Question: In an attempt to improve budgeting, the

> Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Purchasing $40,000 Setups 37,500 Engineering 45,000 Other 40,000 Previously, Sanjay Bhatt, Firenza Company’s controller, had appli

> The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): $64,900 per year Variable costs (supplies): $1.35 per maintenance hour The Assembly and Packaging departments expect to use ma

> During May, the following transactions were completed and reported by Sylvana Company: a . Materials purchased on account, $60,100. b. Materials issued to production to fill job-order requisitions: direct materials, $51,000; indirect materials, $8,950. c

> Lawanna Davis graduated from State U with a major in accounting five years ago. She obtained a position with a well-known professional services firm upon graduation and has become one of their outstanding performers. In the course of her work, she has de

> Garcia Industries produces tool and die machinery for manufacturers. The company expanded vertically in 20x1 by acquiring one of its suppliers of alloy steel plates, Keimer Steel Company. To manage the two separate businesses, the operations of Keimer ar

> Reddy Industries is a vertically integrated firm with several divisions that operate as decentralized profit centers. Reddy’s Systems Division manufactures scientific instruments and uses the products of two of Reddy’s

> For each of the following scenarios, determine whether the specified variable would increase, decrease, or remain the same. Explain your choice. 1. If sales and average operating assets for Kayman Company for Year 2 are identical to their values in Year

> At the end of 20x1, Mejorar Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost producer in its industry. A Balanced Scorecard was developed to guide the company toward this objective. To

> Carson Wellington, president of Mallory Plastics, was considering a report sent to him by Emily Sorensen, vice president of operations. The report was a summary of the progress made by an activity-based management system that was implemented three years

> CableTech Bell Corporation (CTB) operates in the telecommunications industry. CTB has two divisions: the Phone Division and the Cable Service Division. The Phone Division manufactures telephones in several plants located in the Midwest. The product lines

> Elena Chavez is founder and CEO of Willowbank, Inc., which owns and operates several assisted-living facilities. The facilities are apartment-style buildings with 25 to 30 one- or two-bedroom apartments. While each apartment has its own complete kitchen,

> Jack Aerospace Technologies (JAT) researches, designs, manufactures, delivers, and services numerous product part components to the world’s largest aircraft companies. JAT produces approximately 120 aircraft products using numerous proc

> Refer to Brief Exercise 7-10. (Round percentages to four significant digits and cost allocations to the nearest dollar.) Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and

> Beauville Furniture Corporation produces sofas, recliners, and lounge chairs. Beauville is located in a medium-sized community in the southeastern part of the United States. It is a major employer in the community. In fact, the economic well-being of the

> Each of the following scenarios requires the use of accounting information to carry out one or more of the following managerial activities: (1) planning, (2) control and evaluation, (3) continuous improvement, or (4) decision making. a. MANAGER: At t

> Bill Christensen, the production manager, was grumbling about the new quality cost system the plant controller wanted to put into place. “If we start trying to track every bit of spoiled material, we’ll never get any work done. Everybody knows when they

> If I can increase my reported profit by $2 million, the actual earnings per share will exceed analysts’ expectations, and stock prices will increase. The stock options that I am holding will become more valuable. The extra income will also make me eligib

> Consider the following actions associated with a cost management information system: a. Eliminating a non-value-added activity b. Determining how much it costs to perform a heart transplant c. Calculating the cost of inspecting components from an outside

> Hepworth Communications produces cell phones. One of the four major electronic components is produced internally. The other three components are purchased from external suppliers. The electronic components and other parts are assembled (by the Assembly D

> Classify each of the following actions as either being associated with the financial accounting information system (FS) or the cost management information system (CMS): a. Determining the total compensation of the CEO of a public company b. Issuing a qua

> Refer to the data given in Exercise 10-8. Required: 1. Compute the residual income for each of the opportunities. (Round to the nearest dollar.) 2. Compute the divisional residual income (rounded to the nearest dollar) for each of the following four alte

> At the end of Year 2, the manager of the Canned Foods Division is concerned about the division’s performance. As a result, he is considering the opportunity to invest in two independent projects. The first is juice boxes for elementary

> Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Required: 1. Compute the ROI and the margin and turnover ratios for each year for the Frozen Foods Division. (Round your answers to four significant di

> A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as fo

> Arbus Company provided the following information: Turnover 1.4 Operating assets $120,000 Operating income 6,720 Required: 1. What is ROI? 2. What is margin?

> Fermat, Inc., has acquired two new companies, one in consumer products and the other in financial services. Fermat’s top management believes that the executives of the two newly acquired companies can be most quickly assimilated into the parent company i

> The following selected data pertain to the Argent Division for last year: Sales $1,000,000 Variable costs $ 624,000 Traceable fixed costs $ 100,000 Average invested capital $1,500,000 Imputed interest rate 15% Required: 1. How much is the residual income

> Consider the data for each of the following four independent companies: Required: 1. Calculate the missing values in the above table. (Round rates to four significant digits.) 2. Assume that the cost of capital is 9 percent for each of the four firms. Co

> A multinational corporation has a number of divisions, two of which are the North American Division and the Pacific Rim Division. Data on the two divisions are as follows: Round all rates of return to four significant digits. Required: 1. Compute residua

> Asgard Farms, Inc., has a number of divisions that produce jams and jellies, condiments, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Asgard Farm’s

> Xenold, Inc., manufactures and sells cooktops and ovens through three divisions: Home, Restaurant, and Specialty. Each division is evaluated as a profit center. Data for each division for last year are as follows (numbers in thousands): The income tax ra

> Brewster Company manufactures elderberry wine. Last year, Brewster earned operating income of $192,000 after income taxes. Capital employed equaled $2.3 million. Brewster is 45 percent equity and 55 percent 10-year bonds paying 6 percent interest. Brewst

> Janson, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 100,000 units requiring 20,000 standard direct labor hours. Budgeted overhead for the year

> Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be investigated anytime the amount exceeds the lesser of $12,000 or 10 percent of the standar

> The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): $64,900 per year Variable costs (supplies): $1.35 per maintenance hour Estimated usage by: Assembly Department 4,500 Fabricati

> Samson Company produces paper towels. The company has established the following direct materials and direct labor standards for one case of paper towels: Paper pulp (4 lbs. @ $0.30) $ 1.20 Labor (1.8 hrs. @ $18) 32.40 Total prime cost $33.60 During the f

> Redfield Company uses two types of direct labor for the manufacturing of its products: fabricating and assembly. Redfield has developed the following standard mix for direct labor, where output is measured in units. During the second week in April, Redfi

> Chypre, Inc., purchased the amount used of each direct material input on May 2 for the following actual prices: solvent mix for $5.20 per gallon, and aromatic compound for $8,010 per gallon. Required: 1. Compute and journalize the direct materials price

> Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic compounds (the scent base) that it sells to other companies for bottling and sale to consumers. Chypre developed the following standard cost sheet: On May 2,

> Refer to the data in Exercise 9-15. Required: 1. Compute overhead variances using a two-variance analysis. 2. Compute overhead variances using a three-variance analysis. 3. Illustrate how the two- and three-variance analyses are related to the four-varia

> Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours. (Practical capacity is 500,000 hours.)

> Berner Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy: Direct materials (8.2 oz. @ $0.09) $0.738 Direct labor (0.07 hr. @ $18.00) 1.26 Standard prime cost $1.998 During the firs

> During the year, Vandy Company produced 280,000 components for industrial metal working machinery. Vandy’s direct materials and direct labor standards per unit are as follows: Direct materials (3.70 lbs. @ $6) $22.20 Direct labor (1.80 hr. @ $15) 28.80 R

> Quincy Farms is a producer of items made from farm products that are distributed to supermarkets. For many years, Quincy’s products have had strong regional sales on the basis of brand recognition. However, other companies have been marketing similar pro

> Suppose Gene determines that next year’s Sales Division activities include the following: Research—researching current and future conditions in the industry Shipping—arranging for shipping of mattress

> Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follo

> Next year, Bob’s Bistro expects to produce 50,000 units and sell 50,500 units at a price of $20.00 each. Beginning inventory of finished goods is $13,000, and ending inventory of finished goods is expected to be $10,000. Total selling expense is projecte

> Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has pr

> At the end of the year, Engersol, Inc., actually produced 305,000 units of the commercial cleaner and 120,000 of the deluxe model. The actual overhead costs incurred were: Maintenance $ 56,900 Power 10,000 Indirect labor 108,700 Rent 28,000 Required: Pre

> Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufacture

> Del Spencer’s purchases clothing evenly throughout the month. All purchases are on account. On the first of every month, Jana Spencer, Del’s wife, pays for all of the previous month’s purchases. Terms are 2/10, n/30 (i.e., a 2 percent discount can be tak

> Del Spencer is the owner and founder of Del Spencer’s Men’s Clothing Store. Del Spencer’s has its own house charge accounts and has found from past experience that 10 percent of its sales are for cash. The remaining 90 percent are on credit. An aging sch

> Historically, Ragman Company has had no significant bad debt experience with its customers. Cash sales have accounted for 20 percent of total sales, and payments for credit sales have been received as follows: 40 percent of credit sales in the month of t

> LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following: a. Cash balance on October 1 is $980. b. Actual sales for Aug

> Rosita thinks that it may be time to refuse to accept checks and to start accepting credit cards. She is negotiating with VISA/MasterCard and American Express, and she would start the new policy on April 1. Rosita estimates that with the drop in sales fr

> Rosita Flores owns Rosita’s Mexican Restaurant in Tempe, Arizona. Rosita’s is an affordable restaurant near campus and several hotels. Rosita accepts cash and checks. Checks are deposited immediately. The bank charges $0.50 per check; the amount per chec

> Gunnison Company had the following equivalent units schedule and cost information for its Sewing Department for the month of December: Required: 1. Calculate the unit cost for December, using the FIFO method. 2. Calculate the cost of goods transferred ou

> Tiger Drug Store carries a variety of health and beauty aids, including 500-count bottles of vitamins. The sales budget for vitamins for the first six months of the year is presented below. The owner of Tiger Drug believes that ending inventories should

> Video-Forward, Inc., designs and manufactures wearable video cameras. Models A-1, A-2, and A-3 are lightweight video cameras that can be used on arms and headbands. Models A-4 and A-5 have larger memory, better resolution, and more Wi-Fi-related features

> Macchu Company produces stuffed toy animals; one of these is “Andie the Llama.” Each Andie takes 0.30 yard of fabric and eight ounces of polyfiberfill. Fabric costs $3.50 per yard and polyfiberfill is $0.05 per ounce.

> Archer Company produces two products: the custom and the basic. The custom sells for $30, and the basic sells for $8. Projected sales of the two models for the coming four quarters are given below. The president of the company believes that the projected

> Palmgren Company produces consumer products. The sales budget for four months of the year is presented below. Company policy requires that ending inventories for each month be 25 percent of next month’s sales. At the beginning of July,

> Arvin, Inc., produces two products, ins and outs, in a single process. The joint costs of this process were $77,300, and 14,000 units of ins and 36,000 units of outs were produced. Separable processing costs beyond the split-off point were as follows: in

> Refer to Exercise 7-25 and allocate the joint costs using the sales-value-at-split-off method. Data from Exercise 7-25: Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for o

> Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows: Direct materials $67,900 Direct labor 34,000 Overhead 25,500 At the split-off point, a batch yie

> Refer to the data in Exercise 7-22. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the costs of the support departments using the sequential method. (Round allocation ratios to four significant digits. R

> The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. (Round allocation ratio

> Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follo

> Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Required: 1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal

> The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the s

> Belami Company manufactures shampoo and hair conditioner, with each product manufactured in separate departments. Three support departments support the production departments: Power, General Factory, and Purchasing. Budgeted data on the five departments

> When the capacity of the HR Department was originally established, the normal usage expected for each department was 20,000 direct labor hours. This usage is also the amount of activity planned for the two departments in Year 1 and Year 2. Required: 1. A

> Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Hu

> Jeff McMillan owns a small neighborhood shopping mall. Of the 10 store spaces in the building, seven are rented by boutique owners and three are vacant. Jeff has decided that offering more services to stores in the mall would enable him to increase occup

> Samantha and Rashida are planning a trip to Padre Island, Texas, during spring break. Members of the varsity volleyball team, they are looking forward to four days of beach volleyball and parasailing. They will drive Samantha’s car and estimate that they

> Dr. Fred Poston, “Dermatologist to the Stars,” has a practice in southern California. The practice includes three dermatologists, three medical assistants, an office manager, and a receptionist. The office space, which is rented for $5,000 per month, is

> Identify some possible causal factors for the following support departments: a. Cafeteria b. Custodial services c. Laundry d. Receiving, shipping, and stores e. Maintenance f. Personnel g. Accounting h. Power i. Building and grounds

> Classify each of the following departments in a large metropolitan law firm as a producing department or a support department. a. Copying b. WESTLAW computer research c. Tax planning d. Environmental law e. Oil and gas law f. Custodians g. Word processin

> Dulce Company produces 70 percent dark chocolate truffles. Conversion costs are added uniformly. For the first week in March, EWIP is 80 percent complete with respect to conversion costs. Materials are added at the beginning of the process. The following

> Classify each of the following departments in a factory that produces crème-filled snack cakes as a producing department or a support department. a. Janitorial b. Baking c. Inspection d. Mixing e. Engineering f. Grounds g. Purchasing h. Packaging i. Icin

> Tasty Bread makes and supplies bread throughout the state of Kansas. Three types of bread are produced: loaves, rolls, and buns. Seven operations describe the production process. a. Mixing: Flour, milk, yeast, salt, butter, and so on, are mixed in a larg

> Baxter Company has two processing departments: Assembly and Finishing. A predetermined over-head rate of $10 per DLH is used to assign overhead to production. The company experienced the following operating activity for April: a. Materials issued to Asse

> Using the same data found in Exercise 6-22, assume the company uses the FIFO method. Required: Prepare a schedule of equivalent units, and compute the unit cost for the month of December. Data from Exercise 6-22: Brown Company has a product that passes

> Brown Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000

> Dama Company produces women’s blouses and uses the FIFO method to account for its manufacturing costs. The product Dama makes passes through two processes: Cutting and Sewing. During April, Dama’s controller prepared t

> Holmes Products, Inc., produces plastic cases used for video cameras. The product passes through three departments. For April, the following equivalent units schedule was prepared for the first department: Costs assigned to beginning work in process: dir

> Using the data from Exercise 6-18, compute the equivalent units of production for each of the four departments using the FIFO method. Data from Exercise 6-18: The following data are for four independent process-costing departments. Inputs are added cont

> The following data are for four independent process-costing departments. Inputs are added continuously. Required: Compute the equivalent units of production for each of the preceding departments using the weighted average method.

> McCourt Company uses the FIFO method to account for the costs of production. For the first processing department, the following equivalent units schedule has been prepared: The cost per equivalent unit for the period was as follows: Direct materials $ 4.

> Limpiar Company produces a liquid household cleaning product. The Mixing Department, the first process department, mixes the ingredients required for the cleaning product. The following data are for May: Work in process, May 1 — Quarts started 270,000 Qu

> Middelton Company manufactures a product that passes through two processes: Fabrication and Assembly. The following information was obtained for the Fabrication Department for October: a. All materials are added at the beginning of the process. b. Beginn

> Softkin Company manufactures sun protection lotion. The Mixing Department, the first process department, mixes the chemicals required for the repellant. The following data are for the current year: Work in process, January 1 — Gallons started 450,000 Gal

> McKay, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies are produced in three departments: Plate Cutting, Rod Cutting, and Welding. Materials are added at the beginning of the process. Overhead is applied usin

> Friedman Company uses JIT manufacturing. There are several manufacturing cells set up within one of its factories. One of the cells makes stands for flat-screen televisions. The cost of production for the month of April is given below. Cell labor $ 60,00

> A local barbershop cuts the hair of 1,200 customers per month. The clients are men, and the barbers offer no special styling. During the month of May, 1,200 customers were serviced. The cost of haircuts includes the following: Direct labor $ 9,000 Direct

> Sharma Company has three process departments: Mixing, Encapsulating, and Bottling. At the beginning of the year, there were no work-in-process or finished goods inventories. The following data are available for the month of July: Required: 1. Prepare jou

> Reggie Wilmore has just started a new business—building and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients’ garages. Reggie figures his overhead for the coming yea

> Vince Kim, owner of EcoScape, noticed that the watering systems for many houses in a local subdivision had the same layout and required virtually identical amounts of prime cost. Vince met with the subdivision builders and offered to install a basic wate

> Vince Kim, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated th

> Classify the following types of firms as either manufacturing or service. Explain the reasons for your choice in terms of the four features of service firms (heterogeneity, inseparability, intangibility, and perishability). a. Bicycle production b. Pharm