Q1. Financial and Managerial Accounting            

Indicate whether each phrase is more descriptive of financial accounting or managerial accounting

a. May be subjective

b. Often used to state corporate goals

c. Typically prepared quarterly or annually

d. may measure time or customer satisfaction

e. Future oriented

f. Has a greater emphasis on cost-benefit analysis

g. Keeps records of assets and liabilities

h. Highly aggregated statements

i. Must conform to external standards

j. Special-purpose reports

k. Decision-making tool

l. Income statement, balance sheet, and statement of cash flows

Q2. Missions, Goals, and Strategies

Identify each of the following as a mission, goal, or strategy

a. Budget time for study, sleep, and relaxation

b. Provide shelter for the homeless

c. Provide an above-average return to investors

d. Protect the public

e. Locate fire stations so that the average response time is less than five minutes

f. Overlap police patrols so that there are always police cars on major thoroughfares

g. Achieve a 12 percent market share

h. Lower prices and costs

i. Select the most scenic route to drive between Las Vegas and Denver

j. Graduate from College

Q3. Negative Fixed Costs

"This is crazy!" exclaimed the production supervisor as he reviewed the work of his new assistant. "You and that computer are telling me that my fixed costs are negative!  Tell me, how did you get these negative fixed costs, and what am I supposed to do with them?"

Required - Explain to the supervisor the meaning of the negative "fixed costs" and what can be done with them.

Q4. Significance of High R-Squared

Mark Adams had always been suspicious of "newfangled mathematical stuff," and the most recent suggestion of his new assistant merely confirmed his belief that schools are putting a lot of useless junk in students' heads.  It seems that after an extensive analysis of historical data, the assistant suggested that the number of pounds of scrap was the best basis for predicting manufacturing overhead.  In response to Mr. Adams's rage, the slightly intimidated assistant indicated that of the 35 equations he tried, pounds of scrap had the highest coefficient of determination with manufacturing overhead.

Required - Comment on Mr. Adam's reaction.  Is it justified?  Is it likely that the number of pounds of scrap is a good basis for predicting manufacturing overhead?  Is it a feasible basis for predicting manufacturing overhead?

Q5. Profitability Analysis

Assume a local Cost Cutters provides cuts, perms, and hairstyling services.  Annual fixed costs are $120,000, and variable costs are 40 percent of sales revenue.  Last year's revenues totaled $250,000.

Required -

a. Determine its break-even point in sales dollars

b. Determine last year's marigin of safety in sales dollars

c. Determine the sales volume required for an annual profit of $80,000

Q6. Ethics and Pressure to Improve Profit Plans

Art Conroy is the assistant controller of New City Muffler, Inc., a subsidiary of New City Automotive, which manufactures tailpipes, mufflers, and catalytic converters at several plants throughout North America.  Because of pressure to lower selling prices, New City Muffler has had disappointing financial performances in recent years.  Indeed, Conroy is aware of rumblings from corporate headquarters threatening to close the plant.

One of Conroy's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors.  In preparing for the presentation, Conroy was intrigued to note that the focal point in the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point.

Curious as to how the improvement would be accomplished, Conroy ultimately spoke with Paula Mitchell, the plant manager.  Mitchell indicated that a planned increase in productivity would reduce variable costs and increase the contribution margin ratio.

When asked how the productivity increase would be accomplished, Mitchell made a vauge reference to increasing the speed of the assembly line.  Conroy commented that speeding up the assembly line could lead to labor problems because the speed of the line was set by union contract.  Mitchell responded that she was afraid that if the speedup were opened to negotiation, the union would make a big "stink" that could result in the plant being closed.  She indicated that the speedup was the "only way to save the plant, our jobs, and the jobs of all plant employees."  Besides, she did not believe employees would notice a 2 or 3 percent increase in speed.  Mitchell concluded the meeting observing, "You need to emphasize the results we will accomplish next ear, not the details of how we will accomplish those results.  Top management does not want to be bored with details.  If we accomplish what we propose in the budget, we will be in for a big bonus."

Required - What advice would you have for Art Conroy?

Attachment:- Assignment.rar