Question: The Allison-Chambers Corporation, manufacturer of

> What criteria might be used to guide cost-allocation decisions? Which are the dominant criteria?

> Denver Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2011. Costs incurred for 2011 are as follows (V stands for variable; F stands for fixed): Variable manufacturing costs are variable with respect to units p

> Ron Williams recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report fi

> Jim Anderson works in the production department of Midwest Steelworks as a machine operator. Jim, a long-time employee of Midwest, is paid on an hourly basis at a rate of $20 per hour. Jim works five 8-hour shifts per week Monday–Friday

> 1. Calculate total prime costs and total conversion costs. 2. Calculate total inventoriable costs and period costs. 3. Design costs and R&D costs are not considered product costs for financial statement purposes. When might some of these costs be regarde

> The following items (in millions) pertain to Calendar Corporation: Calendar’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturing labor, and manufacturing overhead costs. Required:

> Required: 1. How would the answer to Problem 2-34 be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. 2. Would the sales manager’s salary (included in marke

> The Howell Corporation has the following account balances (in millions): Required: Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2011. (For additional questions regarding these facts

> Consider the following account balances (in thousands) for the Piedmont Corporation: Required: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $600 million. Prepare the income statement for 2011. Beginni

> Consider the following account balances (in thousands) for the Canseco Company: Required: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $300 million. Prepare the income statement for 2011. Home Insert

> Renka’s Heaters selected data for October 2011 are presented here (in millions): Required: Calculate the following costs: 1. Direct materials inventory 10/31/2011 2. Fixed manufacturing overhead costs for October 2011 3. Direct manufa

> Fill in the blanks for each of the following independent cases. Variable Contribution Operating Income Case Revenues Costs Fixed Costs Total Costs Margin Percentage $500 $ 800 $1,200 $ 200 a. $2,000 $1,000 $1,500 b. $300 С. $700 $1,000 d. $300 40%

> Deacon Publishing House is a publishing company that produces consumer magazines. The house and home division, which sells home-improvement and home-decorating magazines, has seen a 20% reduction in operating income over the past nine months, primarily d

> The following data are for Marvin Department Store. The account balances (in thousands) are for 2011. Required: 1. Compute(a)the cost of goods purchased and (b)the cost of goods sold. 2. Prepare the income statement for 2011. $ 37,000 Marketing, di

> Consider the following selected cost data for the Pittsburgh Forging Company for 2011. The company uses normal costing. Its job-costing system has a single manufacturing overhead cost pool. Costs are allocated to jobs using a budgeted machine-hour rate

> Splash Manufacturing produces outdoor wading and slide pools. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the company’s production and sales occ

> Turner & Associates, a consulting firm, has the following condensed budget for 2011: Turner has a single direct-cost category (professional labor) and a single indirect-cost pool (client support). Indirect costs are allocated to jobs on the basis o

> The Lynn Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and two m

> Gammaro Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2011: Required: 1. Calculate the budgeted manufacturing over head rate. 2. Calculate the manufac

> Amesbury Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Direct labor-hours is the allocation base for assembly sup

> Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing over head cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. D

> In each of the following situations, determine whether job costing or process costing would be more appropriate. a. ACPA firm b. An oil refinery c. A custom furniture manufacturer d. A tire manufacturer e. A textbook publisher f. A pharmaceutical company

> Sweetum Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,100 per month. The machine costs $9,000 and is depreciated using straight line depreciation over 10 yea

> Foodmart Corp, an international retail giant, is considering implementing a new business to business (B2B) information system for processing purchase orders. The current system costs Foodmart $2,500,000 per month and $50 per order. Foodmart has two optio

> Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating income statement shown here to George Lopez, a potential investor in the business. Help Mr. Lopez understand Mi

> Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows: Mr. Lurvey, the owner of the store, is unhappy with the operating results. An analysis of other operating costs reveals that it includes $30,000

> Monroe Classical Music Society is a not-for-profit organization that brings guest artists to the community’s greater metropolitan area. The Music Society just bought a small concert hall in the center of town to house its performances. The mortgage payme

> Bobbie’s Bagel Shop sells only coffee and bagels. Bobbie estimates that every time she sells one bagel, she sells four cups of coffee. The budgeted cost information for Bobbie’s products for 2011 follows: Required: 1

> Data 1-2-3 is a top-selling electronic spreadsheet product. Data is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Data 1-2-3, 4.0 or earlier versions). Although

> Global Textiles, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Singapore, Brazil, and the United States. All area rugs are to be sold to retail outlets in the United States for $250 per unit. These

> Color Rugs is holding a two-week carpet sale at Jerry’s Club, a local warehouse store. Color Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor for $350 each, with the privilege of returning any unsol

> Suppose Doral Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: 1. Compute the contribution margin percentage. 2. Compute the selling price if variable costs are $16 per unit. 3. Suppose 95,000 units are sold. Comput

> Hoot Washington is the newly elected leader of the Republican Party. Media Publishers is negotiating to publish Hoot’s Manifesto, a new book that promises to be an instant best-seller. The fixed costs of producing and marketing the book will be $500,000.

> Bredahl Logistics, a U.S. shipping company, has just begun distributing goods across the Atlantic to Norway. The company began operations in 2010, transporting goods to South America. The company’s earnings are currently trailing behind its competitors a

> The Express Banquet has two restaurants that are open 24-hours a day. Fixed costs for the two restaurants together total $459,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.50. The average cost

> Brooke Motors is a small car dealership. On average, it sells a car for $27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 in rent and utilities and $68,000 for salespeople’s salaries. In addition to the

> The Super Donut owns and operates six doughnut outlets in and round Kansas City. You are given the following corporate budget data for next year: Revenues ………………..……………….$10,000,000 Fixed costs ……………………….……….$ 1,800,000 Variable costs ……………………………$ 8,000

> Sunny Spot Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Canadian Air. Sunny Spot’s fixed costs are $23,500 per month. Canadian Air charges passengers $1,500 per round-trip ticket. Required: Calculate the numbe

> he Fremont, California, plant of New United Motor Manufacturing, Inc. (NUMMI), a joint venture of General Motors and Toyota, assembles two types of cars (Corollas and Geo Prisms). Separate assembly lines are used for each type of car. Required: Classify

> Eva Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has $3,000,000 invested in assets in its clothing manufacturing division. After-tax operating income from sales of clothing this year is $

> The Seaside Corporation manufactures similar products in the United States and Norway. The U.S. and Norwegian operations are organized as decentralized divisions. The following information is available for 2012; ROI is calculated as operating income divi

> Carter Corporation recently announced a bonus plan to be awarded to the manager of the most profitable division. The three division managers are to choose whether ROI or RI will be used to measure profitability. In addition, they must decide whether inve

> Performance Auto Company operates a new car division (that sells high performance sports cars) and a performance parts division (that sells performance improvement parts for family cars). Some division financial measures for 2011 are as follows: Requir

> Bleefl Corporation manufactures furniture in several divisions, including the patio furniture division. The manager of the patio furniture division plans to retire in two years. The manager receives a bonus based on the division’s ROI, which is currently

> Home Entertainment Center (HEC) operates a large store in San Francisco. The store has both a video section and a music (compact disks and tapes) section. HEC reports revenues for the video section separately from the music section. Required: Classify e

> Summit Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately two years ago, Ben Harrington, president of Summit, decided to revise the bonus plan (based, at the time, entirely on op

> Superior Motor Company makes electric cars and has only two products, the Simple green and the Superior green. To produce the Simple green, Superior Motor employed assets of $13,500,000 at the beginning of the period, and $13,400,000 of assets at the end

> Global Data, Inc., has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here: Required: 1. Complete the table by filling in the blanks. 2. Use the DuPont method of profitability a

> Refer to Exercise 22-25. Assume that division A can sell the 1,000 units to other customers at $155 per unit, with variable marketing cost of $5 per unit. Required: Determine whether Allison-Chambers will benefit if division C purchases the 1,000 units

> Suppose that the U.S. division could sell as many units of Product 4A36 as it makes at $900 per unit in the U.S. market, net of all marketing and distribution costs. Required: 1. From the viewpoint of the Mornay Company as a whole, would after-tax opera

> The Mornay Company manufactures telecommunications equipment at its plant in Toledo, Ohio. The company has marketing divisions throughout the world. A Mornay marketing division in Vienna, Austria, imports 10,000 units of Product 4A36 from the United Stat

> British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $100 per 100 board-feet of raw lumber Finished lumber division: $125 per 100 board-feet of finished lumber Assume th

> Jackson Markets, a chain of traditional supermarkets, is interested in gaining access to the organic and health food retail market by acquiring a regional company in that sector. Jackson intends to operate the newly-acquired stores independently from its

> Adventure Parks Inc. (API) operates ten theme parks throughout the United States. The company’s slogan is “Name Your Adventure,” and its mission is to offer an exciting theme park experience to visitors of all ages. API’s corporate strategy supports this

> Consumer Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $50per session to provide comments on new products. These focus groups meet in hotels and are led

> The Crossroad Company is an international clothing manufacturer. Its Santa Monica plant will become idle on December 31, 2011. Peter Laney, the corporate controller, has been asked to look at three options regarding the plant. Option 1: The plant, which

> Innovation, Inc., is considering the purchase of a new industrial electric motor to improve efficiency at its Fremont plant. The motor has an estimated useful life of five years. The estimated pretax cash flows for the motor are shown in the table that f

> Anna’s Bakery plans to purchase a new oven for its store. The oven has an estimated useful life of four years. The estimated pretax cash flows for the oven are as shown in the table that follows, with no anticipated change in working ca

> Century Lab plans to purchase a new centrifuge machine for its New Hampshire facility. The machine costs $137,500 and is expected to have a useful life of eight years, with a terminal disposal value of $37,500. Savings in cash operating costs are expecte

> New Bio Corporation is a rapidly growing biotech company that has a required rate of return of 10%. It plans to build a new facility in Santa Clara County. The building will take two years to complete. The building contractor offered New Bio a choice of

> Southern Cola is considering the purchase of a special-purpose bottling machine for $23,000. It is expected to have a useful life of four years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs:

> Assume the same facts as in Exercise 21-18 except that City Hospital is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes. Required: 1. Do requirement 1 of Exercise 21-18. 2. How would your computations in requ

> City Hospital, a non-profit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye testing machine at a cost of $110,000. No terminal disposal value is expected. City Hospita

> Riverbend Company runs hardware stores in a tristate area. Riverbend’s management estimates that if it invests $250,000 in a new computer system, it can save $67,000 in annual cash operating costs. The system has an expected useful life of eight years an

> Assume the same facts as in Exercise 20-23, except now Road Warrior uses only two trigger points, Completion of good finished units of product and Sale of finished goods. Any under- or over allocated conversion costs are written off monthly to Cost of Go

> Each of the following cost items pertains to one of these companies: General Electric (a manufacturing-sector company), Safeway (a merchandising-sector company), and Google (a service-sector company): a. Perrier mineral water purchased by Safeway for sal

> Assume the same facts as in Exercise 20-23, except that Road Warrior now uses a backflush costing system with the following two trigger points: Purchase of direct materials and incurring of conversion costs= Sale of finished goods The Inventory Control a

> Road Warrior Corporation assembles handheld computers that have scaled-down capabilities of laptop computers. Each handheld computer takes six hours to assemble. Road Warrior uses a JIT production system and a backflush costing system with three trigger

> The Champion Hardware Company manufactures specialty brass door handles at its Lynchburg plant. Champion is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooli

> Lakeland Company produces lawn mowers and purchases 18,000 units of a rotor blade part each year at a cost of $60 per unit. Lakeland requires a 15% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials han

> The Denim World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming ins

> Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells to its customers. AT has recently installed computer software that enables its customers to conduct “one-stop” purchasing using state-of-the-art Web site technology. FB’s ord

> Fan Base (FB) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Los Angeles Galaxy soccer jerseys product line. This is a highly popular item. D

> Refer to the information in Exercise 19-25 in answering the following requirements. There is no connection between the requirements. Required: 1. Mayfield produces 2,000 defective units at the machining operation. What is the cost to Mayfield of the def

> Torrance Manufacturing evaluates the performance of its production managers based on a variety of factors, including cost, quality, and cycle time. The following are nonfinancial measures for quality and time for 2010 and 2011 for its only product: The

> Flagstar Conference Center and Catering is a conference center and restaurant facility that hosts over 300 national and international events each year attended by 50,000 professionals. Due to increased competition and soaring customer expectations, the c

> Best Breads manufactures two types of bread, which are sold as wholesale products to various specialty retail bakeries. Each loaf of bread requires a three step process. The first step is mixing. The mixing department combines all of the necessary ingred

> Speed Print manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: Speed Print’s current presses have a quality problem that causes variations in the

> Worldwide Cell Phones (WCP) has developed a cell phone that can be used anywhere in the world (even countries like Japan that have a relatively unique cell phone system). WCP has been receiving complaints about the phone. For the past two years, WCP has

> Refer to information in Exercise 19-17 in answering this question. Dream Rider has discovered a more serious problem with the plastic core of its car seats. An accident can cause the plastic in some of the seats to crack and break, resulting in serious i

> Dream Rider produces car seats for children from newborn to two years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Dream Rider’s only problem with its car sea

> Costen, Inc., produces cell phone equipment. Jessica Tolmy, Costen’s president, decided to devote more resources to the improvement of product quality after learning that her company had been ranked fourth in product quality in a 2009 s

> The Morgan Company has an extensive job-costing facility that uses a variety of metals. Consider each requirement independently. Required: 1. Job 372 uses a particular metal alloy that is not used for any other job. Assume that scrap is material in amou

> White Goods assembles washing machines at its Auburn plant. In February 2012, 60 tumbler units that cost $44 each (from a new supplier who subsequently went bankrupt) were defective and had to be disposed of at zero net disposal value. White Goods was ab

> Barrett Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for 2,100 cases of mixed vegetables costs $9 per case: direct materials, $4; direct manufacturing la

> Refer to the information in Exercise 18-24. Suppose Chipcity determines standard costs of $200 per equivalent unit for direct materials and $75 per equivalent unit for conversion costs for both beginning work in process and work done in the current perio

> Refer to the information in Exercise 18-24. Required: Do Exercise 18-24 using the FIFO method of process costing. Data from Exercise 18-24: Chipcity is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the produ

> .A student association has hired a band and a caterer for a graduation party. The band will charge a fixed fee of $1,000 for an evening of music, and the caterer will charge a fixed fee of $600 for the party setup and an additional $9 per person who atte

> Chipcity is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectab

> Arokia Electronics manufactures cell phone models in its Walnut Creek plant. Suppose the company provides you with the following information regarding operations for September 2011: Assume the spoiled units have no disposal value. Required: 1. What is

> Jordan, Inc., is a manufacturer of vents for water heaters. The company uses a process-costing system to account for its work-in-process inventories. When Job 512 was being processed in the machining department, a piece of sheet metal was off center in t

> Appleton Company makes wooden toys in its forming department, and it uses the weighted-average method of process costing. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the process. Spoiled un

> Required: For the data in Exercise 18-17, use the FIFO method to summarize total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign total costs to units completed and transferred out (includ

> Manufacturing Company uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

> Required: For the data in Exercise 18-17, summarize total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign total costs to units completed and transferred out (including normal spoilage), t

> Consider the following data for November 2012 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the p

> The following data, in physical units, describe a grinding process for January: Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the good units passing inspection. Required: 1. Compute the normal and abnormal spoilage in units.

> UB Healthy Company manufactures three different types of vitamins: vitamin A, vitamin B, and a multivitamin. The company uses four operations to manufacture the vitamins: mixing, tableting, encapsulating, and bottling. Vitamins A and B are produced in ta

> Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification fo

> .Refer to the information in Exercise 17-27. Suppose that Asaya uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise17-27 under the FIFO method are that total transferred-in costs of beginnin