Question:

> On May 1, 2017, Bovar Company began the manufacture of a new paging machine known as Dandy. The company installed a standard costing system to account for manufacturing costs. The standard costs for a unit of Dandy follow: Direct materials (3 lb. at $4 p

> Sandy’s Snacks produces snack mixes for the gourmet and natural foods market. Its most popular product is Tempting Trail Mix, a mixture of peanuts, dried cranberries, and chocolate pieces. For each batch, the budgeted quantities and bud

> Oyster Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $248 per board. This includes 35 pounds of direct materials, at the budgeted price of $3 per pound, and 11 hours of direct m

> Katharine Johnson is the owner of Best Bikes, a company that produces high-quality cross-country bicycles. Best Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle shops. For several years Best

> You have been invited to interview for an internship with an international food manufacturing company. When you arrive for the interview, you are given the following information related to a fictitious Belgian chocolatier for the month of June. The choco

> Ellis Animal Health, Inc., produces a generic medication used to treat cats with feline diabetes. The liquid medication is sold in 100 ml vials. Ellis employs a team of sales representatives who are paid varying amounts of commission. Given the narrow ma

> Student Finance (StuFi) is a start-up that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school’s

> “A component part should be purchased whenever the purchase price is less than its total manufacturing cost per unit.” Do you agree? Why?

> Nantucket Enterprises manufactures insulated cold beverage cups printed with college and corporate logos, which it distributes nationally in lots of 12 dozen cups. In June 2017, Nantucket produced 5,000 lots of its most popular line of cups, the 24-ounce

> Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-30, including requirement 2. Summarize how these journal entries differ from the normal-costing entries described in Chapter 4, pages 120–123. From exercise 30: Daws

> Dawson, Inc., is a privately held furniture manufacturer. For August 2017, Dawson had the following standards for one of its products, a wicker chair: Standards per Chair Direct materials………………………….3 square yards of input at $5.50 per squar

> The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: Direct materials: 10 lb. at $4.50 per lb…………………………………..$45.00 Direct manufacturing labor: 0.5 hour

> Rugged Life, Inc., designs and manufactures fleece quarter-zip jackets. It sells its jackets to brand-name outdoor outfitters in lots of one dozen. Rugged Life’s May 2017 static budget and actual results for direct inputs are as follows

> Consider the following data collected for Great Homes, Inc.: Required: Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing labor. Direct Cost incurred: Actual inputs × actual prices Actual input

> Sunshine Foods manufactures pumpkin scones. For January 2017, it budgeted to purchase and use 14,750 pounds of pumpkin at $0.92 a pound. Actual purchases and usage for January 2017 were 16,000 pounds at $0.85 a pound. Sunshine budgeted for 59,000 pumpkin

> Cascade, Inc., produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Cascade uses standard costing and carries over no inventory from one month to t

> The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the company’s variance analysis calculations for the year ended December 31, 2017. The following table is wha

> Bank Management Printers, Inc., produces luxury checkbooks with three checks and stubs perpage. Each checkbook is designed for an individual customer and is ordered through the customer’s bank. The company’s operating budget for September 2017 included t

> What are four key perspectives in the balanced scorecard?

> Bryant Company’s budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attaché case are $43, $6, and $13, respectively. The president is pleased with the following p

> Sweeney Enterprises manufactures tires for the Formula I motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,600 tires at a variable cost of $71 per tire and total fixed costs of $55,000. The budgeted selling price was $114 per t

> HealthMart is a retail store selling home oxygen equipment. HealthMart also services home oxygen equipment, for which the company bills customers monthly. HealthMart has budgeted for increases in service revenue of $200 each month due to a recent adverti

> Consider each of the following independent situations for Sunrise Tours, a company owned by David Bartlett that sells motor coach tours to schools and other groups. Sunshine Tours owns a fleet of 10 motor coaches and employs 12 drivers, maintenance techn

> Consider each of the following independent situations for Prestige Fountains. Prestige manufactures and sells decorative fountains for commercial properties. The company also contracts to service both its own and other brands of fountains. Prestige has a

> Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2018. Each successive month, the budgeted cost-driver rate decreases by 0.4% relative to the preceding month. So, for example, February’s budg

> The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity-based budget for January 2018. Jiffy Mart has three product categories: soft drinks (35% of cost of goods sold [COGS]), fresh produce (25% of COGS

> DeWitt Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Bahar, the controller, is responsible for preparing DeWitt’s master budget and has accumulated the following information

> Ever Clean Company provides gutter cleaning services to residential clients. The company has enjoyed considerable growth in recent years due to a successful marketing campaign and favorable reviews on service-rating Web sites. Ever Clean owner Joanne Cla

> Xander Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 36 skeins of wool at a cost of $2 per skein and 0.8 gallons of dye at a cost of $6 per gallon. All other materials are indirect. At th

> Describe two potential problems that should be avoided in relevant-cost analysis.

> Saphire, Inc., bottles and distributes mineral water from the company’s natural springs in northern Oregon. Saphire markets two products: 12-ounce disposable plastic bottles and 1-gallon reusable plastic containers. Required: 1. For 2018, Saphire market

> The Yucatan Co. in Mexico has a division that manufactures bicycles. Its budgeted sales for Model XG in 2018 are 95,000 units. Yucatan’s target ending inventory is 7,000 units, and its beginning inventory is 11,000 units. The company’s budgeted selling p

> What are the three methods for determining transfer prices?

> “Organizations typically adopt a consistent decentralization or centralization philosophy across all their business functions.” Do you agree? Explain.

> What is the relationship among motivation, goal congruence, and effort?

> Describe three criteria you would use to evaluate whether a management control system is effective.

> The McGrath Company has prepared a sales budget of 42,000 finished units for a 3-month period. The company has an inventory of 13,000 units of finished goods on hand at December 31 and has a target finished-goods inventory of 15,000 units at the end of t

> What is a management control system?

> “All transfer-pricing methods give the same division operating income.” Do you agree? Explain.

> What properties should transfer-pricing systems have?

> Give an example of how, under absorption costing, operating income could fall even though the unit sales level rises.

> The main trouble with variable costing is that it ignores the increasing importance of fixed costs in manufacturing companies. Do you agree? Why?

> Describe the difference between a direct materials efficiency variance and a variable manufacturing overhead efficiency variance.

> Assume variable manufacturing overhead is allocated using machine-hours. Give three possible reasons for a favorable variable overhead efficiency variance.

> Name four approaches to estimating a cost function.

> Do companies in either the service sector or the merchandising sector make choices about absorption costing versus variable costing?

> When using the high-low method, should you base the high and low observations on the dependent variable or on the cost driver?

> In 2017, Hart & Sons, a small environmental-testing firm, performed 11,400 radon tests for $260 each and 15,000 lead tests for $210 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next ye

> Describe the account analysis method for estimating a cost function.

> What are the four key assumptions examined in specification analysis in the case of simple regression?

> “The difference between practical capacity and master-budget capacity utilization is the best measure of management’s ability to balance the costs of having too much capacity and having too little capacity.” Do you agree? Explain.

> Will the financial statements of a company always differ when different choices at the start of the accounting period are made regarding the denominator-level capacity concept?

> What are the variances in a 4-variance analysis?

> Describe three criteria for evaluating cost functions and choosing cost drivers.

> What denominator-level capacity concepts emphasize the output a plant can supply? What denominator-level capacity concepts emphasize the output customers demand for products produced by a plant?

> Explain how the analysis of fixed manufacturing overhead costs differs for (a) planning and control and (b) inventory costing for financial reporting.

> How do managers plan for variable overhead costs?

> United Savings Bank (USB) is examining the profitability of its Premier Account, a combined savings and checking account. Depositors receive a 2% annual interest rate on their average deposit. USB earns an interest rate spread of 3% (the difference betwe

> Match each of the following numbered descriptions with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity c. Normal capacity utilization d. Master-bu

> Give three definitions of investment used in practice when computing ROI.

> Describe EVA.

> What factors affecting ROI does the DuPont method of profitability analysis highlight?

> Describe moral hazard.

> How can sensitivity analysis be incorporated in DCF analysis?

> “Capital budgeting has the same focus as accrual accounting.” Do you agree? Explain.

> Give examples of costs included in annual carrying costs of inventory when using the EOQ decision model.

> Name six cost categories that are important in managing goods for sale in a retail company.

> Give two examples of appraisal costs.

> The job-costing system at Melody’s Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process of bidding on two jobs: Job 220, an or

> Name two items classified as prevention costs

> How does conformance quality differ from design quality? Explain.

> Describe two benefits of improving quality.

> “The inspection point is the key to the allocation of spoilage costs.” Do you agree? Explain.

> “In accounting for spoiled units, we are dealing with cost assignment rather than cost incurrence.” Explain.

> “Units of abnormal spoilage are inferred rather than identified.” Explain.

> “What has been regarded as normal spoilage in the past is not necessarily acceptable as normal spoilage in the present or future.” Explain.

> “Costs of abnormal spoilage are losses.” Explain.

> “Normal spoilage is planned spoilage.” Discuss.

> When is a company justified in inventorying scrap?

> Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Veritek commented, “We apply ABC to determine product-line profitability. The same ideas apply to customer profitability

> “The costs of rework are always charged to the specific jobs in which the defects were originally discovered.” Do you agree? Explain.

> “The unit cost of normal spoilage is the same as the unit cost of abnormal spoilage.” Do you agree? Explain.

> Why is there an unmistakable trend in manufacturing to improve quality?

> Why should the FIFO method be called a modified or department FIFO method?

> Describe the distinctive characteristic of weighted-average computations in assigning costs to units completed and to units in ending work in process.

> Name the three inventory methods commonly associated with process costing.

> “Transferred-in costs are those costs incurred in the preceding accounting period.” Do you agree? Explain.

> Identify the main difference between journal entries in process costing and job costing.

> Identify a major advantage of the FIFO method for purposes of planning and control.

> Give three examples of industries that use process-costing systems.

> Fitzgerald Supermarkets (FS) operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods. It identifies four activities and their activity cost rates as follows: Orderingâ€

> Why does the sales value at splitoff method use the sales value of the total production in the accounting period and not just the revenues from the products sold?

> What is a joint cost? What is a separable cost?

> Describe two major methods to account for byproducts.

> How might a company simplify its use of the NRV method when final selling prices can vary sizably in an accounting period and management frequently changes the point at which it sells individual products?

> Give two examples of industries in which joint costs are found. For each example, what are the individual products at the splitoff point?

> What is conceptually the most defensible method for allocating support-department costs? Why?

> “To ensure unbiased cost allocations, fixed costs should be allocated on the basis of estimated long-run use by user-department managers.” Do you agree? Why?

> Give examples of allocation bases used to allocate support-department cost pools to operating departments.

> How do budgeted cost rates motivate the support-department manager to improve efficiency?