Question: Chipcity is a fast-growing manufacturer of

> The Seaside Corporation manufactures similar products in the United States and Norway. The U.S. and Norwegian operations are organized as decentralized divisions. The following information is available for 2012; ROI is calculated as operating income divi

> Carter Corporation recently announced a bonus plan to be awarded to the manager of the most profitable division. The three division managers are to choose whether ROI or RI will be used to measure profitability. In addition, they must decide whether inve

> Performance Auto Company operates a new car division (that sells high performance sports cars) and a performance parts division (that sells performance improvement parts for family cars). Some division financial measures for 2011 are as follows: Requir

> Bleefl Corporation manufactures furniture in several divisions, including the patio furniture division. The manager of the patio furniture division plans to retire in two years. The manager receives a bonus based on the division’s ROI, which is currently

> Home Entertainment Center (HEC) operates a large store in San Francisco. The store has both a video section and a music (compact disks and tapes) section. HEC reports revenues for the video section separately from the music section. Required: Classify e

> Summit Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately two years ago, Ben Harrington, president of Summit, decided to revise the bonus plan (based, at the time, entirely on op

> Superior Motor Company makes electric cars and has only two products, the Simple green and the Superior green. To produce the Simple green, Superior Motor employed assets of $13,500,000 at the beginning of the period, and $13,400,000 of assets at the end

> Global Data, Inc., has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here: Required: 1. Complete the table by filling in the blanks. 2. Use the DuPont method of profitability a

> Refer to Exercise 22-25. Assume that division A can sell the 1,000 units to other customers at $155 per unit, with variable marketing cost of $5 per unit. Required: Determine whether Allison-Chambers will benefit if division C purchases the 1,000 units

> The Allison-Chambers Corporation, manufacturer of tractors and other heavy farm equipment, is organized along decentralized product lines, with each manufacturing division operating as a separate profit center. Each division manager has been delegated fu

> Suppose that the U.S. division could sell as many units of Product 4A36 as it makes at $900 per unit in the U.S. market, net of all marketing and distribution costs. Required: 1. From the viewpoint of the Mornay Company as a whole, would after-tax opera

> The Mornay Company manufactures telecommunications equipment at its plant in Toledo, Ohio. The company has marketing divisions throughout the world. A Mornay marketing division in Vienna, Austria, imports 10,000 units of Product 4A36 from the United Stat

> British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $100 per 100 board-feet of raw lumber Finished lumber division: $125 per 100 board-feet of finished lumber Assume th

> Jackson Markets, a chain of traditional supermarkets, is interested in gaining access to the organic and health food retail market by acquiring a regional company in that sector. Jackson intends to operate the newly-acquired stores independently from its

> Adventure Parks Inc. (API) operates ten theme parks throughout the United States. The company’s slogan is “Name Your Adventure,” and its mission is to offer an exciting theme park experience to visitors of all ages. API’s corporate strategy supports this

> Consumer Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $50per session to provide comments on new products. These focus groups meet in hotels and are led

> The Crossroad Company is an international clothing manufacturer. Its Santa Monica plant will become idle on December 31, 2011. Peter Laney, the corporate controller, has been asked to look at three options regarding the plant. Option 1: The plant, which

> Innovation, Inc., is considering the purchase of a new industrial electric motor to improve efficiency at its Fremont plant. The motor has an estimated useful life of five years. The estimated pretax cash flows for the motor are shown in the table that f

> Anna’s Bakery plans to purchase a new oven for its store. The oven has an estimated useful life of four years. The estimated pretax cash flows for the oven are as shown in the table that follows, with no anticipated change in working ca

> Century Lab plans to purchase a new centrifuge machine for its New Hampshire facility. The machine costs $137,500 and is expected to have a useful life of eight years, with a terminal disposal value of $37,500. Savings in cash operating costs are expecte

> New Bio Corporation is a rapidly growing biotech company that has a required rate of return of 10%. It plans to build a new facility in Santa Clara County. The building will take two years to complete. The building contractor offered New Bio a choice of

> Southern Cola is considering the purchase of a special-purpose bottling machine for $23,000. It is expected to have a useful life of four years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs:

> Assume the same facts as in Exercise 21-18 except that City Hospital is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes. Required: 1. Do requirement 1 of Exercise 21-18. 2. How would your computations in requ

> City Hospital, a non-profit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye testing machine at a cost of $110,000. No terminal disposal value is expected. City Hospita

> Riverbend Company runs hardware stores in a tristate area. Riverbend’s management estimates that if it invests $250,000 in a new computer system, it can save $67,000 in annual cash operating costs. The system has an expected useful life of eight years an

> Assume the same facts as in Exercise 20-23, except now Road Warrior uses only two trigger points, Completion of good finished units of product and Sale of finished goods. Any under- or over allocated conversion costs are written off monthly to Cost of Go

> Each of the following cost items pertains to one of these companies: General Electric (a manufacturing-sector company), Safeway (a merchandising-sector company), and Google (a service-sector company): a. Perrier mineral water purchased by Safeway for sal

> Assume the same facts as in Exercise 20-23, except that Road Warrior now uses a backflush costing system with the following two trigger points: Purchase of direct materials and incurring of conversion costs= Sale of finished goods The Inventory Control a

> Road Warrior Corporation assembles handheld computers that have scaled-down capabilities of laptop computers. Each handheld computer takes six hours to assemble. Road Warrior uses a JIT production system and a backflush costing system with three trigger

> The Champion Hardware Company manufactures specialty brass door handles at its Lynchburg plant. Champion is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooli

> Lakeland Company produces lawn mowers and purchases 18,000 units of a rotor blade part each year at a cost of $60 per unit. Lakeland requires a 15% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials han

> The Denim World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming ins

> Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells to its customers. AT has recently installed computer software that enables its customers to conduct “one-stop” purchasing using state-of-the-art Web site technology. FB’s ord

> Fan Base (FB) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Los Angeles Galaxy soccer jerseys product line. This is a highly popular item. D

> Refer to the information in Exercise 19-25 in answering the following requirements. There is no connection between the requirements. Required: 1. Mayfield produces 2,000 defective units at the machining operation. What is the cost to Mayfield of the def

> Torrance Manufacturing evaluates the performance of its production managers based on a variety of factors, including cost, quality, and cycle time. The following are nonfinancial measures for quality and time for 2010 and 2011 for its only product: The

> Flagstar Conference Center and Catering is a conference center and restaurant facility that hosts over 300 national and international events each year attended by 50,000 professionals. Due to increased competition and soaring customer expectations, the c

> Best Breads manufactures two types of bread, which are sold as wholesale products to various specialty retail bakeries. Each loaf of bread requires a three step process. The first step is mixing. The mixing department combines all of the necessary ingred

> Speed Print manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: Speed Print’s current presses have a quality problem that causes variations in the

> Worldwide Cell Phones (WCP) has developed a cell phone that can be used anywhere in the world (even countries like Japan that have a relatively unique cell phone system). WCP has been receiving complaints about the phone. For the past two years, WCP has

> Refer to information in Exercise 19-17 in answering this question. Dream Rider has discovered a more serious problem with the plastic core of its car seats. An accident can cause the plastic in some of the seats to crack and break, resulting in serious i

> Dream Rider produces car seats for children from newborn to two years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Dream Rider’s only problem with its car sea

> Costen, Inc., produces cell phone equipment. Jessica Tolmy, Costen’s president, decided to devote more resources to the improvement of product quality after learning that her company had been ranked fourth in product quality in a 2009 s

> The Morgan Company has an extensive job-costing facility that uses a variety of metals. Consider each requirement independently. Required: 1. Job 372 uses a particular metal alloy that is not used for any other job. Assume that scrap is material in amou

> White Goods assembles washing machines at its Auburn plant. In February 2012, 60 tumbler units that cost $44 each (from a new supplier who subsequently went bankrupt) were defective and had to be disposed of at zero net disposal value. White Goods was ab

> Barrett Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for 2,100 cases of mixed vegetables costs $9 per case: direct materials, $4; direct manufacturing la

> Refer to the information in Exercise 18-24. Suppose Chipcity determines standard costs of $200 per equivalent unit for direct materials and $75 per equivalent unit for conversion costs for both beginning work in process and work done in the current perio

> Refer to the information in Exercise 18-24. Required: Do Exercise 18-24 using the FIFO method of process costing. Data from Exercise 18-24: Chipcity is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the produ

> .A student association has hired a band and a caterer for a graduation party. The band will charge a fixed fee of $1,000 for an evening of music, and the caterer will charge a fixed fee of $600 for the party setup and an additional $9 per person who atte

> Arokia Electronics manufactures cell phone models in its Walnut Creek plant. Suppose the company provides you with the following information regarding operations for September 2011: Assume the spoiled units have no disposal value. Required: 1. What is

> Jordan, Inc., is a manufacturer of vents for water heaters. The company uses a process-costing system to account for its work-in-process inventories. When Job 512 was being processed in the machining department, a piece of sheet metal was off center in t

> Appleton Company makes wooden toys in its forming department, and it uses the weighted-average method of process costing. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the process. Spoiled un

> Required: For the data in Exercise 18-17, use the FIFO method to summarize total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign total costs to units completed and transferred out (includ

> Manufacturing Company uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

> Required: For the data in Exercise 18-17, summarize total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign total costs to units completed and transferred out (including normal spoilage), t

> Consider the following data for November 2012 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the p

> The following data, in physical units, describe a grinding process for January: Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the good units passing inspection. Required: 1. Compute the normal and abnormal spoilage in units.

> UB Healthy Company manufactures three different types of vitamins: vitamin A, vitamin B, and a multivitamin. The company uses four operations to manufacture the vitamins: mixing, tableting, encapsulating, and bottling. Vitamins A and B are produced in ta

> Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification fo

> .Refer to the information in Exercise 17-27. Suppose that Asaya uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise17-27 under the FIFO method are that total transferred-in costs of beginnin

> Asaya Clothing, Inc., is a manufacturer of winter clothes. It has a knitting department and a finishing department. This exercise focuses on the finishing department. Direct materials are added at the end of the process. Conversion costs are added evenly

> Refer to the information in Exercise 17-24. Suppose Bio Doc determines standard costs of $8.25 per equivalent unit for direct materials and $12.70 per equivalent unit for conversion costs for both beginning work in process and work done in the current pe

> Required: Do Exercise 17-24 using the FIFO method. Note that you first need to calculate the equivalent units of work done in the current period (for direct materials and conversion costs) to complete beginning work in process, to start and complete new

> Bio Doc Corporation is a biotech company based in Milpitas. It makes a cancer-treatment drug in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Bio Doc uses the

> Whole Goodness Bakery needs to determine the cost of two work orders for the month of June. Work order 215 is for 1,200 packages of dinner rolls and work order 216 is for 1,400 loaves of multigrain bread. Dinner rolls are mixed and cut into individual ro

> Required: For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed (and transferred out) and to un

> Refer to the information in Exercise 17-19. Suppose the assembly division at Fenton Watches, Inc., uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equivalent units for direct materials and conversion cos

> Required: For the data in Exercise 17-19, summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed (and transferred out) and to units in ending work in p

> Consider the following data for the assembly division of Fenton Watches, Inc.: The assembly division uses the weighted-average method of process costing. Required: Compute equivalent units for direct materials and conversion costs. Show physical units

> Helner Cell Phones (HCP) is developing a new touch screen smartphone to compete in the cellular phone industry. The phones will be sold at wholesale prices to cell phone companies, which will in turn sell them in retail stores to the final customer. HCP

> Describe three methods that can be used to express CVP relationships.

> Roary Chemicals has a mixing department and a refining department. Its process-costing system in the mixing department has two direct materials cost categories (chemical P and chemical Q) and one conversion costs pool. The following data pertain to the m

> Refer to requirement 2 of Exercise 17-16. Required: Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out the cost of goods completed. Show the postings to the Wo

> Nihon, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2012, the company incurred $750,000 on direct materials and $798,000 on conversion costs, for a total manufacturing cost of $1,548,000. Required:

> Royston, Inc., is a large food processing company. It processes 150,000 pounds of peanuts in the peanuts department at a cost of $180,000 to yield 12,000pounds of product A, 65,000 pounds of product B, and 16,000 pounds of product C. Product A is process

> Tasty, Inc., is a producer of potato chips. A single production process at Tasty, Inc., yields potato chips as the main product and a byproduct that can also be sold as a snack. Both products are fully processed by the split off point, and there are no s

> Iowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans that ISP purchases for $300 can be converted for an additional $200 into 500 pounds of soy meal and 100 gallons of soy oil. A pound of soy meal can b

> .Instant Foods produces two types of microwavable products—beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as

> Sinclair Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons to generate three non saleable intermediate products: ICR8, ING4, and XGE3. These intermediate products are further processed separately to produce crude oil, n

> The Evrett Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a single split off point. Products X and Y are ready for

> The Wood Spirits Company produces two products—turpentine and methanol (wood alcohol)—by a joint process. Joint costs amount to $120,000 per batch of output. Each batch totals 10,000 gallons: 25% methanol and 75% turpentine. Both products are processed f

> Marcia Miller is division controller and Tom Maloney is division manager of the Ramses Shoe Company. Miller has line responsibility to Maloney, but she also has staff responsibility to the company controller. Maloney is under severe pressure to achieve t

> Convad Company is one of the world’s leading corn refiners. It produces two joint products—corn syrup and corn starch—using a common production process. In July 2012, Convad reported the following pro

> Quality Chicken is computing the ending inventory values for its July 31, 2012, balance sheet. Ending inventory amounts on July 31 are 15 pounds of breasts, 4 pounds of wings, 6 pounds of thighs, 5 pounds of bones, and 2 pounds of feathers. Quality Chick

> Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2012 is as follows: Joint cost of production in July 2012 was $50. A special shipment of 40 pounds of breasts

> Jim Dandy Auto Sales uses all types of media to advertise its products (television, radio, newspaper, etc.). At the end of 2011, the company president, Jim Dandridge, decided that all advertising costs would be incurred by corporate headquarters and allo

> Yves Parfum Company blends and sells designer fragrances. It has a Men’s Fragrances Division and a Women’s Fragrances Division, each with different sales strategies, distribution channels, and product offerings. Yves i

> Sunny Gunn, a self-employed consultant near Sacramento, received an invitation to visit a prospective client in Baltimore. A few days later, she received an invitation to make a presentation to a prospective client in Chicago. She decided to combine her

> Ben and Gary are students at Berkeley College. They share an apartment that is owned by Gary. Gary is considering subscribing to an Internet provider that has the following packages available: Ben spends most of his time on the Internet (â€&

> Consider E-books again. The controller of E-books reads a widely used textbook that states that “the reciprocal method is conceptually the most defensible.” He seeks your assistance. Required: 1. Describe the key features of the reciprocal method. 2. Al

> E-books, an online book retailer, has two operating departments— corporate sales and consumer sales—and two support departments—human resources and information systems. Each sales department conducts

> Refer to the data given in Exercise 15-19. Required: 1. Allocate the two support departments’ costs to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 2. Compare and expl

> Brite Exteriors is a firm that provides house painting services. Robert Brite, the owner, is trying to find new ways to increase revenues. Mr. Brite performs the following actions, not in the order listed. a. Mr. Brite calls Home Depot to ask the price o

> Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services (AS) and information systems (IS)—and two operating departments&

> Chocolat Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each roundtrip. At the start of 2012, the budgeted costs were as follows: The actual results for the 45 round-trips made in 2012 were as follows:

> Chocolat Inc. is a producer of premium chocolate based in Palo Alto. The company has a separate division for each of its two products: dark chocolate and milk chocolate. Chocolat purchases ingredients from Wisconsin for its dark chocolate division and fr

> The Chicago power plant that services all manufacturing departments of Mid West Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms: The expected monthly costs for operating the power plant during

> Soda-King prepared the budget for 2011 assuming a 12% market share based on total sales in the western region of the United States. The total soft drinks market was estimated to reach sales of 20 million cartons in the region. However, actual total sales

> Soda-King manufactures and sells three soft drinks: Kola, Limor, and Orlem. Budgeted and actual results for 2011 are as follows: Required: 1. Compute the total sales-volume variance, the total sales-mix variance, and the total sales-quantity variance.

> The Jinwa Corporation sells two brands of wine glasses: Plain and Chic. Jinwa provides the following information for sales in the month of June 2011: All variances are to be computed in contribution-margin terms. Required: 1. Calculate the sales-quant