managerial accounting

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1. Skiboards, Inc. has two divisions. The Boards Division makes the board that is made into Skiboards by the Ski Division, but the Board Division can also sell the boards it makes to outside customers. In 2011, The Boards Division reported the following information:

 

Selling price per board 

$ 52

Variable costs per board

$ 22

 

 

Number of boards:

 

Produced in 2011

10,000

Sold to the Ski Division      

  8,000

Sold to outside customers

  2,000

 

Sales from the Boards Division to the Ski Division were made at the same price that sales were made to outside customers. The Ski Division incurred an additional $100 per board in variable costs in shaping the boards into Skiboards and then sold the finished Skiboards for $300 each.

 

A.    Prepare income statements for the Boards Division, the Ski Division, and for Skiboards, Inc.

B.    Assume that the Boards Division’s manufacturing capacity is limited to 10,000 boards per year and that next year, the Ski Division wants to buy 9,000 boards from the Boards Division instead of the 8,000 boards that it bought in 2011 (the Boards Division is the only place that the Ski Division can buy these boards). From the standpoint of the company as a whole, should the Boards Division sell the 1,000 additional boards to the Ski Division or continue to sell those boards to outside customers?

 

Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. For problems, be sure to answer all questions and provide all requested information.

 

2.

Magic Lawnmower Company assembles lawnmowers from a number of different parts. Some of those parts are manufactured by Magic Lawnmower and some of the parts are purchased from other companies. The vendor for the blades that Magic Lawnmower uses has just increased the price of blades to $10 per blade for the first 5,000 blades and $9 per blade for all blades ordered during the year in excess of 5,000. Magic Lawnmower expects to use 7,500 blades this year. Magic lawnmower can make the blades for the following unit costs:

 

Direct materials

$3.50

Direct labor      

$1.75

Variable manufacturing overhead

$4.25

 

Should Magic Lawnmower make the blades or continue to buy the blades from its vendor?

 

Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. For problems, be sure to answer all questions and provide all requested information.



3.

Bienville Company has two operating divisions, and the financial information for each division for 2010 is:

 

 

Top Division

Bottom Division

 

 

 

Sales   

$2,000,000

$3,500,000

Average operating assets

1,000,000

1,000,000

Net operating income

180,000

210,000

Property, plant and equipment

475,000

400,000

 

Compute ROI for each division. Which manager seems to be doing the best job? Why? Does ROI necessarily the best measure of the performance of these managers?     

 

Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. For problems, be sure to answer all questions and provide all requested information.



4.

Punch Products, Inc. is considering purchasing a new production machine and has assembled the following information from two vendors of the machine that it is considering buying:

 

 

A Products

B Products

Increase in revenue

$ 45,200

$ 52,000

Increase in annual operating costs:

 

 

Direct materials

$ 12,000

$ 12,000

Direct labor

$ 10,200

$ 10,200

Variable manufacturing overhead

$ 23,100

$ 25,200

Fixed manufacturing overhead  (including depreciation)

$ 12,600

$ 12,600

 

Which of these costs are relevant? Using only the relevant costs, determine whether Punch Products, Inc. should buy the equipment from A Products or from B Products.

 

Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. For problems, be sure to answer all questions and provide all requested information.



5.

MOS Company sells and delivers appliances. The costs associated with maintaining a delivery truck each year are:

 

Insurance

$2,500

Licenses

  $125

Vehicle taxes

  $150

Depreciation ($15,000/5 years)

$3,000

Gasoline

$ 0.05/mile

Tires

$ 0.02/mile

Repairs

$ 0.01/mile

 

A.   Assume that MOS has a delivery truck that is driven for 60,000 miles in one year. Compute the average cost per mile of owning and operating that truck.

B.   Assume that MOS decides not use the delivery truck and instead arranges for all deliveries that it has to make to be made by a commercial trucking company. (The state where MOS is located the payment of vehicle license and taxes even if the vehicle is not used.) What costs are relevant to a decision by MOS to use its truck for deliveries or to have a commercial trucking companies make deliveries?

 

Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. For problems, be sure to answer all questions and provide all requested information.

    • 10 years ago
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