How do standard and actual costing differ?
> An analysis of La Flamme’s operating income changes between 2015 and 2016 shows the following: Operating income for 2016 ………………………………$1,700,000 Add growth component …………………………………………70,000 Deduct price-recovery component ………………………(60,000) Add productivi
> Ring Delights is a new company that manufactures custom jewellery. Ring Delights currently has six customers referenced by customer number: 01, 02, 03, 04, 05, and 06. Besides the costs of making the jewellery, the company has the following activities: 1
> Patterson Corporation has four operating divisions. During the first quarter of 2015, the company reported total income from operations of $55,000 and the following results for each division: Further analysis of costs reveals the following percentages
> Orca Company is a large manufacturer of optical storage systems based in British Columbia. Its practical annual capacity is 7,500 units, and, for the past few years, its budgeted and actual sales and production volume have been 7,500 units per year. Orca
> Worldwide Cell Phones (WCP) has developed a cell phone that can be used anywhere in the world (even in countries such as Japan that have a relatively unique cell phone system). WCP has been receiving complaints about the phone. For the past two years, WC
> Industrial Fluids Ltd. (IFL) manufactures and sells fluids used by metal-cutting plants. These fluids enable metal-cutting to be done more accurately and more safely. IFL has more than 1,000 customers. It is currently undertaking a customer profitability
> Copeland Sporting Goods is evaluating two suppliers of footballs: Big Red and Quality Sports. Pertinent information about each potential supplier follows: Required: Calculate the relevant costs of purchasing (1) from Big Red and (2) from Quality Sports
> The Ronowski Company produces telephones. For June, there were no beginning inventories of raw materials and no beginning and ending work in process. Ronowski uses a JIT production system and backflush costing with three trigger points for making entries
> Ralph Menard is the owner of a truck repair shop. He uses an EOQ model for each of his truck parts. He initially predicts the annual demand for heavy-duty tires to be 2,000. Each tire has a purchase price of $60. The incremental ordering costs per purcha
> LockTite (LT) has introduced a just-in-time production process and is considering the adoption of lean accounting principles to support its new production philosophy. The company has two product lines: mechanical devices and electronic devices. Two indiv
> Assume the same facts as in Problem 19-33 except now there are only two trigger points: the completion of good finished units of product and the sale of finished goods. Required: 1. Prepare summary journal entries for August, including the disposition o
> Assume that the second trigger point for Acton Corporation is the sale—rather than the completion—of finished goods. Also, the inventory account is confined solely to direct materials, whether these materials are in a storeroom, in work in process, or in
> Cow Spot Computer Co. outsources the production of motherboards for its computers. It has narrowed down its choice of suppliers to two companies: Maji and Induk. Maji is an older company with a good reputation, while Induk is a newer company with cheaper
> The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Margro’s inventory of raw steel averages $600,000. John Oates, president of Margro, and Helen Gorman,
> IMBest Computers supplies computers to Online C. Terry Moore, the president of IMBest, is pleased to hear that Online C will be ordering 500,000 computers. Moore has asked his accounting and production departments to team up and determine the best produc
> Instructions Form groups of two or more students to complete the following requirements: Required: 1. Given your findings in Problem 10-32, should Hanks use multiple regression analysis to better understand the cost drivers of overhead costs? Explain yo
> Online C is an online company that sells computers to individual consumers. The annual demand for one model that will be shipped from the northeast distribution centre is estimated to be 500,000 computers. The ordering cost is $800 per order. The cost of
> MacroHard Corp. produces J-Pods, music players that can download thousands of songs. MacroHard forecasts that demand in 2017 will be 48,000 J-Pods. The variable production cost of each J-Pod is $50. Due to the large $50,000 cost per setup, MacroHard plan
> Clarkson Shoe Co. produces and sells excellent quality walking shoes. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 stores in its region. Clarkson uses an EOQ model to determine
> Koala Blue, a retailer of bed and bath linen, sells 234,000 packages of Mona Lisa designer sheets each year. Koala Blue incurs an ordering cost of $81 per purchase order placed with Mona Lisa Enterprises and an annual carrying cost of $11.70 per package.
> Buckwold Corporation makes two different types of hubcaps for cars–HM3 and JB4. Circular pieces of metal are stamped out of steel sheets (leaving the edges as scrap), formed, and finished. The stamping operation is identical for both ty
> Normal spoilage is 7% of the good units passing inspection in a forging process. In March, a total of 12,000 units were spoiled. Other data include units started during March, 129,000; work-in-process, beginning, 16,000 units (20% completed for conversio
> Richmond Company manufactures products that often require specification changes or modifications to meet customers’ needs. Still, Richmond has been able to establish a normal spoilage rate of 2.5% of normal input. Normal spoilage is recognized during the
> Blue Titanium (BT)Corporation is a manufacturer of computer chips based in Nepean. It manufactures two types of computer chips, CS1 and CS2. The costs of manufacturing each CS1 chip, excluding rework costs, are direct materials, $60; direct manufacturing
> Assume that Job #10 of Tee Time Machine Shop generates normal scrap with a total sales value of $300 (it is assumed that the scrap returned to the storeroom is sold quickly). Required: Prepare the journal entries for the recognition of scrap, assuming:
> Assume that the five spoiled units of Tee Time Machine Shop’s Job #10 can be reworked for a total cost of $1,800. A total cost of $5,000 associated with these units has already been assigned to Job #10 before the rework. Required: Prepare the journal en
> Kathy Hanks, executive assistant to the president of Eastern University, is concerned about the overhead costs at her university. Cost pressures are severe, so controlling and reducing overhead is very important. Hanks believes overhead costs incurred ar
> Tee Time Machine Shop is a manufacturer of motorized carts for vacation resorts. Pat Cruz, the plant manager of Tee Time, obtains the following information for Job #10 in August 2015. A total of 40 units were started, and 5 spoiled units were detected an
> Ottawa Manufacturing is a furniture manufacturer with two departments: moulding and finishing. The company uses the weighted-average method of process costing. In August, the following data were recorded for the finishing department: Units of beginning
> Normal spoilage is 6% of the good units passing inspection in a forging process. In March, a total of 10,000 units were spoiled. Other data include units started during March, 120,000; work-in-process, beginning, 14,000 units (20% completed for conversio
> Refer to the information in Problem 18-35. Suppose Rounder determines standard costs of $246 per (equivalent) unit for direct materials and $96 per (equivalent) unit for conversion costs for both beginning work-in-process and work done in the current per
> Refer to the information in Problem 18-35. Required: Repeat question 1 from Problem 18-35 using the FIFO method of process costing. Data from Problem 18-35: Rounder specializes in the manufacture of ball bearings for aircraft. Direct materials are add
> Rounder specializes in the manufacture of ball bearings for aircraft. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects n
> Hamilton Metal Fabricators Inc. has a large job, No. 2734, that calls for producing various ore bins, chutes, and metal boxes for enlarging a copper concentrator. The following charges were made to the job in November 2015: Direct materials ………………………………
> Refer to the information in Problem 18-32 except for the transferred-in costs for May, which equal the total cost of good units completed and transferred out in May from the cleaning department, which were calculated in Problem 18-31 using the FIFO metho
> In Red Deer Company’s packaging department, conversion costs are added evenly during the process, and direct materials are added at the end of the process. Spoiled units are detected upon inspection at the end of the process and are dis
> Refer to the information in Problem 18-30. Required: Do Problem 18-30 using the FIFO method of process costing. (Problem 18-33 explores additional facets of this problem.) Data from Problem 18-30: The Red Deer Company is a food-processing company b
> Two graduates of the university run M&S Java, and they have just opened their take-out coffee and snack bar on the university campus. At the end of their first month of operations they want to understand which cost driver to choose of two available t
> The Red Deer Company is a food-processing company based in Alberta. It operates under the weighted-average method of process costing and has two departments: cleaning and packaging. For the cleaning department, conversion costs are added evenly during th
> Plastco Industries manufactures a variety of plastic products, including a series of moulded chairs. The three models of moulded chairs, which are all variations of the same design, are standard (can be stacked), deluxe (with arms), and executive (with a
> Two styles of men’s shoes are manufactured by the Comfort Fit Shoe Company: designer and regular. Designer style is made from leather, and regular style uses synthetic materials. Three operations—cutting, sewing, and p
> Paquita’s Pearls Company (PPC) is a manufacturer of knock-off jewellery. Paquita attends Fashion Week in New York City every September and February to gauge the latest fashion trends in jewellery. She then makes trendy jewellery at a fr
> Frito-Lay Inc. manufactures convenience foods, including potato chips and corn chips. Production of corn chips occurs in four departments: cleaning, mixing, cooking, and drying and packaging. Consider the drying and packaging department, where direct mat
> Refer to the information in Problem 17-39. Suppose that Publish Inc. uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17-39 under the FIFO method are that total transferred-in costs of beg
> Publish Inc. has two departments: printing and binding. Each department has one direct cost category (direct materials) and one indirect cost category (conversion costs). This problem focuses on the binding department. Books that have undergone the print
> Do Problem 17-36 using the FIFO method of process costing. If you did Problem 17-36, explain any difference between the cost of work completed and transferred out and the cost of ending work in process in the assembly department under the weighted-averag
> Prepare a set of summarized journal entries for all April transactions affecting Work in Process—Assembly. Set up a T-account for Work in Process—Assembly, and post the entries to it.
> Porter Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: assembly and finishing. This problem focuses on the assembly department. The process-costing system at Porter has a single direc
> The variable manufacturing costs per unit of TC Motors are: Required: 1. Prepare operating statements of comprehensive income for TC Motors in April and May of 2015 under throughput costing. 2. Contrast the results in requirement 1 with those in requir
> Refer to the information in Problem 17-34. Suppose that Larsen Corp. uses the FIFO method instead of the weighted average method in all of its departments. The only changes to Problem 17-34 under the FIFO method are that total transferred-in costs of beg
> Larsen Corp., as you know, is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct materials are added when the testing department process is 90%
> Do Problem 17-31 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method. Data from Problem 17-31: Larsen Corp. manufactures
> Prepare a set of summarized journal entries for all October 2015 transactions affecting Work in Process— Assembly. Set up a T-account for Work in Process—Assembly, and post the entries to it.
> Larsen Corp. manufactures car seats in its Sarnia plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The process-costing system at Larsen Corp. has a single direct cost
> Your Expert (YE) produces and markets DVDs for sal e to the business community. It hires well-known business speakers to present new developments in their area of expertise in DVD format. The compensation paid to each speaker is individually negotiated.
> Greenbold Manufacturing has four divisions named after its locations: Ontario, Alberta, Yukon, and Saskatchewan. Corporate headquarters is in Manitoba. Greenbold corporate headquarters incurs $5,600,000 per period, which is an indirect cost of the divisi
> Your Market (YM) runs two convenience stores, one in Vancouver and one in Surrey. Operating income for each store in 2015 follows: The equipment has a remaining useful life of one year and zero disposal price. In a senior management meeting, Maria Lope
> PétaleParfum (PP) manufactures and sells upscale perfumes. In recent months, PP has started selling its products in bundled form, as well as in individual form. Sales in 2015 of three products that have been sold individually are as follows:
> Bear Hill operates a five-star hotel with a world-recognized championship golf course. It has a decentralized management structure. There are three divisions: ■ Lodging (rooms, conference facilities) ■ Food (restaurants and in-room service) ■ Recreation
> TC Motors assembles and sells motor vehicles, and uses standard costing. Actual data relating to April and May 2015 are The selling price per vehicle is $24,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost p
> Glat Corporation manufactures a product called the glat, which it sells to merchandising firms such as International House of Glats (IHoG), Glats-R-Us (GRU), Glat Marcus (GM), Glat City (GC), Good Glats (GG), and Glat-mart (Gmart). The list price of a gl
> Joliver, a renowned pastry chef employed at a four-star hotel, has decided to open his own exclusive pastry shop. He has $100,000 to invest and the information he has obtained is as follows: ■ There is a 55% probability the market size in the area will b
> Lee Manufacturing makes a component they call P14-31. This component is manufactured only when ordered by a customer, so Lee keeps no inventory of P14-31. The list price is $100 per unit, but customers who place “large”
> Ramish Electronics has only two retail and two wholesale customers. Information relating to each customer for 2015 follows (in thousands): Ramish’s annual distribution-channel costs are $38 million for wholesale customers and $7 milli
> The Sherriton Hotels chain embarked on a new customer loyalty program in 2015. The 2015 year-end data have been collected, and it is now time for you to determine whether the loyalty program should be continued, discontinued, or perhaps altered to improv
> The Department of National Defence (DND) has the difficult decision of deciding which military bases to close down. Military and political factors obviously matter, but cost savings are also an important factor. Consider two naval bases—one in Vancouver,
> Debbie’s Delight attains a 10% market share based on total sales of the Calgary market. The total Calgary market is expected to be 1,000,000 kilograms in sales volume for August 2015. The actual total Calgary market for August 2015 was 960,000 kilograms
> Debbie’s Delight Inc. operates a chain of cookie stores. Budgeted and actual operating data for its three Calgary stores for August 2015 are as follows: Debbie’s Delight focuses on contribution margin in its variance
> Blank Slate’s senior vice-president of marketing prepared his budget at the beginning of the third quarter, assuming a 25% market share based on total sales. The total tablet market was estimated by Fool instead Research to reach sales of 400,000 units w
> Blank Slate Inc. (BSI) produces tablet computers. BSI markets three different handheld models. SlatePro is a souped-up version for the executive on the go; Slate is a consumer-oriented version; and SlateLite is a stripped down version for the young adult
> A number of terms are listed below: absorption costing…………………………………….super-variable costing theoretical capacity…………………………………………..practical capacity normal capacity………………………………………master budget capacity non-productive idle capacity………………………off-limits idl
> Spring Distribution has decided to analyze the profitability of five new customers. It buys bottled water at $12 per case and sells to retail customers at a list price of $14.40 per case. Data pertaining to the five customers are: Activity â€
> Movement Athletics (MA) sells exercise DVDs through television infomercials. It uses a well-known sports celebrity in each DVD. Each celebrity receives a share (typically varying between 10% and 25%) of the revenue from the sale of their DVD. In recent m
> The Princess Corporation classifies animal feed as a byproduct. The byproduct is inventoried at its selling price when produced; the net realizable value of the product is used to reduce the joint production costs before the split off point. Before 2015,
> The Princess Corporation grows, processes, packages, and sells three joint apple products: (a) sliced apples that are used in frozen pies, (b) applesauce, and (c) apple juice. The skin of the apple, processed as animal feed, is treated as a byproduct. Pr
> Pulkits Silk Shirts (PSS) hand-makes blouses and sells them to highend department stores. PSS buys bolts of silk for $300 each. Out of each bolt it gets 30 blouses, which it sells for $90 each. PSS’s new manager has suggested taking the scraps left after
> Cumberland’s accountant needs to record the information about the joint products and byproducts in the general journal, but is not sure what the entries should be. Cumberland Mines has hired you as a consultant to help its accountant. Required: 1. Show
> The Cumberland Mine is a small mine that extracts coal in central Alberta. Each tonne of coal mined is 40% Grade A coal, 40% Grade B coal, and 20% coal tar. All output is sold immediately to a local utility. In May, Cumberland mined 1,000 tonnes of coal.
> Montreal has decided that buttermilk might sell better if it were marketed for baking and sold in pints. This would involve additional packaging at an incremental cost of $0.25 per pint. Each pint could be sold for $0.90. (Note: 1 quart = 2 pints.) Req
> Montreal Dairy Products Corp buys one input, full-cream milk, and refines it in a churning process. From each gallon of milk, Montreal produces two cups (one pound) of butter and two quarts (eight cups) of buttermilk. During May 2015, Montreal bought 10,
> West-Coast Oceanic Water (WOW) desalinates and bottles sea water. The desalinated water is in high demand from a large group of environmentally conscious people on the west coast of Canada. During March, WOW processes 1,000 litres of sea water and obtain
> Amy James is a cost accountant and business analyst for Doorknob Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct cost categories: direct materials and direct manufacturing labour. James feels that manufacturing ove
> Consider the following scenario. Each day, a butcher buys a 200-kilogram pig for $360. The pig can be processed to yield the following three products: Day 1 The butcher buys a pig. The $360 joint cost of the pig is allocated to individual products base
> The Sunshine Oil Company buys crude vegetable oil. Refining this oil results in four products at the splitoff point: A, B, C, and D. Product C is fully processed by the splitoff point. Products A, B, and D can individually be further refined into Super A
> Bill Dundee is the owner and operator of Western Bottling, a bulk soft-drink producer. A single production process yields two bulk soft drinks, Rainbow Dew (the main product) and Resi-Dew (the byproduct). Both products are fully processed at the splitoff
> Jason Miller and Eric Jackson would like to lease an office building to open their separate law offices. The building has a total of 1,700 square metres of office space. Miller and Jackson need 1,000 square metres and 700 square metres, respectively. If
> Bulldog Inc. is a large manufacturing company that runs its own electrical power plant from the excess steam produced in its manufacturing process. Power is provided to two production departments—Department A and Department B. The capac
> Forber Bakery makes baked goods for grocery stores, and has three divisions: bread, cake, and doughnuts. Each division is run and evaluated separately, but the main headquarters incurs costs that are indirect costs for the divisions. Costs incurred in th
> Black Gold Petroleum Company is engaged in all phases of exploring, refining, and marketing of oil and petrochemical products. To ensure full compliance with all applicable laws, the company has a legal department staffed by lawyers who have expertise in
> Magnum T.A. Inc. specializes in the assembly and installation of high-quality security systems for the home and business segments of the market. The four departments at its highly automated state-of-the-art assembly plant are as follows: The budgeted l
> Ransom Inc. and Downey Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Ransom needs the machine for 900 hours and Downey needs it for 600 hours. If ea
> The Manes Company has two products. Product 1 is manufactured entirely in Division X. Product 2 is manufactured entirely in Division Y. To produce these two products, the Manes Company has two support divisions: A (a materials-handling division) and B (a
> Purdue Inc. manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. Required: For each independent scenario given, indicate whether each of the manufacturing v
> Gether Corporation manufactures appliances. It has four divisions: refrigerator, stove, dishwasher, and microwave oven. Each division is located in a different city and the headquarters is located in Mississauga, Ontario. Headquarters incurs a total of $
> Total Body Inc. has a new promotional program that offers a free gift-wrapping service for its customers. Total’s customer-service division has practical capacity to wrap 7,500 gifts at a budgeted fixed cost of $6,750 each month. The bu
> Mayfair Corporation currently subsidizes cafeteria services for its 250 employees. Mayfair is in the process of reviewing the cafeteria services as cost-cutting measures are needed throughout the organization to keep the prices of its products competitiv
> Refer to the data for Exercise 13-37. Assume the fabric costs $4 per metre in 2016 and $4.10 per metre in 2015. Required: 1. Compute Guble Company’s total factor productivity (TFP) for 2016. 2. Compare TFP for 2016 with a benchmark TFP for 2015 inputs b
> Guble Company manufactures wallets from fabric. In 2015, Guble made 2,500,000 wallets using 1,875,000 metres of fabric. In 2016, Guble plans to make 2,650,000 wallets and wants to make fabric use more efficient. At the same time, Guble wants to reduce ca
> Lee Corporation manufactures various types of colour laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the market are comparable in terms of features an
> BrightStar, a cable television operator, had 800,000 subscribers in 2015. The company employs eight customer help-desk representatives to respond to customer questions and problems. During 2015, each customer help-desk representative worked eight hours p
