Part 1 Q2

 

a)     Distinguish between managerial and financial accounting as to (a) primary users of reports, (b) types and frequency of reports, and (c) purpose of reports.

 

Part 2

Tenrack is a fairly large manufacturing company located in the southern United States. The company manufactures tennis rackets, tennis balls, tennis clothing, and tennis shoes, all bearing the companys distinctive logo, a large green question mark on a white flocked tennis ball. The companys sales have been increasing over the past 10 years.

The tennis racket division has recently implemented several advanced manufacturing techniques. Robot arms hold the tennis rackets in place while glue dries, and machine vision systems check for defects. The engineering and design team uses computerized drafting and testing of new products. The following managers work in the tennis racket division:

Jason Dennis, Sales Manager (supervises all sales representatives)
Peggy Groneman, Technical Specialist (supervises computer programmers)
Dave Marley, Cost Accounting Manager (supervises cost accountants)
Kevin Carson, Production Supervisor (supervises all manufacturing employees)
Sally Renner, Engineer (supervises all new-product design teams)

 

a)     What are the primary information needs of each manager?

 

b)    Which, if any, financial accounting report(s) is each likely to use?

 

c)     Name one special-purpose management accounting report that could be designed for each manager. Include the name of the report, the information it would contain, and how frequently it should be issued.

 

Part 4

 

The following information is available for Aikman Company.

		January 1, 2020		2020		December 31, 2020
Raw materials inventory		$21,000				$30,000
Work in process inventory		13,500				17,200
Finished goods inventory		27,000				21,000
Materials purchased				$150,000
Direct labor				220,000
Manufacturing overhead				180,000
Sales revenue				910,000

a)     How would the income statement and balance sheet of a merchandising company be different from Aikmans financial statements?

 

Part 6

 

In the course of routine checking of all journal entries prior to preparing year-end reports, Betty Eller discovered several strange entries. She recalled that the presidents son Joe had come in to help out during an especially busy time and that he had recorded some journal entries. She was relieved that there were only a few of his entries, and even more relieved that he had included rather lengthy explanations. The entries Joe made were:

(1)
Work in Process Inventory		25,000
Cash				25,000
(This is for materials put into process. I dont find the record that we paid for these, so Im crediting Cash because I know well have to pay for them sooner or later.)

 

(2)
Manufacturing Overhead		12,000
Cash				12,000
(This is for bonuses paid to salespeople. I know theyre part of overhead, and I cant find an account called Non-Factory Overhead or Other Overhead so Im putting it in Manufacturing Overhead. I have the check stubs, so I know we paid these.)

 

(3)
Wages Expense		120,000
Cash				120,000
(This is for the factory workers wages. I have a note that employer payroll taxes are $18,000. I still think thats part of wages expense and that well have to pay it all in cash sooner or later, so I credited Cash for the wages and the taxes.)

 

(4)
Work in Process Inventory		3,000
Raw Materials Inventory				3,000
(This is for the glue used in the factory. I know we used this to make the products, even though we didnt use very much on any one of the products. I got it out of inventory, so I credited an inventory account.)

a)     If the entry (1) was not corrected, which financial statements (income statement or balance sheet) would be affected? What balances would be overstated or understated?

 

b)    If the entry (2) was not corrected, which financial statements (income statement or balance sheet) would be affected? What balances would be overstated or understated?

 

c)     If the entry (3) was not corrected, which financial statements (income statement or balance sheet) would be affected? What balances would be overstated or understated?

 

d)    If the entry (4) was not corrected, which financial statements (income statement or balance sheet) would be affected? What balances would be overstated or understated?

 

 

Part 8

 

In a recent year, an oil refinery in Texas City, Texas, on the Houston Ship Channel exploded. The explosion killed 14 people and sent a plume of smoke hundreds of feet into the air. The blast started as a fire in the section of the plant that increased the octane of the gasoline that was produced at the refinery. The Houston Ship Channel is the main waterway that allows commerce to flow from the Gulf of Mexico into Houston.

The Texas Commission on Environmental Quality expressed concern about the release of nitrogen oxides, benzene, and other known carcinogens as a result of the blast. Neighbors of the plant complained that the plant had been emitting carcinogens for years and that the regulators had ignored their complaints about emissions and unsafe working conditions.

Answer the following questions.

 

a)     Outline the costs that the company now faces as a result of the accident.

b)    How could the company have reduced the costs associated with the accident?