Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 3.13Q
“There is no such thing as a fixed cost. All costs can be ‘unfixed’ given sufficient time.” Do you agree? What is the implication of your answer for CVP analysis?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The restaurant's owner wants to better understand his costs and hired a student intern to conduct an activity-based costing study. The intern identified three activities, completed the first-stage cost allocations and gathered the activity measure data shown below.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Serving a party of diners
Number of parties served
$ 33,000
6,000
parties
Serving a diner
Number of diners served
$ 138,000
15,000
diners
Serving drinks
Number of drinks ordered
$ 24,000
10,000
drinks
The above costs exclude organization-sustaining costs such as rent, property taxes, and top-management salaries.
Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served.
Prior to the…
As a 25-year-old, I have set a goal of being a millionaire by the time I am 60. At the age of 25 I have already invested $10,000 in the stock market and historically the stock market has returned somewhere in the neighborhood of 10%. How much am I going to have to add in monthly contributions (payments) to my investment account in order to achieve my $1 million goal over 35 years (420 months)?
You tell your aunt that you have about $100,000 in the stock market earning about 11% per year and you are contributing $250 monthly to the investment account. Your aunt graciously suggests (offers) that when that investment account reaches $200,000, it can be paid to her and the loan will be considered paid in full.
How long is it going to take you to get that investment account up to $200,000 assuming the 11% return and the $250 contributions continue? What will be the balance of the loan at that time?
Chapter 3 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Jacks Jax has total fixed costs of 25,000. If the...Ch. 3 - During the current year, XYZ Company increased its...Ch. 3 - Under the contribution income statement, a...Ch. 3 - A company needs to sell 10,000 units of its only...Ch. 3 - Once a company exceeds its breakeven level,...Ch. 3 - Prob. 3.21ECh. 3 - CVP computations. Garrett Manufacturing sold...Ch. 3 - CVP analysis, changing revenues and costs. Sunset...Ch. 3 - CVP exercises. The Deli-Sub Shop owns and operates...Ch. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - CVP analysis, income taxes. Westover Motors is a...Ch. 3 - CVP analysis, income taxes. The Home Style Eats...Ch. 3 - CVP analysis, sensitivity analysis. Perfect Fit...Ch. 3 - CVP analysis, margin of safety. Suppose Morrison...Ch. 3 - Operating leverage. Cover Rugs is holding a 2-week...Ch. 3 - CVP analysis, international cost structure...Ch. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.33ECh. 3 - Prob. 3.34ECh. 3 - Contribution margin, decision making. Welch Mens...Ch. 3 - Contribution margin, gross margin, and margin of...Ch. 3 - Uncertainty and expected costs. Kindmart is an...Ch. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - CVP, target operating income, service firm....Ch. 3 - CVP analysis, margin of safety. Marketing Docs...Ch. 3 - CVP analysis, income taxes. (CMA, adapted) J.T....Ch. 3 - CVP, sensitivity analysis. The Derby Shoe Company...Ch. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - CVP analysis, shoe stores (continuation of 3-43)....Ch. 3 - Prob. 3.45PCh. 3 - Prob. 3.46PCh. 3 - CVP analysis, income taxes, sensitivity. (CMA,...Ch. 3 - Choosing between compensation plans, operating...Ch. 3 - Prob. 3.49PCh. 3 - Multiproduct CVP and decision making. Crystal...Ch. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.52PCh. 3 - Ethics, CVP analysis. Megaphone Corporation...Ch. 3 - Deciding where to produce. (CMA, adapted) Portal...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Problem Set 2 Caro Ltd, a manufacturer of construction blocks, operates with a fiscal year-end of June 30th, 2024. With a trading history spanning over 25 years, Caro caters to a diverse range of customers, including both large and small hardware stores nationwide. The company's operations encompass a manufacturing plant, five warehouses, and a central head office. Following the manufacturing process, the blocks are stored in one of the warehouses until they are dispatched to customers. It is important to note that Caro currently does not possess an internal audit department. The following is a reflection of the sales system: • • • Each customer is assigned a distinct customer account number, which is utilized to input sales orders upon receiving written requests from customers. The responsibility of entering orders lies with an order clerk, and the system performs an automated verification to ensure product availability and prevent the customer from exceeding their credit limit. New…arrow_forwardKristine transferred investment property she has owned for six years to XYZ Corporation in exchange for 40 percent of the corporation's stock (40 shares valued at $160,000) at the time XYZ was incorporated. The property's adjusted tax basis was $90,000 and its fair market value was $160,000. Assume the transfer qualifies under §351. Note: Leave no answer blank. Enter zero if applicable. Problem 8-49 Part a (Static) a. What gain or loss does Kristine recognize on the transfer?arrow_forwardProblem Set 1 You are the audit manager in charge of the audit of Carico Ltd. The company's year-end is 31 December, and Carico has been a client for six years. The company purchases and resells products for the energy industry including valves, fittings, pumps etc. Clients vary in size from small operators to large companies. No manufacturing takes place in Carico. Information on the company's financial performance is available as follows: 2024 Forecast $'000 Revenue 10,088 Cost of sales (8,184) 2023 Actual $'000 8,965 (6,575) Gross profit 1904 2390 Administration costs (1039) (990) Distribution costs (500) (500) Net profit 365 900 Non-current assets (at net book value) 840 980arrow_forward
- Problem Set 1 You are the audit manager in charge of the audit of Carico Ltd. The company's year-end is 31 December, and Carico has been a client for six years. The company purchases and resells products for the energy industry including valves, fittings, pumps etc. Clients vary in size from small operators to large companies. No manufacturing takes place in Carico. Information on the company's financial performance is available as follows: 2024 Forecast 2023 Actual $'000 $'000 Revenue 10,088 8,965 Cost of sales (8,184) (6,575) Gross profit 1904 2390 Administration costs (1039) (990) Distribution costs (500) (500) Net profit 365 900 Non-current assets (at net book value)…arrow_forwardDecember, and Carico has been a client for six years. The company purchases and resells products for the energy industry including valves, fittings, pumps etc. Clients vary in size from small operators to large companies. No manufacturing takes place in Carico.Information on the company's financial performance is available as follows:2024 Forecast 2023 Actual$'000 $'000Revenue 10,088 8,965Cost of sales (8,184) (6,575)Gross profit 1904 2390Administration costs (1039) (990)Distribution costs (500) (500)Net profit 365 900Non-current assets (at net book value) 840 980Current assetsInventory 50 296Receivables 1300 910Cash and bank 110 358Total assets 2300 2544Capital and reservesShare capital 200 200Accumulated profits 1100 1315Total shareholders' funds 1300 1515Non-current liabilities 300 452Current liabilities 700 5772300 2544Other information The industry that Carico trades in has seen moderate growth of 6% over the last year. Non-current assets mainly relate to company premises for…arrow_forwardOn January 1, 2025, Cheyenne Corporation purchased 20% of the common shares of Ayayai Company for $182,000. During the year, Ayayai earned net income of $90,000 and paid dividends of $22,500. Prepare the entries for Cheyenne to record the purchase and any additional entries related to this investment in Ayayai Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Equity Investments Cash (To record purchase of stock.) Cash Interest Revenue (To record receipt of dividends.) Equity Investments Investment Income (To record revenue.) Debit 65,000 2,600 Credit 65,000 2,600arrow_forward
- Explain what we mean by consolidation (or consolidated financial statements)?arrow_forwardWhat is the Equity Method? How and when is this method applied to account for investment securities owned by a company?arrow_forwardIndigo Corporation purchased for $277,000 a 30% interest in Murphy, Inc. This investment enables Indigo to exert significant influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $64,000. Prepare Indigo's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record the purchase.) (To record the net income.) (To record the dividend.) Debit Creditarrow_forward
- Indigo Corporation purchased for $277,000 a 30% interest in Murphy, Inc. This investment enables Indigo to exert significant influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $64,000. Prepare Indigo's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record the purchase.) (To record the net income.) (To record the dividend.) Debit Creditarrow_forwardCheyenne Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Cheyenne does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per share. Prepare Cheyenne' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation (a) Debt Investments Cash (b) Cash Dividend Revenue (c) Fair Value Adjustment Unrealized Holding Gain or Loss - Income Debit Creditarrow_forwardCrane Corporation purchased 360 shares of Sherman Inc. common stock for $11,800 (Crane does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Crane' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY