Question: Explain how cost accounting supports value creation

> Refer to the information in Exercise 5-36 for Fiske Corporation. Required a. Use the high-low method to estimate the fixed and variable portions of factory costs based on machine-hours. b. Managers expect the plant to operate at 21,000 machine-hours next

> Fiske Corporation manufactures a popular regional brand of kitchen utensils. The design and variety have been fairly constant over the last three years. The managers at Fiske are planning for some changes in the product line next year, but first they wan

> Witherell Musum of Technology (WMT) provides the following data on the costs of maintenance and the number of visitors for the last four quarters: Required a. Use the high-low method to estimate the fixed cost of quarterly staffing and the staffing cost

> Kirby Fasteners supplies the electronics industry with accessories for cases, disc enclosures, and so on. Below are the costs and volumes for the past six months at its Plant #6: Required a. Use the high-low method to estimate the monthly fixed cost of p

> Leach Finishing makes various metal fittings for the construction industry. Three of the fittings, models X-12, X-24, and X-30, require grinding on a patented machine of which Leach has only one. The cost-of-production information for the three products

> How does a value income statement differ from a gross margin income statement? From a contribution margin income statement?

> Brandon Technology makes two models of a specialized sensor for the aerospace industry. The difference in the two models relates to the required accuracy of the sensor. The Standard model is used for most normal operations while the High-Performance mode

> Wing Sporting Goods (WSG) is a small company that makes two models of a metal baseball bat— Sport and Collegiate. Both models are produced on a single machine. The price and costs of the two models are The one machine that is used to pr

> ASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity, which consists of locals who meet the criteria requi

> Refer to the information in Exercise 4-42. A new customer has approached Rathbone Industries and asked if it could make an instrument for the customer’s medical testing equipment. If it chose to take on this work, Rathbone would not be

> Lantz Family Restaurant operates in a suburb of a major city. Recently, the managers at Lantz have noticed an increase in the use of delivery apps such as Grubhub and DoorDash by their customers. The average fee paid by Lantz for this service currently i

> Refer to the facts in Exercise 4-39. Harbortown management is concerned about future changes in material prices arising from volatility in the commodities market. Required At what unit costs for materials would HMP be just indifferent between making and

> Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding, Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent ca

> Short Bakers makes baked goods for catered events and for sale at local grocery stores. The owner of Short Bakers believes that a new type of breakfast pastry would sell well for a price of $9 per dozen. Short estimates unit materials costs to be $4.25 f

> Mather, Inc. makes and sells enclosures for external hard drives. Mather management believes that a new model of enclosure made out of a hard plastic would sell well at a price of $17.00. Labor costs are estimated at $5.30 per unit and overhead costs wou

> Refer to the data for Nardin Outfitters in Exercise 4-27. Suppose Nardin’s capacity is limited to 5,300 per year. Chipman Outdoor Center will not accept any quantity other than the 500 tents in the order. Required a. What is the impact

> Why is it important to incorporate learning into cost estimates? Is learning only important in manufacturing?

> Refer to the data for Rowe Tool and Die (RTD) in Exercise 4-26. Suppose RTD’s capacity is limited to 50,000 units per quarter. Endicott will not accept any quantity other than the 10,000 units in the order. Required a. What impact would

> Schweizer Products produces smart thermostats for home heating, ventilation, and air-conditioning (HVAC) systems and markets them to vendors who sell them under their own label. The cost of one of its thermostats follows. French Road DIY Stores, a chain

> Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.50 each for its new specialty tablet designed for healthcare wor

> Dwight Furniture makes desks specially designed for small spaces, such as studio apartments and extended-stay hotels. Each desk sells for $110 (without chair). The cost of each desk follows: The local university is building a new dorm and asked Dwight fo

> Parkview Fish Tacos sells tacos for $4.50 each. The cost of each taco follows: One of Parkview’s regular customers asked the company to fill a special order of tacos at a selling price of $3.50 each for a youth basketball tournament at

> Nardin Outfitters has the capacity to produce 12,000 of its special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $900 per tent. The cost of producing and selling one tent follows: The co

> Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost, and expected sales volume data for the two models are as follows: Required The total fixed costs for the company are $396,900. a. What is the anticipated level of profit

> Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified pricing model with two alternatives for taxpayers: Standard Deduction (Standard) or Itemized Deductions (Itemized). Price and variable costs for the two services are liste

> Georgeland Cycles makes and sells two models of electric bicycles. The Commuter (a folding model) sells for $2,500 and the Tour-X (a fat-tire trail model) sells for $4,500. Unit variable costs for the Commuter are $1,750 and for the Tour-X, $3,200. Annua

> Gardendale Associates offers landscape consultations, where they provide design advice and plans to residential customers. A single consultation is priced at $750. The variable costs of a consultation total $330, consisting mostly of labor and supplies.

> What do the terms target cost and target price mean? Explain how they are developed.

> Preston Products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics. Preston Products is subject to an income tax rate of 21 percent. Required a. How many gallons must Preston

> Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Cruse Cleaning is subject to an income tax rate of 22 percent. a. How many cleaning services must Cruse Cleaning sell in

> Grandville Fittings earns a quarterly operating profit of $1,500,000 and has an operating leverage of 1.8. Wheeler Works, Inc. earns a quarterly operating profit of $660,000 and has an operating leverage of 3.0. Quarterly revenues total $4,500,000 for Gr

> Bewick Company and Stout, Inc. both earn annual operating profits of $40 million on revenues of $150 million. Bewick Company has an operating leverage of 2.4 and Stout, Inc. has an operating leverage of 1.5. Required Calculate the break-even points in sa

> Baubee Meal Delivery Service (BMDS) provides restaurant to customer meal deliveries for food establishments in a suburban neighborhood. The company provides you with the following information for the third quarter of operations: Required a. Using the tra

> Coastal Bistro has the following information for July, when several new employees were added to the waitstaff: Required a. Using the traditional income statement format, prepare a value income statement. b. What value would there be for managers at Coast

> Tracey Packaged Snax reports the following information for November: Required Prepare: a. A gross margin income statement. b. A contribution margin income statement.

> Stahelin Valves produces a single component, a valve. The valve sells for $23 per unit. Fixed costs are $1,585,000 annually. Production and sales of 405,000 units annually result in profit before taxes of $1,250,000. Required What is the unit variable co

> Refer to the data for Charlevoix Cases in Exercise 3-33. Assume that the company plans to sell 75,000 units annually. Consider requirements (b), (c), and (d) independently of each other. Required a. What will be the operating profit? b. What is the impac

> The controller at Wesson Company’s manufacturing plant has provided you with the following information for the first quarter’s operations: Required Determine each of the following unit costs: a. Variable cost. b. Varia

> As the owner of a wholesale firm that only sells to retailers, should you be interested in the efficiency of your customers (the retailers)? Why?

> Refer to the data for Grove Audio in Exercise 3-31. Assume that the projected number of units sold for the year is 3,750. Consider requirements (b), (c), and (d) independently of each other. Required a. What will the operating profit be? b. What is the i

> Acacia Manufacturing has compiled the following information from the accounting system for the one product it sells: Required Determine each of the following unit costs: a. Variable manufacturing cost. b. Variable cost. c. Full absorption cost. d. Full c

> Refer to the original data (based on 4,000 meals catered) in Exercise 2-51. Trumball expects to serve 30 percent more meals in the next month. Unit variable costs are expected to remain unchanged. The controller at Trumball knows that if the business cat

> Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the manufacturing activity: Required Unit variable costs and total fixed costs are expected to remain unchanged in the following year. Ho

> Trumball Catering served 4,000 meals last month. Trumball recorded the following costs with those meals: Required Unit variable costs and total fixed costs are expected to remain unchanged next month. Calculate the unit cost and the total cost if 4,800 m

> Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a partner, spouse, or other loved one. Top management will not approve this product in view of

> The manager of Gratiot Flooring estimates operating costs for the year will include $540,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of 30 percent. b. Find the break-even point in sales doll

> The following data refer to the most recent fiscal year for Sterritt Company. Amounts are in thousands of dollars. Required Find the following amounts. a. Direct materials used for the year. b. Gross margin for the year. c. Total manufacturing costs for

> The following data refer to the month of May for Bonita Components. Fill in the blanks.

> The following balances are from the accounts of Santa Maria Parts: Direct materials purchased during the quarter amount to $480,000, and the cost of goods sold for the quarter was $1,740,000. Required Reconstruct a cost of goods sold statement and fill i

> Sheffield Advisors offers financial counseling services to self-employed business owners. Sheffield’s operating profits average 22 percent of revenues and its marketing and administrative costs average 30 percent of the cost of services sold. Sheffield A

> Waterman’s WaterWorld Tourist Park has collected the following data for operations for the year: Required a. What is the average selling price for a ticket? b. What is the average variable cost per ticket? c. What is the average contrib

> Annchester Car Service offers limousine service to the local airport. The cost of a trip (one-way) is $95 and the variable costs of a trip are $42, which covers fuel, variable car maintenance, labor, and so on. Fixed costs for the quarter are $24,380. Re

> Braile Gear Works sells a single gear for a price of $55 per unit. The variable costs are $23 per gear and annual fixed costs are $448,000. Required a. What is the break-even level of annual sales for Braile Gear Works? b. The cost analyst tells you that

> In one of its divisions, an aircraft components manufacturer produces experimental navigational equipment for spacecraft and for private transportation companies. Although the products are essentially identical, they carry different product numbers. The

> Refer to the information in Exercise 1-33. The cost analyst working in the CFO’s office at the City Art Museum learns that the space to be rented for the Weekend Lecture Series is owned by a company in which the museum director is a principal investor. A

> Why is cost estimation important for managerial decision making?

> Explain why it is important to consider the concepts of value and value creation in a textbook about cost accounting.

> What are three practical implementation problems when using regression analysis to estimate costs?

> Write out the equation for the target volume (in units) profit equation when the income tax rate is t.

> A local coffee shop has two major product lines—drinks and pastries. If the manager allocates common costs on any objective basis discussed in this chapter, the drinks are profitable, but the pastries are not. The manager is concerned that the supervisor

> What is the function in Microsoft Excel that you can use for CVP analysis?

> Paul & Paul, Inc. is a manufacturing firm. The following selected pieces of information are from July operations:

> Gates Manufacturing reports based on an October 31 fiscal year. As a part of your interview for a cost analyst position, the interviewer provides you with the information on the following page. Required Find the following: a. Cost of goods manufactured.

> Dobel Devices manufactures an electronic lock used in dockless bicycles and scooters. The product’s price and cost characteristics are as follows: Required The company must sell 23,000 units annually in order to earn $93,000 in profits

> Woodrow Economic Advisors (WEA) is a for-profit consulting firm that offers economic analyses and policy recommendations. WEA is organized into two divisions: the Commercial Division and the Defense Division. Commercial clients are charged a fixed fee ne

> Roxford Plastics manufactures and sells model airplane kits for hobbyists for a price of $14. The fixed costs amount to $170,000 per year, of which $105,000 is manufacturing related. At an annual sales volume of 35,000 kits, Roxford earns $71,225 after t

> Algonac Moldings produces a product made from a metal alloy. Two suppliers, Liebold Metal and Cecil Distributors, supply the alloy. Neither supplier can meet Algonac’s typical demand because of capacity constraints. The material from Li

> Merton Electronics operates two retail outlets in Port Wren, one downtown and the other in Docklands. The stores share the use of a corporate staff responsible for functions such as personnel, IT, marketing, purchasing, and so on. The cost of the corpora

> Alwar Brothers is a small, family-owned business that produces animal feed for dairy farms. The administrative offices and manufacturing plant of Alwar share the same building. Financial records provided by the company for the most recent fiscal year sho

> Mount Elliott Fixtures produces a variety of hardware products, primarily for the home construction and remodeling business. The cost accountant provides you with the following data for the year (in $000): Required Prepare the income statement with a sup

> Refer to Exhibit 1.10 (Panel A), which is a heat map based on the profitability of the six districts for The AM Bakery. A new intern tells you that a better heat map is the one shown here, “. . . because the high numbers are all green a

> East Ferry Tool & Die, a manufacturer of parts for agricultural equipment, provides the following financial information for the most recent fiscal year (all costs are in thousands of dollars): Required Prepare an income statement with a supporting co

> Refer to the information in Problem 4-57 requirement (c) for Platt Instruments. The CMO would like a visual representation of the analysis done to arrive at the decision whether to staff internally or outsource to Westmoreland Products. The company can t

> Refer to the information in Problem 4-55 requirement (c) for Spinnaker Museum of Sailing. The museum director continues to be a bit uncertain about the attendance for the upcoming fiscal year and would like a graphical representation of the analysis done

> Clifton Instruments is a small components maker located in Kansas. The company specializes in aircraft instruments and focuses its production around a single family of products. Recently, one of the new members of the company’s board of

> Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company’s suppliers suggested that Whitcomb could increase its profitability by 50 percent if it introduced a seco

> Cranbrook Used Books experienced the following events during the current year: 1. Incurred $12,000 in selling costs. 2. Took an inventory at year-end and learned that goods costing $55,000 were on hand. This compared with a beginning inventory of $72,000

> Refer to the data in Exercise 6-59. Required Spring Garden Vegetables uses operations costing and assigns conversion costs based on materials cost. Compute the cost per unit of each brand of frozen vegetables in November. Exercise 6-59:

> Spring Garden Vegetables (SGV) processes two brands of frozen vegetables, Valu-PAK and Gourmet. The two brands are processed in one factory using the same production process. The only difference between the two brands is the quality (cost) of the raw veg

> Refer to the data in Exercise 6-57. Required Piper Recreational Vehicles uses operations costing and assigns conversion costs based on materials cost. Compute the expected cost of each model assembled next year. Exercise 6-57:

> Piper Recreational Vehicles (PRV) modifies vans into recreational vehicles. PRV offers two models, the XC-2 and XC-6, which differ in the quality of the basic van and the workmanship and machining detail that are used. The following data reflect expected

> Refer to the opening vignette of Adam Mercer and The AM Bakery. Adam has hired you to help him make the decisions he needs to make. Required Answer the four questions in the critical thinking framework identified in the chapter that will guide your analy

> Refer to the data in Exercise 6-55. Required Witt Recreation Company uses operations costing and assigns conversion costs based on the the direct materials costs. Compute the cost of each model assembled in the second quarter. Exercise 6-55:

> Witt Recreation Company (WRC) makes e-bikes. The company currently manufactures two models, the Coaster and the Traveler, in one of the WRC factories. Both models require the same assembling operations. The difference between the models is the cost of ma

> Consider the cost allocation system used at Tacoma Accessories and Westover Travel in Exercises 6-50 through 6-54. Required The system is referred to as a two-stage cost allocation system because a. Cost is allocated first to intermediate cost pools and

> Refer to the data in Exercise 6-52. Required Draw the cost flow diagram that represents the cost system used by Westover Travel. Exercise 6-52:

> Refer to the data in Exercise 6-50 Required Draw the cost flow diagram that represents the cost system used by Tacoma Accessories. Exercise 6-50:

> Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the staff cost to allocate general operating costs. b. Based on the rates computed in requi

> Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the staff hours to allocate general operating costs. b. Based on the rates computed in requ

> Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses revenue to allocate general operating costs. b. Based on the rates computed in requirement

> Harmon Recycling Services (HRS), a not-for-profit organization, has two drop-off centers, Westside and Eastside. Data for the expected operation in the next quarter follow. Required a. Compute the predetermined overhead rate used to apply general operati

> Refer to the data in Exercise 6-44. Required a. Compute the predetermined overhead rate assuming that Kilbourne Appliances uses direct labor costs to allocate overhead costs. b. Draw the cost flow diagram assuming that Kilbourne Appliances uses direct la

> Gregorie Tool & Die reports the following information for the quarter: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $30 2. $35 3. $42 4. $45 b. Variable production cost per unit. 1. $30 2. $35 3. $42 4. $4

> What are predatory pricing, dumping, and price discrimination? What role would a cost accountant play in determining whether dumping or price discrimination has occurred?

> Kilbourne Appliances produces two models of beverage coolers for homes and offices, the KA-15 and the KA-24. Data on operations and costs for March follow. Required a. Compute the predetermined overhead rate assuming that Kilbourne Appliances uses direct

> Refer to the data in Exercise 6-38. Required Draw the cost flow diagram assuming that Redfern Audio uses machine-hours to allocate overhead costs. Exercise 6-38:

> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses machine-hours to allocate overhead costs. Exercise 6-38:

> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses direct material costs to allocate overhead costs. Exercise 6-38:

> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses the number of units to allocate overhead costs. Exercise 6-38:

> Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor costs to allocate overhead costs. Exercise 6-38: