Question: Refer to the information in Exercise 22

> Aquatica uses a standard cost system for materials and labor in producing small fishing boats. Production requires three materials: fiberglass, paint, and a purchased trim package. The standard costs and quantities for materials and labor are as follows:

> Griffon Corp. makes small plastic dog toys with the following material and labor standards: During October, 60,000 pounds of material were acquired on account at $4.15 per pound. During October, 50,120 pounds of that were used in production during the mo

> Schmidt Co. has the following standard material and labor quantities and costs for one unit of Product SWK#468: Material 1.85 pounds @ ……….…………………….$3.50 per pound Labor 0.04 hours @ ………………………………………..$12 per hour During July, the purchasing agent found a

> Haddas Ltd. makes Healthy Life, a nutritional aid. For a 50-pound batch, standard material and labor costs are as follows: During June, the following materials and labor were used in producing 600 batches of Healthy Life: Wheat 18,000 pounds at â&#

> Tomm’s T’s is a New York–based company that produces and sells t-shirts. The firm uses variable costing for internal purposes and absorption costing for external purposes. At year-end, financial infor

> Polermo Inc. produces three-topping, 18-inch frozen pizzas and uses a standard cost system. The three pizza toppings (in addition to cheese) are onions, olives, and mushrooms. To some extent, discretion may be used to determine the actual mix of these to

> Kieffer Company makes men’s suit alterations for a major clothing store chain. No direct materials are used in the alterations process and overhead costs are primarily variable and relate very closely to direct labor charges. The company owner has decide

> The May budget for the Auberage Company shows $1,080,000 of variable conversion costs, $360,000 of fixed conversion costs, and 72,000 machine hours for the production of 24,000 units of product. During May, 76,000 machine hours were worked and 24,000 uni

> Ripper Corp. uses a standard cost system for its aircraft component manufacturing operations. Recently, the company’s direct material supplier went out of business, but Ripper’s purchasing agent found a new source that produces a similar ma

> Namathe Industries manufactures children’s footballs with the following standard costs per unit: Material: one square foot of leather at …………â€&b

> The following variances existed at year-end 2010 for Muckstadt Production Company: Material price variance …………………………………….$23,400 U Material quantity variance ………………………………….24,900 F Labor rate variance ………………………………………………5,250 F Labor efficiency variance

> Hellier Contractors paints interiors of residences and commercial structures. The firm’s management has established cost standards per 100 square feet of area to be painted. Direct material ($18 per gallon of paint) ………………………………..$1.50 Direct labor ……………

> For 2010, Riguilio Inc. set predetermined variable and fixed overhead rates, respectively, of $6.50 and $9.35 based on an expected monthly capacity of 4,000 machine hours. Each unit of product requires 1.25 machine hours. During August 2010, the company

> Terkelsen Mfg. produces comforter sets with the following standard cost information: • Each comforter set requires 0.5 hours of machine time to produce. • Variable overhead is applied at the rate of $9 per machine hour. • Fixed overhead is applied at the

> During December 2010, Amin Corp. manufactured products requiring 8,000 standard labor hours. The following variance and actual information is available: Labor rate variance ………………………………………..$ 4,500 U Labor efficiency variance ………………………………….12,000 U Actua

> Prior to the start of fiscal 2010, managers of MultiTech hosted a Web conference for their shareholders, financial analysts, and members of the financial press. During the conference, the CEO and CFO released the following financial projections for 2010

> N Joy makes wooden picnic tables, swings, and benches. Standard hours for each product are as follows: Picnic table ………………………………………….10 standard direct labor hours Swing ……………………………………………………3 standard direct labor hours Bench ……………………………………………………7 standa

> ALOHA Corp., started in January 2004, manufactures Hawaiian muumuus. At that time, the following material and labor standards were developed: Material ………………………………….3.0 yards at $4 per yard Labor ……………………………………….1.5 hours at $6 per hour In January 2010,

> Quinan Carpentry Co. makes wooden shelves. A small fire on October 1 partially destroyed the records relating to September’s production. The charred remains of the standard cost card appear here. From other fragments of records and seve

> Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed overhead rates were computed using expected capacity of 144,000 units (produced evenly throughout the year) and expected variable and fixed overhead costs,

> Green Tee produces 100 percent cotton t-shirts, with the following standard direct material and labor quantities and costs: Direct material 2.0 yards……………

> Madzinga’s Draperies manufactures curtains. Curtain #4571 requires the following: Direct material standard 10 square yards at …………………………$5 per yard Direct labor standard 5 hours at ………………………………………..$10 per hour During the second quarter, the company purc

> In July 2010, Zinger Corp. purchased 20,000 gallons of Numerol for $61,000 to use in the production of product #43MR7. During July, Zinger Corp. manufactured 3,900 units of product #43MR7. The following information is available about standard and actual

> For each independent case, fill in the missing figures. Case A Case B Case C Case D Units produced 1,000 ? 240 1,500 Standard hours per unit 3.5 0.9 ? Standard hours ? 900 600 Standard rate per hour $ 7.25 $ 10.50 7 Actual hours worked 3,400 975 4,90

> Calista & Lane, CPAs, set the following standard for its inventory audit of Triumph Co.: 350 hours at an average hourly billing rate of $250. The firm actually worked 330 hours during the inventory audit process. The total labor variance for the audit wa

> Information on Hanley’s direct labor costs for January 2010 is as follows: Actual direct labor rate …………………………………………..$7.50 Standard direct labor hours allowed ……………………..11,000 Actual direct labor hours ……………………………………..10,000 Direct labor rate variance …

> Since opening in 2009, Akron Aviation has built light aircraft engines and has gained a reputation for reliable and quality products. Factory overhead is applied to production using direct labor hours and any underapplied or overapplied overhead is close

> Heath Construction builds standard prefabricated wooden frames for walls. Each frame requires 10 direct labor hours and the standard hourly direct labor rate is $18. During July, the company produced 670 frames and worked 6,800 direct labor hours. Payrol

> A&G makes wrought iron table and chair sets. During April, the purchasing agent bought 25,600 pounds of scrap iron at $1.94 per pound. During the month, 21,400 pounds of scrap iron were used to produce 600 table and chair sets. Each set requires a standa

> Ayesha Inc. manufactures a product that requires 5 pounds of material. The purchasing agent has an opportunity to purchase the necessary material at a vendor’s bankruptcy sale at $1.40 per pound rather than the standard cost of $2.10 pe

> Cave Company produces a product called Lem. The standard direct material cost to produce one unit of Lem is 4 quarts of raw material at $2.50 per quart. During May 2010, 4,200 quarts of raw material were purchased at a cost of $10,080. All the purchased

> In November 2010, DayTime Publishing Company’s costs and quantities of paper consumed in manufacturing its 2011 Executive Planner and Calendar were as follows: Actual unit purchase price ………………………………………….$0.13 per page Standard unit price ………………………………………

> One of Sure-Bet Sherbet’s bestselling products is raspberry sherbet, which is manufactured in 10-gallon batches. Each batch requires 6 quarts of raspberries. The raspberries are sorted by hand before entering the production process and, because of imperf

> Bernie Services has three labor classes: administrative assistants, paralegals, and attorneys. Standard wage rates are as follows: administrative assistants, $30 per hour; paralegals, $60 per hour; and attorneys, $125 per hour. For October, the numbers o

> Coffen Corp. employs engineers and draftspeople. The average hourly rates are $60 for engineers and $30 for draftspeople. For one project, the standard was set at 400 hours of engineer time and 600 hours of draftsperson time. Actual hours worked on this

> Hennessey Company produces 12-ounce cans of mixed pecans and cashews. Standard and actual information follows. Standard Quantities and Costs (12-oz. can) Pecans: 6 ounces at $6.00 per pound ………………….$2.25 Cashews: 6 ounces at $8.00 per pound ………………..3.00

> Svenson Technology considers direct labor cost too insignificant to separately account for, and, therefore, uses a $22.50 per machine hour predetermined conversion cost rate (of which $16 is related to fixed overhead costs). The conversion rate was estab

> Bird’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for v

> Auto Brakes Inc. manufactures brake rotors and has always applied overhead to production using direct labor hours. Recently, company facilities were automated, and the accounting system was revised to show only two cost categories: direct material and co

> An HMO medical program began reimbursing hospitals according to diagnostic-related groups (DRGs). Each DRG has a specified standard “length of stay.” If a patient leaves the hospital early, the hospital is financially impacted favorably, but a patient st

> Many companies face the prospect of paying workers overtime wages; some of these payments are at time-and-a-half wages. a. How does overtime pay affect direct labor cost? Variable overhead? b. Obviously, paying overtime to already employed workers makes

> McNeal Concrete makes precast concrete steps for use with manufactured housing. The company had the following 2010 budget based on expected production of 6,400 units: Actual production for 2010 was 7,000 units, and actual costs for the year were as follo

> At year-end 2010, the trial balance of Pennopscott Corp. showed the following accounts and amounts: Assume that, taken together, the variances are believed to be significant. Prepare the journal entries to close the variances at year-end. Round any neces

> Bobcat Inc.’s total predetermined overhead rate is $50 per hour based on a monthly capacity of 58,000 machine hours. Overhead is 30 percent variable and 70 percent fixed. During September 2010, Bobcat Inc. produced 5,100 units of product and recorded 60,

> Li Corporation’s flexible budget formula for total overhead is $360,000 plus $8 per direct labor hour. The combined overhead rate is $20 per direct labor hour. The following data have been recorded for 2010: Actual total overhead ……………………………..$580,000 To

> Munich Ltd. uses a combined overhead rate of $2.90 per machine hour to apply overhead to products. The rate was developed at an expected capacity of 264,000 machine hours; each unit of product requires two machine hours to produce. At 264,000 machine hou

> Kemp Manufacturing set 70,000 direct labor hours as the 2010 capacity measure for computing its predetermined variable overhead rate. At that level, budgeted variable overhead costs are $315,000. Kemp will apply budgeted fixed overhead of $140,400 on the

> The manager of the Texas Department of Transportation has determined that it typically takes 30 minutes for the department’s employees to register a new car. In Bexar County, the predetermined fixed overhead rate was computed on an estimated 10,000 direc

> Georgia Shacks produces small outdoor buildings. The company began operations in 2010, producing 2,000 buildings and selling 1,500. A variable costing income statement for 2010 follows. During the year, variable production costs per unit were $800 for di

> As a three-person team, choose an activity that is commonly performed every day, such as taking a shower/bath, preparing a meal, or doing homework. Have each team member time him- or herself performing that activity for two days and then develop a standa

> Contact a local company that uses a standard cost system. Make an appointment with a manager at that company to interview her or him on the following issues: • the characteristics that should be present in a standard cost system to encourage positive emp

> What is an “equivalent unit of production,” and why is it a necessary concept to employ in a process costing system?

> (Appendix 2) In a process costing system, how are normal and abnormal spoilage typically treated? Why are normal and abnormal spoilage treated differently? Appendix 2: Spoilage The chapter examples assumed that all units to be accounted for have been tr

> Which cost component can be found in a downstream department of a multidepartment production process that will not be present in the first upstream department? Discuss.

> Is one equivalent unit computation sufficient for all cost components? Explain your answer.

> How do the weighted average and first-in, first-out methods of process costing differ in their treatment of beginning Work in Process Inventory units?

> What are the characteristics of a company that would be more likely to use process costing than job order costing?

> (Appendix 2) What is meant by the “method of neglect”? How does the use of this method affect cost of good production? Appendix 2: Spoilage The chapter examples assumed that all units to be accounted for have been tra

> What is a hybrid costing system? In what circumstances are hybrid costing systems typically employed?

> Tom Snider is a staff accountant for BigBiz. Snider was recently given the task of developing a monthly flexible budget formula for several manufacturing costs. He was told that his equations would be used as an aid in developing future budgets for these

> Why does standard costing make process costing more clerically and computationally efficient?

> A company has two sequential processing departments. On the cost of production reports for the departments, will the cost per unit transferred out of the first department always be equal to the cost per unit transferred in to the second department? Expla

> How is the cost of ending inventory calculated in a process costing system?

> What is meant by the term transferred-out cost? Why does the transferred-out cost under the WA method include only one computation but the FIFO method includes multiple computations?

> What is meant by the phrase units started and completed? Why is this phrase more closely associated with the first-in, first-out method of process costing than with the weighted average method?

> Use the information from Problem 4 for Delacroix Co. a. Prepare a cost of production report for March using the FIFO method. b. In general, what differences exist between the WA and FIFO methods of process costing and why do these differences exist? Inf

> Use the Fresh Seasons information from Problem 4, except assume that the company uses a FIFO process costing system. Information form Problem 4: Delacroix Co. had 800 units of inventory at the beginning of March 2010. Other information about that beginn

> Itzgood makes a variety of healthy snack foods. The following information for January 2010 relates to a trail mix. Materials are added at the beginning of processing; overhead is applied based on direct labor. The mix is transferred to a second departmen

> Delacroix Co. had 800 units of inventory at the beginning of March 2010. Other information about that beginning Work in Process Inventory is as follows: Direct labor costs were extremely high during February, because the company had a labor strike and pa

> Fresh Seasons is a contract manufacturer for Delectable Dressing Company. Fresh Seasons uses a weighted average process costing system to account for its salad dressing production. All ingredients are added at the start of the process. Delectable provide

> The Splash makes large fiberglass swimming pools and uses machine hours and direct labor hours to apply overhead in the Production and Installation departments, respectively. The monthly cost formula for overhead in Production is y = $7,950 + $4.05 MH; t

> Spangenberg Products manufactures computer cases. All material is added at the start of production and overhead is applied to each product at the rate of 70 percent of direct labor cost. At the beginning of July, there were no units in the Finished Goods

> Ro-Day-O Inc. manufactures belt buckles in a single-step production process. The following information is available for June 2010: Beginning inventory units were 100 percent complete as to material and 80 percent complete as to labor. The ending inventor

> Use the LaToya Company data given in Problem 20. However, assume that the spoiled goods were detected when conversion was 30 percent complete. Prepare a May 2010 cost of production report using the FIFO method. The cost of normal spoilage is attached to

> LaToya Company produces door pulls, which are inspected at the end of production. Spoilage may occur because the door pull is improperly stamped or molded. Any spoilage in excess of 3 percent of the completed good units is considered abnormal. Direct mat

> Strongarm manufactures various lines of bicycles. Because of the high volume of each type of product, the company employs a process cost system using the weighted average method to determine unit costs. Bicycle parts are manufactured in the Molding Depar

> Gary’s Tools manufactures one of its products in a two-department process. A separate Work in Process Inventory account is maintained for each department, and the company uses a weighted average process costing system. The first departm

> Turkburg produces frozen turkey patties. In the Forming Department, ground turkey is formed into patties and cooked; an acceptable shrinkage loss for this department is 1 percent of the pounds started. The patties are then transferred to the Finishing De

> Be-at-Ease Industries manufactures a series of three models of molded plastic chairs: standard (without arms), deluxe (with arms), and executive (with arms and padding). All are variations of the same design. The company uses batch manufacturing and has

> Donbrowski Co. manufactures reflective lenses and uses a standard process costing system. For May 2010, the following data are available: Standard Cost of 1 Unit Standard Cost of 1 Unit Direct material ……………………………………………………………………………….$ 5.50 Conversion ………

> KeepIn makes fencing in a two-stage production system. In the Cutting Department, wood is cut and assembled into 6-foot fence sections. In the Coating Department, the sections are pressure-treated to resist the effects of weather and then coated with a p

> Joe’s Lawn Care Service primarily mows lawns for residential customers. Management has determined direct labor hours is the primary cost driver and has developed the following cost equations based on direct labor hours: Grooming supplies (variable) y = $

> Elijah Inc. produces accent stripes for automobiles in 50-inch rolls. Each roll passes through three departments (Striping, Adhesion, and Packaging) before it is ready for shipment to customers. Product costs are tracked by department and assigned using

> Always Christmas makes artificial Christmas trees in two departments: Cutting and Boxing. In the Cutting Department, wire wrapped with green “needles” is placed into production at the beginning of the process and is cu

> Use the information for Octavia Corp. in Problem 56, except assume that the company uses FIFO costing. Prepare, in good form, a FIFO cost of production report for the Curing Department for May 2010. Data given in Problem 56: Octavia Corp.â€&#

> Octavia Corp.’s products are manufactured in three separate departments: Molding, Curing, and Finishing. Materials are introduced in Molding; additional material is added in Curing. The following information is available for the Curing

> Waltham Mfg. makes skateboards and uses a weighted average process costing system. On May 1, 2010, the company had 400 boards in process that were 70 percent complete as to material and 85 percent complete as to conversion. During the month, 3,800 additi

> BeGone manufactures spray cans of insect repellent. On August 1, 2010, the company had 9,800 units in the beginning WIP Inventory that were 100 percent complete as to canisters, 60 percent complete as to other materials, 40 percent complete as to direct

> Pylonic Mfg. produces concrete garden border sections. All material is added at the beginning of processing. Production and cost information for May 2010 are as follows: WA EUP Direct material ……………………………………………160,000 sections Direct labor ……………………………………

> Assume that Rojo Inc. in Exercise 24 had 7,200 EUP for direct material in October’s beginning WIP Inventory, 8,000 EUP for direct labor, and 7,920 EUP for overhead. What was the October FIFO cost per EUP for direct material, direct labor, and overhead?

> In October 2010, Rojo Inc.’s production was 53,600 equivalent units for direct material, 48,800 equivalent units for direct labor, and 42,000 equivalent units for overhead. During October, direct material, conversion, and overhead costs incurred were as

> On April 30, 2010, Alvira Co. had 21,600 units in process that were 85 percent complete as to material, 60 percent complete as to direct labor, and 45 percent complete as to overhead. During May, 561,000 units were started. The 13,700 units in ending inv

> Bon Voyage provides charter cruises in the eastern Caribbean. Tina Louise, the owner, wants to understand how her labor costs change per month. She recognizes that the cost is neither strictly fixed nor strictly variable. She has gathered the following i

> Ynugai Corp. uses a process costing system to assign costs to its steel production. During March 2010, Ynugai had beginning Work in Process Inventory of 180,000 tons of steel (100 percent complete as to material and 65 percent complete as to conversion).

> Funtime Inc. makes small toys in a one-department production process. Plastic is added at the beginning of the process; all other materials are considered indirect. The following information is available relative to September 2010 production activities:

> Using the information in Exercise 4 and assuming a FIFO method of process costing, determine the equivalent units of production for labor and overhead. Data given in Exercise 4: For each of the following situations, use the weighted average method to de

> Assume that O’Malley Corp. in Exercise 16 uses the FIFO method of process costing. a. What are the equivalent units of production for direct material? b. What are the equivalent units of production for conversion? Data from Exercise 16 O’Malley Corp. us

> Assume that Trevano Corp. in Exercise 15 uses the FIFO method of process costing. a. What proportion of work needs to be performed on the beginning inventory units to complete them? b. What are the equivalent units of production for direct material? c. W

> For each of the following situations, use the weighted average method to determine the equivalent units of production for labor and overhead, assuming that they are continuously at the same percentage of completion: a. Beginning WIP Inventory (45% comple

> O’Malley Corp. uses a weighted average process costing system. Material is added at the beginning of the production process and overhead is applied on the basis of direct labor. O’Malley’s records indicate that 70,000 units were in process at the beginni