financeCompute the current ratio and acid-test ratio for each of the following separate cases. (Round ratios to two decimals.) Which company case is in the best position to meet short-term obligations? Explain.
| | **Case X** | **Case Y** | **Case Z** |
|------------------------|:----------:|:----------:|:----------:|
| Cash | $2,000 |$ 110 | $1,000 |
| Short-term investments | 50 | 0 | 580 |
| Current receivables | 350 | 470 | 700 |
| Inventory | 2,600 | 2,420 | 4,230 |
| Prepaid expenses | 200 | 500 | 900 |
| Total current assets |$5,200 | $3,500 |$7,410 |
| Current liabilities | $2,000 |$1,000 | $3,800 | financeMcDowell, Inc. manufactures bookcases and uses an activity-based costing system. McDowell's activity areas and related data follow:
$$
\begin{array}{lrlr}
\hline
&\textbf{Budgeted Cost}&&\textbf{Predetermined Overhead}\\
\textbf{Activity}&\textbf{of Activity}&\textbf{Allocation Base}&\textbf{Allocation Rate}\\
\hline
\text{Materials handling}&\$ 210&\textbf{Number of parts}&\$2.00\\
\text{Assembly}&3,100,000&\textbf{Number of assembling direct labor hours}&13.00\\
\text{Finishing}&140,000&\textbf{Number of finished units*}&4.00\\
\hline
\end{array}
$$
*Refers to number of units receiving the finishing activity, not the number of units transferred to Finished Goods Inventory
McDowell produced two styles of bookcases in April: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The totals for quantities, direct materials costs, and other data follow:
$$
\begin{array}{lccccc}
\hline
&&\textbf{Total Direct}&\textbf{Total Direct}&&\textbf{Total Assembling}\\
&\textbf{Total Units}&\textbf{Materials}&\textbf{Labor}&\textbf{Total Number}&\textbf{Direct}\\
\textbf{Products}&\textbf{Produced}&\textbf{Costs}&\textbf{Costs}&\textbf{of Parts}&\textbf{Labor Hours}\\
\hline
\text{Standard bookcase}&3,000&\$45,000&\$72,000&9,000&6,000\\
\text{Unfinished bookcase}&3,600&50,400&51,840&7,200&4,320\\
\hline
\end{array}
$$
Requirements
1. Compute the manufacturing product cost per unit of each type of bookcase.
2. Suppose that pre-manufacturing activities, such as product design, were assigned to the standard bookcases at $6 each and to the unfinished bookcases at$2 each. Similar analyses were conducted of post-manufacturing activities such as distribution, marketing, and customer service. The post-manufacturing costs were $20 per standard bookcase and$15 per unfinished bookcase. Compute the full product costs per unit.
3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference.
4. What price should McDowell's managers set for unfinished bookcases to earn a net profit of $ 16 per bookcase? 13th Edition•ISBN: 9780135165966James M. Rubenstein216 solutions
16th Edition•ISBN: 9781260364132 (5 more)Arthur Getis, David Kaplan, Jon Malinowski, Mark Bjelland, Victoria Getis124 solutions
16th Edition•ISBN: 9781264408184Arthur Getis, David Kaplan, Jon Malinowski, Mark Bjelland, Victoria Getis124 solutions
13th Edition•ISBN: 9781260957211Arthur Getis, Daniel Montello, Mark Bjelland107 solutions
