Florissa’s Flowers jointly produces three varieties of flowers in the same garden: tulips, lilies, and daisies. The flowers are all watered via the same irrigation system and all receive the same amount of water; daisies require three times as much as lilies, and the water required for tulips is about halfway between the amounts needed for daisies and lilies. Although the lilies and tulips receive more water than they need due to the joint irrigation process, they are not hurt by the overwatering. The joint production cost of the three varieties of flowers is about $30 per harvest. Every harvest yields 10 tulips, 20 lilies, and 20 daisies. Instructions: 1. Allocate the joint costs of production to each product using the physical units method. Which products receive the largest portion of the joint costs? 2. Allocate the joint costs of production to each product using the weighted average method. Now which product receives the largest portion of the joint costs? 3. Why would it be important to consider whether the amount of watering is an appropriate weight factor?
> Joyous Julius, Inc., is a large retail chain that has grown quickly thanks to its successful leveraging of homemade-style orange julius. The company would like to narrow down the number of flavors it offers to three. Joyous Julius, Inc., currently produc
> Horsepower Hookup, Inc., is a large automobile company that specializes in the production of high-powered trucks. The company is determining cost allocations for purposes of performance evaluation. A portion of company bonuses depends on divisions achiev
> Milkrageous, Inc., a large, private dairy products company, is determining cost allocations for performance evaluation purposes. Company bonuses are based on cost containment, so accurate costing numbers are imperative. The general managers (GMs) over th
> Life Force Fitness, Inc., assembles and sells treadmills. Activity-based product information for each treadmill is as follows: All of the activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order to rem
> Dura-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process for making the plastic conduit, called extrusion, the melted plastic (resin) i
> Antolini Enterprises produces men’s sports coats that are sold by popular department stores. Each retail order is treated as a job that accumulates materials, labor, and overhead costs for a batch of sports coats. Management has obtaine
> Valley Hospital measures the in-patient occupancy of the hospital by determining the number of patient days divided by the number of available bed days in the hospital for a time period. The following in-patient data are available for the months of April
> Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also no
> At the end of the period, the factory overhead account has a credit balance of $10,000. (a) Is the total factory cost variance favorable or unfavorable? (b) Are the controllable and volume variances favorable or unfavorable?
> A partial list of The Grand Hotel’s costs follows: a. Advertising in local newspaper b. Bedding (sheets, blankets, pillows) c. Bellhop wages d. Champagne for special guest packages e. Coffee and tea for rooms f. Cost of customer surveys g. Depreciation o
> The following is a list of costs incurred by several manufacturing companies: a. Bonus for vice president of marketing b. Costs of operating a research laboratory c. Cost of unprocessed milk for a dairy d. Depreciation of factory equipment e. Entertainme
> Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the
> Eye Swear Inc. has a balanced scorecard that includes the following relationships: Actual results for this year and last year are as follows: Instructions: 1. Analyze these statistics to verify whether they support the expected relationships between th
> Blue Skies Inc. is a retail gardening company that is piloting a new strategic initiative aimed at increasing gross profit. Currently, the company’s gross profit is 25% of sales, and its target gross profit percentage is 30%. The company’s current monthl
> 1. Based on the balanced scorecard and the following descriptions of the predicted relationships between strategic objectives, draw the scorecard’s strategy map. a. Training employees effectively and reducing employee turnover can both
> J. Burns Motorcycle Company manufactures a variety of motorcycles. J. Burns’s purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by
> A condensed income statement for the Electronics Division of Gihbli Industries Inc. for the year ended December 31, 20Y9, is as follows: Assume that the Electronics Division received no allocations from support departments. The president of Gihbli Indus
> Newport Inc. gathered the following data for use in developing the budgets for the first quarter (June, July, August) of its fiscal year: a. Estimated sales at $36 per unit: June ………â€
> Kimbrell Inc. manufactures three sizes of utility tables—small (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and management is considering three proposals: (1) continue Size M
> How does software aid firms in the budgeting process?
> Pachec Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended June 30 are as follows: Instructions: 1. Prepare a table indicating contribution
> During the first month of operations ended July 31, Head Gear Inc. manufactured 6,400 hats, of which 5,200 were sold. Operating data for the month are summarized as follows: During August, Head Gear Inc. manufactured 4,000 hats and sold 5,200 hats. Oper
> The demand for aloe vera hand lotion, one of numerous products manufactured by Smooth Skin Care Products Inc., has dropped sharply because of recent competition from a similar product. The company’s chemists are currently completing tes
> Kizzle’s Crepes Co. produces world famous crepes. The company’s crepes are produced via its Mixing and Cooking activities, which both rely on the Janitorial and Maintenance activities. Kizzle’s management knows the most practical driver of Janitorial cos
> Kizzle’s Crepes Co. produces world famous crepes. The company’s crepes are produced via its Mixing and Cooking activities, which both rely on the Janitorial and Maintenance activities. Kizzle’s management knows the most practical driver of Janitorial cos
> Hooligan Adventure Supply produces and sells various outdoor equipment. The Molding and Assembly production departments are supported by the Personnel and Maintenance departments. Personnel costs are allocated to the production departments based on the n
> Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on
> The management of Gwinnett County Chrome Company, described in Problem 1A, now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows: Stamping Department ………
> Gwinnett County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory overhead for Gwinne
> Barnes Company uses a job order cost system. The following data summarize the operations related to production for October: a. Materials purchased on account, $315,500. b. Materials requisitioned, $290,100, of which $8,150 was for general factory use. c.
> The managers of a company are planning to manufacture more product than is needed for expected sales for the coming year. What effect will this have on operating income under (a) The absorption costing concept and (b) The variable costing concept?
> A partial list of Foothills Medical Center’s costs follows: a. Advertising hospital services on television b. Blood tests c. Cost of drugs used for patients d. Cost of maintaining the staff and visitors’ cafeteria e. Cost of building a new heart wing f.
> The following is a list of costs incurred by several manufacturing companies: a. Annual picnic for plant employees and their families b. Cost of fabric used by clothing manufacturer c. Cost of plastic for a toy manufacturer d. Cost of sewing machine need
> The following is a list of costs that were incurred in the production and sale of large commercial airplanes: a. Annual bonus paid to the chief operating officer of the company b. Annual fee to a celebrity to promote the aircraft c. Cost of electronic gu
> Hyperflash Inc. has a balanced scorecard that includes the following relationships: Actual results for this month and last month are as follows: Instructions: 1. Analyze these data to verify whether they support the expected relationship between the st
> Get Hitched Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company’s current sales revenue is $1.5 million. Currently, the company’s gross profit is 35% of sales, but the compan
> 1. Label each element of the balanced scorecard. 2. Describe in words the relationships illustrated by the scorecard’s strategy map. 3. Describe in words the relationships illustrated by the scorecard’s measure map.
> The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external
> Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated operating income, and net cash flow for each proposal are as follows: The companyâ&
> A condensed income statement for the Commercial Division of Maxell Manufacturing Inc. for the year ended December 31, 20Y9, is as follows: Assume that the Commercial Division received no allocations from support departments. The president of Maxell Manu
> Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using operating income as a percent of revenues. The following quarterly income and expense accounts were
> How does the sales mix affect the computation of the break-even point?
> GHT Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as follows: During January, the costs incurred in the Consum
> Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 70 employees. Each employee presently provides 38 hours of labor per week. Information about a production week is as follows
> Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year: a. Estimated sales at $125 per unit: January ………&
> The budget director of Birding Homes & Feeders Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January: a. Estimate
> During the first month of operations ended May 31, Big Sky Creations Company produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for the month are summarized as follows: During June, Big Sky Creations produced 32,000 designe
> The demand for solvent, one of numerous products manufactured by Logan Industries Inc., has dropped sharply because of recent competition from a similar product. The company’s chemists are currently completing tests of various new formu
> Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: The division of costs between variable and fixed is as follows: Management is considering a plan
> Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of $250 per batch. At the split-off point, one batch produces 80, 40, and 25 bottles of hand, body, and foo
> Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are
> Both Austin Company and Hill Company had the same unit sales, total costs, and operating income for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. Explain the reason for this difference in break-even points.
> From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: a. A product, sales territory, department, or activity to which costs are traced is called a (direct cost, cost object). b. Advertising
> For apparel manufacturer Abercrombie & Fitch, Inc. (ANF), classify each of the following costs as either a product cost or a period cost: a. Advertising expenses b. Chief financial officer’s salary c. Depreciation on office equipment d. Depreciation on s
> Which of the following items are properly classified as part of factory overhead for Ford Motor Company (F), a maker of heavy automobiles and trucks? a. Air conditioner units for installation in vehicles b. Consultant fees for a study of production line
> Indicate whether the following costs of Procter & Gamble (PG), a maker of consumer products, would be classified as direct materials cost, direct labor cost, or factory overhead cost: a. Depreciation on assembly line equipment in the Mehoopany, Pennsylva
> Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead cost: a. Automobile engine b. Brake pads c. Depreciation of robotic assembly line equipment d.
> On March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and sold 12,000 units. The following income statement was prepared, based on the variable costing concept: Determine the unit cost of goods manufactured, based
> Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (150,000 units) during the first month, creating an ending inventory of 20,000 units. During February, th
> Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: a. Prepare an income statement accordi
> The operating revenues of the three largest business segments for Time Warner, Inc. (TWX), for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Assume that the variable costs as a percen
> Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is avai
> What does operating leverage measure, and how is it computed?
> At the end of the first year of operations, 21,500 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials ……………………… $30 Direct labor ……………………………… 18 Fixed factory overhead ……………… 22
> a. Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable costs of $66,611,000. What is the contribution margin ratio for Young Company? b. If the contribution margin ratio for Martinez Company is 40%, sales were $34,800,00
> Continental Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Continental Railroad is a measure of railroad operating a
> Child Play Inc. manufactures electronic toys within a relevant range of 20,000 to 150,000 toys per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Complete the cost schedule, identifying each cos
> Using the data for Loudermilk Inc. in Exercise 17, (a) Determine the maximum possible operating loss, (b) Compute the maximum possible operating profit, (c) Construct a profit-volume chart, and (d) Estimate the break-even sales (units) by using the profi
> Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 60 million direct subscribers (accounts) that generated revenue of $33,347 million. Costs and expenses for the ye
> The Parents for Better Schools of Fresno, California, collected recipes from members and published a cookbook entitled Food for Everyone. The book will sell for $20 per copy. The chairwoman of the cookbook development committee estimated that the club ne
> Currently, the unit selling price of a product is $7,520, the unit variable cost is $4,400, and the total fixed costs are $23,400,000. A proposal is being evaluated to increase the unit selling price to $8,000. a. Compute the current break-even sales (un
> Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year (in millions): In addition, assume that Anheuser-Busch InBev sold 500 million barrels of beer during the year. Assume that variable costs were 75% of the cos
> For the current year ended March 31, Cosgrove Company expects fixed costs of $27,600,000, a unit variable cost of $805, and a unit selling price of $1,150. a. Compute the anticipated break-even sales (units). b. Compute the sales (units) required to real
> What are the two most often used ways of accounting for revenue from by-products?
> For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions): Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrativ
> Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as either variable, fixed, or mixed. 1. Oil used in manufacturing equipment 2. Plasti
> Refer to the information provided for Becker Tabletops in Exercise 7. Allocate the support department costs to the production departments using the reciprocal services method. Table in Exercise 7:
> Refer to the information provided for Becker Tabletops in Exercise 7. Allocate the support department costs to the production departments using the sequential method. Allocate the support department with the highest department cost first. Table in Exerc
> Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows: Allocate the support department costs to the production departments usi
> Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, an
> Crystal Scarves & Co. produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and allocate costs based on machine hours and square feet, r
> Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitori
> Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the companyâ
> Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provide
> When would management most likely use the net realizable value method of joint cost allocation?
> Lily’s Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of $30 per batch. One batch produces 32 cups of pure lemonade, 21 cups of strawberry lemonade
> Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $12,000. After the split-off point, all products are
> Gordon’s Smoothie Stand makes three types of smoothies: blueberry lemon, orange swirl, and triple berry. Before all flavors are added, the smoothies go through a joint mixing process that costs a total of $43 per batch. One batch produces 21.75 cups of b
> Big Al’s Inc. produces and sells various cuts of steak, including sirloin, ribeye, and T-bone. The cuts of steak are produced jointly until Big Al’s cattle are butchered. Big Al estimates that, at the split-off point, 10 cows yield 99 pounds of sirloin c
> Nature’s Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces 20,304 cubic yards of wood chips, 14,100 cubic yards of m
> Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for $0.20 per pound, while granulated and caster sugar are processed further. The market value of the granula
> Carving Creations jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Carving Creations accounts for them just like normally produced goods because of thei
> Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards.
> Refer to your answers to Exercises 7–9. Compare the total support department costs allocated to each production department under each cost allocation method. Which production department is allocated the most support department costs (a) Under the direct
> Yo-Down Inc. produces yogurt. Information related to the company’s yogurt production follows: Support Department 1’s costs total $142,000. Using the direct method of support department cost allocation, determine the c
> What is the main difference between the physical units and weighted average methods of joint cost allocation?
> Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $250,000 and 50,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales ord
> Comfort Foods Inc. uses activity-based costing to determine product costs. For each activity listed in the left column, match an appropriate activity base from the right column. You may use items in the activity-base list more than once or not at all.
> The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company us
> Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allo
