Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method. Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services. Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms. (1) To prepare: The Standard cost card for a single surfboard.

Question

Geisner Inc. has total assets of $1,000,000 and total liabilities of $600,000. The industry average debt-to-equity ratio is 1.20. Calculate Geisner's debt-to-equity ratio and indicate whether the company's default risk is higher or lower than the average of other companies in the industry.

Answer 1

Question

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

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Geisner Inc. has total assets of $1,000,000 and total liabilities of $600,000. The industry average debt-to-equity ratio is 1.20. Calculate Geisner's debt-to-equity ratio and indicate whether the company's default risk is higher or lower than the average of other companies in the industry.

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Baker's Market began the current month with inventory costing $35,250, then purchased additional inventory at a cost of $78,400. The perpetual inventory system indicates that inventory costing $82,500 was sold during the month for $88,250. An inventory count at month-end shows that inventory costing $29,000 is actually on hand. What amount of shrinkage occurred during the month? a) $350 b) $1,150 c) $1,750 d) $2,150

Answer 2

Question

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Expert Solution & Answer

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Answer 3

Question

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Expert Solution & Answer

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Answer 4

Question

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Expert Solution & Answer

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Answer 5

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Answer 6

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

Answer 7

Chapter AA, Problem 6P

To determine

Concept Introduction:

Absorption costing approach: Absorption costing is a cost accounting method under which all of the manufacturing costs including direct materials, direct labor, fixed and variable overheads are absorbed by the units produced. Absorption costing is also called full costing method.

Cost-plus pricing: Cost-plus pricing is the simple cost-based pricing method to determine the prices of goods or services. Under this method first add the direct material cost, the direct labor cost and the overhead cost to calculate the cost of production and a markup percentage is added to the total cost to decide the selling price of the goods or services.

Return on Investment (ROI): Return on investment is the ratio between profit or loss and amount of investment made. It is represented in percentage terms.

(1)

To prepare:

The Standard cost card for a single surfboard.

Answer 8

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

Answer 9

To determine

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

Answer 10

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

Answer 11

To determine

(2b)

To prepare:

The price quotation sheet for a single surfboard.

Answer 12

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

Answer 13

To determine

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

Answer 14

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

Answer 15

To determine

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

Answer 16

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Answer 17

To determine

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Answer 18

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Answer 29

Ch. AA - Prob. 1Q Ch. AA - Prob. 2Q Ch. AA - Prob. 3Q Ch. AA - Prob. 4Q Ch. AA - Prob. 5Q Ch. AA - What assumption does the absorption costing...Ch. AA - Prob. 7Q Ch. AA - Prob. 8Q Ch. AA - Prob. 1E Ch. AA - Prob. 2E

Concept explainers

Videos

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

(2b)

To prepare:

The price quotation sheet for a single surfboard.

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

(3b)

To compute:

The number of units required to be sold to achieve break-even.

Chapter AA Solutions

Concept explainers

Videos

(2a) To compute: The markup required on the surfboard to achieve an 18% return on investment.

(2b) To prepare: The price quotation sheet for a single surfboard.

(2c) To prepare: The income statement for the first year of activity and calculate the ROI.

(3a) To compute: The number of units required to be sold to achieve 18% ROI.

(3b) To compute: The number of units required to be sold to achieve break-even.

Chapter AA Solutions

(2a)

To compute:

The markup required on the surfboard to achieve an 18% return on investment.

(2b)

To prepare:

The price quotation sheet for a single surfboard.

(2c)

To prepare:

The income statement for the first year of activity and calculate the ROI.

(3a)

To compute:

The number of units required to be sold to achieve 18% ROI.

(3b)

To compute:

The number of units required to be sold to achieve break-even.