Accounting for Decision Making and Control 8e Jerold Zimmerman Test Bank, Answered

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Accounting for Decision Making and Control 8e Jerold Zimmerman Test Bank, Answered-The controller of a small private college is complaining about the amount of work she is required to do at the begin... ning of each month. The president of the university requires the controller to submit a monthly report by the fifth day of the following month. The monthly report contains pages of financial data from operations. The controller was heard saying, "Why does the president need all this information? He probably doesn't read half of the report. He's an old English professor and probably doesn't know the difference between a cost and a revenue." Required: a. What is the probable role of the monthly report? b. What is the controller's responsibility with respect to a president who doesn't know much accounting? 2-1: Fixed, Variable, and Average Costs Midstate University is trying to decide whether to allow 100 more students into the university. Tuition is $5000 per year. The controller has determined the following schedule of costs to educate students: Number of Students Total Costs 4000 $30,000,000 4100 30,300,000 4200 30,600,000 4300 30,900,000 The current enrollment is 4200 students. The president of the university has calculated the cost per student in the following manner: $30,600,000/4200 students = $7286 per student. The president was wondering why the university should accept more students if the tuition is only $5000. Test Bank and Solutions 2 Required: a. What is wrong with the president's calculation? b. What are the fixed and variable costs of operating the university? 2-2: The Elements of Cost Volume Profit The M Company’s variable costs are 75% of the sales price per unit and their fixed costs are $240,000. If the company earned $60,000 in selling 150,000 units, what was the sales price per unit? 2-3: Opportunity Costs The First Church has been asked to operate a homeless shelter in part of the church. To operate a homeless shelter the church would have to hire a full time employee for $1,200/month to manage the shelter. In addition, the church would have to purchase $400 of supplies/month for the people using the shelter. The space that would be used by the shelter is rented for wedding parties. The church averages about 5 wedding parties a month that pay rent of $200 per party. Utilities are normally $1,000 per month. With the homeless shelter, the utilities will increase to $1,300 per month. What is the opportunity cost to the church of operating a homeless shelter in the church? 2-4: Fixed and Variable Costs The university athletic department has been asked to host a professional basketball game at the campus sports center. The athletic director must estimate the opportunity cost of holding the event at the sports center. The only other event scheduled for the sports center that evening is a fencing match that would not have generated any additional costs or revenues. The fencing match can be held at the local high school, but the rental cost of the high school gym would be $200. The athletic director estimates that the professional basketball game will require 20 hours of labor to prepare the building. Clean-up depends on the number of spectators. The athletic director estimates the time of clean-up to be equal to 2 minutes per spectator. The labor would be hired especially for the basketball game and would cost $8 per hour. Utilities will be $500 greater if the basketball game is held at the sports center. All other costs would be covered by the professional basketball team. Required: a. What is the variable cost of having one more spectator? b. What is the opportunity cost of allowing the professional basketball team to use the sports center if 10,000 spectators are expected? Test Bank and Solutions 3 c. What is the opportunity cost of allowing the professional basketball team to use the sports center if 12,000 spectators are expected? 2-5: Opportunity Cost of Attracting Industry The Itagi Computer Company From Japan is looking to build a factory for making DVD burners in the United States. The company is concerned about the safety and wellbeing of its employees and wants to locate in a community with good schools. The company also wants the factory to be profitable and is looking for subsidies from potential communities. Encouraging new business to create jobs for citizens is important for communities, especially communities with high unemployment. Wellville has not been very well since the shoe factory left town. The city officials have been working on a deal with Itagi to get the company to locate in Wellville. Itagi officials have identified a 20 acre undeveloped site. The city has tentatively agreed to buy the site for $50,000 for Itagi and not require any payment of property taxes on the factory by Itagi for the first five years of operation. The property tax deal will save Itagi $3,000,000 in taxes over the five years. This deal was leaked to the local newspaper. The headlines the [Show More]

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