亨格瑞管理会计英文第15版练习答案.docx

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1、.CHAPTER 5COVERAGE OF LEARNING OBJECTIVES. .FUNDA- MENTALCRITICAL THINKINGCASES, EXCEL, COLLAB. &LEARNINGASSIGNMENT EXERCISES ANDINTERNETOBJECTIVELO1: Discriminate between relevant andMATERIALEXERCISES 23,30,37,38PROBLEMS 49,50,51,54,57EXERCISES 66irrelevant information for making decisions. LO2: Ap

2、ply the decision process to make business decisions.28,29,39LO3: Construct absorption and contribution-marginA1,B124,31,32,33,4834,35income statements and identify their relevancefor decision making.LO4: Decide to acceptA2,B2 or reject a special order using the contributionmargin technique.36,4055,5

3、6,6263,64LO5: Explain whyA2,B2 pricing decisionsdepend on thecharacteristics of the market.25,4258LO6: Identify the factors that influence pricing decisions in practice.26,4147,52,5365LO7: Compute a targeAt 3 sales price by various approaches, and compare the advantages and disadvantages ofthese app

4、roaches.43,44LO8: Use target costinAg4,B3 to decide whether toadd a new product.27,45,4659,60,61CHAPTER 5Relevant Information for Decision Making with a Focus on Pricing Decisions5-A1(40-50 min.)1. INDEPENDENCE COMPANY Contribution Income StatementFor the Year Ended December 31, 2009 (in thousands o

5、f dollars)Sales$2,200Less variable expensesDirect material$400Direct labor330Variable manufacturing overhead (Schedule 1)150Total variable manufacturing cost of goods sold$880Variable selling expenses80Variable administrative expenses25Total variable expenses985Contribution margin$ 1,215Less fixed e

6、xpenses:Fixed manufacturing overhead (Schedule 2)$345Selling expenses220Administrative expenses119Total fixed expenses684Operating income$ 531INDEPENDENCE COMPANYAbsorption Income StatementFor the Year Ended December 31, 2009 (in thousands of dollars)Sales$2,200Less manufacturing cost of goods sold:

7、Direct material$400Direct labor330Manufacturing overhead (Schedules 1 and 2)495Total manufacturing cost of goods sold1,225Gross margin$ 975Less:Selling expenses$300Administrative expenses144444Operating income$ 531INDEPENDENCE COMPANYSchedules of Manufacturing Overhead For the Year Ended December 31

8、, 2009 (in thousands of dollars)Schedule 1: Variable CostsSupplies$ 20Utilities, variable portion40Indirect labor, variable portion90$150Schedule 2: Fixed Costs Utilities, fixed portion$ 15Indirect labor, fixed portion50Depreciation200Property taxes20Supervisory salaries60345Total manufacturing over

9、head$4952. Change in revenue$200,000Change in total contribution margin:Contribution margin ratio in part 1 is $1,215 $2,200 = .552Ratio times decrease in revenue is .552 $200,000$ 110,400 Operating income before change531,000New operating income$420,600This analysis is readily done by using data fr

10、om the contribution income statement. In contrast, the data in the absorption income statement must be analyzed and split into variable and fixed categories before the effect on operating income can be estimated.5-A3(25-30 min.)1. A contribution format, which is similar to Exhibit 5-6, clarifies the

11、 analysis.Without SpecialOrderEffect of Special OrderWith SpecialOrderUnits2,000,000150,0002,150,000Sales$11,000,000Total$660,000Per Unit$4.40 1$11,660,000Less variable expenses:Manufacturing$ 3,500,000$322,500$2.15 2$ 3,822,500Selling & administrative800,00035,250.2353835,250Total variable expenses

12、$ 4,300,000$357,750$2.385$ 4,647,250Contribution margin$ 6,700,000$302,250$2.015$ 7,002,250Less fixed expenses:Manufacturing$ 3,000,00000.00$ 3,000,000Selling & administrative2,200,00000.002,200,000Total fixed expenses$ 5,200,00000.00$ 5,200,000Operating income$1,500,000$302,250$2.015$ 1,802,2501 $6

13、60,000 150,000 = $4.402 Regular unit cost = $3,500,000 2,000,000 =$1.75Logo.40Variable manufacturing costs$2.153 Regular unit cost = $800,000 2,000,000 =$ .40Less sales commissions not paid (3% of $5.50)(.165)Regular unit cost, excluding sales commission$ .2352. Operating income from selling 7.5% mo

14、re units would increase by $302,250 $1,500,000 = 20.15%. Note also that the average selling price on regular business was $5.50. The full cost, including selling and administrative expenses, was $4.75. The $4.75, plus the 40 per logo, less savings in commissionsof .165 came to $4.985. The president

15、apparently wanted $4.985 + .08($4.985)= $4.985 + .3988 = $5.3838 per pen.Most students will probably criticize the president for being too stubborn. The cost to the company was the forgoing of $302,250 of income in order to protect the companys image and general market position. Whether $302,250 was

16、 a wise investment in the future is a judgment that managers are paid for rendering. .The purpose of this problem is to underscore the idea that any of a number of general formulas might be used that, properly employed, would achieve the same target selling prices. Desired sales = $7,500,000 + $1,50

17、0,000 = $9,000,000.The target markup percentage would be:1. 100% of direct materials and direct labor costs of $4,500,000.Computation is: ($9,000,000 - $4,500,000) $4,500,000 = 100%2. 50% of the full cost of jobs of $6,000,000.Computation is: ($9,000,000 - $6,000,000) $6,000,000 = 50%3.$9,000,000 ($

18、3,500,000 + $1,000,000 + $700,000) $5,200,000 = 73.08%4.($9,000,000 - $7,500,000) $7,500,000 = 20%5.$9,000,000 ($3,500,000 + $1,000,000 + $700,000 + $500,000) $5,700,000= $3,300,000 $5,700,000 = 57.9%If the contractor is unable to maintain these profit percentages consistently, the desired operating

19、 income of $1,500,000 cannot be obtained.5-A4(15-20 minutes)1.Revenue ($360 70,000)$25,200,000Total cost over product life16,000,000Estimated contribution to profit$ 9,200,000Desired (target) contribution to profit40% $25,200,00010,080,000Deficiency in profit$880,000The product should not be release

20、d to production.2.Previous total estimated costCost savings from suppliers$16,000,000.20 .70 $8,000,0001,120,000Revised total estimated cost$14,880,000Revised total contribution to profit:$25,200,000 - $14,880,000$10,320,000Desired (target) contribution to profit10,080,000Excess contribution to prof

21、it$240,000Theproduct should be released to production.3.Previous revised total estimated cost fromrequirement 2.$14,880,000Process improvement savings:.25 .30 $8,000,000$600,000Less cost of new technology220,000380,000Revised total estimated cost14,500,000Revised total contribution to profit:$25,200

22、,000 - $14,500,000$10,700,000Desired (target) contribution to profit10,080,000Excess contribution to profit$620,000The product should be released to production. .5-B1(40-50 min.)1. KINGLAND MANUFACTURING Contribution Income StatementFor the Year Ended December 31, 2009(In thousands of dollars)Sales$

23、13,000Less variable expenses:Direct material$4,000Direct labor2,000Variable indirect manufacturingcosts (Schedule 1)960Total variable manufacturing cost of goods sold$6,960Variable selling expenses:Sales commissions$500Shipping expenses300800Variable clerical salaries400Total variable expenses8,160C

24、ontribution margin$ 4,840Less fixed expenses:Manufacturing (Schedule 2)$ 702Selling (advertising)400Administrative-executive salaries100Total fixed expenses1,202Operating income$3,638KINGLAND MANUFACTURINGAbsorption Income StatementFor the Year Ended December 31, 2009 (In thousands of dollars)Sales$

25、13,000Less manufacturing cost of goods sold:Direct material$4,000Direct labor2,000Indirect manufacturing costs(Schedules 1 and 2)1,662Gross profit5,338Selling expenses:Sales commissions$500Advertising400Shipping expenses300$1,200Administrative expenses:Executive salaries$100Clerical salaries4005001,

26、700Operating income$ 3,638KINGLAND MANUFACTURINGSchedules 1 and 2 Indirect Manufacturing CostsFor the Year Ended December 31, 2009 (In thousands of dollars)Schedule 1: Variable CostsCutting bits$ 60Abrasives for machining100Indirect labor800$960Schedule 2: Fixed Costs Factory supervisors salaries$10

27、0Factory methods research40Long-term rent, factory100Fire insurance on equipment2Property taxes on equipment30Depreciation on equipment400Factory superintendents salary30702Total indirect manufacturing costs$1,6622. Operating income would decrease from $3,638,000 to $3,268,000:Decrease in revenue$1,

28、000,000Decrease in total contribution margin*:Ratio times revenue is .37 $1,000,000$ 370,000 Decrease in fixed expenses0Operating income before increase3,638,000New operating income$3,268,000*Contribution margin ratio in contribution income statement is $4,840 $13,000 = .37 (rounded).The above analy

29、sis is readily calculated by using data from the contribution income statement. In contrast, the data in the absorption income statement must be analyzed and divided into variable and fixed categories before the effect on operating income can be estimated.5-B21.(30-40 min.)DANUBE COMPANYIncome State

30、mentFor the Year Ended December 31, 20X0TotalPer UnitSales$40,000,000$20.00Less variable expenses:Manufacturing$18,000,000Selling & administrative9,000,00027,000,00013.50Contribution margin$13,000,000$ 6.50Less fixed expenses:Manufacturing$ 4,000,000Selling & administrative6,000,00010,000,0005.00Ope

31、rating income$ 3,000,000$ 1.502. Additional details are either in the statement of the problem or in the solution to requirement 1:TotalPer UnitFull manufacturing costVariable cost:$22,000,000$11.00Manufacturing$18,000,000$ 9.00Selling and administrative9,000,0004.50Total variable cost$27,000,000$13

32、.50Full cost = fully allocated cost*Full manufacturing cost$22,000,000$11.00Selling and administrative expenses15,000,0007.50Full cost$37,000,000$18.50Gross margin ($40,000,000 - $22,000,000)$18,000,000$ 9.00Contrib. margin ($40,000,000 - $27,000,000)* Students should be alerted to the loose use of

33、these words.$13,000,000Their meaning may$ 6.50not be exactly the same from company to company. Thus, fully allocated cost in some companies may be used to refer to manufacturing costs only.3. Ricardos analysis is incorrect.He was on the right track, but he did notdistinguish sufficiently between var

34、iable and fixed costs. For example, when multiplying the additional quantity ordered by the $11 full manufacturing cost, he failed to recognize that $2.00 of the $11 full manufacturing cost was a unitized fixed cost allocation. The first fallacy is in regarding the total fixed cost as though it fluc

35、tuated like a variable cost. A unit fixed cost can be misleading if it is used as a basis for predicting how total costs will behave.A second false assumption is that no selling and administrative expenses will be affected except commissions. Shipping expenses and advertising allowances will be affe

36、cted also - unless arrangements with Costco on these items differ from the regular arrangements.WithoutSpecial OrderEffect of Special OrderWithSpecial OrderUnits2,000,000100,0002,100,000Sales$40,000,000Total$1,600,000Per Unit$16.00$41,600,000Manufacturing$18,000,000$ 900,000$ 9.00$18,900,000Selling

37、and administrative9,000,000330,0003.30*9,330,000Total variable expenses$27,000,000$1,230,000$12.30$28,230,000Contribution margin$13,000,000$ 370,000$ 3.70$13,370,000Less fixed expenses:Manufacturing$ 4,000,00000.00$ 4,000,000Selling and administrative6,000,00020,0000.20*6,020,000Total fixed expenses

38、$10,000,00020,0000.20$10,020,000Operating income$ 3,000,000$ 350,000$ 3.50$ 3,350,000The following summary, which is similar to Exhibit 5-6 in the textbook, is a correct analysis. The middle columns are all that are really necessary.Less variable expenses:*Regular variable selling and administrative

39、 expenses,$9,000,000 2,000,000 =$ 4.50Less: Average sales commission at 6% of $20 =(1.20)Regular variable sell. and admin. expenses, less commission$ 3.30*Fixed selling and administrative expenses, specialcommission, $20,000 100,000.20Some students may wish to enter the $20,000 as an extra variable

40、cost, making the unit variable selling and administrative cost $3.50 and thus adding no fixed cost. The final result would be the same; in any event, the cost is relevant because it would not exist without the special order.Some instructors may wish to point out that a 5% increase in volume would ca

41、use an 11.7% increase in operating income, which seems like a high investment by Danube to maintain a rigid pricing policy.4. Ricardo is incorrect. Operating income would have declined from $3,000,000 to$2,850,000, a decline of $150,000.Ricardos faulty analysis follows:Old fixed manufacturing cost p

42、er unit,$4,000,000 2,000,000 =New fixed manufacturing cost per unit,$4,000,000 2,500,000 =SavingsLoss on variable manufacturing costs per unit,$8.70 - $9.00Net savings per unit in manufacturing costsThe analytical pitfalls of unit-cost analysis can be avoided by using the contribution approach and concentrating on the totals:$2.00 1.60$ .40(.30)$ .10WithoutEffect ofWithSpecialSpecialSpecialOrderOrderOrderSalesVariable manufacturing$40,000,000$4,350,000a$44,350,000costs$18,000,000$4,500,000b$22,500,000Other variable costs9,000,00009,000,000Total variable costs$