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Cost Accounting, 14e (Horngren/Datar/Rajan)
Chapter 12 Pricing Decisions and Cost Management
Objective 12.1
1) Companies should only produce and sell units as long as:
A) there is customer demand for the product
B) the competition allows it
C) the revenue from an additional unit exceeds the cost of producing it
D) there is a generous supply of low-cost direct materials
Answer: C
Diff: 2
Terms: target price
Objective: 1
AACSB: Ethical reasoning
2) Too high a price may:
A) deter a customer from purchasing a product
B) increase demand for the product
C) indicate supply is too plentiful
D)
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labor (hours) 1,000 500 300 200
Disbursement of Payments
Direct materials
Wood
(1,000; 500; 300 × $30) $30,000 $15,000 $9,000
Fiberglass
(1,200; 600; 360 × $5) 6,000 3,000 1,800
Direct manuf. labor
(500; 300; 200 × $25) 12,500 7,500 5,000
Interest payment
(6% × $30,000 ÷12) 150 150 150
Variable Overhead Calculation
Variable overhead rate $ 7 $ 7 $ 7
Overhead driver
(direct manuf. labor-hours) 500 300 200
Variable overhead expense $ 3,500 $ 2,100 $1,400
6-32
Cash Budget for the months of July, August, September 2012
July August September
Beginning cash balance $10,000 $ 5,650 $40,100
Add receipts: Collection of receivables 55,800 70,200 54,900
Total cash available $65,800 $75,850 $95,000
Deduct disbursements:
Material purchases $36,000 $18,000 $10,800
Direct manufacturing labor 12,500 7,500 5,000
Variable costs 3,500 2,100 1,400
Fixed costs 8,000 8,000 8,000
Interest payments 150 150 150
Total disbursements 60,150 35,750 25,350
Ending cash balance $ 5,650 $40,100 $69,650
2. Yes. Slopes has a budgeted cash balance of $69,650 on 10/1/2012 and so it will be in a position to pay off the $30,000 1-year note on October 1, 2012.
3. No. Slopes does not maintain a $10,000 minimum cash balance in July. To maintain a
$10,000 cash balance in each of the
An accounting cycle is a process, or a series of activities, that consists of collecting an organization’s transactions at the end of a reporting period to prepare essential financial statements of a business (Fleury, 2015). The accounting cycle is a strict, methodical set of rules used to ensure the accuracy and conformity of financial statements (Investopedia, 2017). The steps involved with an accounting cycle, the roles each of the step facilitate, the impact of omission, and what financial statements are assembled from the accounting cycle data.
The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise.
• You must pay at least the minimum payment by the payment due date to avoid late fees, to avoid the loss of any promotional rates and to keep your account in good standing.
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Marvin Braun had just been appointed vice president of the Great Basin Region of the Financial Services Corporation (FSC). The company provides check processing services for small banks. The banks send checks presented for deposit or payment to FSC, which then records the data on each check in a computerized database. FSC sends the data electronically to the nearest Federal Reserve Bank check-clearing center where the appropriate transfers of funds are made between banks. The Great Basin Region consists of three check processing centers in Eastern Idaho—Pocatello, Idaho Falls, and Ashton. Prior to his promotion to vice president, Mr. Braun had been manager of a check processing