Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $300,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used. Instructions a. Compute the manufacturing overhead rate for the year. b. What is the amount of under- or over-applied overhead at December 31? c. Prepare the adjusting entry to assign the under- or over-applied overhead for the year to cost of goods sold.
> Lowell Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2020. Lowell has a labor contract that calls for a wage increase to $9.00 per h
> Trusler Company has always done some planning for the future, but the company has never prepared a formal budget. Now that the company is growing larger, it is considering preparing a budget. Instructions Write a memo to Jim Dixon, the president of Trus
> Anna Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Anna is unable to carry all variet
> Gwynn Incorporated had the following transactions involving current assets and current liabilities during February 2020. Feb. 3 Collected accounts receivable of $15,000. 7 Purchased equipment for $23,000 cash. 11 Paid $3,000 for a 1-year insurance policy
> Riggs Company purchases sails and produces sailboats. It currently produces 1,200 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $250 each, but the company is considering using the excess c
> Here are the comparative income statements of Delaney Corporation. Instructions a. Prepare a horizontal analysis of the income statement data for Delaney Corporation, using 2019 as a base. (Show the amounts of increase or decrease.) b. Prepare a vertic
> Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 70% of direct labor cost. The direct mater
> Operating data for Joshua Corporation are presented below. Instructions Prepare a schedule showing a vertical analysis for 2020 and 2019. 2020 2019 Sales revenue $800,000 $600,000 Cost of goods sold Selling expenses Administrative expenses 520,000
> Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity: Sales (350,000 units) ………………………….. $4,375,000 Cost of goods sold ……………………………….. 2,600,
> The adjusted trial balance for Karr Farm Corporation at the end of the current year contained the following accounts. Interest Payable ……………………………………………… $ 9,000 Lease Liability …………………………………………………. 89,500 Bonds Payable, due 2025 ……………………………….. 180,000
> Dreiling Company borrowed $300,000 on January 1, 2020, by issuing a $300,000, 8% mortgage note payable. The terms call for annual installment payments of $40,000 on December 31. Instructions a. Prepare the journal entries to record the mortgage loan and
> Trayer Corporation has income from continuing operations of $290,000 for the year ended December 31, 2020. It also has the following items (before considering income taxes). 1. An unrealized loss of $80,000 on available-for-sale securities. 2. A gain of
> The ledger of Hasgrove Company has the following work in process account. Production records show that there were 800 units in the beginning inventory, 30% complete, 1,100 units started, and 1,500 units transferred out. The units in ending inventory we
> The controller of Standard Industries has collected the following monthly expense data for analyzing the cost behavior of electricity costs. Instructions a. Determine the fixed- and variable-cost components using regression analysis b. Prepare a scatte
> Tharp Company operates a small factory in which it manufactures two products: C and D. Production and sales results for last year were as follows. For purposes of simplicity, the firm averages total fixed costs over the total number of units of C and D
> Using the data in E21.15, assume Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on September 1 were 100% complete as to materials (application forms) and 40% complete as to conversion costs. Assume overhead c
> Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of director
> Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Darcy Roofing spent $60,000 refurbishing the lift. It has just determined that
> Naylor Company had $210,000 of net income in 2019 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2020. The pr
> On January 2, 2019, Twilight Hospital purchased a $100,000 special radiology scanner from Bella Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciat
> In 2019, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2020, the selling price and the variable costs per unit did not change, but the break-even point increased to $420,000. I
> Kirk Minerals processes materials extracted from mines. The most common raw mterial that it processes results in three joint products: Spock, Uhura, and Sulu. Each of these products can be sold as is, or each can be processed further and sold for a highe
> Suppose selected comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions). Instructions Compute the following ratios for 2020. a. Profit margin.
> As a study aid, your classmate Pascal Adams has prepared the following list of statements about decision-making and incremental analysis. 1. The first step in management’s decision-making process is, “Determine and evaluate possible courses of action.” 2
> The Palmer Acres Inn is trying to determine its break-even point during its off -peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows . Salaries ……………………………………………………. $5,900 per month Utilities ………………………………………………
> Marty Moser wants Moser Company to use CVP analysis to study the effects of changes in costs and volume on the company. Marty has heard that certain assumptions must be valid in order for CVP analysis to be useful. Instructions Prepare a memo to Marty M
> The controller of Hall Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Instructions a. Determine the fixed- and variable-cost components using the high-low method. b. Prepare a gr
> The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Instructions a. Determine the fixed- and variable-cost components using the high-low method. b. Prepare a
> Kansas Company uses a standard cost accounting system. In 2020, the company produced 28,000 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,000 di
> Felde Bucket Co., a manufacturer of rain barrels, had the following data for 2019: Sales …………………………… 2,500 units Sales price ………………… $40 per unit Variable costs ……………. $24 per unit Fixed costs ………………………. $19,500 Instructions a. What is the contribution
> Yams Company reports the following operating results for the month of August: sales $400,000 (units 5,000), variable costs $240,000, and fixed costs $90,000. Management is considering the following independent courses of action to increase net income. 1.
> Billings Company has the following information available for September 2020. Unit selling price of video game consoles ………………………………………… $ 400 Unit variable costs …………………………………………………………………………. $ 280 Total fixed costs ………………………………………………………………………. $54,000
> Spencer Kars provides shuttle service between four hotels near a medical center and an international airport. Spencer Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month’s activity in the form of a cost-volum
> Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify each co
> Baden Company has gathered the following information. Units in beginning work in process …………………………………………… –0– Units started into production ……………………………………………… 36,000 Units in ending work in process …………………………………………… 6,000 Percent complete in ending wor
> The Sanding Department of Quik Furniture Company has the following production and manufacturing cost data for March 2020, the first month of operation. Production: 7,000 units finished and transferred out; 3,000 units started that are 100% complete as to
> In Shady Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion costs, and production data for its Sterilizing Department in selected months during 2020 are as follows.
> The ledger of American Company has the following work in process account. Production records show that there were 400 units in the beginning inventory, 30% complete, 1,600 units started, and 1,700 units transferred out. The beginning work in process ha
> LRNA Company issued $380,000, 7%, 10-year bonds on January 1, 2020, for $407,968. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. LRNA uses the effective-interest method to amortize bond pr
> Mesa Verde manufactures unpainted furniture for the do-it-yourself (DIY) market. It currently sells a table for $75. Production costs per unit are $40 variable and $10 fixed. Mesa Verde is considering staining and sealing the table to sell it for $100. V
> The Cutting Department of Lasso Company has the following production and cost data for August. Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process. Lasso Company uses the FIFO method to comp
> Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When an application is completed, it is forwarded to the Loan Department for final processing. The following processing and cost data pertain to Septem
> Remington Inc. is contemplating the use of process costing to track the costs of its operations. The operation consists of three segments (departments): Receiving, Shipping, and Delivery. Containers are received at Remington’s docks and sorted according
> The Welding Department of Healthy Company has the following production and manufacturing cost data for February 2020. All materials are added at the beginning of the process. Instructions Prepare a production cost report for the Welding Department for
> Cepeda Corporation has the following cost records for June 2020. Instructions a. Prepare a cost of goods manufactured schedule for June 2020. b. Prepare an income statement through gross profit for June 2020 assuming sales revenue is $92,100. $ 4,5
> The Polishing Department of Major Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,600 units that are 100% complete as to materials a
> Robert Wilkins has prepared the following list of statements about process cost accounting. 1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion. 2. A process cost system is used when each fin
> At May 31, 2020, the accounts of Lopez Company show the following. 1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials $8,200. 2. May 31 inventories—finished goods $9,500, work in process $15,900, and raw materials $7,
> Crawford Corporation incurred the following transactions. 1. Purchased raw materials on account $46,300. 2. Raw materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as
> Financial Statement Identify where each of the following items would be reported in the financial statements. 1. Loss on sale of investments in stock. 2. Unrealized gain or loss—equity. 3. Fair value adjustment—trading
> Trak Corporation incurred the following costs while manufacturing its bicycles. Instructions a. Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs. b. Explain the basic difference in accounting f
> Nick Bosch has prepared the following list of statements about bonds. 1. Bonds are a form of interest-bearing notes payable. 2. Secured bonds have specific assets of the issuer pledged as collateral for the bonds. 3. Secured bonds are also known as deben
> McQueen Motor Company manufactures automobiles. During September 2020, the company purchased 5,000 head lamps at a cost of $15 per lamp. Fifty of these lamps were used to replace the head lamps in autos used by traveling sales staff, and 4,600 lamps were
> An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2020. Costs incurred: raw materials purchases $54,000, direct labor $47,000, manufacturing overhead $19,900. The specific overhead
> University Company produces collegiate apparel. From its accounting records, it prepares the following schedule and financial statements on a yearly basis. a. Cost of goods manufactured schedule. b. Income statement. c. Balance sheet. The following items
> The following information is available for Aikman Company. Instructions a. Compute cost of goods manufactured. b. Prepare an income statement through gross profit. c. Show the presentation of the ending inventories on the December 31, 2020, balance she
> Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client’s consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed bel
> The following are the job cost related accounts for the law firm of Colaw Associates and their manufacturing equivalents: Cost data for the month of March follow. 1. Purchased supplies on account $1,800. 2. Issued supplies $1,200 (60% direct and 40% in
> Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company’s customers are governmental agencies, prices are strictly regulated. Therefore, Hart Labs must constantly monitor and con
> Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost accounting system. In May 2020, 11,250 suits were produced. The following standard and actual cost data applied to the month of M
> Some of Tollakson Corporation’s investments in debt securities are classified as trading securities and some are classifi ed as available-for-sale. The cost and fair value of each category at December 31, 2020, were as follows. At Dec
> Part I Debby Kauff man and her two colleagues, Jamie Hiatt and Ella Rincon, are personal trainers at an upscale health spa/resort in Tampa, Florida. They want to start a health club that specializes in health plans for people in the 50+ age range. The gr
> “The added-worker effect can be explained in terms of the income effect, while the discouraged-worker effect is based on the substitution effect.” Do you agree?
> Assume that labor productivity is rising by 6 percent in the economy as a whole but by only 1 percent in industry X. Also assume that nominal wages for all industries rise in accordance with the economy’s overall rate of productivity increase. Labor cost
> Explain the relationship between changes in (a) nominal wage rates, (b) Productivity, (c) Unit labor costs, and (d) Product price. What does this relationship suggest about the expected impact of productivity growth on employment in a particular ind
> Suppose in a given year a firm’s productivity increases by 2 percent and its nominal wages rise by 5 percent. What would you expect to happen to the firm’s unit labor costs and product price?
> Speculate about how successful attempts by government to tighten the distribution of family income through transfers might inadvertently make the distribution of annual earnings more unequal.
> Suppose that in an economy 100 worker-hours produce 160 units of output in year 1. In years 2 and 3, worker-hours are 120 and 130 and units of output are 216 and 260, respectively. Using year 2 as the base year, calculate (a) The productivity index for
> Assume that the occupational distribution of males and females is as follows: Calculate the index of segregation and explain its meaning. Compare the meaning of an index of 0.40 with indexes of 1.00 and 0. As applied to gender, has the index changed si
> Suppose a hypothetical economy consists of 20 nonunionized private sector workers who have the following annual earnings: $18,000, $9,000, $82,000, $12,000, $13,000, $76,000, $61,000, $14,000, $22,000, $23,000, $21,000, $46,000, $59,000, $26,000, $27,000
> Evidence suggests that firms that sell their products in less competitive product markets are more likely to be unionized than firms selling in highly competitive markets. Recalling from Chapter 5 that the elasticity of product demand is an important det
> Answer these questions on the basis of the information in the accompanying table. The data are for a competitive firm. a. What is the profit-maximizing level of job safety as viewed by the firm? Explain. b. Assume that information is perfect and that wo
> “Only that portion of the MP curve that lies below AP constitutes the basis for the firm’s short-run demand curve for labor.” Explain.
> In what way does discrimination redistribute national income? How does it reduce national income?
> Use simple supply and demand analysis to explain the impact of occupational segregation or “crowding” on the relative wage rates of men and women. Who gains and who loses as a consequence of eliminating occupational segregation? Explain the following sta
> Use the following labor market data to determine the answers to (a) through (d): a. Is this tax progressive? Explain. b. What is the before-tax equilibrium wage rate? c. What effect does the tax have on the number of hours of work supplied and the mark
> What has been the general secular trend of the weekly earnings of full-time female workers compared with male workers? What factors help explain this trend?
> In Becker’s taste for discrimination model, what is the meaning of the discrimination coefficient d? If the monetary value of d is, say, $6 for a given white employer, will that employer hire African-American or white workers if their actual wage rates a
> Explain how the existence of national, state, and city parks might affect; a. Labor demand in the recreational vehicle industry. b. The demand for workers who build and maintain equipment for private recreational theme parks. c. The overall supply of la
> Explain the rapid growth of public sector unionism in the 1960s and early 1970s, despite the general de-unionization of the economy during this period.
> Explain how an increase in the minimum wage could; a. Reduce teenage employment but leave the teenage unemployment rate unaffected. b. Reduce investment in human capital. c. Leave the poverty rate unchanged.
> Explain why “pay comparability” legislation requiring that the public sector remunerate government employees at wages equal to private sector counterparts might create excess supplies of labor in public sector labor markets.
> Use Equation (9.1) to explain the likely effect of each of the following on the present value of net benefits from migration: (a) age, (b) distance, (c) education, (d) marital status, and (e) the discount rate (interest rate). Equation 9.1:
> Assuming that income includes both private and public goods and that leisure is a normal good, explain how a major reduction in governmentally provided goods might increase a person’s optimal number of hours of work.
> Explain why a voluntary army may be less expensive to society than an army composed of draftees. Which will likely be less expensive to taxpayers?
> How is the pure union wage advantage defined? If in a given labor market the wage rate would be $16 without a union and $20 with a union, then what is the pure union wage advantage? Explain how, and in what direction, each of the following might cause th
> Assume that the official national unemployment rate rises from 4 percent to 8 percent because of a major recession. What impact do you predict this would have on (a) The African-American to white unemployment rate ratio, (b) The labor force participat
> How might labor mobility and migration affect the degree of monopsony power (Chapter 6) in labor markets?
> Complete the following table for a single firm operating in labor market A and product market AA: a. What, if anything, can one conclude about the degree of competition in labor market A and product market AA? b. What is the profit-maximizing level of
> Referring back to Figure 7.8, explain why wage differentials resulting exclusively from efficiency wage payments (shirking model and turnover model) will persist rather than erode over time. Figure 7.8 SL W2 W DL2 DLI O2 Quantity of labor Wage rate
> Under what elasticity of labor demand conditions could a union restrict the supply of labor—that is, shift the supply curve leftward—and thereby increase the collective wage income (wage bill) of the workers still employed?
> Critically evaluate each of these statements: a. “The relative decline of the American labor movement can be explained by the shift from goods-producing to service-providing industries and by the closely related shifts from blue- to white-collar occupati
> Discuss: “Many of the lowest-paid people in society—for example, short-order cooks—also have relatively poor working conditions. Hence the theory of compensating wage differentials is disproved.”
> Describe the expected effects that college scholarships based on (a) Student ability and (b) Student need are likely to have on the distribution of earnings.
> Identify and explain a separate common problem associated with each of the following pairs of compensation plans: a. Piece rates; bonuses tied to individual performance. b. Bonuses applied to team performance; profit-sharing plans.
> Use Table 9.1 to determine the impact of wage-induced labor migration on; a. The combined output of the two regions. b. Capital versus wage income in the destination region. c. The average wage rate in the origin region. d. The total wage bill for the na
> Is labor demand (a) elastic, (b) unit elastic, or (c) inelastic over the $4 to $12 wage rate range of DL in Figure 5.11(b)? Explain by referring to the total wage bill rules (Figure 5.7) and the midpoint formula for elasticity [Equation (5.4)]. Figu
> Use the production data shown here on the left and the labor supply data on the right for a single firm to answer the following questions. Assume that this firm is selling its product for $1 per unit in a perfectly competitive product market. a. How ma
> Explain why it may be in a worker’s short-term best interest to have job titles restated to add status: say, becoming a mixologist rather than a bartender or being referred to as a sanitation engineer rather than a garbage worker. Why may such title chan
> Answer the following questions on the basis of the table shown here. QB is type B labor, and VMPBx and VMPBy are the industry values of the marginal products of this labor in producing x and y, the only two goods in the economy. a. If the supply price
