|12. (TCO 10) Which ratio measures the rate earned on total capital provided by the owners? (Points : 4)|
Return on assets
Return on stockholders’ equity
Earnings per share
Price earnings ratio
- (TCO 1) Distinguish managerial accounting from financial accounting. Include a brief discussion of the differences in the types of information provided to users as well as the differences of the users of the accounting information. (Points : 20)
- (TCO 6) Booth Financial Services, LLC has two revenue producing departments, Financial Planning and Business Consulting. The accounting department is trying to determine the best method to allocate $1,000,000 of common costs (secretarial staff, reception personnel, etc), either by salary or number of employees. Information on the revenue departments are as follows:
|Financial Planning||150 employees||$10,000,000|
|Business Consulting||50 employees||$5,000,000|
(a) Allocate the $1,000,000 common costs to the two revenue departments using both methods.
(b) Why are allocations called arbitrary? (Points : 25)
- (TCO 10) Gina’s Boutique makes custom jewelry. One item, the guru necklace, is a best seller and sales in units for the first quarter are as follows:January 100,000 units
February 150,000 units
March 180,000 unitsDesired ending inventory is budgeted at 20% of next month sales.Compute production for February. (Points : 25)
- (TCO 2) Acme Fireworks uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $1,000,000 and direct labor hours are budgeted at 200,000 hours. Actual hours worked were 195,000 and actual overhead was $978,000.(a) Compute the predetermined manufacturing overhead rate.
(b) Compute the applied manufacturing overhead. (c) Compute the amount of over/under applied manufacturing overhead. (Points : 25)
- (TCO 9) A project will require an initial investment of $600,000 and is expected to generate the following cash flows:Year 1 $100,000
Year 2 $250,000
Year 3 $250,000
Year 4 $200,000
Year 5 $100,000(a) What is the project’s payback period?
- TCO 4) Copper Queen Hotel is interested in estimating fixed and variable costs so the hotel can make more accurate projections of costs, break-even and profits. The hotel is in a resort area and busy from November through March. In July and August, the hotel has only a 50 percent occupancy rate. Classify each of the following costs as fixed, variable or mixed.A. Depreciation of the building
B. Salaries of restaurant staff
C. Salaries of hotel manager, desk manager, accounting clerks
D. Soap, shampoo and other toiletries in the bathrooms
E. Laundry costs (cost of bed linens, table cloths, cleaning products, depreciation on cleaning equipment.
F. Food and beverage costs
G. Grounds Maintenance (Points : 25)
- TCO 5) The following data has been taken from Air-Tite company in its first year of business.Units produced 100,000
Units sold 60,000
Units in ending inventory 40,000
Fixed manufacturing overhead $500,000(a) Compute the amount of fixed manufacturing overhead that would be expensed in the current year if full absorption costing is used.
(b) Compute the amount of fixed manufacturing overhead that would be expensed in the current year if variable costing is used.
(c) Compute the amount of fixed manufacturing overhead that would be included in ending inventory under full absorption costing. (Points : 25)