Assume that the following events occurred at Lakewood, Inc. last month. 1. Incurred direct labor costs of $300,000. 2. Completed work on 70 percent of the work in process. Costs are assigned equally across all work in process. 3. Transferred 80 percent of the materials purchased to work in process. 4. Purchased $550,000 in direct materials. 5. Determined that manufacturing overhead was $485,000. 6. The inventory accounts have no beginning balances. All costs incurred were debited to the appropriate account and credited to Accounts Payable. Required Give the amounts for the following items in the Work-in-Process account: a. Transfers-in (TI) b. Transfers-out (TO) c. Ending balance (EB)
> Dobel Devices manufactures an electronic lock used in dockless bicycles and scooters. The product’s price and cost characteristics are as follows: Required The company must sell 23,000 units annually in order to earn $93,000 in profits
> Woodrow Economic Advisors (WEA) is a for-profit consulting firm that offers economic analyses and policy recommendations. WEA is organized into two divisions: the Commercial Division and the Defense Division. Commercial clients are charged a fixed fee ne
> Roxford Plastics manufactures and sells model airplane kits for hobbyists for a price of $14. The fixed costs amount to $170,000 per year, of which $105,000 is manufacturing related. At an annual sales volume of 35,000 kits, Roxford earns $71,225 after t
> Algonac Moldings produces a product made from a metal alloy. Two suppliers, Liebold Metal and Cecil Distributors, supply the alloy. Neither supplier can meet Algonac’s typical demand because of capacity constraints. The material from Li
> Merton Electronics operates two retail outlets in Port Wren, one downtown and the other in Docklands. The stores share the use of a corporate staff responsible for functions such as personnel, IT, marketing, purchasing, and so on. The cost of the corpora
> Alwar Brothers is a small, family-owned business that produces animal feed for dairy farms. The administrative offices and manufacturing plant of Alwar share the same building. Financial records provided by the company for the most recent fiscal year sho
> Mount Elliott Fixtures produces a variety of hardware products, primarily for the home construction and remodeling business. The cost accountant provides you with the following data for the year (in $000): Required Prepare the income statement with a sup
> Refer to Exhibit 1.10 (Panel A), which is a heat map based on the profitability of the six districts for The AM Bakery. A new intern tells you that a better heat map is the one shown here, “. . . because the high numbers are all green a
> East Ferry Tool & Die, a manufacturer of parts for agricultural equipment, provides the following financial information for the most recent fiscal year (all costs are in thousands of dollars): Required Prepare an income statement with a supporting co
> Refer to the information in Problem 4-57 requirement (c) for Platt Instruments. The CMO would like a visual representation of the analysis done to arrive at the decision whether to staff internally or outsource to Westmoreland Products. The company can t
> Refer to the information in Problem 4-55 requirement (c) for Spinnaker Museum of Sailing. The museum director continues to be a bit uncertain about the attendance for the upcoming fiscal year and would like a graphical representation of the analysis done
> Clifton Instruments is a small components maker located in Kansas. The company specializes in aircraft instruments and focuses its production around a single family of products. Recently, one of the new members of the company’s board of
> Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company’s suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a seco
> Cranbrook Used Books experienced the following events during the current year: 1. Incurred $12,000 in selling costs. 2. Took an inventory at year-end and learned that goods costing $55,000 were on hand. This compared with a beginning inventory of $72,000
> Refer to the data in Exercise 6-59. Required Spring Garden Vegetables uses operations costing and assigns conversion costs based on materials cost. Compute the cost per unit of each brand of frozen vegetables in November. Exercise 6-59:
> Spring Garden Vegetables (SGV) processes two brands of frozen vegetables, Valu-PAK and Gourmet. The two brands are processed in one factory using the same production process. The only difference between the two brands is the quality (cost) of the raw veg
> Refer to the data in Exercise 6-57. Required Piper Recreational Vehicles uses operations costing and assigns conversion costs based on materials cost. Compute the expected cost of each model assembled next year. Exercise 6-57:
> Piper Recreational Vehicles (PRV) modifies vans into recreational vehicles. PRV offers two models, the XC-2 and XC-6, which differ in the quality of the basic van and the workmanship and machining detail that are used. The following data reflect expected
> Refer to the opening vignette of Adam Mercer and The AM Bakery. Adam has hired you to help him make the decisions he needs to make. Required Answer the four questions in the critical thinking framework identified in the chapter that will guide your analy
> Refer to the data in Exercise 6-55. Required Witt Recreation Company uses operations costing and assigns conversion costs based on the the direct materials costs. Compute the cost of each model assembled in the second quarter. Exercise 6-55:
> Witt Recreation Company (WRC) makes e-bikes. The company currently manufactures two models, the Coaster and the Traveler, in one of the WRC factories. Both models require the same assembling operations. The difference between the models is the cost of ma
> Consider the cost allocation system used at Tacoma Accessories and Westover Travel in Exercises 6-50 through 6-54. Required The system is referred to as a two-stage cost allocation system because a. Cost is allocated first to intermediate cost pools and
> Refer to the data in Exercise 6-52. Required Draw the cost flow diagram that represents the cost system used by Westover Travel. Exercise 6-52:
> Refer to the data in Exercise 6-50 Required Draw the cost flow diagram that represents the cost system used by Tacoma Accessories. Exercise 6-50:
> Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the staff cost to allocate general operating costs. b. Based on the rates computed in requi
> Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the staff hours to allocate general operating costs. b. Based on the rates computed in requ
> Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses revenue to allocate general operating costs. b. Based on the rates computed in requirement
> Harmon Recycling Services (HRS), a not-for-profit organization, has two drop-off centers, Westside and Eastside. Data for the expected operation in the next quarter follow. Required a. Compute the predetermined overhead rate used to apply general operati
> Refer to the data in Exercise 6-44. Required a. Compute the predetermined overhead rate assuming that Kilbourne Appliances uses direct labor costs to allocate overhead costs. b. Draw the cost flow diagram assuming that Kilbourne Appliances uses direct la
> Gregorie Tool & Die reports the following information for the quarter: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $30 2. $35 3. $42 4. $45 b. Variable production cost per unit. 1. $30 2. $35 3. $42 4. $4
> What are predatory pricing, dumping, and price discrimination? What role would a cost accountant play in determining whether dumping or price discrimination has occurred?
> Kilbourne Appliances produces two models of beverage coolers for homes and offices, the KA-15 and the KA-24. Data on operations and costs for March follow. Required a. Compute the predetermined overhead rate assuming that Kilbourne Appliances uses direct
> Refer to the data in Exercise 6-38. Required Draw the cost flow diagram assuming that Redfern Audio uses machine-hours to allocate overhead costs. Exercise 6-38:
> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses machine-hours to allocate overhead costs. Exercise 6-38:
> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses direct material costs to allocate overhead costs. Exercise 6-38:
> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses the number of units to allocate overhead costs. Exercise 6-38:
> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor costs to allocate overhead costs. Exercise 6-38:
> Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and Enhanced, which differ both in the materials and components used and in the labor skill required. Data for the Campus Plant
> Gullen Partners produces cleaning solvents. On September 1, it had no work-in-process inventory. It started production of 56,000 gallons of solvent in September and completed production of 47,000 gallons. Cost records at Gullen show the following for Sep
> Bremen Fitness Products produces a sports drink. On October 1, it had no work-in-process inventory. It started production of 9,000 cases of the drink in October and shipped 7,800 cases to retailers. (Bremen holds no finished goods inventory.) The costs o
> Duffield Lubricants produces oil-based machine lubricants. On December 1, it had no work-inprocess inventory. It starts production of 86,000 gallons of lubricant in December and completes 72,000 gallons. The costs of the resources used by Duffield in Dec
> For each of the following statements, indicate whether it is true, false, or uncertain. Explain why. Give examples in your answer. a. A cost is something used up to produce revenues in a particular accounting period. b. Variable costs are direct costs; o
> Bostwick Chemicals started business on April 1. The following operations data are available for April for the one solvent it produces. Costs incurred in April follow. There are never any finished goods at Bostwick Chemicals because all production is to o
> In October, Seville Chemicals produced 22,500 barrels of the additive. Manufacturing overhead was $285,000 and the cost per barrel was $16.30. Materials costs were four times greater than labor costs. Required a. What were the labor costs for October? b.
> In May, Seville Chemicals produced 26,000 barrels of the additive. Labor costs were $16,800 and manufacturing overhead was $313,000. The cost per barrel was $15.80. Required What was the materials cost in May?
> Seville Chemicals produces a fuel additive. Operating data for January follow. Seville Chemicals produced 25,125 barrels of the additive in January. Required Compute the cost per barrel of the additive produced in January.
> Lenox Solvents manufactures a special fluid at its Hazelridge plant. Operating data for June follow. The Hazelridge plant produced 1,050,000 liters in June. The plant never has any beginning or ending inventories. Required Compute the cost per liter of l
> Fill in the missing items for the following inventories:
> Fill in the missing items for the following inventories:
> Results from a multiple regression of store costs on revenues and area using the data of Waveney DIY Centers (Exercise 5-44) are as follows: Required The managers in the region are interested in opening a new store with expected revenues of $19 million a
> Results from a regression of store costs on store area using the data of Waveney DIY Centers (Exercise 5-44) are as follows: Required The managers in the region are interested in opening a new store with expected area of 50,000 square feet. Assuming the
> The following information is available for Alcoy Partners for the year just ended: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $12 2. $18 3. $21 4. $25 b. Variable production cost per unit. 1. $12 2. $18 3. $
> Results from a regression of store costs on revenues using the data of Waveney DIY Centers (Exercise 5-44) are as follows. Required The managers in the region are interested in opening a new store with expected revenues of $19 million. Assuming the data
> Refer to the information in Exercise 5-44. Required Prepare a scattergraph based on the store cost and store area data for Waveney DIY Centers in Exercise 5-44. Exercise 5-44:
> Refer to the information in Exercise 5-44. Required Prepare a scattergraph based on the store cost and revenue data for Waveney DIY Centers in Exercise 5-44. Exercise 5-44:
> Results from a multiple regression of factory costs on labor-hours and machine-hours using the data of Fiske Corporation (Exercise 5-36) are as follows: Required Managers expect the plant to operate at 16,000 labor-hours and 21,000 machine-hours next qua
> Results from a regression of factory costs on machine-hours using the data of Fiske Corporation (Exercise 5-36) are as follows: Required Managers expect the plant to operate at 21,000 machine-hours next quarter. Assuming the relationship remains the same
> Results from a regression of factory costs on labor-hours using the data of Fiske Corporation (Exercise 5-36) are as follows: Required Managers expect the plant to operate at 16,000 labor-hours next quarter. Assuming the relationship remains the same wit
> Refer to the information in Exercise 5-36 for Fiske Corporation. Required Prepare a scattergraph based on the factory cost and machine-hour data in Exercise 5-36. Exercise 5-36:
> Refer to the information in Exercise 5-36 for Fiske Corporation. Required Prepare a scattergraph based on the factory cost and labor-hour data for Fiske Corporation in Exercise 5-36. Exercise 5-36:
> Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): HPCS recorded 4,375 billable hours in QTR 1, and fixed administra
> Hemlock Nutritional Supplements (HNS) provides you with the following accounting records on manufacturing cost for the most recent month: Production was 60,000 units (cases). Fixed manufacturing overhead was $144,000. For the coming year, costs are expec
> Refer to the information in Exercise 1-32. The museum director is considering a proposal by the head of the Neighborhood Outreach Program to keep the Evening Lecture Series but expand it by offering a Weekend Lecture Series as well. The Weekend Series wo
> Summit Corporation manufactures machines for the apparel industry. The production manager and cost analyst reviewed the accounts for the previous quarter and have provided an estimated breakdown of the fixed and variable portions of manufacturing overhea
> Dickerson Consultants offers logistics advice for large retail firms. Dickerson classifies its consultants into three categories, based on their experience and skills. The three levels are partner, senior, and associate. Dickerson quotes prices for prosp
> Collingwood Contractors (CC) designs and builds new model homes for individual customers. CC has developed a reputation in the market for relatively upscale, unique designs with highend finishings. CC has developed several formulas, which it uses to esti
> Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans, sweet peas, and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the company’s performance, the chief mark
> Lamothe Kitchen and Bath makes products for the home, which it sells through major retailers and remodeling (do-it-yourself, or DIY) outlets. One product that has had varying success is a ceiling fan for the kitchen. The fan comes in three sizes (36-inch
> Rathbone Industries produces and sells an instrument used in hospital monitoring systems. The instrument uses a specialized sensor that Rathbone currently purchases from Norfolk Electronix. Norfolk charges Rathbone $94 per sensor for the 12,000 sensors R
> Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized fitting that is not used in any other HMP product. The management of HMP has considered outsourcing the fitting for several years but
> Riverdale Partners wants to introduce a new line of fragrances. Market research indicates that a potential fragrance would sell well in the market priced at $268.80 each. Riverdale requires an operating profit of 28 percent of costs. Required What is the
> Refer to Exercise 2-56. Required Prepare: a. A gross margin income statement. b. A contribution margin income statement. Exercise 2-56:
> Accounting records for The Ralston Company show the following for the most recent fiscal year: Required Prepare: a. A gross margin income statement. b. A contribution margin income statement.
> Your colleague says, “If a company only has one product, it doesn’t matter how we allocate cost because the result will always be the same.” Do you agree? Explain.
> Whitmore Glassware makes a variety of drinking glasses and mugs. The company’s designers have discovered a market for a 16-ounce mug with college logos. Market research indicates that a mug like this would sell well in the market priced at $26. Whitmore
> Refer to Exercise 2-54. Required Compute: a. Product costs per unit. b. Period costs for the period. Exercise 2-54:
> Refer to the data for Rochester Street Taco Shop in Exercise 3-49. Required Suppose RSTS expects to sell 7,000 tacos next month, but the fixed costs are uncertain. Using the Goal Seek function in Microsoft Excel, what must be the fixed costs for RSTS to
> Rochester Street Taco Shop (RSTS) sells a variety of tacos to go all at a price of $4.50 each. The variable cost of an RSTS taco averages $2.40. RSTS incurs monthly fixed costs of $7,350. RSTS is subject to a 20 percent tax rate. Required Using the Goal
> Refer to the data for Grove Audio in Exercise 3-31. Required Using the Goal Seek function in Microsoft Excel: a. What number must Grove Audio sell to break even? b. What number must Grove Audio sell to make an operating profit of $180,000 per year? Exer
> Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40.
> Norwood Stationary has provided the following information (in thousands of dollars) for October. Required Prepare an income statement for October with a supporting cost of goods sold statement.
> The cost accountant for Sunset Fashions has compiled the following information for last quarter’s operations: Required Prepare an income statement with a supporting cost of goods sold statement.
> Northampton City Tours (NCT) offers personalized historical and architectural tours in a large midwestern city and the local suburbs. NCT charges $350 per trip to or from the airport. The variable cost for a tour totals $42 for fuel, driver, and so on. T
> Couzen’s Company’s cost structure is dominated by variable costs with a contribution margin ratio of .25 and fixed costs of $450,000. Every dollar of sales contributes 25 cents toward fixed costs and profit. The cost structure of a competitor, Jones & Fa
> Consider a bank that offers both online and branch access for customers. Based on the estimated costs of service through the two channels, the bank has decided it should motivate customers to use online services in place of branch services. After several
> The cost structure of Dennis’s Retail Mart is dominated by variable costs with a contribution margin ratio of .30 and fixed costs of $60,000. Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, Oa
> Refer to the data for Charlevoix Cases in Exercise 3-33. Required Using the Goal Seek function in Microsoft Excel: a. What number must Charlevoix Cases sell to break even? b. What number must Charlevoix Cases sell to make an operating profit of $46,280 a
> The following data are available for Gray Services for the month just ended: Required Find the following by completing a cost of services sold statement. a. Marketing and administrative costs. b. Cost of services sold.
> Tuscola Counseling Services is a small firm that advises job seekers on both employment and education alternatives. Robert Gibson, the founder and president, has collected the following information for the year just ended: Required Prepare an income stat
> Harbor Island Investments (HII) is a discount brokerage firm offering clients investment advice, trading services, and a variety of mutual funds for investment. HII has collected the following information for November: Required Prepare an income statemen
> The following balances (in thousands of dollars) are from the accounts of Birwood Furniture: Direct materials used during the year amount to $1,096,000 and the cost of goods sold for the year was $1,278,000. Required Find the following by completing a co
> The following balances appear on the accounts of Greusel Fabrication: Direct materials used during the month amount to $525,000 and the cost of goods sold for the month was $1,436,000. Required Find the following by completing a cost of goods sold statem
> Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Required a. What number must Grove Audio sell annually to break even? b. What number must Grove Audio sell to make an opera
> For each of the following costs incurred in a manufacturing firm, indicate whether the costs are fixed (F) or variable (V) and whether they are period costs (P) or product costs (M) under full absorption costing. a. Straight-line depreciation on corporat
> Lillibridge & Friends, Inc. provides you with the following data for its single product: Required Give the amounts for each of the following: a. Prime cost per unit. b. Contribution margin per unit. c. Gross margin per unit. d. Conversion cost per un
> A manager asks you for a cost estimate to open a new retail outlet and says, “I want you to use statistical analysis, so it will be based on real data and therefore objective.” How might you respond?
> Elmo Security Consultants (ESC) offers a standardized review of data security for small business owners. The following data apply to the provision of these reviews: Required Give the amount for each of the following (one unit = one review): a. Variable r
> Refer to the information in Exercise 1-30. The managers of Lessing Toy & Hobby (LTH) have decided to keep the stores in the Northern Division open, in spite of the dwindling demand in the area. They want to forecast what the income will be in the com
> Refer to Exhibit 1.6, which shows budgeted versus actual costs. Assume that The AM Bakery is preparing a budget for the month ending October 31. Management prepares the budget by starting with the actual results for August 31 that appear in Exhibit 1.6.
> Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Required a. How many cases must Charlevoix sell annually to break even? b. How many cases must Charlevoix sell annually to make an operatin
