The left column lists the titles of documents and accounts used in job order cost accounting. The right column presents short descriptions of the purposes of the documents. Match each document in the left column to its numbered description in the right column. A. Time ticket B. Materials ledger card C. Factory Payroll account D. Clock card E. Materials requisition F. Factory Overhead account G. Voucher 1. Shows amount of time an employee works on a job. 2. Temporarily accumulates the cost of incurred overhead until the cost is assigned to specific jobs. 3. Temporarily accumulates incurred labor costs until they are assigned to specific jobs or to overhead. 4. Communicates the need for materials to complete a job. 5. Shows only total time an employee works each day. 6. Shows amount approved for payment of an overhead or other cost. 7. Perpetual inventory record of raw materials received, used, and available for use.
> Using the following data, compute (1) the cost of goods manufactured (2) the cost of goods sold for both Garcia Company and Culpepper Company Culpepper Company Company Garcia Beginning finished goods inventory Beginning goods in process inventory B
> Current assets for two different companies at calendar year-end 2013 are listed here. One is a manufacturer, Salomon Skis Mfg., and the other, Sun Fresh Foods, is a grocery distribution company. (1) Identify which set of numbers relates to the manufactu
> Georgia Pacific, a manufacturer, incurs the following costs. (1) Classify each cost as either a product or a period cost. If a product cost, identify it as direct materials, direct labor, or factory overhead, and then as a prime and/or conversion cost.
> Listed here are product costs for the production of soccer balls. (1) Classify each cost (a) as either variable or fixed and (b) as either direct or indirect. (2) What pattern do you see regarding the relation between costs classified by behavior and co
> (1) Identify each of the five cost classifications discussed in the chapter. (2) List two purposes of identifying these separate cost classifications.
> Both managerial accounting and financial accounting provide useful information to decision makers. Indicate in the following chart the most likely source of information for each business decision (a decision can require major input from both sources, in
> In the following chart, compare financial accounting and managerial accounting by describing how each differs for the items listed. Be specific in your responses. Financial Accounting Managerial Accounting I. Time dimension 2. Users and decision make
> Besides inventories, what other assets often appear on manufacturers’ balance sheets but not on merchandisers’ balance sheets?
> Why does managerial accounting often involve working with numerous predictions and estimates?
> Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs, and DVDs. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because
> Explain why product costs are capitalized but period costs are expensed in the current accounting period.
> Explain why knowledge of cost behavior is useful in product performance evaluation.
> Should we evaluate a manager’s performance on the basis of controllable or noncontrollable costs? Why?
> What product cost is listed as both a prime cost and a conversion cost?
> Access Dell’s annual report (10-K) for the fiscal year ended February 3, 2012, at the SEC’s EDGAR database (SEC.gov) or its Website (Dell.com). From its financial statement notes, identify the titles and amounts of its inventory components.
> Can management of a company such as Polaris use cycle time and cycle efficiency as useful measures of performance? Explain.
> Define and describe two measures to assess raw materials inventory management.
> Describe the relations among the income statement, the manufacturing statement, and a detailed listing of factory overhead costs.
> Prepare a proper title for the annual “manufacturing statement” of Arctic Cat. Does the date match the balance sheet or income statement? Why?
> List the four components of a manufacturing statement and provide specific examples of each for Polaris.
> Both Polaris and Arctic Cat provide warranties on the products they sell. Accurate estimates of these future warranty claims are important. Access the annual report or 10-K for both Polaris (from Appendix A) and Arctic Cat. The Polaris report is for the
> List several examples of factory overhead.
> What are the three categories of manufacturing costs?
> Manufacturing activities of a company are described in the _______. This statement summarizes the types and amounts of costs incurred in its manufacturing _______.
> Why does a manufacturing company require three different inventory categories?
> Distinguish between direct material and indirect material.
> How do an income statement and a balance sheet for a manufacturing company and a merchandising company differ?
> Distinguish between (a) factory overhead and (b) selling and administrative overhead.
> Refer to this chapter’s Global View. Porsche AG is the manufacturer of the Porsche automobile line. Does Porsche produce in jobs or in job lots? Explain.
> An advertising agency is estimating costs for advertising a music festival. The job will require 200 direct labor hours at a cost of $50 per hour. Overhead costs are applied at a rate of $65 per direct labor hour. What is the total estimated cost for thi
> At the beginning of a period a company predicts total direct materials costs of $900,000 and total overhead costs of $1,170,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate
> A company allocates overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $950,000, and direct labor cost is $600,000. Prepare the entry to close over- or underapplied overhead to cost of goods sold.
> Explain how business activities and inventories for a manufacturing company, a merchandising company, and a service company differ.
> A company’s Factory Overhead T-account shows total debts of $624,000 and total credits of $646,000 at the end of a period. Prepare the journal entry to close the balance in the Factory Overhead account to Cost of Goods Sold.
> A company incurred the following manufacturing costs this period: direct labor, $468,000; direct materials, $354,000; and factory overhead, $117,000. Compute its overhead cost as a percent of (1) direct labor and (2) direct materials. Express your answer
> During the current month, a company that uses a job order cost accounting system incurred a monthly factory payroll of $175,000, paid in cash. Of this amount, $44,000 is classified as indirect labor and the remainder as direct for the production of Job 6
> During the current month, a company that uses a job order cost accounting system incurred a monthly factory payroll of $180,000, paid in cash. Of this amount, $40,000 is classified as indirect labor and the remainder as direct. Prepare entries to record
> During the current month, a company that uses a job order cost accounting system purchases $50,000 in raw materials for cash. It then uses $12,000 of raw materials indirectly as factory supplies and uses $32,000 of raw materials as direct materials. Prep
> Clemens Cars’ job cost sheet for job A40 shows that the cost to add security features to a car was $10,500. The car was delivered to the customer, who paid $14,900 in cash for the added features. What journal entries should Clemens record for the complet
> List the three types of costs that are typically recorded on a job cost sheet. How can managers use job cost sheets?
> Determine which products are most likely to be manufactured as a job and which as a job lot. 1. Hats imprinted with company logo. 2. Little League trophies. 3. A hand-crafted table. 4. A 90-foot motor yacht. 5. Wedding dresses for a chain of stores. 6
> Record the journal entry to close over- or underapplied factory overhead to Cost of Goods Sold for each of the independent cases below. Marsh Concert Ellis Home Promotions Builders Actual indirect materials costs $22,000 $ 12,500 Actual indirect labo
> Refer to information in Exercise 2-7. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.
> Identify the usual changes that a company must make when it adopts a customer orientation.
> Use information in Exercise 2-7 to prepare journal entries for the following events for the month of May. 1. Factory overhead excluding indirect materials and indirect labor (record credit to Other Accounts). 2. Application of overhead to goods in proces
> Use information in Exercise 2-7 to prepare journal entries for the following events for the month of May. 1. Factory payroll costs in cash. 2. Direct labor usage. 3. Indirect labor usage.
> Use information in Exercise 2-7 to prepare journal entries for the following events for the month of May. 1. Raw materials purchases for cash. 2. Direct materials usage. 3. Indirect materials usage.
> Lorenzo Company uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following. 1. Determine the overhead rate used (based on direct ma
> In December 2012, Shire Computer’s management establishes the year 2013 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $747,500 of overhea
> The following information is from the materials requisitions and time tickets for Job 9-1005 completed by Great Bay Boats. The requisitions are identified by code numbers starting with the letter Q and the time tickets start with W. At the start of the y
> Match the terms below with their definitions. 1. Cost accounting system 2. Target cost 3. General accounting system 4. Job 5. Job order production 6. Job lot a. Production of products in response to customer orders. b. A system that records manufacturing
> A recent balance sheet for Porsche AG shows beginning raw materials inventory of €83 million and ending raw materials inventory of €85 million. Assume the company purchased raw materials (on account) for €3,108 million during the year. (1) Prepare journa
> Hansel Corporation has requested bids from several architects to design its new corporate headquarters. Frey Architects is one of the firms bidding on the job. Frey estimates that the job will require the following direct labor. Frey applies overhead t
> Distinguish between managerial and financial accounting on a. Users and decision makers. b. Purpose of information. c. Flexibility of practice. d. Time dimension. e. Focus of information. f. Nature of information.
> Describe the managerial accountant’s role in business planning, control, and decision making.
> Referring to the citation only, determine which court issued these decisions. a. 716 F.2d 693 (CA–9, 1983). b. 92 T.C. 400 (1998). c. 70 U.S. 224 (1935). d. 3 B.T.A. 1042 (1926). e. T.C.Memo. 1957–169. f. 50 AFTR2d 92–6000 (Ct. Cl., 1992). g. Ltr.Rul. 90
> What is the difference between the Federal income tax on individuals and that imposed on corporations?
> Is there an automatic right to appeal to the U.S. Supreme Court? If so, what is the process?
> Elijah and Anastasia are husband and wife who have five married children and nine minor grandchildren. For 2017, what is the maximum amount they can give to their family (including the sons- and daughters-in-law) without using any of their unified transf
> In the citation Schuster’s Express, Inc., 66 T.C. 588 (1976), aff’d 562 F.2d 39 (CA–2, 1977), nonacq., to what do the 66, 39, and nonacq. refer?
> Address the following issues: a. What is the purpose of the unified transfer tax credit? b. Is the same amount available for both the Federal gift tax and the estate tax? Explain. c. Does the use of the credit for a gift affect the amount of credit avail
> Marvin is the executor and sole heir of his aunt’s estate. The estate includes her furnished home, which Marvin is considering converting to rental property to generate additional cash flow. What are some of the tax problems Marvin may confront?
> In assessing the validity of a prior court decision, discuss the significance of the following on the taxpayer’s issue: a. The decision was rendered by the U.S. District Court of Wyoming. Taxpayer lives in Wyoming. b. The decision was rendered by the U.S
> Jake (age 72) and Jessica (age 28) were recently married. To avoid any transfer taxes, Jake has promised to leave Jessica all of his wealth when he dies. Is Jake under some misconception about the operation of the Federal gift and estate taxes? Explain.
> Marcie is divorced, and her married son, Jamie (age 25), and his wife, Audrey (age 18), live with her. During the year, Jamie earned $4,800 from a part-time job and filed a joint return with Audrey to recover his withholdings. Audrey reports zero gross i
> Lynn Swartz’s husband died three years ago. Her parents have an income of over $200,000 a year and want to ensure that funds will be available for the education of Lynn’s 8-year-old son, Eric. Lynn is currently earning $45,000 a year. Lynn’s parents have
> Distinguish between an estate tax and an inheritance tax. a. Do some states impose both? Neither? b. Which, if either, does the Federal government impose?
> During the year, Hernando recorded the following transactions. How should Hernando treat these transactions for income tax purposes? • Gain on the sale of stock held as an investment for 10 months. • Gain on the sale of land held as an investment for 4 y
> During a social event, Muriel and Earl are discussing the home computer each recently purchased. Although the computers are identical makes and models, Muriel is surprised to learn that she paid a sales tax, while Earl did not. Comment as to why this cou
> In connection with the application of the kiddie tax, comment on the following. a. The child generates only earned income. b. The child reports a modest amount of unearned income. c. The child is age 20, not a student, and not disabled. d. The child is
> Mona viewed herself as a creative individual who had chosen to go to law school for economic reasons. Mona’s undergraduate majors were creative writing and American Indian studies. Mona was very successful as an attorney and eventually was admitted to p
> Rex and Agnes Harrell purchased a beach house at Duck, North Carolina, in early 2016. Although they intended to use the beach house occasionally for recreational purposes, to help pay the mortgage payments, property taxes, and maintenance costs, they als
> Sarah was contemplating making a contribution to her traditional IRA in 2016. She determined that she would contribute $5,000 in December 2016, but forgot about making the contribution until she was preparing her 2016 tax return in February 2017. Use the
> For each of the following independent transactions, calculate the recognized gain or loss to the seller and the adjusted basis to the buyer. a. Bonnie sells Parchment, Inc. stock (adjusted basis $17,000) to Phillip, her brother, for its fair market value
> The Robin Corporation is owned as follows: Isabelle……………………………………………………………….26% Peter, Isabelle’s husband……………………………………..19% Sonya, Isabelle’s mother………………………………………15% Reggie, Isabelle’s father………………………………………..25% Quinn, an unrelated party……………………………………
> Brittany Callihan sold stock (basis of $184,000) to her son, Ridge, for $160,000, the fair market value. a. What are the tax consequences to Brittany? b. What are the tax consequences to Ridge if he later sells the stock for $190,000? For $152,000? For $
> Tonya, who lives in California, inherited a $100,000 State of California bond in 2017. Her marginal Federal tax rate is 35%, and her marginal state tax rate is 5%. The California bond pays 3.3% interest, which is not subject to California income tax. She
> Elisa and Clyde operate a retail sports memorabilia shop. For the current year, sales revenue is $55,000 and expenses are as follows: Cost of goods sold……………………………. $21,000 Advertising………………………………………..1,000 Utilities……………………………………………..2,000 Rent……………………
> Chee, single, age 40, had the following income and expenses during 2017: Income Salary……………………………………………………………………………………………$43,000 Rental of vacation home (rented 60 days, used personally 60 days, vacant 245 days)…………………………………………………4,000 Municipal bond in
> The Grays live in Clay County, which is adjacent to Jackson County. Although the retail stores in both counties are comparable, the Grays usually drive a few extra miles to shop in Jackson County. As to why the Grays might do this, consider the following
> How would your answer to Problem 48 differ if Anna had rented the house for 87 days and had used it personally for 13 days?
> During the year (not a leap year), Anna rented her vacation home for 30 days, used it personally for 20 days, and left it vacant for 315 days. She had the following income and expenses: Rent income…………………………………………………. $ 7,000
> Adelene, who lives in a winter resort area, rented her personal residence for 14 days while she was visiting Brussels. Rent income was $5,000. Related expenses for the year were as follows: Real property taxes…………………………………..$ 3, 800 Mortgage interest………
> Sarah owns a vacation cabin in the Tennessee mountains. Without considering the cabin, she has gross income of $65,000. During the year, she rents the cabin for two weeks for $2,500 and uses it herself for four weeks. The total expenses for the year are
> Samantha, an executive, has AGI of $100,000 before considering income or loss from her miniature horse business. Her outside income comes from prizes for winning horse shows, stud fees, and sales of yearlings. Samantha’s home is on 20 a
> Alex, who is single, conducts an activity in 2017 that is appropriately classified as a hobby. The activity produces the following revenues and expenses: Revenue……………………………………………..$18,000 Property taxes………………………………………..3,000 Materials and supplies………………
> Terry traveled to a neighboring state to investigate the purchase of two hardware stores. His expenses included travel, legal, accounting, and miscellaneous expenses. The total was $52,000. He incurred the expenses in June and July 2017. Under the follow
> In January 2017, Ezra purchased 2,000 shares of Gold Utility Mutual Fund for $20,000. In June, Ezra received an additional 100 shares as a dividend, in lieu of receiving $1,000 in cash dividends. In December, the company declared a two-for-one stock spli
> Nancy, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $35,000 of expenses associated with this investigation. Based on the regulatory environment f
> Amber, a publicly held corporation, currently pays its president an annual salary of $900,000. In addition, it contributes $20,000 annually to a defined contribution pension plan for him. As a means of increasing company profitability, the board of direc
> Trevor, a friend of yours from high school, works as a server at the ST Cafe. He asks you to help him prepare his Federal income tax return. When you inquire about why his bank deposits substantially exceed his tip income, he confides to you that he is a
> What is meant by the term petitioner?
> Doug incurred and paid the following expenses during the year: • $50 for a ticket for running a red light while he was commuting to work. • $100 for a ticket for parking in a handicapped parking space. • $200 to an attorney to represent him in traffic co
> Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2017. Gross receipts were $300,000. The following expenses were incurred and paid as indicated: Because the coliseum was not scheduled to be used again until January 15, the c
> A list of the items that Peggy sold and the losses she incurred during the current tax year is as follows: Yellow, Inc. stock………………………………………………………..$ 1,600 Peggy’s personal use SUV………………………………………………8,000 Peggy’s personal residence……………………………………………10,000
> Janice, age 22, is a student who earns $10,000 working part-time at the college ice cream shop in 2017. She has no other income. Her medical expenses for the year total $3,000. During the year, she suffers a casualty loss of $3,500 when her apartment cat
> Daniel, age 38, is single and has the following income and expenses in 2017. Salary income………………………………………………………………………………………..$60,000 Net rent income……………………………………………………………………………………….6, 000 Dividend income……………………………………………………………………………………...3,500 Payment
> Amos is a self-employed tax attorney. He and Monica, his employee, attend a conference in Dallas sponsored by the American Institute of CPAs. The following expenses are incurred during the trip: a. Amos pays for all of these expenses. Calculate the eff
> Determine Hazel’s gross income from the following receipts for the year: Gain on sale of Augusta County bonds…………………………………………..$800 Interest on U.S. government savings bonds……………………………………400 Interest on state income tax refund………………………………………………..200 Int
> During the current year, Robert pays the following amounts associated with his own residence: Property taxes………………………………………$3, 000 Mortgage interest…………………………………..8, 000 Repairs…………………………………………………..1, 200 Utilities…………………………………………………..2, 700 Replacement
