管理会计quiz-3--ch-9-10.doc

该【管理会计quiz-3--ch-9-10 】是由【红色的种子】上传分享，文档一共【7】页，该文档可以免费在线阅读，需要了解更多关于【管理会计quiz-3--ch-9-10 】的内容，可以使用淘豆网的站内搜索功能，选择自己适合的文档，以下文字是截取该文章内的部分文字，如需要获得完整电子版，请下载此文档到您的设备，方便您编辑和打印。QUIZ CH9/10
1。 Contribution Format versus Traditional Income Statement（10 MARKS)
Marwick’s Pianos， Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost， on the average， $125 each from the manufacturer. Marwick’s Pianos， Inc., sells the pianos to its customers at an average price of $250 each。 The selling and administrative costs that the company incurs in a typical month are presented below：
Costs
Cost Formula
Selling:
Advertising
$800
per month
Sales salaries and commissions
$1，200
per month, plus 10％ of sales
Delivery of pianos to customers
$15
per piano sold
Utilities
$500
per month
Depreciation of sales facilities
$750
per month
Administrative：
Executive salaries
＄2，000
per month
Insurance
＄250
per month
Clerical
$700
per month， plus ＄5 per piano sold
Depreciation of office equipment
＄400
per month
During June, Marwick's Pianos, Inc。， sold and delivered 100 pianos。
Required：
1。 Prepare an income statement for Marwick’s Pianos， Inc。， for June。 Use the traditional format, with costs organized by function.
2。 Redo (1) above, this time using the contribution format， with costs organized by behavior. Show costs and revenues on both a total and a per unit basis down through contribution margin。
3。 Refer to the income statement you prepared in （2） above. Why might it be misleading to show the fixed costs on a per unit basis？
2。 Sales Mix; Break—Even Analysis； Margin of Safety（10 MARKS）
Island Novelties， Inc。, of Palau makes two products， Hawaiian Fantasy and Tahitian Joy. Present revenue， cost， and sales data for the two products follow:
Hawaiian Fantasy
Tahitian Joy
Selling price per unit
＄
＄25。00
Variable expenses per unit
＄
＄10。00
Number of units sold annually
25，000
10，000
Fixed expenses total $270，000 per year. The Republic of Palau uses the . dollar as its currency。
Required：
1. Assuming the sales mix given above， do the following：
a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole.
b。 Compute the break-even point in dollars for the company as a whole and the margin of safety in both dollars and percent。
2. The company has just developed a new product to be called Samoan Delight。 Assume that the company could sell 12,000 units at ＄ each. The variable expenses would be ＄14。00 each。 The company’s fixed expenses would not change.
a. Prepare another contribution format income statement, including sales of the Samoan Delight （sales of the other two products would not change).
b. Compute the company’s new break—even point in dollars and the new margin of safety in both dollars and percent.
3. The president of the company examines your figures and says， “There’s something strange here。 Our fixed costs haven’t changed and you show greater total contribution margin if we add the new product， but you also show our break—even point going up。 With greater contribution margin， the break—even point should go down, not up。 You’ve made a mistake somewhere。” Explain to the president what has happened。
3. Changes in Fixed and Variable Costs; Break—Even and Target Profit Analysis（10 MARKS）
Neptune Company produces toys and other items for use in beach and resort areas. A small， inflatable toy has come onto the market that the company is anxious to produce and sell。 The new toy will sell for ＄5。50 per unit. Enough capacity exists in the company’s plant to produce 20,000 units of the toy each month。 Variable costs to manufacture and sell one unit would be ＄, and fixed costs associated with the toy would total ＄70,000 per month.
The company’s Marketing Department predicts that demand for the new toy will exceed the 20,000 units that the company is able to produce. Additional manufacturing space can be rented from another company at a fixed cost of ＄5,000 per month。 Variable costs in the rented facility would total ＄3。00 per unit, due to somewhat less efficient operations than in the main plant.
Required：
1. Compute the monthly break—even point for the new toy in units and in total dollar sales. Show all computations in good form。
2. How many units must be sold each month to make a monthly profit of ＄3，000?
3. If the sales manager receives a bonus of 5 cents for each unit sold in excess of the break-even point, how many units must be sold each month to earn a return of 4。9％ on the monthly investment in fixed costs？
4. Dropping or Retaining a Flight（20 MARKS）
Profits have been decreasing for several years at Pegasus Airlines。 In an effort to improve the company’s performance， consideration is being given to dropping several flights that appear to be unprofitable。
A typical income statement for one such flight (flight 482) is given below (per flight)：
Ticket revenue (200 seats × 50% occupancy × ＄240 ticket price)
$24，000

％
Less variable expenses （＄60 per person)
   6,000

Contribution margin
 18,000

％
Less flight expenses:
Salaries, flight crew
5，100
Flight promotion
700
Depreciation of aircraft
1,600
Fuel for aircraft
6,000
Liability insurance
4，200
Salaries, flight assistants
800
Baggage loading and flight preparation
1，400
Overnight costs for flight crew and assistants at destination
      400
Total flight expenses
 20，200
Net operating loss
$（2,200)
The following additional information is available about flight 482:
a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid by the flight。
b。 One-third of the liability insurance is a special charge assessed against flight 482 because in the opinion of the insurance company， the destination of the flight is in a “high—risk” area. The remaining two—thirds would be unaffected by a decision to drop flight 482.
c。 The baggage loading and flight preparation expense is an allocation of ground crews' salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the company’s total baggage loading and flight preparation expenses。
d。 If flight 482 is dropped， Pegasus Airlines has no authorization at present to replace it with another flight。
e。 Depreciation of aircraft is due entirely to obsolescence. Depreciation due to wear and tear is negligible。
f。 Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll。
Required:
1。 Prepare an analysis showing what impact dropping flight 482 would have on the airline’s profits.
2。 The airline’s scheduling officer has been criticized because only about 50% of the seats on Pegasus Airlines flights are being filled compared to an average of 60% for the industry。 The scheduling officer has explained that Pegasus Airlines average seat occupancy could be improved considerably by eliminating about 10％ of the flights, but that doing so would reduce profits. Explain how this could happen。
5。 Make or Buy a Component(10 MARKS）
Troy Engines, Ltd。, manufactures a variety of engines for use in heavy equipment。 The company has always produced most of the parts for its engines, including all of the pistons. An outside supplier has offered to sell one type of piston to Troy Engines, Ltd., at a cost of $39。00 per unit. To evaluate this offer， Troy Engines has gathered the following information relating to its own cost of producing the piston internally:
30,000 Units
Per Unit
per Year
Direct materials
$21
$  630，000
Direct labor
6
180，000
Variable manufacturing overhead
4
120,000
Fixed manufacturing overhead， traceable
9*
270，000
Fixed manufacturing overhead, allocated
 12
     360,000
Total cost
$52
＄1，560，000
＊One—third supervisory salaries; two-thirds depreciation of special equipment （no resale value）.
Required：
1。 Assuming that the company has no alternative use for the facilities that are now being used to produce the pistons， should the outside supplier's offer be accepted? Show all computations.
2。 Suppose that if the pistons were purchased， Troy Engines， Ltd., could use the freed capacity to launch a new product。 The segment margin of the new product would be ＄250，000 per year. Should Troy Engines, Ltd.， accept the offer to buy the pistons for $ per unit? Show all computations。
6。Accept or Reject a Special Order（10 MARKS）
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity， the company can produce and sell 20,000 Rets per year。 Costs associated with this level of production and sales are given below:
Unit
Total
Direct materials
＄12。00
$240，000
Direct labor
6。00
120,000
Variable manufacturing overhead

80,000
Fixed manufacturing overhead
7。00
140，000
Variable selling expense
3。00
60,000
Fixed selling expense
    
    80，000
Total cost
$
＄720,000
The Rets normally sell for $42。00 each。 Fixed manufacturing overhead is constant at $140,000 per year within the range of 15,000 through 20,000 Rets per year。
Required：
1. Assume that due to a recession， Polaski Company expects to sell only 15,000 Rets through regular channels next year。 A large retail chain has offered to purchase 5,000 Rets if Polaski Company is willing to accept a 15% discount off the regular price。 There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 80%。 However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 5，000 units。 This machine would cost $5，000。 Polaski Company has no assurance that the retail chain will purchase additional units in the future。 Determine the impact on profits next year if this special order is accepted.
2。 Refer to the original data。 Assume again that Polaski Company expects to sell only 15,000 Rets through regular channels next year. The U。S. Army would like to make a one—time—only purchase of 5,000 Rets. The Army would pay a fixed fee of $ per Ret， and it would reimburse Polaski Company for all costs of production （variable and fixed） associated with the units。 Since the Army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order。 If Polaski Company accepts the order， by how much will profits increase or decrease for the year？
3. Assume the same situation as that described in （2） above, except that the company expects to sell 20,000 Rets through regular channels next year. Thus, accepting the U。S. Army's order would require giving up regular sales of 5,000 Rets. If the Army’s order is accepted, by how much will profits increase or decrease from what they would be if the 5,000 Rets were sold through regular channels？
7. Shutting Down or Continuing to Operate a Plant（10 MARKS）
(Note: This type of decision is similar to dropping a product line。)
Birch Company normally produces and sells 50，000 units of RG-6 each month。 RG-6 is a small electrical relay used as a component part in the automotive industry。 The selling price is $28。00 per unit, variable costs are ＄22。00 per unit， fixed manufacturing overhead costs total $420，000 per month, and fixed selling costs total $88，000 per month.
Employment-contract strikes in the companies that purchase the bulk of the RG-6 units have caused Birch Company’s sales to temporarily drop to only 26，000 units per month. Birch Company estimates that the strikes will last for two months， after which time sales of RG-6 should return to normal。 Due to the current low level of sales， Birch Company is thinking about closing down its own plant during the strike, which would reduce its fixed manufacturing overhead costs by $120,000 per month and its fixed selling costs by 10%。 Start-up expenses at the end of the shutdown period wo