question 30 options: $45,175 $278,000 $323,175 $232,825arrow_forwardThree years ago, Marissa Moore started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Marissa sells the baskets for $25 each, and her variable costs are $15 per basket. She incurs $12,000 in fixed costs each year. How many baskets will Marissa have to sell this year if she wants to earn $30,000 in operating income? (Round answer to 0 decimal places, e.g. 5,275.)arrow_forwardFred Flingstone operates a French Fries stand at the local flee market that operates for 8 weekends through the summer. The market vendor fee is $50 per weekend, his vendor insurance is $376 for the summer and he has committed to paying a helper $150 per weekend. His variable costs are $1.58 per French Fries (This includes the cost of napkins, ketchup and salt). He plans to sell the fries for $3.50 each and he knows from experience that he can make a maximum of 200 fries each weekend. a) How many fries does he have to sell per week to break even? b) On one weekend he gets sick and cannot get to the market? What is his net loss for that weekend? c) Another french fries vendor at the market sells fries for $3.10 each. How many fries would Fred have to sell in summer at this price to break even assuming none of his costs change? d) How much would he have to change the variable costs (assuming original fixed costs) to maintain his original break even point if he sold fries at $3.00?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you