Clover Dairy Products Corp. buys one input of full-cream milk, and refines it in a churning process. From each gallon of milk Clover produces three cups of butter and nine cups of buttermilk. During May 2020, Clover bought 12,000 gallons of milk for $44,500. Clover spent another $18,860 on the churning process to separate the milk into butter and buttermilk. Butter could be sold immediately for $4.40 per pound and buttermilk could be sold immediately for $2.40 per quart (Note: two cups = one pound; four cups = one quart). Clover chooses to process the butter further into spreadable butter by mixing it with canola oil, incurring an additional cost of $3.20 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $4.60. Required 1. Allocate the $63,360 joint cost to the spreadable butter and the buttermilk using the following: a. Physical-measure method (using cups) of joint cost allocation b. Sales value at splitoff method of joint cost allocation c. NRV method of joint cost allocation d. Constant gross margin percentage NRV method of joint cost allocation 2. Each of these measures has advantages and disadvantages; what are they? 3. Some claim that the sales value at splitoff method is the best method to use. Discuss the logic behind this claim.
> Assume the same facts for the Grand Meter Corporation as in Problem 21-37, except that now assume there are only two trigger points for making entries in the accounting system: ■ Completion of good finished units of product ■ Sale of finished goods The i
> Assume the same facts for the Grand Meter Corporation as in Problem 21-37, except that now assume the second trigger point for it is the sale, rather than the completion of finished goods: ■ Purchase of direct materials and incurring of conversion costs
> The Grand Meter Corporation manufactures electrical meters. For August, there were no beginning inventories of direct materials and no beginning or ending work in process. Grand Meter uses a JIT production system and backflush costing with three trigger
> Smart Jeans Ltd. orders high-quality denim fabric from two different suppliers: Shine Fabrics and Soft Cotton. Smart would like to use only one of the suppliers in the future. Due to variations in quality, Smart would need to inspect 15% of Shine Fabrics
> ClearPic Television Co. outsources the production of picture-tubes for the televisions it manufactures. It is currently deciding whether to use sup- plier X or supplier Y. Due to differences in the product failure rates in the two companies, 7.5% of pict
> The KateSteel Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. KateSteel’s inventory of raw steel averages $400,000. Keith Abbott, president of KateSteel, and Sha
> CompTech Solution purchases one model of computer at a wholesale cost of $400 per unit and resells it to end consumers. The annual demand for the company’s product is 500,000 units. Ordering costs are $1,000 per order and carrying costs are $80 per compu
> Gadgets Galore Corp. produces J-Pods, music players that can download thousands of songs. Gadgets Galore forecasts that demand in 2020 will be 22,800 J-Pods. The variable production cost of each J-Pod is $52. In its MRP system, due to the large $19,000 c
> Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $360 per order. The annual carrying cost is $6.50 per mot
> FootLove Shoe Co. produces and sells excellent quality walking shoes. After production, these shoes are distributed to 30 warehouses around the country. Each warehouse services approximately 120 stores in its region. FootLove uses an EOQ model to determi
> The Belkin Company has three product lines of coffee mugs—A, B, and C—with contribution margins of $7, $5, and $4, respectively. The president foresees sales of 240,000 units in the coming period, consisting of 40,000 units of A, 120,000 units of B, and
> Outmark Corporation manufactures computer processors for leading com- puter makers. Joe Agent is the management accountant for one of Outmark’s largest manufacturing plants. His bonus is based on the plant’s revenues.
> American Electronics manufactures 200,000 55-inch 4K TVs each year. The variable and fixed costs of rework and repair for the TVs are as follows: American Electronics’ 55-inch 4K TVs have a quality problem that causes shadows in the pic
> IVplast is still de- bating whether it should introduce Y28. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z39 and Y28: Required Using the average manufacturing cycle times calculated in Pro
> The IVplast Corporation uses an injection molding ma- chine to make a plastic product, Z39, after receiving firm orders from its customers. IVplast estimates that it will receive 40 orders for Z39 during the coming year. Each order of Z39 will take 120 h
> The Brightlight Corporation uses multicolored molding to make plastic lamps. The molding operation has a capacity of 150,000 units per year. The demand for lamps is very strong. Brightlight will be able to sell whatever output quantities it can produce a
> The Brady Corporation sells 375,000 V262 valves to the automobile and truck industry. Brady has a capacity of 210,000 machine-hours and can produce two valves per machine-hour. V262’s contribution margin per unit is $9. Brady sells only 375,000 valves be
> Pauli’s Pizza has recently begun collecting data on the quality of its customer order processing and delivery. Pauli’s made 1,800 deliveries during the first quarter of 2020. The following quality data pertain to first
> Chunky Meatbots produces a wide variety of unorthodox bread sauces. The company’s three best-selling variants are The BLT Apprentice, The Submachine Bun, and Game of Scones. Each bottle containing these sauces is required to meet predet
> The Horsheim Company manufactures furniture in two departments: molding and finishing. The company uses the weighted- average method of process costing. August data for the finishing department are as follows: Conversion costs are added evenly during the
> Superb Furniture manufactures plastic lawn furniture in a continuous process. The company pours molten plastic into molds and then cools the plastic. Materials are added at the beginning of the process, and conversion is considered uniform through the pe
> Chartz 1-2-3 is a top-selling electronic spreadsheet product. Chartz is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Chartz 1-2-3 4.0 or earlier versions). Alt
> Which of the following statements regarding department costing and ABC is/are correct? I. Department costing systems always properly recognize the drivers of costs within departments. II. Emphasizing activities leads to more focused and homogenous costs
> Textual Brilliance is a manufacturer of writing products for aspiring indie authors. Winston Smith, the plant manager of Textual Brilliance, obtains the following information for Job #10 in August 2020. A total of 46 units were started, and 6 spoiled uni
> Jiminy Jacks produces jacks that are used in many types of automobiles. In the assembly department, materials are added at the beginning of the process and conversion costs are added evenly during the process. At the start of April 2020, Jiminy Jacks ass
> Refer to the information in Problem 19- 37 except that the transferred-in costs of beginning work in process on May 1 are $33,090 (instead of $33,698). Transferred-in costs for May equal the total cost of good units completed and transferred out in May f
> In the Seafood Company’s packaging department, conversion costs are added evenly during the process, and direct materials are added at the end of the process. Spoiled units are detected upon inspection at the end of the process and are
> Refer to the information in Problem 19-35. Required Do Problem 19-35 using the FIFO method of process costing. (Problem 19-38 explores additional facets of this problem.)
> The Seafood Company is a food-processing firm based in Oslo. It operates under the weighted-average method of process costing and has two departments: clean- ing and packaging. For the cleaning department, conversion costs are added evenly during the pro
> Brown Industries operates several laminate flooring plants. Given the competitive pricing for flooring, Brown’s managers pay close attention to costs. Each plant uses a process- costing system, and at the end of every quarter, each plan
> The Sedona Company is dedicated to making products that meet the needs of customers in a sustainable manner. Sedona is best known for its KLN water bottle, which is a BPA-free, dishwasher-safe, bubbly glass bottle in a soft silicone sleeve. The productio
> The Tiffenex Company manufactures reproductions of expensive earrings. Tiffenex uses the standard-costing method of process costing to account for production of earrings. All materials are added at the beginning of production. The costs and output of ear
> Refer to the information in Problem 18-43. Suppose that Publishers, Inc., uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 18-43 under the FIFO method are that total transferred-in costs o
> Plush Decor, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Italy, Spain, and Singapore. All area rugs are to be sold to retail outlets in Australia for $200 per unit. These retail outlets add their
> Publishers, Inc., has two departments: printing and binding. Each department has one direct-cost category (direct materials) and one indirect-cost category (conversion costs). This problem focuses on the binding department. Books that have undergone the
> Complete Problem 18-41 using the FIFO method of process costing. 2. If you did Problem 18-41, explain any difference between the cost of work completed and transferred out and the cost of ending work-in-process inventory in the assembly department under
> McKnight Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing sys
> Refer to the information in Problem 18-39. Suppose that Larsen Company uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 18-39 under the FIFO method are that total transferred-in costs of b
> Larsen Company, as you know, is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct materials are added when the testing department process is 90
> Do Problem 18-36 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method. 2. Should Larsen’s managers choose the weighted-avera
> Prepare a set of summarized journal entries for all October 2020 transactions affecting Work in Process— Assembly. Set up a T-account for Work in Process—Assembly and post your entries to it.
> Larsen Company manufactures car seats in its San Antonio plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The process-costing system at Larsen Company has a single di
> Third Wave Bakery supplies cupcakes to a national grocery chain for their private label. The cupcakes must meet specific requirements of the grocery chain. Third Wave uses a specific process to produce the cupcakes to the grocery chain’s specifications.
> Iridium Technologies manufactures a variety of flash memory chips at its main foundry in Anam, Korea. Some chips are sold by Iridium to makers of electronic equipment while others are embedded into consumer products for sale under Iridiumâ€
> Broadpull Rugs is holding a 4-week carpet sale at Tryst’s Club, a local ware- house store. Broadpull Rugs plans to sell carpets for $1,500 each. The company will purchase the carpets from a local distributor for $900 each, with the privilege of returning
> The Palm Company produces two products—coconut and coconut water—by a joint process. Joint costs amount to $14,000 per batch of output. Each batch totals 4,000 pounds of coconut and 6,000 pounds of coconut water. Both products are processed further witho
> Cloths of Heaven’s accountant needs to record the information about the joint and byproducts in the general journal but is not sure what the entries should be. The company has hired you as a consultant to help its accountant. Required 1. Show journal en
> Cloths of Heaven purchases old tires and recycles them to produce rubber floor mats and car mats. The company washes, shreds, and molds the recycled tires into sheets. The floor and car mats are cut from these sheets. A small amount of rubber shred remai
> Clover has decided that buttermilk may sell better if it was marketed for baking and sold in pints. This would involve additional packaging at an incremental cost of $0.70 per pint. Each pint could be sold f or $1.50 (note: one quart = two pints). Requir
> The Cocoa Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-chocolate liquor base. These two intermediate products become separately
> The Eastern Oil Company buys crude vegetable oil. Refining this oil results in four products at the splitoff point: A, B, C, and D. Product C is fully processed by the splitoff point. Products A, B, and D can individually be further refined into Super A,
> Tivoli Labs produces a drug used for the treatment of hypertension. The drug is produced in batches. Chemicals costing $60,000 are mixed and heated, creating a reaction; a unique separation process then extracts the drug from the mixture. A batch yields
> Premier Resorts (PR) operates a five-star hotel with a championship golf course. PR has a decentralized management structure, with three divisions: â– Lodging (rooms, conference facilities) â– Food (restaurants and in-ro
> Sportz, Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facil
> Blanchard Company manufactures and sells dresses at a variable cost of $30 each and a fixed cost of x. It can sell 6,000 dresses at a selling price of $50 to earn an operating income of $20,000 or it can sell 3,500 dresses at a selling price of $60 and a
> Office Magic, Inc., sells computer hardware to end consumers. Its most popular model, the CX30 is sold as a “bundle,” which includes three hardware products: a personal computer (PC) tower, a 26-inch monitor, and a col
> Ema Inc. and Gold Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Ema needs the machine for 600 hours and Gold needs it for 400 hours. If each company
> The Milton Company has two products. Product 1 is manufactured entirely in department X. Product 2 is manufactured entirely in department Y. To produce these two products, the Milton Company has two support departments: A (a materials-handling department
> The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. The
> Baker University completed construction of its newest administrative building at the end of 2019. The University’s first employees moved into the building on January 1, 2020. The building consists of office space, common meeting rooms (
> Yang Inc. produces and sells DVDs to businesspeople and students who are plan- ning extended stays in China. It has been very successful with two DVDs: Beginning Mandarin and Conversational Mandarin. It is introducing a third DVD, Reading Chinese Charact
> Henry Jackson, the new controller of United Manufacturing Company (UMC) believes that the company should use the dual rate method of allocating overhead costs of its Materials Management Department to its Machining and Assembly Departments instead of the
> The Robin’s Basket’s senior vice president of marketing prepared her budget at the beginning of the third quarter assuming a 10% market share based on a budgeted market size of 1,000,000 pints in August. However, actual market size in August was 1,250,00
> The Robin’s Basket operates a chain of Italian gelato stores. Although the Robin’s Basket charges customers the same price for all flavors, production costs vary, depending on the type of ingredients. Budgeted and actu
> Space Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Star Research estimated that the total handheld-organizer market would reach sales of 444,00
> Ariba Corporation reaches its breakeven point at $3,200,000 of revenues. At present, it is selling 105,000 units and its variable costs are $30. Fixed manufacturing costs, administrative costs, and marketing costs are $400,000, $250,000, and $150,000, re
> Space Infonautics, Inc., produces handheld Windows CEâ„¢-compatible organizers. Space Infonautics markets three different handheld models: MobilePro is a souped-up version for the executive on the go, MobileCE is a consumer-oriented versi
> Basic Boards makes keyboards that are sold to different customers in two main distribution channels. Recently, the company’s profitability has decreased. Management would like to analyze the profitability of each channel based on the fo
> Rod Manufacturing Company produces metal rods for their customers. Its wholesale division is the focus of our analysis. Management of the company wishes to analyze the profitability of the three key customers in the division and has gathered the followin
> Francisco Bakery makes baked goods for grocery stores and has three divisions: bread, cake, and doughnuts. Each division is run and evaluated separately, but the main headquarters incurs costs that are indirect costs for the divisions. Costs incurred in
> Dusty Rhodes, controller of Richfield Oil Company, is preparing a presentation to senior executives about the performance of its four divisions. Summary data (dollar amounts in millions) related to the four divisions for the most recent year are as follo
> Denise Nelson owns Interiors by Denise, an interior design consulting and window treatment fabrication business. Her business is made up of two different distribution channels, a consulting business in which Denise serves two architecture firms (Attracti
> Antelope Manufacturing makes a component called A1030. This component is manufactured only when ordered by a customer, so Antelope keeps no inventory of A1030. The list price is $115 per unit, but customers who place “largeâ€
> Save Trees Delivery has decided to analyze the profitability of five new customers. It buys recycled paper at £20 per case and sells to retail customers at a list price of £26 per case. Data pertaining to the five customers are
> Sarah Reynolds recently started a job as an administrative assistant in the cost accounting department of Mize Manufacturing. New to the area of cost accounting, Sarah is puzzled by the fact that one of Mize’s manufactured products, SR4
> Wood Creations designs, manufactures, and sells modern wood sculptures. Sally Jensen is an artist for the company. Jensen has spent much of the past month working on the design of an intricate abstract piece. Jim Smoot, product development manager, likes
> Northampton plc, a British-based company, makes superbikes for the U.S. and British markets. For the current year, it estimates fixed costs of £10 million. Its variable costs are £3,000 per motorcycle, and it expects to both produce and sell 25,000 units
> The management of ProDry is considering use of the cost-plus approach rather than the target-cost approach used in 14-35. Refer to the information in 14-35. Required 1. Do you think that it’s a good idea for ProDry to use the cost-plus approach to price
> ProDry is entering the professional hair dryer market. Research shows that their customers wish to pay $310 or less for each dryer. Cost accountants at the manufacturer have collected the following information: Required 1. What is the estimated cost per
> Europa Airways is about to introduce a daily round-trip flight from Madrid, Spain, to Cairo, Egypt, and is determining how to price its round-trip tickets. The market research group at Europa Airways segments the market into business and pleasure travele
> Life Cycle Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Life Cycle at no cost. Life Cycle intends to extract scrap m
> Quick Test Laboratories evaluates the re- action of materials to extreme increases in temperature. Much of the company’s early growth was attribut- able to government contracts, but recent growth has come from expansion into commercial
> Florida Temps, a large labor contractor, supplies contract labor to construction companies. For 2020, Florida Temps has budgeted to supply 82,000 hours of contract labor. Its variable costs are $11 per hour, and its fixed costs are $328,000. Roger Mason,
> A & L Mechanical sells and services plumbing, heating, and air-conditioning systems. A & L’s cost accounting system tracks two cost categories: direct labor and direct materials. A & L uses a time-and-materials pricing syste
> Zoom-o-licious makes candy bars for vending ma- chines and sells them to vendors in cases of 30 bars. Although Zoom-o-licious makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Zoom-o-licious has
> Refer to the data for Problem 13-43. Assume the fabric costs $4.40 per yard in 2020 and $4.55 per yard in 2019. Required 1. Compute Goldstein Company’s total factor productivity (TFP) for 2020. 2. Compare TFP for 2020 with a benchmark TFP for 2019 input
> Goldstein Company manufactures wallets from fabric. In 2019, Goldstein made 2,700,000 wallets using 1,875,000 yards of fabric. In 2019, Goldstein has capacity to make 3,600,000 wallets and incurs a cost of $10,800,000 for this capacity. In 2020, Goldstei
> The Swift Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $456,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $9.50. The average cost of f
> While many reports do recognize the advantage of an out- comes focus in government, often public bodies concentrate on individual outputs. Many agencies are still working on short-term or annual planning and budgeting cycles, and in some cases confusing
> Highland State Company provides cable and Internet services in Barcelona. There are many competitors that provide similar services. Highland State believes that the key to financial success is to offer a quality service at the lowest cost. Highland State
> Monza Pharma (Monza) is a developer and manufacturer of medical drugs, based in Beeland but selling its products all over the world. As a listed company, the overall objective of the company is to maximize the return to shareholders, and it has used retu
> Vic Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers on the market are comparable in terms of features and
> Unearth, Inc., refines petrol and sells it through its own Unearth gas stations. On the basis of market research, Unearth determines that 60% of the overall petrol market consists of “service-oriented customers,” mediu
> Refer to the information for XBlast in Problem 13-34. Required 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2020 based on actual production and actual nu
> Suppose that during 2020, the market for hoverboards increased by 25%. All increases in market share (that is, sales increases greater than 25%) and decreases in the selling price of HOV-X are the result of XBlast’s strategic actions. Required Calculate
> XBlast manufactures an entry-level hoverboard, HOV-X. Pursuing a cost-leadership strategy, the company has tried to improve quality and reduce costs. As a result of the actions taken over the last year, quality has significantly improved in 2020 while re
> The R and J Company manufactures a robotic vacuum called the Baxter. The company sells the vacuum to discount stores throughout the country. The Baxter is a basic robotic vacuum with a remote and is significantly less expensive than the robotic vacuum th
> Susan Smith manages the Wexford plant of Sanchez Manufacturing. A representative of Darnell Engineering approaches Smith about replacing a large piece of manufacturing equipment that Sanchez uses in its process with a more efficient model. While the repr
> Sonix Electronics is a dealer of industrial refrigerator. Its average sell- ing price of an industrial refrigerator is $5,000, which it purchases from the manufacturer for $4,200. Each month, Sonix Electronics pays $52,800 in rent and other office expend
> Mechum River Anglers, a division of Old Dominion Travel, offers two types of guided fishing tours, Basic and Deluxe. Operating income for each tour type in 2020 is as follows: The equipment has a disposal value of zero. Guide wages, supplies, and vehicle
