Question: Distinguish between ( a ) A variable cost, (

> The questions in this exercise are based on Dell, Inc. To answer the questions, you will need to download Dell’s 2005 Form 10-K by going to www.sec.gov/edgar/searchedgar/companysearch.html. Input CIK code 826083 and hit enter. In the gray box on the righ

> The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee has assembled the following expected costs for the event: The committee members would like to charge $35 per person for the evening’s activities

> Define the following: (a) Direct materials, (b) Indirect materials, (c) Direct labour, (d) Indirect labour, and (e) Manufacturing overhead.

> What are the major differences between financial and managerial accounting?

> Describe the three major activities of a manager.

> Define the following terms: differential cost, opportunity cost, and sunk cost.

> Mauro Products distributes a single product, a woven basket whose selling price is $15 and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,200. Required: 1. Solve for the company’s break-even point in unit sales using th

> Is it possible for costs such as salaries or depreciation to end up as assets on the balance sheet? Explain.

> Why are product costs sometimes called inventoriable costs? Describe the flow of such costs in a manufacturing company from the point of incurrence until they finally become expenses on the income statement.

> Describe the schedule of cost of goods manufactured. How does it tie into the income statement?

> Describe how the income statement of a manufacturing company differs from the income statement of a merchandising company.

> Explain the difference between a product cost and a period cost.

> Outback Outfitters sells recreational equipment. One of the company’s products, a small camp stove, sells for $50 per unit. Variable expenses are $32 per stove, and fixed expenses associated with the stove total $108,000 per month. Required: 1. Compute t

> You have just been hired by Ogden Company to fill a new position that was created in response to rapid growth in sales. It is your responsibility to coordinate shipments of finished goods from the factory to distribution warehouses located in various par

> Swift Company was organized on March 1 of the current year. After five months of start-up losses, management had expected to earn a profit during August. Management was disappointed, however, when the income statement for August also showed a loss. Augus

> Various costs associated with the operation of factories are given below: 1. Electricity to run production equipment. 2. Rent on a factory building. 3. Cloth used to make drapes. 4. Production superintendent’s salary. 5. Wages of labour

> Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building. The company has received a rental income of $30,000 pe

> Listed below are costs found in various organizations. 1. Property taxes, factory. 2. Boxes used for packaging detergent produced by the company. 3. Salespersons’ commissions. 4. Supervisor’s salary, factory. 5. Deprec

> Lin Corporation has a single product whose selling price is $120 and whose variable expense is $80 per unit. The company’s monthly fixed expense is $50,000. Required: 1. Using the equation method, solve for the unit sales that are required to earn a targ

> Supply the missing data in the following cases. Each case is independent of the others. Case 1 3 Schedule of Cost of Goods Manufactured Direct materials $4,500 $6.000 $5,000 $3,000 $4,000 Direct labor. Manufacturing overhead Total manufacturing costs

> Visic Corporation, a manufacturing company, produces a single product. The following information has been taken from the company’s production, sales, and cost records for the just completed year. The finished goods inventory is being

> M. K. Gallant is president of Kranbrack Corporation, a company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company’s earnings would grow by 20% this year

> Selected account balances for the year ended December 31 are provided below for Superior Company: Inventory balances at the beginning and end of the year were as follows: The total manufacturing costs for the year were $683,000; the goods available for

> Magic Realm, Inc., has developed a new fantasy board game. The company sold 15,000 games last year at a selling price of $20 per game. Fixed costs associated with the game total $182,000 per year, and variable costs are $6 per game. Production of the gam

> Staci Valek began dabbling in pottery several years ago as a hobby. Her work is quite creative, and it has been so popular with friends and others that she has decided to quit her job with an aerospace company and manufacture pottery full time. The salar

> The Dorilane Company specializes in producing a set of wood patio furniture consisting of a table and four chairs. The set enjoys great popularity, and the company has ample orders to keep production going at its full capacity of 2,000 sets per year. Ann

> Various cost and sales data for Meriwell Company for the just completed year appear in the worksheet below: Of the $105,000 of manufacturing overhead, $15,000 is variable and $90,000 is fixed. Required: 1. Prepare a schedule of cost of goods manufacture

> Northwest Hospital is a full-service hospital that provides everything from major surgery and emergency room care to outpatient clinics. Required: For each cost incurred at Northwest Hospital, indicate whether it would most likely be a direct cost or an

> Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a

> The Devon Motor Company produces motorcycles. During April, the company purchased 8,000 batteries at a cost of $10 per battery. Devon withdrew 7,600 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in motorcycle

> Data for Hermann Corporation are shown below: Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. Required: 1. The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthl

> The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed: Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare the cost of goods sold section of Mason Companyâ&#1

> The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are

> “I was sure that when our battery hit the market it would be an instant success,” said Roger Strong, founder and president of Solar Technology, Inc. “But just look at the gusher of red ink for the fir

> Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. ( Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, an

> Refer to the data for Lakeshore Hotel in Exercise 5–8. Exercise 5–8 Required: 1. Prepare a scatter graph using the data from Exercise 5–8. Plot cost on the vertical axis and activity on the horizontal

> Hector P. Wastrel, a careless employee, left some combustible materials near an open flame in Salter Company’s plant. The resulting explosion and fi re destroyed the entire plant and administrative offices. Justin Quick, the company’s controller, and Con

> Mercury, Inc., produces cell phones at its plant in Texas. In recent years, the company’s market share has been eroded by stiff competition from overseas. Price and product quality are the two key areas in which companies compete in thi

> Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 k

> In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease th

> A number of terms relating to the cost of quality and quality management are listed below: Required: Choose the term or terms that most appropriately complete the following statements. The terms can be used more than once and a blank can hold more than

> Paul Clark is employed by Aerotech Products where he assembles a component part for one of the company’s product lines. He is paid $14 per hour for regular time and time and a half (i.e., $21 per hour) for all work in excess of 40 hours per week. Require

> Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000. Required: 1. What is the company’s contribution margin (CM) ratio? 2. Estimate the change in th

> Several days ago you took your TV set into a shop to have some repair work done. When you later picked up the set, the bill showed a $75 charge for labour. This charge represented two hours of service time—$30 for the first hour and $45 for the second. W

> A number of activities that are a part of a company’s quality control system are listed below: Required: 1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal co

> Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company’s fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year. Required: 1. What are the v

> Mark Hansen is employed by Eastern Products and works on the company’s assembly line. Mark’s basic wage rate is $20 per hour. The company’s union contract states that employees are to be paid time and a half (i.e., $30 per hour) for any work in excess of

> The questions in this problem are based on Blue Nile, Inc. To answer the questions, you will need to download Blue Nile’s 2004 Form 10-K at www.sec.gov/edgar/searchedgar/company search.html. Once at this website, input CIK code 1091171

> Define the following terms: ( a ) Cost behaviour and ( b ) Relevant range.

> What is the difference between a contribution approach income statement and a traditional approach income statement?

> Distinguish between discretionary fixed costs and committed fixed costs.

> Distinguish between ( a ) A variable cost, ( b ) A mixed cost, and ( c ) A step-variable cost. Plot the three costs on a graph, with activity plotted horizontally and cost plotted vertically.

> Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months fol

> Jaffre Enterprises distributes a single product whose selling price is $16 and whose variable expense is $11 per unit. The company’s fixed expense is $16,000 per month. Required: 1. Prepare a profit graph for the company up to a sales level of 4,000 unit

> Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its

> The following data relating to units shipped and total shipping expense have been assembled by Archer Company, a wholesaler of large, custom-built air-conditioning units for commercial buildings: Required: 1. Using the high-low method, estimate a cost f

> Nova Company’s total overhead cost at various levels of activity are presented below: Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 ma

> Amfac Company manufactures a single product. The company keeps careful records of manufacturing activities from which the following information has been extracted: The company’s manufacturing overhead cost consists of both variable and

> Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead cost

> Pleasant View Hospital of British Columbia has just hired a new chief administrator who is anxious to employ sound management and planning techniques in the business affairs of the hospital. Accordingly, she has directed her assistant to summarize the co

> The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel’s busin

> Oki Products, Ltd., has observed the following processing costs at various levels of activity over the last 15 months: Required: 1. Prepare a scatter graph using the above data. Plot cost on the vertical axis and activity on the horizontal axis. Fit a l

> Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22. Required: 1. Fill in the following table with your estimate

> The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company’s Ski Department for a recent quarter is presented below: Skis sell, on the average, for $750 per pair. Variable selling expens

> Angora Wraps of Pendleton, Oregon, makes fi ne sweaters out of pure angora wool. The business is seasonal, with the largest demand during the fall, the winter, and Christmas holidays. The company must increase production each summer to meet estimated dem

> Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez’s business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times. One

> Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Required: 1. What is the monthly break-even point in units sold and in sales dollars? 2. Without resorting to computations, what is the

> St. Mark’s Hospital contains 450 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital’s beds are occupied by patients. At this level of occupancy, the hospital’s operating costs are $32 per occupied bed per d

> 1. Referring to the data for Blue Nile in Research and Application 5–20 and the data on net sales available on the company’s website, estimate the variable and fixed components of the company’s quarterly selling, general, and administrative expense. Expr

> Professor John Morton has just been appointed chairperson of the Finance Department at Westland University. In reviewing the department’s cost records, Professor Morton has found the following total cost associated with Finance 101 over

> Refer to the data for Pleasant View Hospital in Problem 5–14. Data from Problem 5–14. Required: 1. Using the least-squares regression method, estimate a cost formula for utilities. (Round the variable cost to the neare

> Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare suc

> Refer to the data for Archer Company in Exercise 5–6. Data from Exercise 5–6. Required: 1. Using the least-squares regression method, estimate a cost formula for shipping expense. 2. If you also completed Exercise 5&a

> George Caloz & Frères, located in Grenchen, Switzerland, makes prestige high-end custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has obse

> Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the behaviour of the company’s costs. One of those costs is the cost of washing

> Hokuriku-Seika Co., Ltd., of Yokohama, Japan, is a subcontractor to local manufacturing companies. The company specializes in precision metal cutting using focused high-pressure water jets and high-energy lasers. The company has a traditional job-order c

> In what ways are job-order and process costing similar?

> Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Pro

> The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were: Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is c

> Miller Company’s most recent contribution format income statement is shown below: Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): 1. The number of

> Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May: The company uses the weighted-average method. Required:

> Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Depa

> Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments: Refining and Blending. Raw materials are introduced at various points in the Refining Department. The follo

> Data concerning a recent period’s activity in the Prep Department, the fi rst processing department in a company that uses process costing, appear below: A total of 20,100 units were completed and transferred to the next processing dep

> Superior Micro Products uses the weighted-average method in its process costing system. Data for the Assembly Department for May appear below: Required: 1. Compute the cost per equivalent unit for materials, for labour, and for overhead. 2. Compute the

> Clonex Labs, Inc., uses a process costing system. The following data are available for one department for October: The department started 175,000 units into production during the month and transferred 190,000 completed units to the next department. Requ

> Quality Brick Company produces bricks in two processing departments—Molding and Firing. Information relating to the company’s operations in March follows: a. Raw materials were issued for use in production: Molding Department, $23,000; and Firing Departm

> Alaskan Fisheries, Inc., processes salmon for various distributors. Two departments are involved— Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below: A total of

> Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,000 units and transferred them to the next department. The cost of beginning inventory an

> Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a commission of 15% of

> Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below: Required: 1.

> Roberts Corporation uses a process cost system. The records for the month of May show the following information: Required Prepare a cost of production summary for each department. Production Report Cutting Grinding Units in process, May 1 5,000 10,

> Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows the following: The products, Num 1 and Num 2, are sold in two territories, North and South, as follows: The common fixed expenses are traceable to

> Define differential analysis, differential revenue, differential cost, and differential income.

> Limerick Enterprises, Inc., is considering building a manufacturing plant in Dublin. Predicting sales of 100,000 units, Limerick estimates the following expenses: An Irish firm that specializes in marketing will be engaged to sell the manufactured produ

> The production of a new product required Mirage Manufacturing Company to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales—24,000 units Selling expenses are expecte

> 1. For E5-10, prepare a cost of production summary for the month for Blending. 2. Prepare a journal entry to transfer the completed units from Blending to Finished Goods. In E5-10 Cost in Mixing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Using the data, determine: 1. The cost of goods received from Shaping during the month. 2. The production costs incurred in Forming during the month. 3. The cost of goods completed and transferred to Finishing during the month. Work in Process-Formi

> If the prior department’s transfers from two different periods have different unit costs each month, how are they treated for purposes of the cost of production summary for the department to which they were transferred?

> What is the difference between the contribution margin ratio and the margin of safety ratio?