Question: A company with an advanced manufacturing

> What is the cause of over applied or under applied overhead?

> Golden State Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by Go

> What is meant by the term cost driver? What is a volume-based cost driver?

> Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department performs

> Why is manufacturing overhead applied to products when product costs are used in making pricing decisions?

> For each of the following activities, explain which of the objectives of managerial accounting activity is involved. In some cases, several objectives may be involved. 1. Measuring the cost of the inventory of tablet computers on hand in a retail electro

> Southwestern Fashions, Inc. which uses a job-order costing system, had two jobs in process at the start of the year: job no. 101 ($168,000) and job no. 102 ($107,000). The following information is available: a. The company applies manufacturing overhead

> How is the concept of product costing applied in service industry firms?

> Dessert Delite Company produces frozen microwavable desserts. The following accounts appeared in the ledger as of December 31. Additional information: a. Accounts payable is used only for direct-material purchases. b. Underapplied overhead of $3,500 fo

> Explain how a Texas Instruments engineer might use bar code technology to record the time she spends on various activities.

> Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $78,400. The

> Describe how a large retailer such as Lowes could use EDI.

> Vermont Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $260,000. The firm employs 10

> Define each of the following terms, and explain the relationship among them: a. Overhead cost distribution b. Service department cost allocation c. Overhead application.

> ColorTech Corporation manufactures two different color printers for the business market. Cost estimates for the two models for the current year are as follows Each model of printer requires 20 hours of direct labor. The basic system requires 5 hours in

> When a single, volume-based cost driver (or activity base) is used to apply manufacturing overhead, what is the managerial accountant’s primary objective in selecting the cost driver?

> Suppose the fixed expenses of a travel agency increase. What will happen to its break-even point, measured in number of clients served? Why?

> Refer to the illustration of overhead application in the Midtown Advertising Agency on pp. 104–105. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each ad contract From pp. 104-105: To illustrate the cos

> Why are some manufacturing firms switching from direct-labor hours to machine hours or throughput time as the basis for overhead application?

> Refer to Exhibit 3–12, which portrays the three types of allocation procedures used in two-stage allocation. Give an example of each of these allocation procedures in a hospital setting. The ultimate cost object is a patient-day of hosp

> Give an example of how a hospital, such as the Mayo Clinic, might use job-order costing concepts.

> Suppose you are the controller for a company that produces handmade glassware. 1. Choose a volume-based cost driver upon which to base the application of overhead. Write a memo to the company president explaining your choice. 2. Now you have changed jobs

> Describe the flow of costs through a product-costing system. What special accounts are involved, and how are they used?

> Rocky Mountain Leatherworks, which manufactures saddles and other leather goods, has three departments. The Assembly Department manufactures various leather products, such as belts, purses, and saddlebags, using an automated production process. The Saddl

> Describe an important cost-benefit issue involving accuracy versus timeliness in accounting for overhead.

> Contemporary Trends is an interior decorating firm in Munich. The following costs were incurred in the firm’s contract to redecorate the mayor’s offices. Direct material used ............................................................ € 4,100 Direct pr

> Describe how job-order costing concepts are used in professional service firms, such as law practices and consulting firms.

> What does the term safety margin mean?

> Happy Days Balloon Company incurred $167,000 of manufacturing overhead costs during the year just ended. However, only $145,000 of overhead was applied to production. At the conclusion of the year, the following amounts of the year’s applied overhead rem

> Budgeted direct-labor cost: 77,000 hours (practical capacity) at $17 per hour Actual direct-labor cost: 79,000 hours at $18 per hour Budgeted manufacturing overhead: $993,300 Budgeted selling and administrative expenses: $417,000 Actual manufacturing ove

> Biloxi Billiards Company uses normal costing, and manufacturing overhead is applied to work in process on the basis of machine hours. On January 1 of the current year there were no balances in work-in-process or finished-goods inventories. The following

> Describe the process of two-stage cost allocation in the development of departmental overhead rates.

> Refer to the data for the preceding exercise for Aquarius Hotel Supply Company. Prepare a journal entry to add to work-in-process inventory the total manufacturing overhead cost for the year, assuming: 1. The firm uses actual costing. 2. The firm uses no

> Describe some costs and benefits of using multiple overhead rates instead of a plantwide overhead rate.

> The following data pertain to the Aquarius Hotel Supply Company for the year just ended. Budgeted sales revenue ................................................................ $945,000 Budgeted manufacturing overhead ...................................

> Crunchem Cereal Company incurred the following actual costs during 20x4. Direct material used ................................................... $412,500 Direct labor .................................................................... 180,000 Manufactu

> Dewitt Educational Products started and finished job number RM67 during June. The job required $5,100 of direct material and 40 hours of direct labor at $18 per hour. The predetermined overhead rate is $6 per direct-labor hour. Required: Prepare journ

> Explain the difference between actual and normal costing

> What is the meaning of the term unit contribution margin? Contribution to what?

> Selected data concerning the past year’s operations of the Lone Star Leather Company are as follows: Required: 1. What was the cost of raw materials purchased during the year? 2. What was the direct-labor cost charged to production dur

> The following data refer to Superior Metals Corporation for the year 20x4. Required: 1. Prepare Superior Metals’ schedule of cost of goods manufactured for 20x4. 2. Prepare the company’s schedule of cost of goods sold

> Jay Sports Equipment Company, Inc. incurred the following costs during 20x2. Direct material used .................................................. $226,200 Direct labor...................................................................... 421,200 Manuf

> Describe one advantage and one disadvantage of prorating overapplied or underapplied overhead.

> Visit the website of a film producer, such as Disney, MGM, or Warner Brothers. Walt Disney Studios: www.disney.com MGM: www.mgm.com Warner Brothers; www.warnerbros.com Required: Read about one of the company’s recent (or upcoming) film releases. Then

> Explain the benefits of using a predetermined overhead rate instead of an actual overhead rate.

> The controller for Tender Bird Poultry, Inc. estimates that the company’s fixed overhead is $150,000 per year. She also has determined that the variable overhead is approximately $.15 per chicken raised and sold. Since the firm has a single product, over

> Explain the difference between job-order and process costing.

> For each of the following companies, indicate whether job-order or process costing is more appropriate. 1. Manufacturer of household cleaning solutions. 2. Manufacturer of custom hot tubs and spas. 3. Architectural firm. 4. Manufacturer of ceramic tile.

> What are the purposes of the following documents: a material requisition form, b labor time record, and c job-cost record.

> Delmarva Oyster Company has been able to decrease its variable expenses per pound of oysters harvested. How will this affect the firm’s break-even sales volume?

> An individual in the United States wants to buy office equipment from England that costs 2,800 pounds. If the exchange rate is $1.92, how much will it cost him in dollar terms? a. $2,800 b. $5,376 c. $1,458 d. Need more information

> Metering is a. a type of indirect price discrimination b. a type of direct price discrimination c. an evaluation of a product d. an example of bundling

> Airlines charge a ____________ price to business travelers compared to leisure travelers because business travelers have a ____________ demand than leisure travelers. a. higher; more elastic b. higher; less elastic c. lower; more elastic d. lower; les

> Arbitrage a. is the act of buying low in one market and selling high in another market. b. can force a seller to go back to uniform pricing. c. can defeat direct price discrimination. d. All of the above.

> Assume that the price elasticity of demand for movie theatres is -.85 during all evening shows but for all afternoon shows the price elasticity of demand is -2.28. For the theatre to maximize total revenue, it should a. charge the same price for both sh

> What is a better pricing strategy for the monopolist? What is the resulting profit? a. Bundle the goods at $2,800; Profits=$5,600 b. Bundle the goods at $4,000; Profits=$8,000 c. Charge $2,800 for good 1 and charge $1,700 for good 2; Profits=$4,500 d.

> What is the total profit to the monopolist from selling the goods separately? a. $4,500 b. $6,300 c. $7,000 d. $6,000

> Suppose a monopolist only sold the goods separately. What price will the monopolist charge for good 1 to maximize revenues for good 1? a. $2,300 b. $2,800 c. $1,200 d. $1,700

> Perfect price discrimination is when a firm can charge each customer exactly what they are willing to pay. In this case, a. the demand curve is very inelastic. b. the marginal revenue is the demand curve c. the demand curve is very elastic. d. the ma

> Which of the following conditions must be satisfied for price discrimination to be successful? 
 a. The seller must have a different product for each group of customers. b. The seller must be able to identify each customer as having a high or low value.

> In which of the following cases might you expect to find a manufacturer granting exclusive territories? a. A pet supply chain that requires heavy local advertising to drive sales b. Custom computer sales that require a good deal of consultation c. A sub

> A software firm can offer a high-feature version of its software or a stripped-down low-feature version, each with similar production costs. Which of the following cannot be an optimal segmentation strategy? a. Offer only the high-feature version aimed o

> You, a real-estate developer, own a piece of land in Nassau, Bahamas, next to an equal size piece of land owned by a competitor. Both of you have the choice of building a casino or a hotel. Your payoffs are as follows: Your competitor  Casino Hote

> Suppose the game is infinitely repeated. What strategies will each firm utilize? a. firm A will charge a low price, and firm B will charge a low price. b. firm A will charge a high price, and firm B will charge a low price. c. firm A will charge a low

> If this game is played once, then a. firm A will charge a low price, and firm B will charge a low price. b. firm A will charge a high price, and firm B will charge a low price. c. firm A will charge a low price, and firm B will charge a high price. d.

> In repeated games, all of the following make it easier to get out of bad situations except a. be nice, no first strikes. b. respond immediately to rivals. c. punish uncooperative players as much as you can. d. make sure your competitors can easily int

> In a Nash equilibrium, a. players are always maximizing their joint profit. b. one player is always earning a higher profit than the other. c. players must be playing the game sequentially. d. None of the above

> If collusion were not illegal, then it would be optimal a. for Megastore to advertise and for Superstore to advertise. b. for Megastore to advertise and for Superstore not to advertise. c. for Megastore not to advertise and for Superstore to advertise.

> When the stores reach the Nash equilibrium, their profits will be a. Megastore $95 and Superstore $80. b. Megastore $305 and Superstore $55. c. Megastore $65 and Superstore $285. d. Megastore $165 and Superstore $115.

> A Nash equilibrium is a. for Megastore to advertise and for Superstore to advertise. b. for Megastore to advertise and for Superstore not to advertise. c. for Megastore not to advertise and for Superstore to advertise. d. for Megastore not to adverti

> A Nash equilibrium a. is where one player maximizes his payoff and the other doesn’t. b. is where each player maximizes his own payoff given the action of the other player. c. is where both players are maximizing their total payoff. d. is a unique pr

> A multinational firm acquires many of its components pre-assembled from suppliers. One of these suppliers operates in a country with a much lower corporate income tax rate. How does this affect the vertical relationship between this supplier and the mult

> The intersection between demand for dollars and the supply of dollars is known as the a. Inflation rate b. Exchange rate c. Price d. Quantity

> Two hospitals are bargaining with an insurance company to get into its provider network. The insurance company can earn $100 if it puts one of the hospitals in its network and $200 if it puts both hospitals in its network. If both hospitals merge and b

> The game of chicken has a. a second-mover advantage. b. a first-mover advantage. c. no sequential-move advantage. d. potential sequential-move advantages, depending on the players.

> George and KC have been working jobs that pay $60,000 and $30,000 per year, respectively. They are trying to decide whether to quit their jobs and jointly open up a taco stand on the beach, which they estimate can earn $150,000 per year. How will the

> Pete and Lisa are entering into a bargaining situation in which Pete stands to gain up to $5,000 and Lisa stands to gain up to $1,000, provided they reach agreement. Who is likely to have the stronger bargaining position? a. Pete b. Lisa c. They will be

> Consider bargaining in which each party increases its outside option by $10,000. Which of the following is a likely result. a. The chance of a deal increases. b. Each party’s share of the bargaining surplus increases by $10,000. c. The bargaining split

> Consider a vendor-buyer relationship. Which of the following conditions would lead to the buyer having more bargaining power? a. Lots of substitutes for the vendor's product are available. b. There are relatively few buyers and many vendors. c. It costs

> In the game in Question 3, how much does Labor earn if they can move first? a. 10 b. 15 c. 18 d. 20

> How many pure strategy equilibria does the following game have? a. 0 b. 1 c. 2 d. 3  LABOR     Bargain Hard Be Nice  MANAGEMENT Bargain Hard 0,0 20, 10   Be Nice 12, 18 15, 15  

> Fred and his employer both know that Fred can generate $200,000 of profit per year for his company. After negotiations, they agree that he will earn $110,000 in annual compensation. What does this imply for the value of his outside or next best alternati

> CUS Pharmacy wishes to carry Pepgro blue pills. But Daisy Pharmaceuticals, the maker of Pepgro, will not supply CUS unless CUS agrees to carry other medications that Daisy makes. This is an example of a. Exclusion b. Tying c. territory restriction d.

> You are considering entry into a market in which there is currently only one producer (incumbent). If you enter, the incumbent can take one of two strategies, price low or price high. If he prices high, then you expect a $60K profit per year. If he price

> You have two types of buyers for your product. Forty percent of buyers value your product at $10 and sixty percent value it at $6. What price maximizes your expected revenue? a. $10 b. $6 c. $7.60 d. $8

> Your production line has recently been producing a serious defect. One of two possible processes, A and B, could be the culprit. From past experience you know that the probability that A is causing the problem is 0.8 but investigating A costs $100,000 wh

> Your company has a customer list that includes 3000 people. Your market research indicates that 90 of them responded to the coupon. If you send a coupon to one customer at random, what’s the probability that he or she will use the coupon? a. 0.03 b. 0.0

> To test the effectiveness of a two Web advertising agencies, you increase your ad purchase with agency A by 50% without changing your purchase through agency B. The referrals to your website from agency A increased by only 34% but the referrals from agen

> Suppose an investment project has an NPV of $75 million if it becomes successful and an NPV of –$25 million if it is a failure. What is the minimum probability of success above which you should make the investment? a. 0.5 b. 1/3 c. 0.25 d. 0.1

> 4. Your software development company is considering investing in a new mobile app. If it goes viral (10% probability), you expect an NPV of $1,000,000; if it is moderately successful (20% probability), you expect an NPV of $200,000; and if it fails (70%

> 3. You’ve just decided to add a new line to your manufacturing plant. Compute the expected loss/profit from the line addition if you estimate the following: • There’s a 50% chance that profit will increase by $100,000. • There’s a 30% chance that profit

> In a first-price auction, you bid __________ your value, and in a second-price auction you bid _______ your value. a. at; above b. below; above c. below; at d. below; below

> A bidder’s value for a good may be low ($2), medium ($5), or high ($7). There is an equal number of potential bidders having each value. Suppose two bidders participate in a second-price auction. What is the best estimate of the expected revenue from the

> Why do vertical agreements typically pose less antitrust risk than horizontal agreements? a. Vertical agreements occur less often than horizontal agreements b. Vertical agreements often result in lower prices, which are beneficial to the consumer c. Vert

> Which of the following is true about the winner’s curse? a. The winner’s curse occurs primarily in private-value auctions. [each bidder knows his or her value in private value auctions, so there is no winner’s curse.] b. You successfully avoided the winn

> 7. You’ re holding an auction to license a new technology that your company has developed. One of your assistants raises a concern that bidders’ fear of the winner’s curse may encourage them to shade their bids. How might you address this concern? a. Rel

> If a seller is concerned about collusion among bidders, which of the following changes to the auction should the seller make? a. Hold frequent, small auctions instead of infrequent large auctions. b. Conceal the amount of winning bids. c. Publicly announ

> In a common-value auction, you should a. bid more aggressively the more competitors you face. b. bid less aggressively the more competitors you face. c. bid the same regardless of the number of competitors. d. bid more aggressively when others have bette

> In the above auction, if the bidders with the first- and third-highest values ($500 and $300) collude, which of these is closest to the winning price? a. $500 b. $400 c. $300 d. $200

> Suppose that five bidders with values of $500, $400, $300, $200, and $100 attend an oral auction. Which of these is closest to the winning price? a. $500 b. $400 c. $300 d. $200