Question: In what ways are job-order and

> Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a

> The Devon Motor Company produces motorcycles. During April, the company purchased 8,000 batteries at a cost of $10 per battery. Devon withdrew 7,600 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in motorcycle

> Data for Hermann Corporation are shown below: Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. Required: 1. The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthl

> The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed: Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare the cost of goods sold section of Mason Companyâ&#1

> The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are

> “I was sure that when our battery hit the market it would be an instant success,” said Roger Strong, founder and president of Solar Technology, Inc. “But just look at the gusher of red ink for the fir

> Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. ( Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, an

> Refer to the data for Lakeshore Hotel in Exercise 5–8. Exercise 5–8 Required: 1. Prepare a scatter graph using the data from Exercise 5–8. Plot cost on the vertical axis and activity on the horizontal

> Hector P. Wastrel, a careless employee, left some combustible materials near an open flame in Salter Company’s plant. The resulting explosion and fi re destroyed the entire plant and administrative offices. Justin Quick, the company’s controller, and Con

> Mercury, Inc., produces cell phones at its plant in Texas. In recent years, the company’s market share has been eroded by stiff competition from overseas. Price and product quality are the two key areas in which companies compete in thi

> Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 k

> In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease th

> A number of terms relating to the cost of quality and quality management are listed below: Required: Choose the term or terms that most appropriately complete the following statements. The terms can be used more than once and a blank can hold more than

> Paul Clark is employed by Aerotech Products where he assembles a component part for one of the company’s product lines. He is paid $14 per hour for regular time and time and a half (i.e., $21 per hour) for all work in excess of 40 hours per week. Require

> Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000. Required: 1. What is the company’s contribution margin (CM) ratio? 2. Estimate the change in th

> Several days ago you took your TV set into a shop to have some repair work done. When you later picked up the set, the bill showed a $75 charge for labour. This charge represented two hours of service time—$30 for the first hour and $45 for the second. W

> A number of activities that are a part of a company’s quality control system are listed below: Required: 1. Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal co

> Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company’s fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year. Required: 1. What are the v

> Mark Hansen is employed by Eastern Products and works on the company’s assembly line. Mark’s basic wage rate is $20 per hour. The company’s union contract states that employees are to be paid time and a half (i.e., $30 per hour) for any work in excess of

> The questions in this problem are based on Blue Nile, Inc. To answer the questions, you will need to download Blue Nile’s 2004 Form 10-K at www.sec.gov/edgar/searchedgar/company search.html. Once at this website, input CIK code 1091171

> Define the following terms: ( a ) Cost behaviour and ( b ) Relevant range.

> Distinguish between ( a ) A variable cost, ( b ) A fixed cost, and ( c ) A mixed cost.

> What is the difference between a contribution approach income statement and a traditional approach income statement?

> Distinguish between discretionary fixed costs and committed fixed costs.

> Distinguish between ( a ) A variable cost, ( b ) A mixed cost, and ( c ) A step-variable cost. Plot the three costs on a graph, with activity plotted horizontally and cost plotted vertically.

> Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months fol

> Jaffre Enterprises distributes a single product whose selling price is $16 and whose variable expense is $11 per unit. The company’s fixed expense is $16,000 per month. Required: 1. Prepare a profit graph for the company up to a sales level of 4,000 unit

> Marwick’s Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick’s Pianos, Inc., sells the pianos to its

> The following data relating to units shipped and total shipping expense have been assembled by Archer Company, a wholesaler of large, custom-built air-conditioning units for commercial buildings: Required: 1. Using the high-low method, estimate a cost f

> Nova Company’s total overhead cost at various levels of activity are presented below: Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 ma

> Amfac Company manufactures a single product. The company keeps careful records of manufacturing activities from which the following information has been extracted: The company’s manufacturing overhead cost consists of both variable and

> Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labour-hours worked in the factory. Total factory overhead cost

> Pleasant View Hospital of British Columbia has just hired a new chief administrator who is anxious to employ sound management and planning techniques in the business affairs of the hospital. Accordingly, she has directed her assistant to summarize the co

> The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel’s busin

> Oki Products, Ltd., has observed the following processing costs at various levels of activity over the last 15 months: Required: 1. Prepare a scatter graph using the above data. Plot cost on the vertical axis and activity on the horizontal axis. Fit a l

> Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22. Required: 1. Fill in the following table with your estimate

> The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company’s Ski Department for a recent quarter is presented below: Skis sell, on the average, for $750 per pair. Variable selling expens

> Angora Wraps of Pendleton, Oregon, makes fi ne sweaters out of pure angora wool. The business is seasonal, with the largest demand during the fall, the winter, and Christmas holidays. The company must increase production each summer to meet estimated dem

> Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez’s business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times. One

> Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Required: 1. What is the monthly break-even point in units sold and in sales dollars? 2. Without resorting to computations, what is the

> St. Mark’s Hospital contains 450 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital’s beds are occupied by patients. At this level of occupancy, the hospital’s operating costs are $32 per occupied bed per d

> 1. Referring to the data for Blue Nile in Research and Application 5–20 and the data on net sales available on the company’s website, estimate the variable and fixed components of the company’s quarterly selling, general, and administrative expense. Expr

> Professor John Morton has just been appointed chairperson of the Finance Department at Westland University. In reviewing the department’s cost records, Professor Morton has found the following total cost associated with Finance 101 over

> Refer to the data for Pleasant View Hospital in Problem 5–14. Data from Problem 5–14. Required: 1. Using the least-squares regression method, estimate a cost formula for utilities. (Round the variable cost to the neare

> Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare suc

> Refer to the data for Archer Company in Exercise 5–6. Data from Exercise 5–6. Required: 1. Using the least-squares regression method, estimate a cost formula for shipping expense. 2. If you also completed Exercise 5&a

> George Caloz & Frères, located in Grenchen, Switzerland, makes prestige high-end custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has obse

> Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the behaviour of the company’s costs. One of those costs is the cost of washing

> Hokuriku-Seika Co., Ltd., of Yokohama, Japan, is a subcontractor to local manufacturing companies. The company specializes in precision metal cutting using focused high-pressure water jets and high-energy lasers. The company has a traditional job-order c

> Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Pro

> The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were: Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is c

> Miller Company’s most recent contribution format income statement is shown below: Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): 1. The number of

> Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May: The company uses the weighted-average method. Required:

> Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Depa

> Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments: Refining and Blending. Raw materials are introduced at various points in the Refining Department. The follo

> Data concerning a recent period’s activity in the Prep Department, the fi rst processing department in a company that uses process costing, appear below: A total of 20,100 units were completed and transferred to the next processing dep

> Superior Micro Products uses the weighted-average method in its process costing system. Data for the Assembly Department for May appear below: Required: 1. Compute the cost per equivalent unit for materials, for labour, and for overhead. 2. Compute the

> Clonex Labs, Inc., uses a process costing system. The following data are available for one department for October: The department started 175,000 units into production during the month and transferred 190,000 completed units to the next department. Requ

> Quality Brick Company produces bricks in two processing departments—Molding and Firing. Information relating to the company’s operations in March follows: a. Raw materials were issued for use in production: Molding Department, $23,000; and Firing Departm

> Alaskan Fisheries, Inc., processes salmon for various distributors. Two departments are involved— Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below: A total of

> Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,000 units and transferred them to the next department. The cost of beginning inventory an

> Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a commission of 15% of

> Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below: Required: 1.

> Roberts Corporation uses a process cost system. The records for the month of May show the following information: Required Prepare a cost of production summary for each department. Production Report Cutting Grinding Units in process, May 1 5,000 10,

> Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows the following: The products, Num 1 and Num 2, are sold in two territories, North and South, as follows: The common fixed expenses are traceable to

> Define differential analysis, differential revenue, differential cost, and differential income.

> Limerick Enterprises, Inc., is considering building a manufacturing plant in Dublin. Predicting sales of 100,000 units, Limerick estimates the following expenses: An Irish firm that specializes in marketing will be engaged to sell the manufactured produ

> The production of a new product required Mirage Manufacturing Company to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales—24,000 units Selling expenses are expecte

> 1. For E5-10, prepare a cost of production summary for the month for Blending. 2. Prepare a journal entry to transfer the completed units from Blending to Finished Goods. In E5-10 Cost in Mixing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Using the data, determine: 1. The cost of goods received from Shaping during the month. 2. The production costs incurred in Forming during the month. 3. The cost of goods completed and transferred to Finishing during the month. Work in Process-Formi

> If the prior department’s transfers from two different periods have different unit costs each month, how are they treated for purposes of the cost of production summary for the department to which they were transferred?

> What is the difference between the contribution margin ratio and the margin of safety ratio?

> Foamy, Inc., manufactures shaving cream and uses an average cost system. In November, production is 14,800 equivalent units for materials and 13,300 units for labor and overhead. During the month, materials, labor, and overhead costs were as follows: Mat

> Camacho Chemical Company uses an average cost processing system. All materials are added at the start of the production process. Labor and overhead are added evenly at the same rate throughout the process. Camacho’s records indicate the following data fo

> What information is reflected on a production report?

> Fifteen workers are assigned to a group project. The productionstandard calls for 500 units to be completed each hour to meet acustomer’s set deadline for the products. If the required unitscan be delivered before the target date on the

> Analyze the information presented in the following general ledger account of Mantle Manufacturing Co., which has three departments: Shaping, Forming, and Finishing: Additional facts: a. 2,000 units were in process at the beginning of the month, one-half

> What is the importance of make-or-buy studies for a company?

> What is the primary objective in accumulating costs by departments?

> Buscemi Products, Inc., desires an after-tax income of $500,000. It has fixed costs of $2,500,000, a unit sales price of $300, and unit variable costs of $150, and is in the 40% tax bracket. Required: 1. What amount of pre-tax income is needed to earn

> Ichiro Manufacturing Co. uses the process cost system. The following information for the month of December was obtained from the company’s books and from the production reports submitted by the department heads: Required: 1. Prepare co

> Using the data in P5-5: 1. Draft the necessary entries to record the manufacturing costs incurred during the month of July. 2. Prepare a statement of cost of goods manufactured for the month ended July 31. Cubbies Manufacturing Co. Departmental Cost

> Using the data given for Cases 1–3 and the FIFO cost method, compute the separate equivalent units of production, one for materials and one for labor and overhead, under each of the following assumptions (labor and factory overhead are applied evenly dur

> What are the advantages and disadvantages of using variable costing?

> Spaulding Manufacturing Company has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year: Direct materials . . . . . . . . . . . . . . . . . . . . $ 5 Direct labor . . . . . . . . . . .

> Why is it necessary to estimate the stage or degree of completion of work in process at the end of the accounting period under the process cost system?

> Marion Corporation has determined the following selling price and manufacturing cost per unit based on normal production of 72,000 units per year: Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> What would be the effect on the unit cost of finished goods if an estimate of the stage of completion of work in process was too high?

> Assume each of the following conditions concerning the data given: 1. All materials are added at the beginning of the process. 2. All materials are added at the end of the process. 3. Half of the materials are added at the beginning of the process, and

> In E5-7, prepare a statement of cost of goods manufactured for the period. In E5-7 North Arlington Company has two production departments. The nature of the process is such that no units remain in process in Finishing at the end of the period. During th

> North Arlington Company has two production departments. The nature of the process is such that no units remain in process in Finishing at the end of the period. During the period, 10,000 units with a cost of $30,000 were transferred from Assembly to Fini

> The Coca-Cola Company’s manufacturing operations are ideal for process costing because it and its bottlers produce long runs of identical beverages in a continuous flow production process. Go to the companion Web site at www.cengage.com/accounting/vander

> What steps are required in constructing a break-even chart?

> Assuming that all materials are added at the beginning of the process and the labor and factory overhead are applied evenly during the process, compute the figures to be inserted in the blank spaces of the following data, using the average cost method.

> Eradicate, Inc., produces and sells a line of insect repellants that are sold primarily in the summer months. Recently, the chief operating officer has become interested in possibly manufacturing a repellant, ‘‘Halt’’ that can prevent a person from being

> U.S. Grant Company has two production departments. Blending had 1,000 units in process at the beginning of the period, two fifths complete. During the period 7,800 units were received from Mixing, 8,200 units were transferred to Finished Goods, and 600 u

> Why are there objections to using absorption costing when segment reports of profitability are being prepared?

> Colbert Company has 1,000 units in process in Forming at the beginning of the month with a transferred cost of $21,200 from Blanking. During the month, 5,000 units with a total cost of $100,000 are received from Blanking; 4,000 units are finished and tra

> The Nut House, Inc., sells three types of nuts: almonds, cashews, and walnuts. Ten thousand cans of nuts were sold in 2011, and the amount of walnuts sold were twice as much as the number of cans of cashews, whereas almond sales were one-half the amount

> Rancho Santa Fe Manufacturing, Inc., produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Required: 1. Classify each cost element as either variable,