Foundational 15 Chapter 1

In: Business and Management

Submitted By teekasmom
Words 1568
Pages 7
Unit 1 Lecture

This unit explores the general business environment, in the Prologue, and the reason for the existence of managerial accounting in Chapter 1. Managers are in need of information. Managerial accounting is the vehicle that satisfies that need. Without reasonable, valid, timely information companies will always be at a disadvantage when it comes to competing in the marketplace.

Managers use the provided information to carry out three major activities: planning, directing and motivating, and controlling

Planning involves the identification of alternative business plans. The plans that are most beneficial to the company should be reviewed and implemented if feasible. The implementation process involves budgets. Budgets are prepared under the direction of a controller, a manager in charge of the accounting department. Typically, budgets are prepared annually. We will learn more about budgets in chapter 7.

Besides analyzing business alternatives managers must direct and motivate employees. As we know, unhappy, unguided employees can be detrimental to a business. I have worked for companies where one employee would stifle other employees to the point where he had to be fired. Productivity is paramount to profitability. In addition to managing personnel, managerial must keep the company running in an orderly fashion by analyzing daily sales reports, among other reports, to ensure there are no bottlenecks in production, falling sales within certain product groups, etc….Identification of such problems would lead to actions to resolve the issues.

Controlling involves making sure the plan is being followed. Feedback is key to effective control. As the book points out, performance reports are part of feedback. How managers use these reports could determine how a successful a company can be. Imagine a manger looking at a performance report and…...

Similar Documents

Bus520 Chapter 15 & 16

...Chapter 15: Understanding Accounting and Financial Statements Introduction The purpose of this chapter is to identify some of the concepts of Understanding Accounting and Financial Statements in the business world. Learning objectives 1. Explain the functions of accounting, and identify the three basic activities involving accounting. 2. Describe he roles played by public, management, government, and not-for-profit accountants. 3. Identify the foundations of the accounting system, including GAAP and the role of the Financial Accounting Standards Board (FASB). 4. Outline the steps in the accounting cycle, and define double-entry bookkeeping and the accounting equation. 5. Explain the functions and major components of the four principal financial statements: the balance sheet, the income statement, the statement of owner’s equity, and the statement of cash flows. 6. Discuss how financial ratios are used to analyze a company’s financial strengths and weaknesses. 7. Describe the role of budges in a business. 8. Outline accounting issues facing global business and the move towards one set of worldwide accounting rules. 1. Explain the functions of accounting, and identify the three basic activities involving accounting. Accounting measure, interpret, and communicate financial information to parties inside and outside the firm to support improved decision making. Accountants gather, record, and interpret financial information to management....

Words: 1062 - Pages: 5

Chapter 15 I: 15-61

...any previous decisions made by the U. S. Supreme Court. The district court in HPU’s location has a previous rule that the business should be capitalized therefore; it should not be used in this case. The federal court also follows upper court decisions in its decisions. So this court would follow in the ruling of the IRS. The tax court does not have to follow any other court rulings. The tax court is the one where the claim should be filed. This court goes on bases of the company reason of use for deduction. This point that it is not required to follow other court rulings might help HPU with winning this case. References Pope, T. R., Anderson, K. E., & Kramer, J. L. (2011). Prentice Hills Federal Taxation 2011: Individuals. Chapter 1 & Chapter 15. Retrieved May 25, 2012 from University of Phoenix e-campus ACC497. ...

Words: 295 - Pages: 2

Accounting - Chapter 6 - Foundational 15

...The Foundational 15 1. and 2. The unit product costs under variable costing and absorption costing are computed as follows: | Variable Costing | Absorption Costing | Direct materials | $24 | $24 | Direct labor | 14 | 14 | Variable manufacturing overhead | 2 | 2 | Fixed manufacturing overhead ($800,000 ÷ 40,000 units) |  —  |    20 | Unit product cost | $40 | $60 | 3. and 4. The total contribution margin and net operating income under variable costing are computed as follows: Sales | | $2,800,000 | Variable expenses: | | | Variable cost of goods sold | | | (35,000 units × $40 per unit) | $1,400,000 | | Variable selling and administrative (35,000 units × $4 per unit) |     140,000 |  1,540,000 | Contribution margin | | 1,260,000 | Fixed expenses: | | | Fixed manufacturing overhead | 800,000 | | Fixed selling and administrative |     496,000 |  1,296,000 | Net operating loss | | $   (36,000) | The Foundational 15 (continued) 5. and 6. The total gross margin and net operating income under absorption costing are computed as follows: Sales (35,000 units × $80 per unit) | $2,800,000 | Cost of goods sold (35,000 units × $60 per unit) |  2,100,000 | Gross margin | 700,000 | Selling and administrative expenses [(35,000 units × $4 per unit) + $496,000] |    636,000 | Net operating income | $    64,000 | 7. The difference between the......

Words: 896 - Pages: 4

Foundational 15 Chapter 1

...The Foundational 15 1. Direct materials Direct Labor Variable manufacturing overhead Variable manufacturing cost per unit Variable manufacturing cost per unit Number of units produced Total variable manufacturing cost Fixed manufacturing overhead per unit Number of units produced Total fixed manufacturing cost Total product (manufacturing) cost $ $ $ $ $ 6.00 3.50 1.50 11.00 11.00 10,000 $ 110,000.00 4.00 10,000 $ 40,000.00 $ 150,000.00 $ 2. Sales commission Variable administrative expense Variable selling and administrative per unit Varible selling and admin. Per unit Number of units sold Total variable selling and admin. Expense Fixed selling and administrative expense per unit ($3 fixed selling + $2 fixed admin) Number of units sold Total fixed selling and administrative expense Total period (nonmanufacturing) cost $ $ $ $ 1.00 0.50 1.50 1.50 10,000 $ 15,000.00 $ 5.00 10,000 $ 50,000.00 $ 65,000.00 3. Direct materials Direct labor Variable manufacturing overhead Sales commissions Variable administrative expense Variable cost per unit sold Direct materials Direct Labor Variable manufacturing overhead Sales commissions Variable administrative expense Variable cost per unit sold $ $ $ $ $ $ $ $ $ $ $ $ 6.00 3.50 1.50 1.00 0.50 12.50 6.00 3.50 1.50 1.00 0.50 12.50 4. 5. Variable cost per unit sold Number of units sold Total variable costs Variable cost per unit sold Number of units sold Total variable costs Total fixed......

Words: 567 - Pages: 3

Week 8 Chapter 15

... Week 8 home work Wed class Week 8 chapter 15 1) What is the difference between the permanent link and channel testing? The permanent link includes only that portion of the cabling installation that is "permanent" (think punched down). It includes jack to rack -or- wall outlet to patch panel. One connector is allowed at each end but any patch cables must be accounted for and removed from the test results. This generally means you must use the cables that came with your test equipment so the equipment knows exactly what to subtract the channel link includes two or more patch cables and may include multiple patch panels - possibly in multiple closets. 2) if you have installed a category 6a cable, what is the maximum NEXT that can be supported for a 500mhz channel. 26.1 3) what is the insertion loss budget for 300 meter link intended to operate at 10Gbase-SR using OM3 fiber. ILB = (2 x 0.75db) + (0.3km x 3.5dB/km) = 2.6dB 4) What are the basic recommended steps for troubleshooting a cable problem? 1. Split the system into logical elements.2.Locate the element that is most likely the cause of the problem. 3. Test the element or install a substitute to verify it as the cause of the problem.4.If the suspected element is not the......

Words: 250 - Pages: 1

Foundational 15 Chapter 5

... | $ 40,000.00 |40% | $100.00 | | Fixed expenses | $ 35,000.00 | | | | Net operating income | $ 5,000.00 | | | | | | | | | 40 cents from every dollar in sales goes towards covering fixed | | expenses. | | | | | Determine Break-Even | | |Total |$ | | | Sales (1 speaker) | $ 250.00 | $250.00 | | | Variable expenses | $ 150.00 | $150.00 | | | Contribution margin | | $100.00 | | | |$ 100.00 | | | | | | | | | Fixed expenses | $ 35,000.00 | | | | Net operating income | $ (34,900.00) | | | | | | | ...

Words: 1044 - Pages: 5

Chapter 5 the Oundatio 15

...Chapter 5 Cost-Volume-Profit Relationships Solutions to Questions 5-1 The contribution margin (CM) ratio is the ratio of the total contribution margin to total sales revenue. It can also be expressed as the ratio of the contribution margin per unit to the selling price per unit. It is used in target profit and break-even analysis and can be used to quickly estimate the effect on profits of a change in sales revenue. 5-2 Incremental analysis focuses on the changes in revenues and costs that will result from a particular action. 5-3 All other things equal, Company B, with its higher fixed costs and lower variable costs, will have a higher contribution margin ratio than Company A. Therefore, it will tend to realize a larger increase in contribution margin and in profits when sales increase. 5-4 Operating leverage measures the impact on net operating income of a given percentage change in sales. The degree of operating leverage at a given level of sales is computed by dividing the contribution margin at that level of sales by the net operating income at that level of sales. 5-5 The break-even point is the level of sales at which profits are zero. 5-6 (a) If the selling price decreased, then the total revenue line would rise less steeply, and the break-even point would occur at a higher unit volume. (b) If the fixed cost increased, then both the fixed cost line and the total cost line would shift upward and the break-even point would occur at a higher unit volume. (c)......

Words: 10506 - Pages: 43

Chapter 15

...Exercise 15-1 (a) Nath-Langstrom Services, Inc. (Lessee) June 30, 2013 Rent expense 10,000 Cash 10,000 December 31, 2013 Rent expense 10,000 Cash 10,000 (b) ComputerWorld Corporation (Lessor) June 30, 2013 Cash 10,000 Rent revenue 10,000 December 31, 2013 Cash 10,000 Rent revenue 10,000 Depreciation expense ($90,000 ÷ 6 years) 15,000 Accumulated depreciation 15,000 Exercise 15-3 Present Value of Minimum Lease Payments: ($15,000 x 7.47199*) = $112,080 lease present payments value * present value of an annuity due of $1: n=8, i=2% [i = 2% (8% ÷ 4) because the lease calls for quarterly payments] Lease Amortization Schedule Lease Effective Decrease Outstanding Payments Interest in Balance Balance 2% x Outstanding Balance 112,080 1 15,000 15,000 97,080 2 15,000 .02 (97,080) = 1,942 13,058 84,022 3 15,000 .02 (84,022) = 1,680 13,320 70,702 4 15,000 .02 (70,702) = 1,414 13,586 57,116 5 15,000 .02 (57,116) = 1,142 13,858 43,258 6 15,000 .02 (43,258) = 865 14,135 29,123 7 15,000 .02 (29,123) = 582 14,418 14,705 8 15,000 .02 (14,705) = 295* 14,705 0 120,000 7,920 112,080 * adjusted for rounding of other numbers in the schedule January 1, 2013 Leased equipment (calculated above) 112,080 Lease payable (calculated above) 112,080 Lease payable 15,000 Cash (lease payment) 15,000 Exercise 15-3 (concluded) April 1, 2013 Interest expense (2% x......

Words: 948 - Pages: 4

Foundational 15 for Chapter 2

...Chapter 2- The Foundational 15 1. Direct materials $  6.00 Direct labor 3.50 Variable manufacturing overhead    1.50 Variable manufacturing cost per unit $11.00 Variable manufacturing cost per unit $11.00 Number of units produced 10,000 Total variable manufacturing cost $110,000 Fixed manufacturing overhead per unit $4.00 Number of units produced 10,000 Total fixed manufacturing cost    40,000 Total product manufacturing)cost $150,000 2. Sales commissions $1.00 Variable administrative expense   0.50 Variable selling and administrative per unit $1.50 Variable selling and admin. per unit $1.50 Number of units sold 10,000 Total variable selling and admin. expense $15,000 Fixed selling and administrative expense per unit ($3 fixed selling + $2 fixed admin.) $5.00 Number of units sold 10,000 Total fixed selling and administrative expense   50,000 Total period (nonmanufacturing) cost $65,000 3. Direct materials $  6.00 Direct labor 3.50 Variable manufacturing overhead    1.50 Sales commissions 1.00 Variable administrative expense    0.50 Variable cost per unit sold $12.50 4. Direct materials $  6.00 Direct labor 3.50 Variable manufacturing overhead    1.50 Sales commissions 1.00 Variable administrative expense    0.50 Variable cost per unit sold $12.50 5. Variable cost per unit sold $12.50 Number of units sold 8,000 Total variable costs    $100,000...

Words: 506 - Pages: 3

Chapter 15

...Chapter 15—Contracts in Writing TRUE/FALSE 1. The parol evidence rule is an exclusionary rule of evidence. ANS: F PTS: 1 2. The parol evidence rule only applies to written contracts. ANS: T PTS: 1 3. The word “parol” literally means release. ANS: F PTS: 1 4. The parol evidence rule would allow evidence to be introduced to explain what the parties meant by the term "serrated." ANS: T PTS: 1 5. The parol evidence rule prohibits introduction of all evidence that would result in modifying written contracts. ANS: F PTS: 1 6. The statute of frauds has to do with fraud in the inducement of a contract. ANS: F PTS: 1 7. Most types of contracts are valid without being written. ANS: T PTS: 1 8. The statute of frauds generally requires that both parties sign the writing. ANS: F PTS: 1 9. A collateral promise is an undertaking to be primarily liable for the principal debtor's debt. ANS: F PTS: 1 10. Jim promises to marry Cynda if Cynda will buy him a new Ferrari for his birthday. This promise must be in writing to be enforceable. ANS: T PTS: 1 11. A part performance exception to the statute of frauds in many states requires both that the transferee has paid at least a portion of the purchase price and has either taken possession of the real estate or has started to make valuable improvements on it. ANS: T PTS: 1 12. A usage of trade is a practice or method of dealing, regularly observed and followed in a......

Words: 4166 - Pages: 17

Chapter 5 Foundational 15

...% per unit $ Units sold Sales $20,000.00 100% $20.00 1000 Variable expenses $12,000.00 60% $12.00 Contribution Margin $8,000.00 40% $8.00 Fixed Expenses $6,000.00 Net operating income $2,000.00 1. Total contribution margin $8,000.00 Total units sold 1,000 units Contribution margin per unit $8.00 per unit 2. Total contribution margin $8,000.00 Total sales $20,000.00 Contribution margin ratio 40% 3 Total variable expenses $12,000.00 Total sales $20,000.00 Variable expense ratio 60% 4 Contribution margin per unit $8.00 per unit Increase in unit sales 1001 unit Increase in net operating income $8.00 5. Units Per unit Sales 900 $18,000.00 $20.00 Variable expenses $10,800.00 $12.00 Contribution margin $7,200.00 $8.00 Fixed expenses $6,000.00 Net operating income $1,200.00 6. Units Per unit Sales 900 $19,800.00 $22.00 Variable expenses $11,800.00 $13.20 Contribution margin $8,000.00 $8.80 Fixed expenses $6,000.00 Net operating income $2,000.00 7 Sales 1250 $26,250.00 $21.00 Variable expenses $15,750.00 $12.60......

Words: 394 - Pages: 2

Fundamental 15 Chapter 5

...Chapter 6: 6-1, 6-2, 6-5, 6-7, 6-15 6-1 Determinants of Interest Rates for Individual Securities A particular security’s default risk premium is 2 percent. For all securities, the inflation risk premium is 1.75 percent and the real interest rate is 3.5 percent. The security’s liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. The security has no special covenants. Calculate the security’s equilibrium rate of return. (LG6-4) [1.035*1.0175] - 1 = 0.05311, or 5.311%  6-2 Determinants of Interest Rates for Individual Securities You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 1.25 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real interest rate 0.75% Default risk premium 1.15% Liquidity risk premium 0.50% Maturity risk premium 1.75% a. What is the inflation premium? (LG6-4) IP = 1.25% - 0.75 = 0.50% b. What is the fair interest rate on Moore Corporation 30-year bonds? (LG6-4) I = (0.50 + .75% +1.15% +0.50% + 0 + 1.75%) I = 4.65% 6-5 Unbiased Expectations Theory Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 6%, E(2r1) = 7%, E(3r1) = 7.5%, E(4r1) = 7.85% Using the......

Words: 1134 - Pages: 5

Foundational 15

...Chapter 5 Cost-Volume-Profit Relationships Solutions to Questions 5-1 The contribution margin (CM) ratio is the ratio of the total contribution margin to total sales revenue. It can also be expressed as the ratio of the contribution margin per unit to the selling price per unit. It is used in target profit and break-even analysis and can be used to quickly estimate the effect on profits of a change in sales revenue. 5-2 Incremental analysis focuses on the changes in revenues and costs that will result from a particular action. 5-3 All other things equal, Company B, with its higher fixed costs and lower variable costs, will have a higher contribution margin ratio than Company A. Therefore, it will tend to realize a larger increase in contribution margin and in profits when sales increase. 5-4 Operating leverage measures the impact on net operating income of a given percentage change in sales. The degree of operating leverage at a given level of sales is computed by dividing the contribution margin at that level of sales by the net operating income at that level of sales. 5-5 The break-even point is the level of sales at which profits are zero. 5-6 (a) If the selling price decreased, then the total revenue line would rise less steeply, and the break-even point would occur at a higher unit volume. (b) If the fixed cost increased, then both the fixed cost line and the total cost line would shift upward and the break-even point would occur at a higher unit volume. (c)......

Words: 10506 - Pages: 43

Foundational 15 Chapter 1

...Chapter 1 The Foundational 15 Martinez Company’s relevant range of Production is 7,500 to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows: | AmountPer Unit | Direct Materials | $ 6.00 | Direct Labor | 3.50 | Variable Manufacturing Overhead | 1.50 | Fixed Manufacturing Overhead | 4.00 | Fixed Selling Expenses | 3.00 | Fixed Administrative Expense | 2.00 | Sales Commissions | 1.00 | Variable Administration Expense | 0.50 | Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units? Direct Materials $6.00 Direct Labor $3.50 Variable Manuf OH $1.50 Fixed Manuf OH $4.00 $15.00/Unit 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units? Fixed Selling Exp $3.00 Fixed Admin Exp $2.00 Sales Commissions $1.00 Variable Admin Exp $0.50 $6.50/unit 3. If 8,000 units are sold, what is the variable cost per unit sold? Direct Materials $6.00 Direct Labor $3.50 VariableManuf OH $1.50 Sales Commissions $1.00 Variable Admin Exp $0.50 $12.50 4. If 12,500 units are sold, what is the variable cost per unit sold? Direct Materials $6.00 Direct Labor $3.50 VariableManuf OH $1.50 Sales Commissions $1.00 Variable Admin Exp $0.50 $12.50 5. If 8,000 units are sold, what is the total amount of variable......

Words: 643 - Pages: 3

Answer for Chapter 15

...INSTRUCTORS MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT, 9TH ED. CHAPTER 15 SUGGESTED ANSWERS TO CHAPTER 15 QUESTIONS 1. As seen in Exhibit 15.2, Hong Kong stocks are over twice as volatile as U.S. stocks. Does that mean that risk-averse American investors should avoid Hong Kong equities? Explain. ANSWER. No. Although Hong Stock stocks are much more volatile /than U.S. stocks, their systematic component of risk is relatively low because of the low correlation with the U.S. market. The net result is that the systematic risk (beta) of the average Hong Kong stock from a U.S. perspective is only 0.85, compared with a beta of 1.0 for the average U.S. stock. In other words, diversifying into Hong Kong stocks will reduce the riskiness of a portfolio currently concentrated in U.S. stocks. 2. What characteristics of foreign securities lead to diversification benefits for American investors? ANSWER. The two basic characteristics are: a) Many foreign securities are issued by companies that produce goods and services not available from U.S. companies. b) All U.S. companies are more or less subject to the same cyclical economic fluctuations. Foreign securities by contrast involve claims on economies whose cycles are not perfectly in phase with the U.S. economic cycle. Thus, just as movements in different stocks partially offset one another in an all-U.S. portfolio, so also movements in U.S. and non-U.S. stocks cancel out each other somewhat. 3. Will......

Words: 6684 - Pages: 27