2nd EditionDavid Anderson, Margaret Ray1,044 explanations

8th EditionN. Gregory Mankiw814 explanations

Timothy Taylor895 explanations

7th EditionMichael Parkin, Robin Bade232 explanations

ACCOUNTINGBright Day Company produces two beverages, Hi-Voltage and EasySlim. Data about these products follow.
$$
\begin{matrix}
& \text{Hi-Voltage} & \text{EasySlim}\\
\text{Production volume} \ldots\ldots\ldots & \text{12,500 bottles} & \text{180,000 bottles}\\
\text{Liquid materials}\ldots\ldots\ldots & \text{1,400 gallons} & \text{37,000 gallons}\\
\text{Dry materials} \ldots\ldots\ldots & \text{620 pounds} & \text{12,000 pounds}\\
\text{Bottles} \ldots\ldots\ldots & \text{12,500 bottles} & \text{180,000 bottles}\\
\text{Labels}\ldots\ldots\ldots & \text{3 labels per bottle} & \text{1 label per bottle}\\
\text{Machine setups} \ldots\ldots\ldots & \text{500 setups} & \text{300 setups}\\
\text{Machine hours}\ldots\ldots\ldots & \text{200 MH} & \text{3,750 MH}\\
\end{matrix}
$$
Additional data from its two production departments follow.
$$
\begin{matrix}
\text{Department} & \text{Driver} & \text{Cost}\\
\text{Mixing department}\\
\text{Liquid materials} \ldots\ldots\ldots & \text{Gallons} & \text{\$ 2,304}\\
\text{Dry materials} \ldots\ldots\ldots & \text{Pounds} & \text{6,941}\\
\text{Utilities}\ldots\ldots\ldots & \text{Machine hours} & \text{1,422}\\
\text{Bottling department}\\
\text{Bottles} \ldots\ldots\ldots & \text{Units} & \text{\$77,000}\\
\text{Labeling}\ldots\ldots\ldots & \text{Labels per bottle} & \text{6,525}\\
\text{Machine setup} \ldots\ldots\ldots & \text{Setups} & \text{20,000}\\
\end{matrix}
$$
1. Determine the cost of each product line using ABC. 2. What is the cost per bottle of Hi-Voltage? What is the cost per bottle of EasySlim? 3. If Hi-Voltage sells for $3.75 per bottle, how much profit does the company earn per bottle of Hi-Voltage that it sells? 4. What is the minimum price that the company should set per bottle of EasySlim? Explain. ACCOUNTINGThe stockholders' equity section of Velcro World is presented here.
$$
\text{VELCRO WORLD} \\ \text{Balance Sheet (partial)}\\ \begin{array}{ll}
\text{$(\$ \text { and shares in thousands) }$} & \text{ }\\
\text{Stockholders' equity:} & \text{ }\\
\text{Preferred stock, $\$ 1$ par value} & \text{\$6,000}\\
\text{Common stock, $\$ 1$ par value} & \text{$30,000$}\\
\text{Additional paid-in capital} & \underline{1,164,000}\\
\text{Total paid-in capital} & \text{$1,200,000$}\\
\text{Retained earnings} & \text{$288,000$}\\
\text{Treasury stock, $11,000$ common} & \underline{(352,000)}\\
\text{shares} & \text{ }\\
\text{Total stockholders' equity} & \underline{\underline{\$ 1,136,000}}\\
\end{array}
$$
Based on the stockholders' equity section of Velcro World, answer the following questions. Remember that all amounts are presented in thousands. 1. How many shares of preferred stock have been issued? 2. How many shares of common stock have been issued? 3. If the common shares were issued at $30 per share, at what average price per share were the preferred shares issued? 4. If retained earnings at the beginning of the period was$250 million and $30 million was paid in dividends during the year, what was the net income for the year? 5. What was the average cost per share of the treasury stock acquired?