Building Blocks of Managerial Accounting|Quick homework help

Posted: February 26th, 2023

Please complete Exercise Set A, Odd number problems. Attached is a PDF of the A Exercise Questions.  You can copy the questions into a Word document and answer the questions or use a Word document to reflect just the questions.

Exercise A – Chapter 2 – Building Blocks of Managerial Accounting

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EA1.

LO 2.1 Magio Company manufactures kitchen equipment used in hospitals. They distribute their

products directly to the customer and, for the year ending 2019, they reported the following

revenues and expenses. Use this information to construct an income statement for the year 2019.

 

EA2.

LO 2.1 Park and West, LLC, provides consulting services to retail merchandisers in the

Midwest. In 2019, they generated $720,000 in service revenue. Their total cost (fixed and

variable) per client was $2,500 and they served 115 clients during the year. If operating expenses

for the year were $302,000 what was their net income?

EA3.

LO 2.1 Canine Couture is a specialty dog clothing boutique that sells clothing and clothing

accessories for dogs. In 2019, they had gross revenue from sales totaling $86,500. Their

operating expenses for this same period were $27,500. If their Cost of Goods Sold (COGS) was

24% of gross revenue, what was their net operating income for the year?

EA4.

LO 2.2 Hicks Contracting collects and analyzes cost data in order to track the cost of installing

decks on new home construction jobs. The following are some of the costs that they incur.

Classify these costs as fixed or variable costs and as product or period costs.

A. Lumber used to construct decks ($12.00 per square foot)

B. Carpenter labor used to construct decks ($10 per hour)

C. Construction supervisor salary ($45,000 per year)

D. Depreciation on tools and equipment ($6,000 per year)

E. Selling and administrative expenses ($35,000 per year)

F. Rent on corporate office space ($34,000 per year)

G. Nails, glue, and other materials required to construct deck (varies per job)

 

 

 

 

 

 

Exercise A – Chapter 2 – Building Blocks of Managerial Accounting

EA5.

LO 2.2 Rose Company has a relevant range of production between 10,000 and 25,000 units. The

following cost data represents average cost per unit for 15,000 units of production.

 

Using the cost data from Rose Company, answer the following questions:

A. If 10,000 units are produced, what is the variable cost per unit?

B. If 18,000 units are produced, what is the variable cost per unit?

C. If 21,000 units are produced, what are the total variable costs?

D. If 11,000 units are produced, what are the total variable costs?

E. If 19,000 units are produced, what are the total manufacturing overhead costs incurred?

F. If 23,000 units are produced, what are the total manufacturing overhead costs incurred?

G. If 19,000 units are produced, what are the per unit manufacturing overhead costs

incurred?

H. If 25,000 units are produced, what are the per unit manufacturing overhead costs

incurred?

EA6.

LO 2.2 Carr Company provides human resource consulting services to small- and medium-sized

companies. Last year, Carr provided services to 700 clients. Total fixed costs were $159,000

with total variable costs of $87,500. Based on this information, complete this chart:

 

 

 

Exercise A – Chapter 2 – Building Blocks of Managerial Accounting

EA7.

LO 2.2 Western Trucking operates a fleet of delivery trucks. The fixed expenses to operate the

fleet are $79,900 in March and rose to $93,120 in April. It costs Western Trucking $0.15 per

mile in variable costs. In March, the delivery trucks were driven a total of 85,000 miles, and in

April, they were driven a total of 96,000 miles. Using this information, answer the following:

A. What were the total costs to operate the fleet in March and April, respectively?

B. What were the cost per mile to operate the fleet in March and April, respectively?

EA8.

LO 2.2 Suppose that a company has fixed costs of $18 per unit and variable costs $9 per unit

when 15,000 units are produced. What are the fixed costs per unit when 12,000 units are

produced?

EA9.

LO 2.3 The cost data for Evencoat Paint for the year 2019 is as follows:

 

A. Using the high-low method, express the company’s maintenance costs as an equation

where x represents the gallons of paint produced. Then estimate the fixed and variable

costs.

B. Predict the maintenance costs if 90,000 gallons of paint are produced.

C. Predict the maintenance costs if 81,000 gallons of paint are produced.

D. Using Excel, create a scatter graph of the cost data and explain the relationship between

gallons of paint produced and equipment maintenance expenses.

 

 

Exercise A – Chapter 2 – Building Blocks of Managerial Accounting

 

EA10.

LO 2.3 This cost data from Hickory Furniture is for the year 2017.

 

A. Using the high-low method, express the company’s utility costs as an equation

where X represents number of tables produced.

B. Predict the utility costs if 800 tables are produced.

C. Predict the utility costs if 600 tables are produced.

D. Using Excel, create a scatter graph of the cost data and explain the relationship between

number of tables produced and utility expenses.

EA11.

LO 2.3 Markson and Sons leases a copy machine with terms that include a fixed fee each month

plus a charge for each copy made. Markson made 9,000 copies and paid a total of $480 in

January. In April, they paid $320 for 5,000 copies. What is the variable cost per copy if Markson

uses the high-low method to analyze costs?

 

 

 

 

 

Exercise A – Chapter 2 – Building Blocks of Managerial Accounting

EA12.

LO 2.3 Markson and Sons leases a copy machine with terms that include a fixed fee each month

of $500 plus a charge for each copy made. The company uses the high-low method to analyze

costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would

Markson pay if it made 7,500 copies?

EA13.

LO 3.5 Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed

costs are $3,000,000. Company B is a service firm with current service revenue of $5,000,000

and a 20% contribution margin. Company B’s fixed costs are $500,000. Compute the degree of

operating leverage for both companies. Which company will benefit most from a 25% increase

in sales? Explain why.

EA14.

LO 3.5 Marshall & Company produces a single product and recently calculated their break-even

point as shown.

 

What would Marshall’s target margin of safety be in units and dollars if they required a $14,000

margin of safety?

 

 

SOLUTION

Managerial accounting is a crucial aspect of any business organization that involves identifying, measuring, analyzing, and interpreting financial information to assist managers in making informed decisions. Here are the building blocks of managerial accounting: Cost concepts: Cost concepts refer to the various types of costs incurred by the business, such as direct costs, indirect costs, variable costs, fixed costs, and opportunity costs. Understanding cost concepts is essential for budgeting, pricing, and decision-making. Cost behavior: Cost behavior refers to how costs change as a result of changes in business activity levels. Understanding cost behavior helps managers to make better decisions and to manage costs effectively.

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