C06

Determine company's operating leverage

9-105-081 REV: SEPTEMBER 1, 2005    DAVID F. HAWKINS  ROBERT S. KAPLAN  GREGORY S. MILLER    Accounting at MacCloud Winery Mike MacCloud had worked in the operations side of a winery for several years. Having built a strong knowledge of the art of making wine, he had decided to create his own wine label (i.e., brand).  For his label, he planned to grow all of his own grapes. He had identified an ideal plot of five acres of land in northern California that had most recently been used to grow soybeans. His initial plans were to lease a nearby building to use as a winery (i.e., a place for processing grapes and fermenting and aging his wine). However, Mike hoped someday to build his own winery and thus would only plant on four acres of land. Mike agreed to lease the building for 10 years at $5,000 per year. It was estimated that the building was worth $32,000 and had a 30-year economic life. The lease contract Mike signed did not mention any bargain purchase option or that Mike might…

9-105-081 REV: SEPTEMBER 1, 2005    DAVID F. HAWKINS  ROBERT S. KAPLAN  GREGORY S. MILLER    Accounting at MacCloud Winery Mike MacCloud had worked in the operations side of a winery for several years. Having built a strong knowledge of the art of making wine, he had decided to create his own wine label (i.e., brand).  For his label, he planned to grow all of his own grapes. He had identified an ideal plot of five acres of land in northern California that had most recently been used to grow soybeans. His initial plans were to lease a nearby building to use as a winery (i.e., a place for processing grapes and fermenting and aging his wine). However, Mike hoped someday to build his own winery and thus would only plant on four acres of land. Mike agreed to lease the building for 10 years at $5,000 per year. It was estimated that the building was worth $32,000 and had a 30-year economic life. The lease contract Mike signed did not mention any bargain purchase option or that Mike might…

9-105-081 REV: SEPTEMBER 1, 2005    DAVID F. HAWKINS  ROBERT S. KAPLAN  GREGORY S. MILLER    Accounting at MacCloud Winery Mike MacCloud had worked in the operations side of a winery for several years. Having built a strong knowledge of the art of making wine, he had decided to create his own wine label (i.e., brand).  For his label, he planned to grow all of his own grapes. He had identified an ideal plot of five acres of land in northern California that had most recently been used to grow soybeans. His initial plans were to lease a nearby building to use as a winery (i.e., a place for processing grapes and fermenting and aging his wine). However, Mike hoped someday to build his own winery and thus would only plant on four acres of land. Mike agreed to lease the building for 10 years at $5,000 per year. It was estimated that the building was worth $32,000 and had a 30-year economic life. The lease contract Mike signed did not mention any bargain purchase option or that Mike might…

9-105-081 REV: SEPTEMBER 1, 2005    DAVID F. HAWKINS  ROBERT S. KAPLAN  GREGORY S. MILLER    Accounting at MacCloud Winery Mike MacCloud had worked in the operations side of a winery for several years. Having built a strong knowledge of the art of making wine, he had decided to create his own wine label (i.e., brand).  For his label, he planned to grow all of his own grapes. He had identified an ideal plot of five acres of land in northern California that had most recently been used to grow soybeans. His initial plans were to lease a nearby building to use as a winery (i.e., a place for processing grapes and fermenting and aging his wine). However, Mike hoped someday to build his own winery and thus would only plant on four acres of land. Mike agreed to lease the building for 10 years at $5,000 per year. It was estimated that the building was worth $32,000 and had a 30-year economic life. The lease contract Mike signed did not mention any bargain purchase option or that Mike might…

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Classification of Costs Jan Holliday Dance Studios is a chain of 45 wholly owned dance studiosthat offer private lessons in ballroom dancing. The studios are located in various cities throughout thesouthern and southeastern states. Holliday offers a set of 12 private lessons; students may pay for thelessons one at a time, but each student is required to enroll for at least a 12-lesson plan. The 20-, 40-,and 100-lesson plans offer savings. Each dance instructor is paid a small salary plus a commissionbased on the number of dance lessons provided.Required1. Holliday’s owner is interested in a strategic analysis of the business. The owner wants to understandwhy overall profitability has declined slightly in the most recent year while other studios in the areaseem to be doing well. What is the proper cost object to begin this analysis? Explain your choice.2. For each of the following cost elements, indicate whether the cost should be classified as (a) direct,(b) indirect, (c) variable, and…

profile-image Student question Time to preview question: 00 : 08 : 51 The Epsilon Co. have a building, which houses three production department, Alpha, Beta and Gamma,              and one service department Delta.                                                                                                             The service department, Delta is wholly involved in working for the three production departments  and it is estimated that department Alpa uses 50%, department Beta uses 30% and department Gamma uses 20% of the services of department Delta.  The budgeted overhead for the four departments for a period were: REQUIRED:  a. Apportion the costs to the departments on the most equitable bases and calculate the overhead absorption rate, based on labour hours, for all the production department.

Question Content Area I AM NEEDING THE PICTURES ANWSERED THE PASSAGE IS JUST FOR ASSISTANCE TO ANSWER THE QUESTIONS Question Content Area LearnCo LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its second year of operations, by preparing budgets from its master budget. The company is trying to decide how many units to manufacture, how much it might spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2. You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets. Sales Budget The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised…

General Accounting Question need help

Financial Accounting

Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights. Cancun 6 Jamaica Cost Data $57/night Meals: Breakfasts 6 4 $11/ea Lunches 7 5 $16/ea Dinners 6 4 $26/ea Scuba diving trips 3 2 $76/ea Water skiing trips 4 2 $51/ea Airfare (round trip from Miami) 1 1 $320 (Cancun), $500 (Jamaica) Transportation to and from airport 1 1 $24 (Cancun), $44 (Jamaica) The Cancun trip sells for $1,760, and the Jamaica trip sells for $1,520, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $101 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels. Complete this question by entering…

Performance metrics Buffalo BBQ Restaurant is trying to become more efficient in training its chefs. It is experimenting with two training programs aimed at this objective. Both programs have basic and advanced training modules. The restaurant has provided the following data regarding the two programs after two weeks of implementation:   Training Program A         Training Program B         New chef # 1 2 3 4 5 6 7 8 9 10 Hours of basic training 24 26 30 21 24 23 26 31 30 24 Hours of advanced training 9 5 8 12 10 6 3 0 1 2 Number of chef mistakes 10 12 14 15 15 5 5 8 3   a. Compute the following performance metrics for each program: (1) Average hours of employee training per chef, rounded to one decimal place. Program A: _____ hrs. per chef Program B: _____ hrs. per chef (2) Average number of mistakes per chef, rounded to one decimal place. Program A: _____ mistakes per chef Program B: _____ mistakes per chef b. Which program should the restaurant implement moving…

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Before you begin this assignment review the Tying It All Together feature in the chapter Starbucks Corporation is the premier roaster, marketer, and retailer of specialty coffee in the world, operating in 68 countries. Starbucks generates revenues through company-operated stores, licensed stores, and consumer packaged goods. In 20 5, revenues from company-operated stores accounted for 79% of total revenues. Starbucks states that its retail objective is to be the leading retailer and brand of coffee and tea by selling the finest quality coffee, tea, and related products In addition, the company strives to provide the Starbucks Experience by exemplifying superior customer service and providing clean and well maintained stores. Part of this experience involves providing free internet service to customers while they are enjoying their food and beverages. Requirements How would the cost of internet service be reported by Starbucks and on which financial statement? Suppose Starbucks…

Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Airfare (round trip from Miami) Transportation to and from airport Cancun Jamaica 6 4 Cost Data $75/night $14/ea 454227 69634L $19/ea $29/ea $91/ea $66/ea 1 $135 (Cancun), $515 (Jamaica) 1 1 $32 (Cancun), $60 (Jamaica) The Cancun trip sells for $2,060, and the Jamaica trip sells for $1,820, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $116 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels. Complete this question by entering your…

Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: Package Specifications Oceanfront room; number of nights Meals: Breakfasts Lunches Dinners Scuba diving trips Water skiing trips Transportation to and from airport Airfare (round trip from Miami) Cost Data Cancun 6 Jamaica 4 $ 55/night $ 10/ea 7 6963. 454221 4 1 1 1 $ 15/ea $ 25/ea $ 75/ea $ 50/ea $ 375 (Cancun), $ 550 (Jamaica) $ 25 (Cancun), $ 40 (Jamaica) The Cancun trip sells for $1,750, and the Jamaica trip sells for $1,500, and both packages allow two bags to be checked for free. Required: 1. What are the current profit margins on both trips? 2. Take-a-Break's management believes that it must drop the price of each trip by $100 in order to remain competitive in the market. Recalculate profit margins for both packages at these price levels. Complete this question by…

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Activity Cost Drivers and Cost Estimation Market Street Soup Company produces ten varieties of soup in large vats, several thousand gallons at a time. The soup is distributed to several categories of customers. Some soup is packaged in large containers and sold to college and university food services. Some is packaged in half-gallon or small containers and sold through wholesale distributors to grocery stores. Finally, some is packaged in a variety of individual servings and sold directly to the public from trucks owned and operated by Market Street Soup Company. Management has always assumed that cost fluctuated with the volume of soup, and cost-estimating equations have been based on the following cost function: Estimated costs = Fixed costs + Variable costs per gallon x Production in gallons Lately, however, this equation has not been a very accurate predictor of total costs. At the same time, management has noticed that the volumes and varieties of soup sold through the three…