Question: Describe alternative ways to prorate end-of-

> Distinguish between total direct materials yield and mix variances.

> The 4-variance analysis format shows ‘never a variance’ for two areas. Which two areas? Why?

> Embutidos Vallina SA has two direct-cost categories: direct materials and direct manufacturing labor. Its single indirect-cost category (manufacturing overhead) is allocated on the basis of machine-hours. Numbers taken from the monthly budgets for June 2

> Explain how 4-variance analysis differs from 1-, 2- and 3-variance analyses.

> Assume variable manufacturing overhead is allocated using machine-hours. Give three possible reasons for a €25 000favourable variable-overhead efficiency variance.

> Both financial and non-financial measures are used to control variable manufacturing overhead. Give two examples of each type of measure.

> Budgeting for variable manufacturing overhead requires a knowledge of cost drivers. Name three possible cost drivers.

> What are the steps in planning variable-overhead costs?

> How might the continuous improvement theme be incorporated into the process of setting budgeted costs?

> ‘There are many costs associated with acquiring and using materials over and above materials purchase costs.’ Give three examples.

> ‘Performance may be both effective and efficient, but either condition can occur without the other.’ Do you agree? Give an example of effectiveness. Give an example of efficiency

> What is the key question in deciding which variances should be calculated and analyzed?

> What is a benchmark? Give an example of three types of benchmark of interest to managers.

> A toy manufacturer that specializes in making fad items has just developed a £50 000 molding machine for producing a special toy. The machine has been used to produce only one unit so far. The company will depreciate the £50 000 initial machine investmen

> Outline three criticisms of traditional budgeting and a related proposal for change.

> Define responsibility accounting.

> Cite three benefits companies report from using an activity-based budgeting approach.

> ‘Budgets are wonderful vehicles for communication.’ Comment.

> ‘Discounted cash flow techniques are relevant only to for-profit organizations.’ Do you agree? Explain.

> What approaches might be used to recognize risk in capital budgeting?

> Corporation tax only plays a role in capital budgeting because of capital allowances.’ Do you agree? Explain.

> How is the accounting rate of return method different from the payback method?

> How is an activity-based approach different from a traditional approach to designing a job-costing system?

> When explaining a motor vehicle market-share turnaround, a car manufacturer stated: ‘We listened to what our customers wanted and acted on what they said. Good things happen when you pay attention to the boss.’ How might management accountants apply the

> Assume that six projects, A–F in the table that follows, have been submitted for inclusion in the coming year’s budget for capital expenditures: Required 1. Calculate the internal rates of return (to the nearest half

> Peter Drucker, a noted business observer, made the following comment in an address to management accountants: ‘I am not saying that you do not need a “cop on the beat”, you do . . . But your great challenge is to get across to your associates your abilit

> Explain the meaning of cost management.

> The accounting system should provide information for five broad purposes. Describe them.

> Describe two consequences of using direct manufacturing labour-hours as an allocation base in a machine-paced work environment.

> Why is the distinction between labour-paced and machine-paced operations important when selecting indirect-cost allocation bases?

> Different costs for different purposes means that a cost allocated for one purpose is not allocated for another purpose. Do you agree?

> How do cost–benefit considerations affect choices by a company about the allocation of indirect costs to products, services or customers?

> How can an individual cost item, such as the salary of a plant security guard, be both a direct cost and an indirect cost at the same time?

> Why might the classification of a cost as a direct cost or an indirect cost of a cost object change over time?

> Previous department costs are those incurred in the preceding accounting period.’ Do you agree? Explain.

> The manager of the Robin Hood Company is considering two investment projects that are mutually exclusive. The after-tax required rate of return of this company is 10%, and the anticipated cash flows are as follows: Required 1. Calculate the internal ra

> Why should the accountant distinguish between transferred-in costs and additional direct material costs for a particular department?

> What problems might arise in estimating the degree of completion of an aircraft blade in a machining shop?

> Changes in the way managers operate require rethinking the design and operation of management accounting systems. Describe five themes that are affecting both the way managers operate and developments in management accounting.

> A leading management observer stated that the most successful companies are those which have an obsession for their customers. Is this statement pertinent to management accountants? Explain.

> Which costs are considered direct? Indirect? Give an example of each.

> What are the three major categories of the inventorial costs of a manufactured product?

> What is a cost driver? Give one example for each area in the value chain.

> Give three factors that will affect the classification of a cost as direct or indirect.

> Describe how a given cost item can be both a direct cost and an indirect cost.

> Why might an advertising agency use job costing for an advertising campaign for Pepsi while a bank uses process costing for the cost of current account withdrawals?

> AalesundFotballklubb is a Norwegian football team with a long tradition of winning. However, the last three years have been traumatic. The team has not won a major championship, and attendance at games has dropped considerably. NorskFiskevÃ&brvbar

> In the production of services, direct materials are usually the major cost.’ Is this quote accurate? Explain.

> Why might a company prefer the adjusted allocation rate approach over a proration approach to under- or over allocated indirect costs?

> Give two reasons for under- or over allocation of indirect costs at the end of an accounting period.

> Describe the role of a manufacturing overhead allocation base in job costing.

> What are two major goals of a job-costing system?

> Compaq Computer incurs the following costs: a. Electricity costs for the plant assembling the Presario computer line of products. b. Transportation costs for shipping Presario software to a retail chain. c. Payment to David Kelley Designs for design of t

> Zimmermann GmbH is an international consulting firm. Its annual budget includes the following for each category of professional labor: Required 1. Calculate the budgeted direct-cost rate for professional labor (salary and fringe benefits) per hour for (

> A student association has hired a music group for a graduation party. The cost will be a fixed amount of €40 000. Required 1. Suppose 500 people attend the party. What will be the total cost of the music group? The unit cost per person? 2. Suppose 2000

> Olympiakos SA provides outsourcing services and advice to both government and corporate clients. For costing purposes, Olympiakos classifies its departments into two support departments The Administrative/Human Resource support percentages are based on h

> Meer has been offered a special-purpose metal-cutting machine for €110 000. The machine is expected to have a useful life of eight years with a terminal disposal value of €30 000. Savings in cash-operating costs are expected to be €25 000 per year. Howev

> Catherine MacDougall, a third-year undergraduate student at a university near Edinburgh, received an invitation to visit a prospective employer in Nice. A few days later, she received an invitation from a prospective employer in Copenhagen. She decided t

> Rolf, Ilse and Ulrich are members of the Frankfurt Fire Brigade. They share an apartment that has a lounge with the latest wide-screen TV. Ulrich owns the apartment, its furniture and the wide-screen TV. He can subscribe to a cable television company tha

> The Fredensborg power plant that services all manufacturing departments of Fabri-Danmark AS has a budget for the coming year. This budget has been expressed in the following terms on a monthly basis: The expected monthly costs for operating the departmen

> Brian McGarrigle went to Les Arcs for his annual winter vacation. Unfortunately, he suffered a broken ankle while skiing and had to spend two days at the Hôpital de Grasse. McGarrigle’s insurance company received a â

> Jyvaskyla Oyo is a retail chain of supermarkets. For many years, it has used gross margin (selling price minus cost of goods sold) to guide it in deciding on which products to emphasize or de-emphasize. And, for many years, it has not allocated any costs

> A computer-service centre of Madrid University serves two major users, the department of Engineering and the department of Humanities and Sciences (H&S). Required 1. When the computer equipment was initially installed, the procedure for cost allocation

> Koala Ltd has only two divisions: A and B. The following data apply to Division A. Required 1. Prepare a segment report for Division A that differentiates between the performance of the manager and the performance of the division. 2. Division Bâ&#

> Euro-Medi Plc manufactures a wide range of medical instruments. Two testing instruments (101 and 201) are produced at its highly automated Limerick plant. Data for December 2018 are as follows: Manufacturing overhead is allocated to each instrument produ

> Germinal etAssociés provides tax advice to multinational firms. Germinal charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct professional costs billed). The three professionals

> Refer to the information in Exercise 4.17. Suppose Telemark-Kjemi determines standard costs of NKr 1050 per (equivalent) tone of transferred-in costs, NOK 390 per (equivalent) tone of direct materials and NOK 640 per (equivalent) tone of conversion costs

> Carmelo, SA, is planning to buy equipment costing €120 000 to improve its materials handling system. The equipment is expected to save €40 000 in cash-operating costs per year. Its estimated useful life is six years, and it will have zero terminal dispos

> Refer to the information in Exercise 4.17. Suppose that Telemark-Kjemi uses the FIFO method instead of the weighted-average method in all its departments. The only changes under the FIFO method are that the total transferred-in cost of opening work in pr

> Telemark-Kjemi AS manufactures an industrial solvent in two departments – mixing and cooking. This question focuses on the Cooking Department. During June 2018, 90 tones of solvent were completed and transferred out from the Cooking Dep

> Duddon Ltd makes a product that has to pass through two manufacturing processes, I and II. All the material is input at the start of process I. No losses occur in process I but there is a normal loss in process II equal to 7% of the input into that proce

> Consider the following data for the satellite Assembly Division of Aéro-France: Required 1. Calculate equivalent units of work done in the current period for direct materials and conversion costs. Show physical units in the first column. 2.

> 1. Using the FIFO process-costing method, do the requirements of Exercise 4.24. The transferred in costs from the Forming Department for the April opening work in progress are €17 520. During April, the costs transferred in are €103 566. All other data a

> Sligo Toys Ltd manufactures wooden toy figures at its Ballinode plant. It has two departments – the Forming Department and the Finishing Department. (Exercises 4.22 and 4.23 focused on the Forming Department.) Consider now the Finishing

> Do Exercise 4.22 (1) using FIFO and four decimal places for unit costs. Explain any difference between the cost of work completed and transferred out and cost of closing work in progress in the Forming Department under the weighted-average method and the

> Sligo Toys Ltd manufactures one type of wooden toy figure. It buys wood as its direct material for the Forming Department of its Ballinode plant. The toys are transferred to the Finishing Department, where they are hand-shaped and metal is added to them.

> Do Exercise 4.20 using the FIFO method of process costing. Explain any difference between the cost of work completed and transferred out and cost of closing work in progress in the Assembly Department under the weighted-average method and the FIFO method

> Euro-Défense is a manufacturer of military equipment. Its Tourcoing plant manufactures the Déca-Pite missile under contract to the French government and friendly countries. All Déca-Pites go through an identical man

> Euro-Jouets SNC sells neon-coated ‘Feu-Follet’ cars to several local toy stores. It has the capacity to make 250 000 of these units per year, but during the year ending 31 December 2018, it made and sold 130 000 cars t

> Europe Electronics SNC manufactures microchips in large quantities. Each microchip undergoes assembly and testing. The total assembly costs during January 2018 were: Required 1. Assume there was no opening stock on 1 January 2018. During January, 10 000

> For each journal entry in your answer to Exercise 3.18, (a) indicate the source document that would most probably authorize the entry and (b) give a description of the entry into the subsidiary ledgers, if any entry needs to be made there.

> The Editions Sorbonne is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the Editions Sorbonne were an outside business enterprise. The Editions Sorbonne also publishes and maintains

> Eldorado SA is a management consulting firm. Its job-costing system has a single direct-cost category (consulting labor) and a single indirect-cost pool (consulting support). Consulting support is allocated to individual jobs using actual consulting labo

> Tricheur et Associés is a recently formed law partnership. Jean Racine, the managing partner of Tricheur et Associés, has just finished a tense telephone call with Blaise Rascal, president of Morges-Guyère, Sarl. Ras

> Ti-Enne Srl uses a normal costing system with a single manufacturing overhead cost pool and machine-hours as the allocation base. The following data are for 2019: Machine-hours data and the closing balances (before proration of under allocated or over al

> Consider the following selected cost data for Schwarz metal GmbH for 2019. Schwarz metal’s job-costing system has a single manufacturing overhead cost pool (allocated using a budgeted rate based on actual machine-hours). Any amount of u

> Budenmayer BV is a small machine shop that uses highly skilled labor and a job-costing system (using normal costing). The total debits and credits in certain accounts just before year-end are as follows: All materials purchased are for direct materials.

> Giannacopoulos SA uses a job-costing system at its Korinthos plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct cost categories (direct materials and direct manufacturing labor) and two manufactu

> An auditor for the Inland Revenue is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by letters A to D (figures are assumed to be in £000).

> ST operates in a highly competitive market and is considering introducing a new product to expand its current range. The new product will require the purchase of a specialized machine costing £825 000. The machine has a useful life of four y

> Pagnol-Carrelages SNC is a small distributor of marble tiles. Pagnol-Carrelages identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and reports the following details for 2018: Pagnol-Carrelages buys 250

> Required Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended 31 December 2018. (For additional questions regarding these facts, see the next problem.)

> Calculate cost of goods manufactured and cost of goods sold from the following account balances relating to 2018 (in € millions):

> A Toyota analyst is preparing a presentation on cost drivers. Unfortunately, both the list of its business function areas and the accompanying list of representative cost drivers are accidentally randomized. The two lists now on the computer screen are a

> Crescendo Srl operates a large store in Milan. The store has both a film (video/DVDs) section and a musical (compact discs and tapes) section. Crescendo reports revenues for the film section separately from the musical section. Required Classify each of

> Presta-Serviços SA is a marketing research firm that organises focus groups for consumer product companies. Each focus group has eight individuals who are paid €9000 per session to provide comments on new products. These foc

> Weltferien AG markets vacation packages to Tenerife from Dresden. The package includes a round-trip flight on Saxon-Air. Weltferien pays Saxon-Air €60 000 for each round-trip flight. The maximum load on a flight is 300 passengers. Required 1. What is th

> Overtoom International Nederland BV manufactures and sells metal shelving. It began operations on 1 January 2018. Costs incurred for 2018 (V stands for variable; F stands for fixed) are as follows: Variable manufacturing costs are variable with respect t

> Aran Sweaters Ltd designs and markets wool jumpers to many retailers and distributors around Europe. Its corporate headquarters are situated in Dublin, Ireland. Manufacturing is done by a subcontractor (O’Neil’s Clothing Ltd) on Achill Island. The local

> A distraught employee, Guy Pirault-Manne, put a torch to a manufacturing plant on a blustery day, 26 February 2018. The resulting blaze completely destroyed the plant and its contents. Fortunately, certain accounting records were kept in another building