Test Bank for Fundamentals of Cost Accounting, 7th Edition by (Lanen/ Anderson/ Maher), All 18 Chapters Covered, Verified Latest Edition.

Test Bank for Fundamentals of Cost Accounting, 7th Edition by (Lanen/ Anderson/ Maher), All 18 Chapters Covered, Verified Latest Edition. Answers Included at the End of each Chapter. Chapter 01 7e 1) Carley Incorporated incurs many types of costs in its operations. Place the number of the appropriate stage in the value chain in Column 2 in the blank next to each cost in Column 1. Cost Stage in the Value Chain Transportation costs to ship vans to customers 1. Customer Service Labor costs for factory workers 2. Distribution Overtime costs for scientists working on new engine technology 3. Research & Development Utilities cost for the design testing center 4. Marketing Costs to survey customers about their satisfaction 5. Production Costs to sponsor a sporting event 6. Design 2) SuperMax is an integrated provider of genetically engineered corn. Many types of costs are incurred in its operations. Place the number of the appropriate stage in the value chain in Column 2 in the blank next to each cost in Column 1. Cost Stage in the Value Chain Warehouse costs to store seed awaiting shipment to customers 1. Customer Service Utility costs for seed mill 2. Distribution Equipment costs in genetics laboratory 3. Research & Development Labor costs to staff help-line call center 4. Marketing Costs to prepare advertising campaign in national agriculture magazine 5. Production Costs to contract with growers to provide seed 6. Design Answers Included at the End of each Chapter. Version 1 2 3) Travon's Limo Service provides transportation services in and around Bentonville. Its profits have been declining, and management is planning to add a package delivery service that is expected to increase revenue by $275,000 per year. The total cost to lease additional delivery vehicles from the local dealer is $60,000 per year. The present manager will continue to supervise all services. However, labor and utilities costs will increase by 40% and rent and other costs will increase by 15% when the package delivery service is added. Travon’s Limo Service Annual Income Statement Before Expansion Sales Revenue $ 960,000 Costs: Vehicle Leases $ 400,000 Labor 290,000 Utilities 50,000 Rent 100,000 Other Costs 60,000 Manager’s Salary 120,000 Total Costs 1,020,000 Operating Profit (Loss) $ (60,000) a. Prepare a report of the differential costs and revenues if the delivery service is added. b. Should management start up the delivery service? Explain your answer. Version 1 3 4) Morris Incorporated is a management consulting firm that specializes in management training programs. Tackle Manufacturing Incorporated has approached Morris to contract for management training for a one-year period. Last year's income statement for Morris is as follows: Sales Revenue $ 360,000 Costs: Labor $ 120,000 Equipment Lease 12,000 Rent 24,000 Utilities 8,400 Supplies 23,600 Other Costs 14,400 Manager’s Salary 80,000 Total Costs 282,400 Operating Profit (Loss) $ 77,600 To satisfy the Tackle contract, another part-time trainer will need to be hired at $42,000. Supplies will increase by 12% and other costs will increase by 15%. In addition, new equipment will need to be leased at a cost of $2,500. a. What are the differential costs that would be incurred if the Tackle contract is signed? b. If Tackle will pay $55,000 for one year, should Morris accept the contract? Explain your answer. Version 1 4 5) The Arielle Company reported the following results for the manufacture and sale of one of its products known as Controllers during the most recent year. Sales (6,500 Controllers at $130 each) $ 845,000 Cost of sales 390,000 Distribution costs 65,000 Advertising expense 275,000 Salaries 25,000 Building costs 145,000 Operating loss $ (55,000) The Arielle Company is trying to determine whether or not to discontinue the manufacture and sale of Controllers. The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped. The building costs represent the costs of production facilities and equipment that the Controllers product shares with other products produced by Arielle. If the Controllers product were dropped, there would be no change in the building costs of the company. Management has determined that discontinuing the manufacture and sale of Controllers will have no effect on the company's other product lines. Determine the change in operating profits that will happen if the manufacture and sale of Controllers is discontinued. 6) The management of Parachute Corporation is considering dropping product ABC123. Data from the company's accounting system appear below: Sales $ 260,000 Version 1 5 Cost of goods sold 125,000 Building expenses 88,000 Selling and administrative expenses 75,000 All building expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $42,000 of the building expenses and $48,000 of the selling and administrative expenses will not be incurred if product ABC123 is discontinued. a. According to the company's accounting system, what are the operating profits earned by product ABC123? b. What would be the impact on the company's overall operating profits if product ABC123 is dropped? Should the product be dropped? 7) The management of Marvel Corporation has been concerned for some time with the financial performance of its product EX123 and has considered discontinuing it on several occasions. Data from the company's accounting system appear below: Sales $ 650,000 Cost of goods sold 293,000 Building expenses 221,000 Selling and administrative expenses 150,000 In the company's accounting system, all building expenses of the company are fully allocated to products. Further investigation has revealed that $95,000 of the building expenses and $85,000 of the selling and administrative expenses will not be incurred if product EX123 is discontinued. a. According to the company's accounting system, what are the operating profits (losses) earned by product EX123? b. What would be the effect on the company's overall operating profits if product EX123 is dropped? Version 1 6 8) Place the letter of the appropriate element of an organization's value chain in Column 2 in the blank next to each operation in Column 1. Column 1 Column 2 Macy’s replies to customers' questions on merchandise A. Research and Development Updating PetSmart’s electronic Internet catalogue of chew bones and leash merchandise. B. Design Development of new software applications at Apple. C. Production Contracting with United Parcel Services to ship computers to customers at Best Buy D. Marketing Writing of software programs at QuickBooks Professional Accountant Division. E. Distribution Creation of new movie ideas at Universal Studios. F. Customer Service.