Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 10, Problem 10PC
To determine
Calculate property, plant, equipment and
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Texas Instruments (TI) designs and manufactures semiconductor products for use
in computers, telecommunications equipment, automobiles, and other electronics-
based products. The manufacturing of semiconductors is highly capital-intensive.
Hewlett-Packard Corporation (HP) manufactures computer hardware and various
imaging products, such as printers and fax machines. Exhibit 4.25 presents selected
data for TI and HP for three recent years.
Exhibit 4.25 Selected Data for Texas Instruments and Hewlett-Packard
(Amounts in Millions) (Problem 4.19)
Texas Instruments
Sales
Cost of goods sold
Capital expenditures
Average fixed assets
Percentage fixed assets depreciated
Percentage change in sales
Hewlett-Packard
Sales
Cost of goods sold
Capital expenditures
Average fixed assets
Percentage fixed assets depreciated
Percentage change in sales
Required
Year 3
$ 12,501
6,256
763
3,457
54.9%
(9.6)%
$114,552
86,351
3,695
11,050
74.7%
(3.2)%
Year 2
$ 13,835
5,432
686
3,780
52.3%
(3.0)%
$118,364
87,065…
Carlyle Capital Company offers financial services to its clients. Recently, Carlyle has experienced rapid growth and has increased both its client base and the variety of services it offers. The company is becoming concerned about its rising costs, however, particularly related to technology overhead. After some study, Carlyle determines that its variable and fixed technology overhead costs are both driven by the processing time involved in meeting client requests. This is typically measured in CPU units of their computer usage. Carlyle’s measure of output is the number of client interactions in a given period.
Q.Comment on Carlyle Capital’s overhead variances. In your view, is the firm right to be worried about its control over technology spending?
Carlyle Capital Company offers financial services to its clients. Recently, Carlyle has experienced rapid growth and has increased both its client base and the variety of services it offers. The company is becoming concerned about its rising costs, however, particularly related to technology overhead. After some study, Carlyle determines that its variable and fixed technology overhead costs are both driven by the processing time involved in meeting client requests. This is typically measured in CPU units of their computer usage. Carlyle’s measure of output is the number of client interactions in a given period.
Q.Calculate the variable overhead spending and efficiency variances, and indicate whether each is favorable (F) or unfavorable (U).
Chapter 10 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 10 - Prob. 1QECh. 10 - The chapter encourages analysts to develop...Ch. 10 - Prob. 3QECh. 10 - Suppose you are analyzing a firm that is...Ch. 10 - Use the following hypothetical data for Walgreens...Ch. 10 - Prob. 6QECh. 10 - Prob. 7QECh. 10 - Prob. 8QECh. 10 - The Home Depot is a leading specialty retailer of...Ch. 10 - Prob. 10PC
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