Describe a just-in-time inventory system, including its advantages and disadvantages, if any.
> Briefly describe absorption costing.
> Why do the analyses presented in this chapter focus on future costs rather than on past costs? Explain.
> Why might employee morale be a factor in deciding whether to replace existing equipment with new equipment?
> Why might management be reluctant to accept a special order for its products at less than the normal price even though such an order would be legal and profitable?
> Suppose that a company is considering the purchase of new equipment. The old equipment will be sold when the new equipment is acquired. How should the proceeds from the sale of the old equipment be considered in the analysis of the effects of the purchas
> Suggest some non-measurable data that might be considered in deciding to replace existing equipment with new equipment.
> Which of the following items are subtracted from net sales to arrive at contribution margin? a. fixed administrative expenses b. variable administrative expenses c. fixed manufacturing costs d. variable cost of goods sold e. fixed selling expenses f. var
> What is the advantage of using a flexible budget?
> Home Gifts has three sales departments: dishes, clothing, and paper products. The store’s condensed income statement for the year ended December 31, 20X1, is shown below: The proprietor asked the auditor if the Clothing and/or Paper Products departments
> What is a flexible budget?
> What is included in a budget performance report?
> What is a budget?
> What is the relevant range of activity as used in budgeting?
> Briefly explain the high-low point method for analyzing semivariable costs.
> Explain how variable costs per unit change as the level of activity changes.
> What are semivariable costs?
> What are the possible causes of overhead variances?
> What are the possible causes of labor variances?
> What two variances make up the total labor variance?
> Knotting Company was formed and began business on January 1, 2022, when J. T. Wood transferred merchandise inventory with a value of $60,000, cash of $55,000, accounts receivable of $60,000, and accounts payable of $35,000. Common stock with a par value
> Who provides information about wage rates in setting labor standards?
> What are the possible causes of unfavorable materials variances?
> Which manager would more likely be responsible for materials quantity variances?
> What does the price variance for materials show?
> Explain how to compute the quantity variance for materials.
> How are standards set for materials?
> What are standard costs?
> Define the term “fixed cost.”
> How does accounting for the raw materials inventory and the finished goods inventory differ under the process cost accounting system and the job order cost accounting system?
> Why might the process cost accounting system be unsatisfactory when several different products are being manufactured in the same department?
> Charles Alan, the bookkeeper for Roswell Company, asks for your help in identifying whether the following transactions should be reported on the corporation’s statement of cash flows. Prepare a list for Alan indicating whether or not each transaction sho
> Why is it not necessary to use an overhead application rate when the process cost accounting system is employed?
> Will the amount shown as a department’s ending inventory of work in process on the cost of production report agree with the work in process for the department in the general ledger after adjusting and closing entries have been posted? Explain.
> Will the same equivalent units always be used for materials, labor, and overhead? Explain.
> How is the ending work in process inventory computed in a process cost accounting system?
> In a cost of production report, what items are found in the Costs to Be Accounted For section?
> What are equivalent units of production?
> Explain how to compute the equivalent production for labor when there is a beginning work in process inventory for the period, assuming that the average cost method is used.
> Explain what is meant by “the average method” of accounting for beginning work in process inventories in a process cost system.
> Why are job order cost sheets not used in the process cost accounting system?
> What account is debited and what account is credited when manufacturing overhead is applied?
> Charles Allen, the accountant for Sue Bee Inc., was asked to make a presentation to the board of directors concerning the corporation’s year-end financial position. While flying to the meeting on Saturday morning, Allen checked the papers in his briefcas
> Name the sources of postings to the job order cost sheet.
> What is idle time? How is the cost of idle time usually accounted for?
> What entry is made for indirect materials issued from the storeroom?
> What does the Raw Materials Inventory account show?
> What is a materials requisition?
> When direct materials are issued from the storeroom, what entries are made in the subsidiary records?
> What information does a job order cost sheet contain?
> Discuss how costs flow through the Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory accounts to cost of goods sold.
> Name three types of businesses that would use a job order cost accounting system.
> Doors, Inc.’s condensed income statement and balance sheet for the years 2022 and 2021 follow. INSTRUCTIONS Using the following additional information, fill in the missing values: 1. Accounts Receivable increased 50 percent from 2021 to
> What is a time ticket? What is its relationship to an order cost sheet?
> What account is debited and what account is credited when completed goods are transferred from the factory floor to the finished goods storeroom?
> Why is an overhead application rate used?
> Name five common manufacturing overhead costs.
> What is a perpetual inventory?
> Why does the figure for total manufacturing cost not equal the cost of goods manufactured?
> What is manufacturing overhead?
> How would the wages of the employee who issues materials from the factory storeroom be classified?
> It is possible that one company might consider an item, such as glue, as one of its direct materials, while another company with identical manufacturing processes might classify the item as one of its indirect materials. Why?
> What is indirect labor?
> On December 31, 2022, Express, Inc., has $1,000,000 of 6 percent, 10-year bonds outstanding. These bonds were issued on January 1, 2016, at par value. Interest rates have dropped to 5 percent, and the president of the company is considering buying back t
> What procedure is used on the statement of cost of goods manufactured to arrive at the cost of raw materials used?
> What is the relationship between the cost of goods manufactured and the income statement?
> Name the three inventory accounts found in the chart of accounts of a manufacturing business and explain each one.
> Explain how a manufacturing business records reversing entries and why the reversing entries are made.
> How is the cost of goods sold determined for a manufacturing business?
> Give three examples not given in the chapter of indirect labor for a manufacturing firm.
> Describe the flow of costs through the inventory accounts of a manufacturing firm.
> Is the statement of cost of goods manufactured prepared before or after the income statement? Explain.
> Are the financial statements prepared after the closing entries have been posted? Explain.
> What is the source of the information for preparing the journal entry to close manufacturing cost accounts to the Manufacturing Summary account?
> On December 31, 2022, the equity accounts of Book Creations, Inc., contained the following balances: Common stock ($10 par, 100,000 shares authorized) 50,000 shares issued and outstanding $500,000 Retained earnings $500,000 For the year 2022, the corpor
> Give some examples of manufacturing overhead items.
> How is the work in process inventory determined?
> How do the accounting problems of a manufacturing business differ from those of a merchandising business?
> Suggest a logical basis for allocating these indirect expenses: housekeeping services; office equipment repairs; general institutional advertising.
> Explain the difference between semidirect and indirect expenses.
> How does a departmentalized income statement differ from one that is not departmentalized?
> How is contribution margin computed?
> Why would a retail operation departmentalize its records?
> Is departmental accounting a form of responsibility accounting? Explain.
> Briefly define responsibility accounting.
> EZLife Inc. has the following stockholders’ equity on June 30, 20X1: Common Stock, $15 par (200,000 shares issued) $3,000,000 Paid-in Capital in Excess of Par 2,000,000 Retained Earnings 4,000,000 Total Stockholders’ Equity $9,000,000 For the past three
> 1. How might a poor set of recording procedures affect the flow of information to management? 2. Why should management be concerned about the efficiency of a firm’s procedures for journalizing and posting transactions? 3. Why should man
> Why does managerial accounting focus on the future?
> Why is interest expense not allocated to departments?
> How does managerial accounting differ from financial accounting?
> A corporation’s income statement shows a gain of $8,000 on the sale of plant and equipment. In computing the net cash provided by operating activities, how would this $8,000 be treated?
> Is an investment in a corporate bond maturing 180 days after the purchase date a cash equivalent? Explain.
> What are cash and cash equivalents?
> Give two examples of cash inflows from financing activities.
> Give two examples of cash outflows from financing activities.
> Give two examples of cash outflows from investing activities.
> Give two examples of cash inflows from investing activities.
> The Stockholders’ Equity section of the balance sheets for Ztop Corporation on December 31, 20X0, and December 31, 20X1, along with other selected account balances on the two dates is provided below. (Certain information is missing from
> Where is information obtained for preparing the statement of cash flows?
> Identify in which of the three types of activities on the statement of cash flows the following transactions appear. Indicate whether each is a cash inflow or outflow: a. Cash dividends paid. b. Cash interest payment received. c. Cash on notes receivable
> Why must noncash investing and financing activities be disclosed on the statement of cash flows?
