Managerial Accounting Jiambalvo Solution Manual

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					            Name:                                                    Date:
        Instructor:                                                Course:
Managerial Accounting, Second Edition by James Jiambalvo
Solving Managerial Accounting Problems Using Microsoft Excel
                        for Windows Templates by Rex A Schildhouse
Exercise E7-4 Incremental Analysis
Nelson Design, a Kitchen and Bath design company, has experienced a drop in business due to an increase
in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company
is considering exhibiting at the Atlanta Home Show. The exhibit will cost the company $10,000 for space. At
the show, Nelson Design will present a slide show on a PC, pass out brochures that are printed previously,
and show its portfolio of previous jobs.

 The company estimates that revenue will increase by $30,000 over the next year as a result of the exhibit.
For the previous year, profit was as follows:

                      Revenue                                                                      $170,000
                      Less:
                       Design supplies                                               $10,000
                       Salary of Laura Nelson (owner)                                 72,000
                       Salary of Emily Holder (full time employee)                    51,000
                       Rent                                                           18,000
                       Utilities                                                       4,000
                       Depreciation of office equipment                                2,500
                       Printing of advertising materials                                 500
                       Advertising in Atlanta Home Magazine                            2,000
                       Travel expenses other than depreciation of autos                1,000
                       Depreciation of company cars                                    8,000        169,000
                      Net income                                                                     $1,000

Required:
Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show?

           In this solution, supplies and travel are assumed to vary with revenue.
                        Supplies as a percent of revenue                                         Percentage
                        Travel as a percent of revenue                                           Percentage
                        Increase in revenue                                                         Amount
                        Less:
                          Title                                                                      Amount
                          Title                                                                      Amount
                          Title                                                                      Amount
                        Increase in profit                                                           Formula

Narrative answer:




 FileName: a93bc025-a0f7-430a-9da0-dbb8fc81a110.xls, Tab: Exercise E7-4, Page 1 of 2, 6/14/2011, 2:02 PM
Instructions for the Microsoft Excel Templates

Detail and information on Excel is contained within the manual.

Striking the "F1" key or following the path "Windows>Excel Help" will invoke the Office Assistant
and bring up one of several help menus.

Type your name into the cell "D5". This will be copied by formula to the rest of the pages as required.

Type the due date of your problem into cell "I5". This will be copied by formula to the rest of the pages as required.

Type the instructor's name into cell "D6". This will be copied by formula to the rest of the pages as required.

Type the course identifier into cell "I6". This will be copied by formula to the rest of the pages as required.

The problem is identified for you in cell "B7".

In "DATE" cells enter the date in any of several formats and Excel will format it correctly.

If more than one page is preformatted into the problem, page breaks are preset and formulas are
set to copy the header into the remaining pages.

Place the proper account title in the cell where the word "ACCOUNT" appears on the template.

Place the amount in the cell where the word "AMOUNT" appears on the template. A formula may be placed in


Enter a number like 914 to signify units or gallons where the word "NUMBER" appears.

Write a formula into cells where the word "FORMULA" appears. In these cells, an amount calculated outside of


Place the explanation for the entry in the cell where the word "EXPLANATION" appears on the template.

Insert the account number where "ACCT #" appears on the template during posting.

Insert the journal reference where "JOURN #" appears on the template during posting.

Insert the title in the cell where "TITLE" appears on the template.

The print area is defined to fit onto 8 1/2" X 11" sheets in portrait or landscape mode as required.

The gray filled cells define the perimeter of the problem and the print area.

The problem is formatted for whole dollars with comma separations (no cents) except where required.

The display may have "Freeze Pane" invoked so column titles remain visible during data entry.

Negative values may be shown as ($400) vice -$400.

Enter a string like: ($259,417 X 12 months) + (0.3651 X 5,434,631) where the word TEXT appears.

				
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