All Related Questions of Cost Accounting

Q: Study the performance report for Leonardo’s Italian Cafe´ in Figure and

Study the performance report for Leonardo’s Italian Cafe´ in Figure and write a brief explanation of the strengths and weaknesses of September and year-to-date operation...

Q: The payroll records of Torero Machining Company show the following information for

The payroll records of Torero Machining Company show the following information for the week ended April 17: Hourly workers are paid time-and-a-half for overtime. a. Determine the net earnings of each...

Q: A rush order was accepted by San Diego Machine Conversions for five

A rush order was accepted by San Diego Machine Conversions for five van conversions. The labor time records for the week ended January 27 show the following: All employees are paid $10.00 per hour, e...

Q: What factors should management consider when determining the amount of investment in

What factors should management consider when determining the amount of investment in materials?

Q: What kind of information and data are needed to calculate an order

What kind of information and data are needed to calculate an order point?

Q: Albert Machine Tool Company produces tools on a job order basis.

Albert Machine Tool Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Other factory costs for the month totaled $16,800. Factory...

Q: A partial summary of the payroll data for Burrington Manufacturing Company for

A partial summary of the payroll data for Burrington Manufacturing Company for each week of June is as follows: a. Compute the missing amounts in the summary, assuming that no employees have reached...

Q: Fontana Fabricating Company paid wages to its employees during the year as

Fontana Fabricating Company paid wages to its employees during the year as follows: Burris . . . . . . . . . . . . . . . . . . . . . . . . $ 15,400 Combs . . . . . . . . . . . . . . . . . . . . . ....

Q: Using the earnings data developed in E3-1, /

Using the earnings data developed in E3-1, and assuming that this was the eighth week of employment for Jolly and the previous earnings to date were $7,900, prepare the journal entries for the follow...

Q: Using the earnings data developed in E3-1, and assuming

Using the earnings data developed in E3-1, and assuming that this was the eighth week of employment for Jolly and the previous earnings to date were $7,900, prepare the journal entries for the followi...

Q: The total wages and salaries earned by all employees of Cutler Manufacturing

The total wages and salaries earned by all employees of Cutler Manufacturing Company during the month of March, as shown in the labor cost summary and the schedule of fixed administrative and sales sa...

Q: A weekly payroll summary made from labor time records shows the following

A weekly payroll summary made from labor time records shows the following data for Musketeer Manufacturing Company: Overtime is payable at one-and-a-half times the regular rate of pay for an employee...

Q: Go to the companion Website at www.cengage.com/

Go to the companion Website at www.cengage.com/accounting/vanderbeck and click on the link to ‘‘The Sarbanes-Oxley Act.’’ Read the accompanying PowerPoint presentation, and write a one-page summary of...

Q: The following form is used by MoJo Manufacturing Company to compute payroll

The following form is used by MoJo Manufacturing Company to compute payroll taxes incurred during the month of April: 1. Using the above form, calculate the employer’s payroll taxes...

Q: Marta Johns is the Division Controller and Kevin Deere is the Division

Marta Johns is the Division Controller and Kevin Deere is the Division Vice President of Tuffy Tractor, Inc. Due to pressures to meet earnings estimates for 2011, Deere instructs Johns to record as re...

Q: O’Reilly Manufacturing, Inc.’s cost of goods sold for the

O’Reilly Manufacturing, Inc.’s cost of goods sold for the month ended July 31 was $345,000. The ending work in process inventory was 90% of the beginning work in process inventory. Factory overhead wa...

Q: Fayetteville Manufacturing Co. produces only one product. You have obtained

Fayetteville Manufacturing Co. produces only one product. You have obtained the following information from the corporation’s books and records for the year ended December 31, 2011: a. Total manufactur...

Q: Hidalgo Company manufactures goods to special order and uses a job order

Hidalgo Company manufactures goods to special order and uses a job order cost system. During its first month of operations, the following selected transactions took place: a. Materials purchased on a...

Q: Spokane Manufacturing Co. obtained the following information from its records for

Spokane Manufacturing Co. obtained the following information from its records for the month of July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the mon...

Q: St. Lawrence Manufacturing Co. manufactures engines that are made only

St. Lawrence Manufacturing Co. manufactures engines that are made only on customers’ orders and to their specifications. During January, the company worked on Jobs 007, 008, 009, 010...

Q: Prepare a performance report for the dining room of Leonardo’s Italian Cafe

Prepare a performance report for the dining room of Leonardo’s Italian Cafe´ for the month of February 2011, using the following data:

Q: Beth Elkins, a factory worker, earns $1,000

Beth Elkins, a factory worker, earns $1,000 each week. In addition, she will receive a $4,000 bonus at year-end and a four-week paid vacation. Prepare the entry to record the weekly payroll and the co...

Q: The following data were taken from the general ledgers and other data

The following data were taken from the general ledgers and other data of Alpha Manufacturing, Inc., and Bravo Merchandising Co. on April 30 of the current year: Merchandise inventory, April 1 . . . ....

Q: The following data were taken from the general ledger of Thornton Merchandisers

The following data were taken from the general ledger of Thornton Merchandisers on January 31, the end of the first month of operations in the current fiscal year: Merchandise inventory, January 1 ....

Q: The adjusted trial balance for Indy Furniture Company on November 30,

The adjusted trial balance for Indy Furniture Company on November 30, the end of its first month of operation, is as follows: The general ledger reveals the following additional data: a. There were...

Q: The post-closing trial balance of Beamer Manufacturing Co. on

The post-closing trial balance of Beamer Manufacturing Co. on April 30 is reproduced as follows: During the month of May, the following transactions took place: a. Purchased raw materials at a cost o...

Q: Selected account balances and transactions of Alpine Manufacturing Co. follow:

Selected account balances and transactions of Alpine Manufacturing Co. follow: May Transactions: a. Purchased raw materials and factory supplies on account at costs of $45,000 and $10,000, respectiv...

Q: How would you define the following costs: direct materials, indirect

How would you define the following costs: direct materials, indirect materials, direct labor, indirect labor, and factory overhead?

Q: Distinguish prime cost from conversion cost. Does prime cost plus conversion

Distinguish prime cost from conversion cost. Does prime cost plus conversion cost equal the total manufacturing cost?

Q: For a manufacturer, what does the planning process involve, and

For a manufacturer, what does the planning process involve, and how is cost accounting information used in planning?

Q: How is effective control achieved in a manufacturing concern?

How is effective control achieved in a manufacturing concern?

Q: What actions should a CMA take when the established policies of the

What actions should a CMA take when the established policies of the organization do not resolve an ethical conflict?

Q: Clark Kent earns $800 per week for a five-day

Clark Kent earns $800 per week for a five-day week, and he is entitled to 12 paid holidays and four weeks of paid vacation. a. Over how many weeks should the holiday pay and vacation pay be expensed?...

Q: What circumstances created the need for the Sarbanes-Oxley Act,

What circumstances created the need for the Sarbanes-Oxley Act, and how are CEOs and CFOs affected by it?

Q: When is job order costing appropriate, and what types of businesses

When is job order costing appropriate, and what types of businesses use it?

Q: The following data were taken from the general ledger and other data

The following data were taken from the general ledger and other data of Thomas Manufacturing on July 31: Finished goods, July 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: When is process costing appropriate, and what types of businesses use

When is process costing appropriate, and what types of businesses use it?

Q: What are the advantages of accumulating costs by departments or jobs rather

What are the advantages of accumulating costs by departments or jobs rather than for the factory as a whole?

Q: Name five key elements of the Sarbanes-Oxley Act.

Name five key elements of the Sarbanes-Oxley Act.

Q: What are standard costs, and what is the purpose of a

What are standard costs, and what is the purpose of a standard cost system?

Q: If the factory operations and selling and administrative offices are housed in

If the factory operations and selling and administrative offices are housed in the same building, what would be a good cost allocation basis to use in dividing the depreciation expense between the two...

Q: How is cost accounting related to: financial accounting? Managerial accounting

How is cost accounting related to: financial accounting? Managerial accounting?

Q: How does the computation of cost of goods sold for a manufacturer

How does the computation of cost of goods sold for a manufacturer differ from that of a merchandiser?

Q: A. Jolly of Pittsburgh Manufacturing Company is paid at the rate

A. Jolly of Pittsburgh Manufacturing Company is paid at the rate of $20 an hour for an 8-hour day, with time-and-a-half for overtime and double-time for Sundays and holidays. Regular employment is on...

Q: How would you describe the following accounts—Finished Goods, Work

How would you describe the following accounts—Finished Goods, Work in Process, and Materials?

Q: Compare the manufacturing, merchandising, and service sectors. How do

Compare the manufacturing, merchandising, and service sectors. How do they differ as to the kinds of businesses in each category, the nature of their output, and type of inventory, if any?

Q: What is the difference between a perpetual inventory system and a periodic

What is the difference between a perpetual inventory system and a periodic inventory system?

Q: Classify the following as direct materials, direct labor, factory overhead

Classify the following as direct materials, direct labor, factory overhead, or selling and administrative expense. a. Steel used in an overhead door plant. b. Cloth used in a shirt factory. c. Fiberg...

Q:  How does the cost accounting function assist in the management of

 How does the cost accounting function assist in the management of a business? 

Q: In what ways does a typical manufacturing business differ from a merchandising

In what ways does a typical manufacturing business differ from a merchandising concern? In what ways are they similar?

Q: How is cost accounting information used by management?

How is cost accounting information used by management?

Q: Why is unit cost information important to management?

Why is unit cost information important to management?

Q: Catskill Manufacturing, Inc., records the following use of materials during

Catskill Manufacturing, Inc., records the following use of materials during the month of June: Prepare a summary journal entry for the materials requisitions.

Q: Prepare a journal entry to record each of the following materials transactions

Prepare a journal entry to record each of the following materials transactions: a. Total materials purchased on account during the month amounted to $200,000. b. Direct materials requisitioned for the...

Q: Using the earnings data developed in E3-1 and assuming that

Using the earnings data developed in E3-1 and assuming that this was the first week of employment for A. Jolly with Pittsburgh Manufacturing Company, prepare the journal entries for the following: a....

Q: Using first-in, first-out; perpetual inventory costing

Using first-in, first-out; perpetual inventory costing; and the following information, determine the cost of materials used and the cost of the July 31 inventory: July 1 Balance on hand, 1,000 yd of l...

Q: Using last-in, first-out; perpetual inventory costing

Using last-in, first-out; perpetual inventory costing; and the information presented, compute the cost of materials used and the cost of the July 31 inventory. In E2-6 July 1 Balance on hand, 1,000 y...

Q: Using the moving average method of perpetual inventory costing and the information

Using the moving average method of perpetual inventory costing and the information presented in E2-6, compute the cost of materials used and the cost of the July 31 inventory. In E2-6 July 1 Balance...

Q: In tabular form, compare the total materials cost transferred to Work

In tabular form, compare the total materials cost transferred to Work in Process and the cost of the ending inventory for each method used in E2-6, E2-7, and E2-8. Discuss the effect that each method...

Q: Explain in narrative form the flow of direct materials, direct labor

Explain in narrative form the flow of direct materials, direct labor, and factory overhead costs through the ledger accounts.

Q: Benson Company was franchised on January 1, 2011. At the

Benson Company was franchised on January 1, 2011. At the end of its third year of operations, December 31, 2013, management requested a study to determine what effect different materials inventory cos...

Q: Mystic Manufacturing Company maintains the following accounts in the general ledger:

Mystic Manufacturing Company maintains the following accounts in the general ledger: Materials, Work in Process, Factory Overhead, and Accounts Payable. On June 1, the materials account had a debit ba...

Q: RDI Company uses backflush costing to account for its manufacturing costs.

RDI Company uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to...

Q: A machine shop manufactures a stainless steel part that is used in

A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered tha...

Q: Venus, Inc., manufactures tennis clothing. During the month,

Venus, Inc., manufactures tennis clothing. During the month, the company cut and assembled 8,000 skirts. One hundred of the skirts did not meet specifications and were considered ‘‘seconds.’’ Seconds...

Q: Marcia Young earns $25 per hour for up to 400 units

Marcia Young earns $25 per hour for up to 400 units of production per day. If she produces more than 400 units per day, she will receive an additional piece rate of $0.50 per unit. Assume that her hou...

Q: David Mfg. Company manufactures an integrated transistor circuit board for repeat

David Mfg. Company manufactures an integrated transistor circuit board for repeat customers but also accepts special orders for the same product. Job No. MS1 incurred the following unit costs for 1,00...

Q: Aztec Company expects daily usage of 500 pounds of material Inca,

Aztec Company expects daily usage of 500 pounds of material Inca, an anticipated lead time of seven days, and a desired safety stock of 2,500 pounds. a. Determine the order point. b. Determine the num...

Q: Patriot Company predicts that it will use 360,000 gallons of

Patriot Company predicts that it will use 360,000 gallons of material during the year. The material is expected to cost $5 per gallon. Patriot anticipates that it will cost $72 to place each order. Th...

Q: Match the materials control form in the left column with the person

Match the materials control form in the left column with the person responsible for its preparation in the right column. (A selection may be used more than once.) a. Purchase requisition 1. Product...

Q: Go to the text Website at http://www.cengage.

Go to the text Website at http://www.cengage.com/accounting/vanderbeck and click on the link to the following article: Benefits From Lean and Cellular Manufacturing, by Strategos, Inc.-Consultants, En...

Q: The following data are taken from the general ledger and other records

The following data are taken from the general ledger and other records of Black Hills Manufacturing Co. on January 31, the end of the first month of operations in the current fiscal year: Sales . . ....

Q: Katy, Inc., manufactures ‘‘smart phones.’’ It is

Katy, Inc., manufactures ‘‘smart phones.’’ It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to $200,000 annually. Estimated benefits from the...

Q: In the scenario on page 91, Boston Company was trying to

In the scenario on page 91, Boston Company was trying to decide whether or not to change from a traditional inventory system to a just-in-time (JIT) system. The president, Teresa Francona, wanted to k...

Q: Milano’s Specialty Clothing, Inc., uses a job order cost system

Milano’s Specialty Clothing, Inc., uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows: Cash . . . . . . . . ....

Q: Scarlatta’s Manufacturing Company uses a job order cost system. The following

Scarlatta’s Manufacturing Company uses a job order cost system. The following accounts have been taken from the books of the company: Required: 1. Analyze the accounts and describe i...

Q: Go to the Vanguard Investments’ Web site https://retirementplans.

Go to the Vanguard Investments’ Web site https://retirementplans.vanguard.com/VGApp/pe/PubHome for retirement information that is linked to the text Web site at www.cengage.com/accounting/vanderbeck....

Q: The following actions occurred at Sanibel Sheet Metal Company relative to accounting

The following actions occurred at Sanibel Sheet Metal Company relative to accounting for materials costs for April. Mar. 31 The factory manager informs the storeroom keeper that for the month of April...

Q: Yusane Bolts, Inc., produces 50,000 units each day

Yusane Bolts, Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in...

Q: T. Hilliary, Inc., uses backflush costing to account for

T. Hilliary, Inc., uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and...

Q: An examination of Frosty Corporation’s records reveals the following transactions:

An examination of Frosty Corporation’s records reveals the following transactions: a. On December 31, the physical inventory of raw material was 9,950 gallons. The book quantity, using the moving aver...

Q: One of the tennis racquets that Set Point manufactures is a titanium

One of the tennis racquets that Set Point manufactures is a titanium model (Ace) that sells for $149. The cost of each Ace consists of: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Torre, Inc., manufactures electrical equipment from specifications received from customers

Torre, Inc., manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The following costs were...

Q: The following inventory data relate to Niagara Corp.: /

The following inventory data relate to Niagara Corp.: Calculate the following for the year: a. Direct materials purchased. b. Direct labor costs incurred. c. Cost of goods sold. d. Gross profit.

Q: Marino Company predicts that it will use 25,000 units of

Marino Company predicts that it will use 25,000 units of material during the year. The expected daily usage is 200 units, and there is an expected lead-time of five days and a desired safety stock of...

Q: Cortez Chemical, Inc., requires 20,000 gallons of material

Cortez Chemical, Inc., requires 20,000 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5. Determine the EOQ from potential order sizes of...

Q: Cortez Chemical, Inc., requires 500 gallons of material annually;

Cortez Chemical, Inc., requires 500 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5. Required: 1. Compute the average number of gallon...

Q: Stacey Womack is considering the implementation of an incentive wage plan to

Stacey Womack is considering the implementation of an incentive wage plan to increase productivity in her small manufacturing plant. The plant is nonunion, and employees have been compensated with onl...

Q: The purchases and issues of rubber gaskets (Materials Ledger #11216

The purchases and issues of rubber gaskets (Materials Ledger #11216) as shown in the records of HD Corporation for the month of November follow: Required: 1. Complete a materials ledger account simil...

Q: The following transactions affecting materials occurred in February: Feb.

The following transactions affecting materials occurred in February: Feb. 1 Balance on hand, 1,200 ft @ $2.76, $3,312.00 (plastic tubing, materials ledger account #906). 5 Issued 60 ft to production o...

Q: How would you define the term economic order quantity?

How would you define the term economic order quantity?

Q: What are the costs associated with carrying materials in stock?

What are the costs associated with carrying materials in stock?

Q: Briefly, what are the duties of the following employees?

Briefly, what are the duties of the following employees? a. Purchasing agent b. Receiving clerk c. Storeroom keeper d. Production supervisor

Q: Purchasing agents are responsible for contacting vendors from which to purchase materials

Purchasing agents are responsible for contacting vendors from which to purchase materials required by production. Why is the purchasing agent also responsible for reviewing and approving incoming vend...

Q: Illustrations of forms for requisitioning, ordering, and accounting for materials

Illustrations of forms for requisitioning, ordering, and accounting for materials are presented in the chapter. Would you expect these forms, as shown, to be used by all manufacturers? Discuss.

Q: The following is a list of manufacturing costs incurred by Orleans Products

The following is a list of manufacturing costs incurred by Orleans Products Co. during the month of July: Direct materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: What internal control procedures should be established for incoming shipments of materials

What internal control procedures should be established for incoming shipments of materials purchased?

Q: Who originates each of the following forms? a. Purchase

Who originates each of the following forms? a. Purchase requisition b. Purchase order c. Receiving report d. Materials requisition e. Debit-credit memorandum

Q: Elite Manufacturing Company uses a job order cost system to cost its

Elite Manufacturing Company uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and dou...

Q: A company may select an inventory costing method from a number of

A company may select an inventory costing method from a number of commonly used procedures. Briefly, how would you describe each of the following methods? a. First-in, first-out b. Last-in, first-out...

Q: Why do companies adopt the LIFO method of inventory costing? Your

Why do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on both the income statement and balance sheet.

Q: WTA Manufacturing Company operates on a modified wage plan. During one

WTA Manufacturing Company operates on a modified wage plan. During one week’s operation, the following direct labor costs were incurred: The employees are machine operators. Piece r...

Q: Terri Whelan, SS# 036-47-2189, is

Terri Whelan, SS# 036-47-2189, is a Grade 1 Machinist who earns $20 per hour. On Monday June 12 through Wednesday June 14, she worked four hours per day on each of Jobs 007 and 2525. On Thursday and F...

Q: Which of the forms shown in the chapter is the source for

Which of the forms shown in the chapter is the source for the following entries to subsidiary ledger accounts? a. Debits in materials ledger to record materials purchased b. Credits in materials ledg...

Q: Although payroll records may vary in design, what types of employee

Although payroll records may vary in design, what types of employee data would be found in the payroll records of most manufacturing companies?

Q: In accounting for labor costs, what is the distinction between the

In accounting for labor costs, what is the distinction between the accounting treatment for regular pay and overtime premium pay?

Q: Maintaining internal control over labor cost is necessary for a cost accounting

Maintaining internal control over labor cost is necessary for a cost accounting system to function effectively. What are the internal control procedures regarding the charge to the work in process acc...

Q: What accounts are used to record employees’ withholding taxes and the employer’s

What accounts are used to record employees’ withholding taxes and the employer’s payroll taxes?

Q: What are the procedures involved in accounting for labor cost, and

What are the procedures involved in accounting for labor cost, and what supporting forms are used for each procedure?

Q: What is a shift premium, and how is it usually accounted

What is a shift premium, and how is it usually accounted for?

Q: a. Distinguish between defined benefit pension plans and defined contribution pension

a. Distinguish between defined benefit pension plans and defined contribution pension plans. b. Distinguish between contributory and noncontributory pension plans.

Q: What are the two alternatives for accounting for the fringe benefits of

What are the two alternatives for accounting for the fringe benefits of direct laborers?

Q: The general ledger of Smokey Mountain Mfg., Inc., showed the

The general ledger of Smokey Mountain Mfg., Inc., showed the following credit balances on January 15: FICA Tax Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: What is the difference between direct and indirect labor?

What is the difference between direct and indirect labor?

Q: Briefly stated, what are the advantages and disadvantages of (a

Briefly stated, what are the advantages and disadvantages of (a) the hourly rate wage plan and (b) the piece-rate wage plan?

Q: How does the just-in-time approach to production differ

How does the just-in-time approach to production differ from the traditional approach?

Q: What purpose do digital records and remote computer terminals serve in a

What purpose do digital records and remote computer terminals serve in a payroll system?

Q: What would be the appropriate basis for distributing the costs of each

What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments? a. Building maintenance b. Inspection and packing c. Machine repair...

Q: A manufacturing company has two service and two production departments. Building

A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The...

Q: a. If the direct labor cost method is used in applying

a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials...

Q: Job 401k required $5,000 for direct materials, $

Job 401k required $5,000 for direct materials, $2,000 for direct labor, 200 direct labor hours, 100 machine hours, two setups, and three design changes. The cost pools and overhead rates for each pool...

Q: Match each of the following cost pools with the most appropriate cost

Match each of the following cost pools with the most appropriate cost allocation base and determine the overhead rates: Cost Pool Amount Assembly support . . . . . . . . . . . . . . . . . . . . . . ....

Q: The books of Prestige Products Company revealed that the following general journal

The books of Prestige Products Company revealed that the following general journal entry had been made at the end of the current accounting period: Factory Overhead . . . . . . . . . . . . . . . . . ....

Q: The payroll records of XU Corporation for the week ending October 7

The payroll records of XU Corporation for the week ending October 7, the fortieth week in the year, show the following: Required: 1. Complete a work sheet with the following column headings: Employee...

Q: The general ledger of Stephens Products, Inc. contains the following

The general ledger of Stephens Products, Inc. contains the following control account: If the materials charged to the one uncompleted job still in process amounted to $3,400, what amount of labor and...

Q: The following form represents an account taken from the general ledger of

The following form represents an account taken from the general ledger of Brodsky Costumes Company: Answer the following questions: a. What is the title of the account? b. Is this a departmentalized f...

Q: ETA Company had a remaining credit balance of $20,000

ETA Company had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in...

Q: What is the difference between throughput time and velocity?

What is the difference between throughput time and velocity?

Q: Classify each of the following items of factory overhead as either a

Classify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that varia...

Q: Copper Mountain Company has accumulated the following data over a six-

Copper Mountain Company has accumulated the following data over a six-month period: Separate the indirect labor into its fixed and variable components, using the high-low method.

Q: Using the data in E4-2 and a piece of graph

Using the data in E4-2 and a piece of graph paper: 1. Plot the data points on the graph and draw a line by visual inspection, indicating the trend shown by the data points. 2. Determine the variable c...

Q: Determine: 1. The variable cost per unit, the

Determine: 1. The variable cost per unit, the total fixed cost, and R2. 2. The plotted data points using Chart Wizard. 3. Compare the results to your solutions in E4-2 and E4-3.

Q: Scentsation, Inc., budgeted for 12,000 bottles of perfume

Scentsation, Inc., budgeted for 12,000 bottles of perfume Oui during the month of May. The unit cost of Oui was $20, consisting of direct materials, $7; direct labor, $8; and factory overhead, $5 (fix...

Q: Go to the companion Web site at www.cengage.com

Go to the companion Web site at www.cengage.com/accounting/vanderbeck and click on the link to Activity-based costing from Economist.com. Required: Answer the following questions based on the article...

Q: Pan-Am Manufacturing Company prepares cost estimates for projects on which

Pan-Am Manufacturing Company prepares cost estimates for projects on which it will bid. In order to anticipate the labor cost to be included in a request to bid on a contract for 1,200,000 units that...

Q: Home Entertainment, Inc., manufactures two types of DVD players:

Home Entertainment, Inc., manufactures two types of DVD players: standard and deluxe. It attempts to set selling prices based on a 50% markup on manufacturing costs to cover selling and administrative...

Q: Bakery Products, Inc., is divided into five departments, Mixing

Bakery Products, Inc., is divided into five departments, Mixing, Blending, Finishing, Factory Office, and Building Maintenance. The first three departments are engaged in production work. Factory Offi...

Q: Using the information in P4-6, prepare a schedule showing

Using the information in P4-6, prepare a schedule showing the distribution of the service departments’ expenses using the sequential distribution method in the order of number of other departments ser...

Q: Barbara-Lee Manufacturing Company uses the job order cost system of

Barbara-Lee Manufacturing Company uses the job order cost system of accounting. The following is a list of the jobs completed during the month of March, showing the charges for materials requisitioned...

Q: What are the arguments for and against ‘‘backflush’’ costing?

What are the arguments for and against ‘‘backflush’’ costing?

Q: Lexus Products, Inc., has its factory divided into three departments

Lexus Products, Inc., has its factory divided into three departments, with individual factory overhead rates for each department. In each department, all the operations are sufficiently alike for the...

Q: Julio Manufacturing Company uses activity-based costing. The factory overhead

Julio Manufacturing Company uses activity-based costing. The factory overhead budget for the coming period is $500,000, consisting of the following: Cost Pool Budgeted Amount Direct labor support . ....

Q: GGT Products, Inc., uses a job order cost system.

GGT Products, Inc., uses a job order cost system. Selected transactions dealing with factory items for the month follow: a. Requisitioned indirect materials from storeroom, $3,200. b. Purchased, on a...

Q: Manufacturing Company is studying the results of applying factory overhead to production

Manufacturing Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, $60,000; estimated materials costs, $50,000; es...

Q: The following information, taken from the books of Nicholas Company,

The following information, taken from the books of Nicholas Company, represents the operations for the month of January: The job cost system is used, and the February cost sheet for Job M45 shows the...

Q: An analysis of the payroll for the month of November for Hollywood

An analysis of the payroll for the month of November for Hollywood, Inc., reveals the information shown: Crowe, Eastwood, and Carey are production workers, and Penn is the plant manager. Giamatti is...

Q: Ko-Be Corporation has four departmental accounts: Building Maintenance,

Ko-Be Corporation has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and Assembly. The direct labor hour method is used to apply factory overhead to the jobs be...

Q: Planet Products, Inc., completed Job 2525 on May 31,

Planet Products, Inc., completed Job 2525 on May 31, and there were no jobs in process in the plant. Prior to June 1, the predetermined overhead application rate for June was computed from the followi...

Q: Plano Products, Inc., had a remaining credit balance of $

Plano Products, Inc., had a remaining credit balance of $10,000 in its under- and overapplied factory overhead account at yearend. It also had year-end balances in the following accounts: Work in Pro...

Q: The cost behavior patterns on page 222 are lettered A through H

The cost behavior patterns on page 222 are lettered A through H. The vertical axes of the graphs represent total dollars of expense, and the horizontal axes represent production in units, machine hour...

Q: Fahrenheit Company manufactures a product that requires the use of a considerable

Fahrenheit Company manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired temperature. The process requires a constant level of heat, so the furna...

Q: A manufacturing process may produce a considerable quantity of scrap material because

A manufacturing process may produce a considerable quantity of scrap material because of the nature of the product. What methods can be used to account for the sales value of scrap material?

Q: Listed below are the budgeted factory overhead costs for 2011 for Muncie

Listed below are the budgeted factory overhead costs for 2011 for Muncie Manufacturing, Inc., at a projected level of 2,000 units: Expenses: Indirect materials . . . . . . . . . . . . . . . . . . . ....

Q: How does accounting for factory overhead differ in small enterprises versus large

How does accounting for factory overhead differ in small enterprises versus large enterprises?

Q: What is the function and use of each of the two types

What is the function and use of each of the two types of factory overhead analysis spreadsheets?

Q: What are two types of departments found in a factory? What

What are two types of departments found in a factory? What is the function or purpose of each?

Q: Giovanni Construction Company uses the job order cost system. In recording

Giovanni Construction Company uses the job order cost system. In recording payroll transactions, the following accounts are used: Cash Administrative Salaries Wages Payable Miscellaneous Administrati...

Q: What are the two most frequently used methods of distributing service department

What are the two most frequently used methods of distributing service department costs to production departments?

Q: When using the step-down method of distributing service department costs

When using the step-down method of distributing service department costs, if a service department receives services from other service departments, will those costs be allocated back to it even though...

Q: What are the shortcomings of waiting until the actual factory overhead expenses

What are the shortcomings of waiting until the actual factory overhead expenses are known before recording such costs on the job cost sheets?

Q: What are the two types of budget data needed to compute predetermined

What are the two types of budget data needed to compute predetermined overhead rates?

Q: What are three methods traditionally used for applying factory overhead to jobs

What are three methods traditionally used for applying factory overhead to jobs? Discuss the allocation base used in each method.

Q: What factory operating conditions and data are required for each of the

What factory operating conditions and data are required for each of the traditionally used methods for applying factory overhead to products? Discuss the strengths and weaknesses of each method.

Q: After a product is inspected, some units may be classified as

After a product is inspected, some units may be classified as spoiled and others as defective. What distinguishes a product as being spoiled or defective?

Q: Under what conditions would it be desirable for a company to use

Under what conditions would it be desirable for a company to use more than one method to apply factory overhead to jobs or products?

Q: How does activity-based costing differ from traditional methods of applying

How does activity-based costing differ from traditional methods of applying overhead to products?

Q: What steps must a company take to successfully employ activity-based

What steps must a company take to successfully employ activity-based costing?

Q: The factory payroll for the week is $200,000,

The factory payroll for the week is $200,000, consisting of $140,000 earned by 100 direct laborers and $60,000 earned by 30 indirect laborers. The total of factory bonuses to be received at year-end i...

Q: Distinguish between volume-related and non-volume-related overhead

Distinguish between volume-related and non-volume-related overhead costs.

Q: If the factory overhead control account has a debit balance of $

If the factory overhead control account has a debit balance of $1,000 at the end of the first month of the fiscal year, has the overhead been under- or overapplied for the month? What are some probabl...

Q: What are two ways that an under- or over applied factory

What are two ways that an under- or over applied factory overhead balance can be disposed of at the end of a fiscal period? How can one decide which method to choose?

Q: What are factory overhead expenses, and what distinguishes them from other

What are factory overhead expenses, and what distinguishes them from other manufacturing costs? What other terms are used to describe factory overhead expenses?

Q: What are three categories of factory overhead expenses? Give examples of

What are three categories of factory overhead expenses? Give examples of each.

Q: What are the distinguishing characteristics of variable, fixed, and semi

What are the distinguishing characteristics of variable, fixed, and semi variable factory overhead costs?

Q: When a product’s cost is composed of both fixed and variable costs

When a product’s cost is composed of both fixed and variable costs, what effect does the increase or decrease in production has on per unit cost?

Q: Bristol Manufacturing, Inc., uses the job order cost system of

Bristol Manufacturing, Inc., uses the job order cost system of accounting. The following information was taken from the company’s books after all posting had been completed at the en...

Q: What effect does a change in volume have on total variable,

What effect does a change in volume have on total variable, fixed, and semi variable costs?

Q: What are the advantages and disadvantages of the scattergraph method as compared

What are the advantages and disadvantages of the scattergraph method as compared to the high-low method?

Q: In P3-11, prepare the entries to distribute the weekly

In P3-11, prepare the entries to distribute the weekly payroll and the costs and liabilities related to the bonus, vacation, and holiday pay, assuming that the fringe benefits of the direct laborers a...

Q: Clark Kent, Inc., buys crypton for $0.80

Clark Kent, Inc., buys crypton for $0.80 a gallon. At the end of processing in Dept. 1, crypton splits off into products A, B, and C. Product A is sold at the split-off point with no further processin...

Q: Materials often represent a substantial portion of a company’s assets; therefore

Materials often represent a substantial portion of a company’s assets; therefore, they should be controlled from the time orders are placed to the time finished goods are shipped to the customer. What...

Q: Seymour Brothers Products, Inc., manufactures a liquid product in one

Seymour Brothers Products, Inc., manufactures a liquid product in one department. Due to the nature of the product and the process, units are regularly lost at the beginning of production. Materials a...

Q: Orlando Metals manufactures tin. During the process, a byproduct—

Orlando Metals manufactures tin. During the process, a byproduct— scrap metal—is obtained and placed in stock. The estimated sales value of the scrap metal produced during the month of April is $2,000...

Q: Janitorial Products, Inc., manufactures two products, brooms and mops

Janitorial Products, Inc., manufactures two products, brooms and mops, which are sold in two territories designated by the company as East Territory and West Territory. The following income statement...

Q: The normal capacity of Austin Adhesives, Inc., is 40,

The normal capacity of Austin Adhesives, Inc., is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimat...

Q: Handyman Helper, Inc., manufactures household products such as windows,

Handyman Helper, Inc., manufactures household products such as windows, light fixtures, ladders, and work tables. During the year it produced 10,000 Model 10X windows but only sold 5,000 units at $40...

Q: Assume that during the month of April the production report of Austin

Assume that during the month of April the production report of Austin Adhesives, Inc., in E8-10 revealed the following information: Units produced during the month . . . . . . . . . . . . . . . . . ....

Q: Last year, Tri-Rivers Corporation adopted a standard cost system

Last year, Tri-Rivers Corporation adopted a standard cost system. Labor standards were set on the basis of time studies and prevailing wage rates. Materials standards were determined from materials sp...

Q: Marblehead Manufacturing, Inc., has two departments, Mixing and Blending

Marblehead Manufacturing, Inc., has two departments, Mixing and Blending. When goods are completed in Mixing, they are transferred to Blending and then to the finished goods storeroom. There was no be...

Q: The standard capacity of a factory is 8,000 units per

The standard capacity of a factory is 8,000 units per month. Cost and production data follow: Standard application rate for fixed overhead . . . . . . $0.50 per unit Standard application rate for v...

Q: The normal capacity of a manufacturing plant is 30,000 direct

The normal capacity of a manufacturing plant is 30,000 direct labor hours or 20,000 units per month. Standard fixed costs are $6,000, and variable costs are $12,000. Data for two months follow: For e...

Q: The overhead application rate for a company is $2.50

The overhead application rate for a company is $2.50 per unit, made up of $1.00 for fixed overhead and $1.50 for variable overhead. Normal capacity is 10,000 units. In one month, there was an unfavora...

Q: Georgia Gasket Company budgets 8,000 direct labor hours for the

Georgia Gasket Company budgets 8,000 direct labor hours for the year. The total overhead budget is expected to amount to $20,000. The standard cost for a unit of the company’s product estimates the va...

Q: Using the data shown, calculate the following overhead variances:

Using the data shown, calculate the following overhead variances: Production for the month . . . . . . . . . . . . . . . . . . . . . . . . 9,000 units Direct labor hours used . . . . . . . . . . . ....

Q: 1,000 units were started and finished. Case 1

1,000 units were started and finished. Case 1: All prices and quantities for the cost elements are standard, except for materials cost, which is $8.50 per pound. Case 2: All prices and quantities for...

Q: Akron Manufacturing Company manufactures a cement sealing compound called Ultra-Seal

Akron Manufacturing Company manufactures a cement sealing compound called Ultra-Seal. The process requires that the product pass through three departments. In Dept. 1, all materials are put into produ...

Q: D-List Calendar Company specializes in manufacturing calendars that depict obscure

D-List Calendar Company specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct m...

Q: Overhead Doors, Inc., manufactures garage doors for homes. The

Overhead Doors, Inc., manufactures garage doors for homes. The standard quantity of direct labor to manufacture a door is 4.5 hours. The standard hourly wage in this department is $12.50 per hour. Dur...

Q: AACSB Processors, Inc., produces an average of 10,000

AACSB Processors, Inc., produces an average of 10,000 units each month. The factory standards are 20,000 hours of direct labor and 10,000 pounds of materials for this volume. The standard cost of dire...

Q: This includes standards for such items as food, labor, and

This includes standards for such items as food, labor, and paper products. Given the level of sales volume achieved, the actual costs incurred are compared to the standard costs that should have been...

Q: Cost and production data for Biloxi Beverages, Inc., are presented

Cost and production data for Biloxi Beverages, Inc., are presented as follows. Required: 1. Calculate net variances for materials, labor, and factory overhead. 2. a. Calculate specific materials and...

Q: The standard cost summary for the most popular product of Phase-

The standard cost summary for the most popular product of Phase-Five Products Company is shown as follows, together with production and cost data for the period. Standard Cost Summary Materials: 2 gal...

Q: Suzy-Q Corporation has established the following standard cost per unit

Suzy-Q Corporation has established the following standard cost per unit: Materials—5.5 lb@$2.20 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.10 Labor—1.8 hr@$6.25 per...

Q: On May 1, Maximus Company began the manufacture of a new

On May 1, Maximus Company began the manufacture of a new mechanical device known as Caesar. The company installed a standard cost system in accounting for manufacturing costs. The standard costs for a...

Q: The standard specifications for an electric motor manufactured by B&B

The standard specifications for an electric motor manufactured by B&B Electric Corporation follow: Standard cost per unit: Materials (2 lb $5 per lb) . . . . . . . . . . . . . . . . . . . . . . ....

Q: Poway Shirts, Inc., manufactures men’s sport shirts for large stores

Poway Shirts, Inc., manufactures men’s sport shirts for large stores. Folsom produces a single quality shirt in lots of a dozen according to each customer’s order a...

Q: Gold Giant Products, Inc., cans peas and uses an average

Gold Giant Products, Inc., cans peas and uses an average cost system. For the month of November, the company showed the following: Each can contain 16 oz, or 1 lb, of peas. Required: 1. Calculate the...

Q: Fargo Company manufactures products in batches of 100 units per batch.

Fargo Company manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60...

Q: Metropolis Manufacturing Company manufactures a small electric motor that is a replacement

Metropolis Manufacturing Company manufactures a small electric motor that is a replacement part for the more popular gas furnaces. The standard cost card shows the product requirements as follows: Dir...

Q: K-Rod Corporation uses a standard cost system and manufactures one

K-Rod Corporation uses a standard cost system and manufactures one product. The variable costs per product follow: Materials (4 parts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Tech-Elec Manufacturing Company estimates the following labor and overhead costs

Tech-Elec Manufacturing Company estimates the following labor and overhead costs for the period: Variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4...

Q: Using the data provided, / /

Using the data provided, Calculate the overhead cost variances under the three-variance method.

Q: Wausau Furniture Company uses a standard cost system in accounting for its

Wausau Furniture Company uses a standard cost system in accounting for its production costs. The standard cost of a unit of furniture follows: The following flexible monthly overhead budget applies:...

Q: Ichiro Inspections, Inc., specializes in determining whether a building or

Ichiro Inspections, Inc., specializes in determining whether a building or house’s drain pipes are properly tied into the city’s sewer system. The company pours colored chemical through the pipes and...

Q: Folsom Fabricators, Inc., uses a standard cost system to account

Folsom Fabricators, Inc., uses a standard cost system to account for its single product. The standards established for the product include the following: Materials . . . . . . . . . . . . . . . . . ....

Q: Accelerator, Inc., manufactures a fuel additive, Surge, that

Accelerator, Inc., manufactures a fuel additive, Surge, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your exam...

Q: Prado Corporation manufactures and sells a single product. The company uses

Prado Corporation manufactures and sells a single product. The company uses a standard cost system. The standard cost per unit of product follows: Materials—1 lb plastic@$3.00 . . . . . . . . . . . ....

Q: Sinaloa Products Co. uses the process cost system. A record

Sinaloa Products Co. uses the process cost system. A record of the factory operations for the month of October follows: Production Summary Units Started in process . . . . . . . . . . . . . . . . . ....

Q: Stylized Products, Inc., uses a standard cost system in accounting

Stylized Products, Inc., uses a standard cost system in accounting for the cost of production of its only product, Suave. The standards for the production of one unit of Suave follow: Direct materials...

Q: TBA Products Company manufactures a variety of products made of plastic and

TBA Products Company manufactures a variety of products made of plastic and aluminum components. During the winter months, substantially all of the production capacity is devoted to the production of...

Q: When a company uses a standard cost system, are the inventory

When a company uses a standard cost system, are the inventory accounts—Finished Goods, Work in Process, and Materials—valued at actual cost or standard cost?

Q: What might cause the following materials variances? a. An

What might cause the following materials variances? a. An unfavorable materials price variance. b. A favorable materials price variance. c. An unfavorable materials quantity variance. d. A favorable...

Q: What might cause the following labor variances? a. An

What might cause the following labor variances? a. An unfavorable labor rate variance. b. A favorable labor rate variance. c. An unfavorable labor efficiency variance. d. A favorable labor efficiency...

Q: Is it possible that a variance of one type might be partially

Is it possible that a variance of one type might be partially or fully offset by another variance? Explain.

Q: Why is it important to determine controllable variances?

Why is it important to determine controllable variances?

Q: What is a volume variance?

What is a volume variance?

Q: What is the significance of a volume variance?

What is the significance of a volume variance?

Q: How does a standard cost accounting system work, and why is

How does a standard cost accounting system work, and why is it valuable to management?

Q: Chikin, Inc., specializes in chicken farming. Chickens are raised

Chikin, Inc., specializes in chicken farming. Chickens are raised, packaged, and sold mostly to grocery chains. Chickens are accounted for in batches of 50,000. At the end of each growing period, the...

Q: How are standards for materials and labor costs determined?

How are standards for materials and labor costs determined?

Q: How do rate and efficiency variances relate to labor costs?

How do rate and efficiency variances relate to labor costs?

Q: Is a favorable variance ‘‘good’’ and an unfavorable variance ‘‘bad’’

Is a favorable variance ‘‘good’’ and an unfavorable variance ‘‘bad’’? Explain.

Q: Chiao and Piaker, CPAs, budgeted for the following professional labor

Chiao and Piaker, CPAs, budgeted for the following professional labor hours for the coming year: partners, 1,500; managers, 5,000; and staff, 20,000. Budgeted billing rates are: partners, $250 per hou...

Q: Jones and Wang, physicians, budgeted for the following revenue and

Jones and Wang, physicians, budgeted for the following revenue and expenses for the month of September: Depreciation—equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The partners of Harris and Whelan, attorneys-at-law

The partners of Harris and Whelan, attorneys-at-law, decide to implement an activity-based costing system for their firm. They identify the following three cost pools and budgeted amounts for each for...

Q: From the following list of performance measures, label each one as

From the following list of performance measures, label each one as Financial, Customer, Internal Business Processes, or Learning and Growth: Percentage of on-time deliveries Employee turnover ratio...

Q: Hi-End, Inc., a chain of gasoline service stations

Hi-End, Inc., a chain of gasoline service stations, has a strategy of charging premium prices for its gasoline by providing excellent service such as attendants to pump gas, clean restrooms, and free...

Q: Hayes and Manolis have a professional service firm that has the following

Hayes and Manolis have a professional service firm that has the following budgeted costs for the current year: Associates’ salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Brown and Stetham, plumbers, successfully bid $30,000

Brown and Stetham, plumbers, successfully bid $30,000 for the plumbing work on a new luxury home. Total direct labor cost on the job was $9,500, other direct costs were $2,500, and overhead is charged...

Q: Boone Oil Company transports crude oil to its refinery where it is

Boone Oil Company transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off poin...

Q: One of the service businesses referred to in the chapter was the

One of the service businesses referred to in the chapter was the international accounting firm of PricewaterhouseCoopers (PwC). Go to the text Web site at www.cengage.com/accounting/vanderbeck and cl...

Q: Ed Hickey, the consultant introduced at the beginning of section two

Ed Hickey, the consultant introduced at the beginning of section two of the chapter has obtained the following data relative to the Kaufman and D’Esti consulting job: Assume that th...

Q: Matthews and Thomas, partners in a systems consulting firm, budgeted

Matthews and Thomas, partners in a systems consulting firm, budgeted the following professional labor hours for the year ended December 31, 2011: Partners . . . . . . . . . . . . . . . . . . . . . . ....

Q: Matthews and Thomas, the systems consultants, budgeted overhead and other

Matthews and Thomas, the systems consultants, budgeted overhead and other expenses as follows for the year ended December 31, 2011: Overhead: Depreciation—equipment . . . . . . . . . . . . . . . $ 6...

Q: The partners of Mayweather and Pacquiao, a security services firm,

The partners of Mayweather and Pacquiao, a security services firm, decide to implement an activity-based costing system. They identify the following three cost pools and budgeted amounts for each for...

Q: Boyer and Kubek, architects, have been using a simplified costing

Boyer and Kubek, architects, have been using a simplified costing system in which all professional labor costs are included in a single direct cost category, professional labor; and all overhead costs...

Q: Referring to P9-6, compare the results of the cost

Referring to P9-6, compare the results of the cost allocations to the Young Products and Doug’s Markets jobs under the simplified costing system and the activity-based costing system. Label each diffe...

Q: Mercury Athletics manufactures sporting goods that are then sold to retailers.

Mercury Athletics manufactures sporting goods that are then sold to retailers. It is a very competitive industry where quality and price are important to gain space on retailers’ shelves. Mercury’s st...

Q: Dayton Dairies is a vertically integrated company that has dairy farms,

Dayton Dairies is a vertically integrated company that has dairy farms, processing plants, and retail ice cream stores. Dayton’s strategy is to maximize shareholder value by providing top-of the- line...

Q: Shank and Verst, attorneys-at-law, provided legal

Shank and Verst, attorneys-at-law, provided legal representation to Baldwin Equipment, Inc., in a product liability suit. Twenty partner hours and 65 associate hours were worked in defending the compa...

Q: Manufacturing data for the months of January and February in the Mixing

Manufacturing data for the months of January and February in the Mixing Department of Cappy Cleaning Products follow: All materials are added at the start of the process. Labor and factory overhead a...

Q: The budget for the Baldwin Equipment, Inc. job in P9

The budget for the Baldwin Equipment, Inc. job in P9-1 consisted of the following amounts: Partners’ salary and overhead . . . . . . . . . . . . . $6,300 Associates’ salary and overhead . . . . . . ....

Q: Why is it important for professional labor hours to be budgeted with

Why is it important for professional labor hours to be budgeted with extreme care?

Q: What is the difference between the accounting treatment of overhead for a

What is the difference between the accounting treatment of overhead for a service business and for a manufacturer?

Q: Explain how a budgeted income statement for a service business may be

Explain how a budgeted income statement for a service business may be used for both planning and control purposes.

Q: What are the two main things that an activity-based costing

What are the two main things that an activity-based costing system attempts to accomplish relative to direct and indirect costs?

Q: Explain the concept of a cost/benefit decision and how it

Explain the concept of a cost/benefit decision and how it relates to job costing systems.

Q: Give five examples of nonfinancial performance measures.

Give five examples of nonfinancial performance measures.

Q: Name the four categories that performance measures are typically divided into,

Name the four categories that performance measures are typically divided into, and give an example of a performance measure for each category.

Q: What factors help to explain the growth of service businesses relative to

What factors help to explain the growth of service businesses relative to manufacturing businesses in the United States in recent years?

Q: What factors would you consider in deciding whether to use direct labor

What factors would you consider in deciding whether to use direct labor dollars or direct labor hours in charging overhead to jobs in a service firm?

Q: On December 1, Lake George Production Company had a work in

On December 1, Lake George Production Company had a work in process inventory of 1,200 units that were complete as to materials and 50% complete as to labor and overhead. December 1 costs follow: Mate...

Q: Distinguish between a direct cost and an indirect cost when the cost

Distinguish between a direct cost and an indirect cost when the cost object is the job.

Q: The fixed overhead budgeted for Hamlet Company at an expected capacity of

The fixed overhead budgeted for Hamlet Company at an expected capacity of 500,000 units is $1,500,000. Variable costing is used internally, and the net income is adjusted to an absorption costing net...

Q: Grecian Products, Inc., has two divisions, Athens and Sparta

Grecian Products, Inc., has two divisions, Athens and Sparta. For the month ended March 31, Athens had sales and variable costs of $500,000 and $225,000, respectively, and Sparta had sales and variabl...

Q: The sales price per unit is $13 for the Dakota Company’s

The sales price per unit is $13 for the Dakota Company’s only product. The variable cost per unit is $5. In year 2011, the company sold 80,000 units, which was 10,000 units above the break-even point....

Q: Jackson Company sells its only product for $50 per unit.

Jackson Company sells its only product for $50 per unit. Fixed expenses total $800,000 per year. Variable expenses are $1,000,000 when 40,000 units are sold. How many units must be sold to earn a net...

Q: A new product is expected to have sales of $100,

A new product is expected to have sales of $100,000, variable costs of 60% of sales, and fixed costs of $20,000. 1. Using graph paper, construct a break-even chart and label the sales line, total cost...

Q: Leisure Products, Inc., manufactures and sells two products, golf

Leisure Products, Inc., manufactures and sells two products, golf balls and tennis balls. Fixed costs are $100,000, and unit sales are 60,000 sheaths of golf balls and 40,000 cans of tennis balls. The...

Q: A company has sales of $1,000,000,

A company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the following: 1. Contribution margin ratio. 2. Break-even sales volume. 3. Margin of safety ratio....

Q: A company has prepared the following statistics regarding its production and sales

A company has prepared the following statistics regarding its production and sales at different capacity levels. 1. At what point is break-even reached in sales dollars? In units? 2. If the company i...

Q: Lewis Products, Inc., desires to earn an after-tax

Lewis Products, Inc., desires to earn an after-tax income of $150,000. It has fixed costs of $1,000,000, a unit sales price of $500, and unit variable costs of $200. The company is in the 30% tax brac...

Q: Fill in the missing figures for each of the following independent cases

Fill in the missing figures for each of the following independent cases:

Q: Dribble, Inc., manufactures basketballs. The company’s forecasted income statement

Dribble, Inc., manufactures basketballs. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted inc...

Q: Alpha Company needs 20,000 units of a certain part to

Alpha Company needs 20,000 units of a certain part to use in its production cycle. The following information is available: Cost to Alpha to make the part: Direct materials . . . . . . . . . . . . . ....

Q: Julian Manufacturing, Inc., wishes to determine the profitability of its

Julian Manufacturing, Inc., wishes to determine the profitability of its products and asks the cost accountant to make a comparative analysis of sales, cost of sales, and distribution costs of each pr...

Q: Lynne Products Company uses a process cost system and applies actual factory

Lynne Products Company uses a process cost system and applies actual factory overhead to work in process at the end of the month. The following data came from the records for the month of March: Direc...

Q: Using the information presented in E10-1 Prepare comparative income statements

Using the information presented in E10-1 Prepare comparative income statements for March (a) under absorption costing and (b) Under variable costing. Information presented in E10-1 Lynne Products Comp...

Q: The chief executive officer (CEO) of Button Corporation attended a

The chief executive officer (CEO) of Button Corporation attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that...

Q: The following production data came from the records of LeShaq Athletic Enterprises

The following production data came from the records of LeShaq Athletic Enterprises for the year ended December 31, 2011: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: A company had income of $50,000, using variable

A company had income of $50,000, using variable costing for a given period. Beginning and ending inventories for the period were 18,000 units and 13,000 units, respectively. If the fixed overhead appl...

Q: Go to the Web site for Delta Air Lines, which is

Go to the Web site for Delta Air Lines, which is linked to the text Web site at www.cengage.com/accounting/vanderbeck. Click on ‘‘Specials,’’ then ‘‘Web Fares’’ and do the following: 1. Find a fare de...

Q: The board of directors of Garden City Gaskets, Inc., set

The board of directors of Garden City Gaskets, Inc., set the profit goal for the calendar year 2011 at $2,200,000. It also established a bonus plan in which the top five officers of the company will s...

Q: Mallory Manufacturing Company has a maximum productive capacity of 210,000

Mallory Manufacturing Company has a maximum productive capacity of 210,000 units per year. Normal capacity is 180,000 units per year. Standard variable manufacturing costs are $10 per unit. Fixed fact...

Q: What is the difference between absorption costing and variable costing?

What is the difference between absorption costing and variable costing?

Q: What effect will applying variable costing have on the income statement and

What effect will applying variable costing have on the income statement and the balance sheet?

Q: The sales department of S. Miller Manufacturing Company has forecast sales

The sales department of S. Miller Manufacturing Company has forecast sales for its single product to be 20,000 units for the month of June, with three-quarters of the sales expected in the East region...

Q: How would you describe the method used to treat the cost of

How would you describe the method used to treat the cost of abnormal processing losses?

Q: What computations must be made if materials added in a department increase

What computations must be made if materials added in a department increase the number of units being processed in that department?

Q: The sales department of P. Gillen Manufacturing Company has forecast sales

The sales department of P. Gillen Manufacturing Company has forecast sales in March to be 20,000 units. Additional information follows: Finished goods inventory, March 1 . . . . . . . . . . . . . . ....

Q: Branson Manufacturing, Inc., produces a single type of small motor

Branson Manufacturing, Inc., produces a single type of small motor. The bookkeeper who does not have an in-depth understanding of accounting principles prepared the following performance report with t...

Q: Use the information in Figure 7-12 of the chapter.

Use the information in Figure 7-12 of the chapter. Required: Prepare flexible budgets for the production and sale of 29,000 units and 31,000, respectively.

Q: Presented below are the monthly factory overhead cost budget (at normal

Presented below are the monthly factory overhead cost budget (at normal capacity of 5,000 units or 20,000 direct labor hours) and the production and cost data for a month. The predetermined overhead r...

Q: Mountaineer Manufacturing Company uses a job order cost system and standard costs

Mountaineer Manufacturing Company uses a job order cost system and standard costs. It manufactures one product, whose standard cost follows: Materials, 20 yards@$0.90 per yard . . . . . . . . . . . ....

Q: The sales department of Optimo Company has forecast sales for May 2011

The sales department of Optimo Company has forecast sales for May 2011 to be 40,000 units. Additional information follows: Finished goods inventory, May 1 . . . . . . . . . . . . . . . . . . . . . . ....

Q: Cruise Tire Company’s budgeted unit sales for the year 2011 were:

Cruise Tire Company’s budgeted unit sales for the year 2011 were: Passenger car tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Budgeted selling and administrative expenses for Cruise Tire Company in P7-

Budgeted selling and administrative expenses for Cruise Tire Company in P7-2 for the year ended December 31, 2011, were as follows: Advertising expense . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Which budget must be prepared before the others? Why?

Which budget must be prepared before the others? Why?

Q: Why is it important to have front-line managers participate in

Why is it important to have front-line managers participate in the budgeting process?

Q: What is the difference between the average cost method and the first

What is the difference between the average cost method and the first-in, first-out (FIFO) cost method?

Q: What are the advantages and disadvantages of each of the following for

What are the advantages and disadvantages of each of the following for a company that has greatly fluctuating sales during the year? a. A stable production policy b. A stable inventory policy

Q: S. Prosser Manufacturing Company forecast October sales to be 45,

S. Prosser Manufacturing Company forecast October sales to be 45,000 units. Additional information follows: Finished goods inventory, October 1 . . . . . . . . . . . . . . . . . . . . . . . . 5,000 u...

Q: Why is a flexible budget better than a master budget for comparing

Why is a flexible budget better than a master budget for comparing actual results to budgeted expectations?

Q: In comparing actual sales revenue to flexible budget sales revenue, would

In comparing actual sales revenue to flexible budget sales revenue, would it be possible to have a favorable variance and still not have met revenue expectations?

Q: How would you define the following? a. Theoretical capacity

How would you define the following? a. Theoretical capacity b. Practical capacity c. Normal capacity

Q: Is it possible for a factory to operate at more than 100

Is it possible for a factory to operate at more than 100% of normal capacity?

Q: How is the standard cost per unit for factory overhead determined?

How is the standard cost per unit for factory overhead determined?

Q: What are six principles of good budgeting?

What are six principles of good budgeting?

Q: What is a continuous budget, and why is it useful?

What is a continuous budget, and why is it useful?

Q: Give three examples each of operating budgets and financial budgets.

Give three examples each of operating budgets and financial budgets.

Q: What advantage does the FIFO cost method have over the average cost

What advantage does the FIFO cost method have over the average cost method relative to providing information for cost control?

Q: Prepare a cost of goods sold budget for the Summit Manufacturing Company

Prepare a cost of goods sold budget for the Summit Manufacturing Company for the year ended December 31, 2011, from the following estimates. Inventories of production units: Direct materials purchased...

Q: Gyro Company has the following totals from its operating budgets:

Gyro Company has the following totals from its operating budgets: Selling and administrative expenses budget . . . . . . . . . . . . . . . . . . . $ 244,500 Cost of goods sold budget . . . . . . . . ....

Q: Why might the total number of units completed during a month plus

Why might the total number of units completed during a month plus the number of units in process at the end of a month be less than the total number of units in process at the beginning of the month p...

Q: Using the following per-unit and total amounts, prepare a

Using the following per-unit and total amounts, prepare a flexible budget at the 14,000-, 15,000-, and 16,000-unit levels of production and sales for Celestial Products, Inc.: Selling price per unit ....

Q: Strand Manufacturing, Inc., has the following flexible budget formulas and

Strand Manufacturing, Inc., has the following flexible budget formulas and amounts: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25 per...

Q: How is the cost of units normally lost in manufacturing absorbed by

How is the cost of units normally lost in manufacturing absorbed by the unit cost for the period?

Q: How would you define each of the following? a.

How would you define each of the following? a. joint products b. by-products c. joint costs d. split-off point

Q: Solar Panels, Inc., has the following items and amounts as

Solar Panels, Inc., has the following items and amounts as part of its master budget at the 10,000-unit level of sales and production: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: How would you describe accounting for by-products for which no

How would you describe accounting for by-products for which no further processing is required?

Q: The normal capacity of a manufacturing plant is 5,000 units

The normal capacity of a manufacturing plant is 5,000 units per month. Fixed overhead at this volume is $2,500, and variable overhead is $7,500. Additional data follow: Month 1 Month 2 Actual...

Q: The normal capacity of a factory is 8,000 units per

The normal capacity of a factory is 8,000 units per month. Cost and production data follow: Standard application rate for fixed overhead . . . . . . . . . . . . . . . . $0.50 per unit Standard applic...

Q: Go to the text Web site at www.cengage.com

Go to the text Web site at www.cengage.com/accounting/vanderbeck and click on the link to ‘‘kaizen,’’ from Wikipedia, the free encyclopedia. After reading the entry, answer the following questions: 1....

Q: Does the calculation of unit cost in a department subsequent to the

Does the calculation of unit cost in a department subsequent to the first department take into consideration the costs transferred in from the previous departments?

Q: What are the two basic systems of costaccounting, and under what

What are the two basic systems of costaccounting, and under what conditions mayeach be used advantageously?

Q: Cooper Company’s joint cost of producing 1,000 units of Product

Cooper Company’s joint cost of producing 1,000 units of Product A, 500 units of Product B, and 500 units of Product C is $200,000. The unit sales values of the three products at the split-off point ar...

Q: South-Central Publishing Company prepares income statements segmented by divisions,

South-Central Publishing Company prepares income statements segmented by divisions, but the chief operating officer is not certain about how the company is actually performing. Financial data for the...

Q: What is the primary difference between the two cost accounting systems regarding

What is the primary difference between the two cost accounting systems regarding the accumulation of costs and the calculation of unit costs?

Q: Lexington Lumber Co. processes rough timber to obtain three grades of

Lexington Lumber Co. processes rough timber to obtain three grades of finished lumber, A, B, and C. The company allocates costs to the joint products on the basis of market value. During the month of...

Q: Swedish Navy Company manufactures wristwatches on an assembly line. The work

Swedish Navy Company manufactures wristwatches on an assembly line. The work in process inventory as of March 1 consisted of 1,000 watches that were complete as to materials and 75% complete as to lab...

Q: How do the two cost accounting systems differ in accounting for each

How do the two cost accounting systems differ in accounting for each of the following items? a. Materials b. Labor c. Factory overhead

Q: The following data appeared in the accounting records of Royale Manufacturing Company

The following data appeared in the accounting records of Royale Manufacturing Company, which uses an average cost production system: Started in process . . . . . . . . . . . . . . . . . . . 12,000 u...

Q: Rancho Santa Fe Manufacturing, Inc., produces and sells a product

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: Requi...

Q: The Nut House, Inc., sells three types of nuts:

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 c...

Q: Colbert Company has 1,000 units in process in Forming at

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 re...

Q: Why are there objections to using absorption costing when segment reports of

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

Q: U.S. Grant Company has two production departments. Blending

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, 8,2...

Q: Eradicate, Inc., produces and sells a line of insect repellants

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 re...

Q: Assuming that all materials are added at the beginning of the process

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 o...

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

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

Q: The Coca-Cola Company’s manufacturing operations are ideal for process costing

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 c...

Q: North Arlington Company has two production departments. The nature of the

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...

Q: In E5-7, prepare a statement of cost of goods

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 pr...

Q: Assume each of the following conditions concerning the data given:

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 mat...

Q: What would be the effect on the unit cost of finished goods

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?

Q: Marion Corporation has determined the following selling price and manufacturing cost per

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 . . . . . . . . . . . . . . ....

Q: Why is it necessary to estimate the stage or degree of completion

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?

Q: Spaulding Manufacturing Company has determined the cost of manufacturing a unit of

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 . . . . . . . . . . . . ....

Q: What are the advantages and disadvantages of using variable costing?

What are the advantages and disadvantages of using variable costing?

Q: Using the data given for Cases 1–3 and the FIFO

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 assumpti...

Q: Using the data in P5-5: 1. Draft

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 Jul...

Q: Ichiro Manufacturing Co. uses the process cost system. The following

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 submi...

Q: Buscemi Products, Inc., desires an after-tax income of

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. Require...

Q: What is the primary objective in accumulating costs by departments?

What is the primary objective in accumulating costs by departments?

Q: What is the importance of make-or-buy studies for

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

Q: Analyze the information presented in the following general ledger account of Mantle

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 w...

Q: Fifteen workers are assigned to a group project. The productionstandard calls

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 requir...

Q: What information is reflected on a production report?

What information is reflected on a production report?

Q: Camacho Chemical Company uses an average cost processing system. All materials

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 pro...

Q: Foamy, Inc., manufactures shaving cream and uses an average cost

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, mat...

Q: What is the difference between the contribution margin ratio and the margin

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

Q: If the prior department’s transfers from two different periods have different unit

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 the...

Q: Using the data, determine: 1. The cost of

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...

Q: 1. For E5-10, prepare a cost of production

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 . ....

Q: The production of a new product required Mirage Manufacturing Company to lease

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 salesâ...

Q: Limerick Enterprises, Inc., is considering building a manufacturing plant in

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 ma...

Q: Define differential analysis, differential revenue, differential cost, and differential

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

Q: Digital Software, Inc., has two product lines. The income

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...

Q: Roberts Corporation uses a process cost system. The records for the

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.

Q: Explain the differences between financial accounting and cost accounting. Why arethese

Explain the differences between financial accounting and cost accounting. Why arethese differences important?

Q: “It’s not the job of accounting to determine strategy. It

“It’s not the job of accounting to determine strategy. It is only used to measure results.”Discuss.

Q: Would you support a proposal to develop a set of “generally

Would you support a proposal to develop a set of “generally accepted” accountingstandards for measuring executive performance that would be used to determine compensation?Why or why not?

Q: Airlines are well known for using complex pricing structures. For example

Airlines are well known for using complex pricing structures. For example, it is often (butnot always) less expensive to buy a ticket in advance than it is on the day of the flight.However, if the air...

Q: Nabisco (a unit of Kraft Foods) makes a variety of

Nabisco (a unit of Kraft Foods) makes a variety of cookies (OreosTM, for example)just like Carmen’s Cookies. In what ways are the cost accounting issues the same? Inwhat ways are they different?

Q: What potential conflicts might arise between marketing managers and the controller’sstaff?

What potential conflicts might arise between marketing managers and the controller’sstaff? How might these potential conflicts be resolved with a minimum of interference from the chief executive offic...

Q: Refer to the Business Application discussion of supply chain costs. A

Refer to the Business Application discussion of supply chain costs. A colleague says, “We don’t have to worry about other firms in the supply chain. If every firm in the chain minimizes its own cost,...

Q: Refer to the Business Application discussion of options backdating. If stock

Refer to the Business Application discussion of options backdating. If stock optionsand other forms of performance-based compensation result in some managers engagingin unethical or illegal behavior,...

Q: Why does a cost accountant need to be familiar with new developments

Why does a cost accountant need to be familiar with new developments in informationtechnology?

Q: Will studying cost accounting increase the chances that Carmen’s Cookies will succeed

Will studying cost accounting increase the chances that Carmen’s Cookies will succeed? How? Will it guarantee success? Explain.

Q: Apple, Inc. incurs many types of costs in its operations

Apple, Inc. incurs many types of costs in its operations. Required For each cost in the following table, identify the stage in the value chain where this cost is incurred: Cost ___ Programmer costs...

Q: Place the letter of the appropriate accounting cost in Column 2 in

Place the letter of the appropriate accounting cost in Column 2 in the blank next toeach decision category in Column 1. Column 1 ___ Providingcost information for financial reporting ___ Identifying t...

Q: Coastal Cabinets produces cabinets for new home builders. You have been

Coastal Cabinets produces cabinets for new home builders. You have been called in to settle adispute between Coastal Cabinets and Executive Homes, a builder of custom homes. Executive Homes buys 20,00...

Q: As an analyst at Delta Airlines, you are asked to help

As an analyst at Delta Airlines, you are asked to help the operations staff. Operations has identified a new method of loading baggage that is expected to result in a 30 percent reductionin labor time...

Q: Betty’s Fashions operates retail stores in both downtown and suburban locations.

Betty’s Fashions operates retail stores in both downtown and suburban locations. The companyhas two responsibility centers: the City Division, which contains stores in downtown locations, and the Mall...

Q: State University Business School (SUBS) offers several degrees, including

State University Business School (SUBS) offers several degrees, including Bachelor of BusinessAdministration (BBA). The new dean believes in using cost accounting information tomake decisions and is r...

Q: Refer to the information in Exercise 1-23. The dean

Refer to the information in Exercise 1-23. The dean of the Business School is considering expanding the BBA program by offering an evening program in a nearby city. The program would be the same size...

Q: Refer to Exhibit 1.5, which shows budgeted versus actual

Refer to Exhibit 1.5, which shows budgeted versus actual costs. Assume that Carmen’s Cookies is preparing a budget for the month ending June 30. Management prepares the budget by sta...

Q: For each cost accounting development listed below, identify one value chain

For each cost accounting development listed below, identify one value chain component where it might be used and described how it could be used in that component. a. Activity-based costing b. Benchmar...

Q: The chapter identified five financial management titles with responsibilities.

The chapter identified five financial management titles with responsibilities. Required Match the financial management title in the first column with the major responsibility in the second column of...

Q: Continental Condiments is a large food products firm in Pennsylvania. Its

Continental Condiments is a large food products firm in Pennsylvania. Its sales staff has a strong incentive plan tied to meeting quarterly budgets. On June 25, Maria Tuzzi, a divisional controller, l...

Q: Refer to the information in Exercise 1-24. Jon Blake

Refer to the information in Exercise 1-24. Jon Blake, the cost analyst working in the CFO’s office at the Business School, learns that the building to be rented for the evening program is owned by a c...

Q: Distinguish between the value chain, the supply chain, and the

Distinguish between the value chain, the supply chain, and the distribution chain.

Q: Dewi Hartono is an assistant controller at Giant Engineering, which contracts

Dewi Hartono is an assistant controller at Giant Engineering, which contracts with the Defense Department to build and maintain roads on military bases. Dewi recently determined that the company was i...

Q: KC Services provides landscaping services in Edison. Kate Chen, the

KC Services provides landscaping services in Edison. Kate Chen, the owner, is concerned about the recent losses the company has incurred and is considering dropping its lawn services, which she feels...

Q: Tom’s Tax Services is a small accounting firm that offers tax services

Tom’s Tax Services is a small accounting firm that offers tax services to small businesses and individuals. A local store owner has approached Tom about doing his taxes but is concer...

Q: Refer to Exhibit 1.5. Assume that Carmen’s Cookies is

Refer to Exhibit 1.5. Assume that Carmen’s Cookies is preparing a budget for the month ending September 30. Management prepares the budget by starting with the actual results for Apr...

Q: Refer to Exhibit 1.5, which shows budgeted versus actual

Refer to Exhibit 1.5, which shows budgeted versus actual costs. Assume that Carmen’s Cookies is preparing a budget for the month ending November 30. Management prepares the budget fo...

Q: Quince Products is a small company in southern California that makes jams

Quince Products is a small company in southern California that makes jams and preserves. Recently, a sales rep from one of the company’s suppliers suggested that Quince could increas...

Q: Who are the customers of cost accounting?

Who are the customers of cost accounting?

Q: The managers of Quince Products (Problem 1-39) decide

The managers of Quince Products (Problem 1-39) decide they will hire a management accountant to help them analyze the decision to expand their product line. They solicit bids from various accountants...

Q: Miller Cereals is a small milling company that makes a single brand

Miller Cereals is a small milling company that makes a single brand of cereal. Recently, a business school intern recommended that the company introduce a second cereal in order to “...

Q: Before Miller Cereals can introduce the new cereal, the board of

Before Miller Cereals can introduce the new cereal, the board of directors has to give their approval. The marketing manager really wants to introduce the new product and believes (honestly) that it w...

Q: The following story is true except that all names have been changed

The following story is true except that all names have been changed and the time period has been compressed: Charles Austin graduated from a prestigious business school and took a job in a public acco...

Q: How can cost accounting information together with a classification of activities intothose

How can cost accounting information together with a classification of activities intothose that are value-added and those that are nonvalue-added help managers improvean organization’s performance?

Q: Identify three key financial managers in an organization and their major responsibilities

Identify three key financial managers in an organization and their major responsibilities.

Q: Does the passage of Sarbanes-Oxley mean that codes of ethics

Does the passage of Sarbanes-Oxley mean that codes of ethics are no longer necessary?

Q: A manager once asked, “How would you calculate the cost

A manager once asked, “How would you calculate the cost of a checking account?” What will be your first question to the manager?

Q: You are considering lending a car to a friend so she can

You are considering lending a car to a friend so she can drive to Aspen. What costswould you ask her to reimburse? How would your answer change, if at all, if youdecided to go along? Identify the poss...

Q: What is the difference in meaning between the terms cost and expense

What is the difference in meaning between the terms cost and expense?

Q: As a manager making a decision, which is likely more important

As a manager making a decision, which is likely more important: gross margin or contribution margin? Why?

Q: The Dollar Store’s cost structure is dominated by variable costs with a

The Dollar Store’s cost structure is dominated by variable costs with a contribution margin ratio of .30 and fixed costs of $30,000. Every dollar of sales contributes 30 cents toward...

Q: Foxx Company’s cost structure is dominated by variable costs with a contribution

Foxx Company’s cost structure is dominated by variable costs with a contribution margin ratio of .25 and fixed costs of $100,000. Every dollar of sales contributes 25 cents toward fixed costs and prof...

Q: Rainbow Tours gives walking tours of Springfield. Rainbow charges $40

Rainbow Tours gives walking tours of Springfield. Rainbow charges $40 per person for the tour and incurs $16 in variable costs for labor, drinks, and maps. The monthly fixed costs for Rainbow Tours ar...

Q: Refer to the data for Cambridge, Inc., in Exercise 3

Refer to the data for Cambridge, Inc., in Exercise 3-25. In Exercise 3-25 Cambridge, Inc., is considering the introduction of a new calculator with the following price and cost characteristics: Sales...

Q: Refer to the data for Balance, Inc., in Exercise 3

Refer to the data for Balance, Inc., in Exercise 3-27. In Exercise 3-27 Balance, Inc., is considering the introduction of a new energy snack with the following price and cost characteristics: Sales p...

Q: Crest Industries sells a single model of satellite radio receivers for use

Crest Industries sells a single model of satellite radio receivers for use in the home. The radios have the following price and cost characteristics: Sales price . . . . . . . . . . . . . . . $ 160 pe...

Q: Rio Coffee Shoppe sells two coffee drinks, a regular coffee and

Rio Coffee Shoppe sells two coffee drinks, a regular coffee and a latte. The two drinks have the following prices and cost characteristics: The monthly fixed costs at Rio are $6,720. Based on experi...

Q: What is operating leverage? Why is knowledge of a firm’s operating

What is operating leverage? Why is knowledge of a firm’s operating leverage important to its managers?

Q: What is the margin of safety? Why is this important for

What is the margin of safety? Why is this important for managers to know?

Q: Write out the equation for the target volume (in units)

Write out the equation for the target volume (in units) profit equation when the income tax rate is t.

Q: What do the terms step costs and semivariable costs mean?

What do the terms step costs and semivariable costs mean?

Q: How do income taxes affect the break-even equation? Why

How do income taxes affect the break-even equation? Why?

Q: Why is it common to assume a fixed sales mix before finding

Why is it common to assume a fixed sales mix before finding the break-even volume with multiple products?

Q: What are the components of total costs in the profit equation?

What are the components of total costs in the profit equation?

Q: How does the total contribution margin differ from the gross margin that

How does the total contribution margin differ from the gross margin that is often shown on companies’ financial statements?

Q: Compare cost-volume-profit (CVP) analysis with profit

Compare cost-volume-profit (CVP) analysis with profit-volume analysis. How do they differ?

Q: Fixed costs are often defined as “fixed over the short run

Fixed costs are often defined as “fixed over the short run.” Does this mean that they are not fixed over the long run? Why or why not?

Q: Freeflight Airlines is presently operating at 70 percent of capacity. Management

Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight’s routes between Europe and the United States. If t...

Q: CompDesk, Inc., makes a single model of an ergonomic desk

CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and p...

Q: Playful Pens, Inc., makes a single model of a pen

Playful Pens, Inc., makes a single model of a pen. The cartridge for the pen (which contains the ink) is manufactured on one machine. The cartridge holder (which you hold when you hold the pen) is man...

Q: Sherene Nili manages a company that produces wedding gowns. She produces

Sherene Nili manages a company that produces wedding gowns. She produces both a custom product that is made to order and a standard product that is sold in bridal salons. Her accountant prepared the f...

Q: What do the terms variable costs and fixed costs mean?

What do the terms variable costs and fixed costs mean?

Q: Sam, Martina, Aretha, Roxi, and Tomas (SMART

Sam, Martina, Aretha, Roxi, and Tomas (SMART) operate a management consulting firm. The firm has just received an inquiry from a prospective client about its prices for educational seminars to teach i...

Q: M. Anthony, LLP, produces music in a studio in

M. Anthony, LLP, produces music in a studio in London. The cost of producing one typical song follows: Average Cost per Song: Labor, including musicians and technicians . . . . . . . . . . . . . . . $...

Q: King City Specialty Bikes (KCSB) produces high-end bicycles

King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company’s volume of 2,000 units per month are shown in the follow...

Q: Carson Corporation produces and sells three products, Alpha, Beta,

Carson Corporation produces and sells three products, Alpha, Beta, and Gamma, in a local market and in a regional market. At the end of the first quarter of the current year, the following income stat...

Q: Power Music owns five music stores, where it sells music,

Power Music owns five music stores, where it sells music, instruments, and supplies. In addition, it rents instruments. At the end of last year, the new accounts showed that although the business as a...

Q: You have been asked to assist the management of Ironwood Corporation in

You have been asked to assist the management of Ironwood Corporation in arriving at certain decisions. Ironwood has its home office in Michigan and leases factory buildings in Wisconsin, Minnesota, an...

Q: The Bubble Company produces a variety of bottles from recycled plastic.

The Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine on which it can produce either of two types of water bottles, 1-liter bottles or 1/2-lite...

Q: Slavin Corporation manufactures two products, Alpha and Delta. Each product

Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products...

Q: Layton Machining Company (LMC) manufactures two versions of a basic

Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom model, which requires some additional work and slightly higher-gra...

Q: To win a predatory pricing case, law enforcement officials traditionally have

To win a predatory pricing case, law enforcement officials traditionally have had to prove that a company has sold products or services for less than their average variable cost. Companies with relati...

Q: “Materials and labor are always direct costs, and supply costs

“Materials and labor are always direct costs, and supply costs are always indirect.” What is your opinion of this statement?

Q: The Liquid Chemical Company manufactures and sells a range of high-

The Liquid Chemical Company manufactures and sells a range of high-grade products. Many of these products require careful packaging. The company has a special patented lining made that it uses in spec...

Q: Are sunk costs ever differential costs?

Are sunk costs ever differential costs?

Q: What costs are included in the full cost of a product?

What costs are included in the full cost of a product? Is a product’s full cost always the appropriate cost for decision makers to use?

Q: What are life-cycle product costing and pricing?

What are life-cycle product costing and pricing?

Q: What do the terms target cost and target price mean? Explain

What do the terms target cost and target price mean? Explain how they are developed.

Q: What is predatory pricing? Why is it illegal in many jurisdictions

What is predatory pricing? Why is it illegal in many jurisdictions?

Q: What is price discrimination? How could a cost accountant help determine

What is price discrimination? How could a cost accountant help determine if differences in prices were evidence of price discrimination?

Q: If we want to maximize profit, why do we use unit

If we want to maximize profit, why do we use unit contribution margins in our analysis instead of unit gross margins?

Q: Why are production constraints important in determining the optimal product mix?

Why are production constraints important in determining the optimal product mix?

Q: What are some nonfinancial factors in decisions to drop a product line

What are some nonfinancial factors in decisions to drop a product line?

Q: The cost per seat-mile for a major U.S

The cost per seat-mile for a major U.S. airline is 13.7¢. Therefore, to estimate the cost of flying a passenger from Detroit to Los Angeles, we should multiply 1,980 miles by 13.7¢. Do you agree?

Q: On what three main factors does the theory of constraints focus?

On what three main factors does the theory of constraints focus?

Q: As a marketing manager for an airline, would you sell a

As a marketing manager for an airline, would you sell a seat to a passenger who walked up to the gate at the last minute at the variable (marginal) cost? Why or why not? Do the costs from the accounti...

Q: One of your acquaintances notes, “This whole subject of differential

One of your acquaintances notes, “This whole subject of differential costing is easy; variable costs are the only costs that are relevant.” How would you respond?

Q: A manager in your organization just received a special order at a

A manager in your organization just received a special order at a price that is “below cost.” The manager points to the document and says, “These are the kinds of orders that will get you in trouble....

Q: Many airline frequent-flier programs upgrade elite (high volume)

Many airline frequent-flier programs upgrade elite (high volume) flyers one, three, or five days in advance from economy to first class. What are the differential costs of doing this? What are the opp...

Q: If you are considering driving to a weekend resort for a quick

If you are considering driving to a weekend resort for a quick break from school, what are the differential costs of operating your car for that drive?

Q: If you are considering buying a second car, what are the

If you are considering buying a second car, what are the differential costs of that decision? Are they the same as in Question 4-26? Why or why not? In Question 4-26 If you are considering driving to...

Q: Under what circumstances would fixed costs be relevant when management is making

Under what circumstances would fixed costs be relevant when management is making decisions in a multiproduct setting?

Q: Maria’s Food Service provides meals that nonprofit organizations distribute to handicapped and

Maria’s Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April, when she expects to...

Q: Carlsbad Enterprises has a capacity to produce 400,000 computer cases

Carlsbad Enterprises has a capacity to produce 400,000 computer cases per year. The company is currently producing and selling 320,000 cases per year at a selling price of $80 per case. The cost of pr...

Q: In evaluating product profitability, we can ignore marketing costs because they

In evaluating product profitability, we can ignore marketing costs because they are not considered product costs. Do you agree?

Q: Assume that Cold Rock sells ice cream for $4.80

Assume that Cold Rock sells ice cream for $4.80 per gallon. The cost of each gallon follows: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Mother’s Bottlers, Inc., is a small bottling company that bottles

Mother’s Bottlers, Inc., is a small bottling company that bottles and sells cold teas for $5 per unit. The cost of each unit follows: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Andreasen Corporation manufactures thermostats for office buildings. The following is the

Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Mission Electronics manufactures and sells basic DVD players under various generic store

Mission Electronics manufactures and sells basic DVD players under various generic store brand names. The cost of one of their models follows: Materials . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Sid’s Skins makes a variety of covers for electronic organizers and portable

Sid’s Skins makes a variety of covers for electronic organizers and portable music players. The company’s designers have discovered a market for a new clear plastic covering with college logos for a p...

Q: Dino’s, Inc., makes a variety of T-shirts with

Dino’s, Inc., makes a variety of T-shirts with logos. The company has discovered a new market for sweatshirts with logos. Market research indicates that a sweatshirt like this would sell well in the m...

Q: Terracotta, Inc., makes toy soldiers. Company management believes that

Terracotta, Inc., makes toy soldiers. Company management believes that a new model would sell well at a price of $65. The company estimates unit materials costs to be $16 for the model, and overhead c...

Q: Mobility Partners makes wheelchairs and other assistive devices. For years it

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to s...

Q: Mel’s Meals 2 Go purchases cookies that it includes in the 10

Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel’s kitchen and adjoining meeting room operate at 70 percent of capacity. Mel’s purchase...

Q: Refer to the facts in Exercise 4-42. Mel suddenly

Refer to the facts in Exercise 4-42. Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from...

Q: You and two friends drive your car to Texas for spring break

You and two friends drive your car to Texas for spring break. A third friend asks if you can drop her off in Oklahoma. How would you allocate the cost of the trip among the four of you?

Q: Atlantic Soup Company is presently operating at 75 percent of capacity.

Atlantic Soup Company is presently operating at 75 percent of capacity. Worried about the company’s performance, the president is considering dropping its clam chowder line. If clam...

Q: What is dumping? What role would a cost accountant play in

What is dumping? What role would a cost accountant play in determining whether dumping has occurred?

Q: A company has learned that a particular input product required for its

A company has learned that a particular input product required for its production of several products is in limited supply. What approach should management take to maximize profits in the presence of...

Q: Consider the Business Application item, “Cost Analysis and the Choice

Consider the Business Application item, “Cost Analysis and the Choice of Office Space for a Small Business”. In the decision to relocate to the virtual office, what are the differential costs? What co...

Q: Consider the Business Application item, referred to in Question 4-

Consider the Business Application item, referred to in Question 4-17. Suppose the company had signed a lease for five years and had two years remaining on the contract. Would the remaining lease payme...

Q: A company has several units of old-model telephones that it

A company has several units of old-model telephones that it is selling for $10 per unit. The units cost $25 to produce. Is the company engaging in predatory pricing? Explain.

Q: You buy an airline ticket to New York City to see a

You buy an airline ticket to New York City to see a play. You buy the ticket on the day you fly and pay $100. The person sitting next to you, who bought a ticket two months earlier, paid $200. Are the...

Q: Consider the Business Application item, “Cost-Volume-Profit

Consider the Business Application item, “Cost-Volume-Profit Analysis and Airline Pricing” in Chapter 3. Based on the article alone, was go! engaging in predatory pricing? Why or why not?

Q: Management notes that the contribution from one product is higher than the

Management notes that the contribution from one product is higher than the contribution from a second product. Hence, it concludes that the company should concentrate on production of the first produc...

Q: In the theory of constraints, what are ways to improve performance

In the theory of constraints, what are ways to improve performance at the bottleneck?

Q: The friend in question 2-16 decides that she does not

The friend in question 2-16 decides that she does not want to go to Oklahoma after all. How will the costs of your trip change? Was your choice of allocation in question 2-16 incorrect? Why? Informati...

Q: According to the theory of constraints, what are the ways to

According to the theory of constraints, what are the ways to increase profits?

Q: Fixed costs are often defined as “fixed over the short run

Fixed costs are often defined as “fixed over the short run.” Does this mean that they are not fixed over the long run? Why or why not?

Q: What is the difference between a sunk cost and a differential cost

What is the difference between a sunk cost and a differential cost?

Q: What is the difference between short-run and long-run

What is the difference between short-run and long-run decisions? Give one example of each.

Q: When is cost-plus pricing most likely to be used?

When is cost-plus pricing most likely to be used?

Q: Assume that General Dynamics, which manufactures high-technology instruments for

Assume that General Dynamics, which manufactures high-technology instruments for spacecraft, is considering the sale of a navigational unit to a government agency in India that wishes to launch its ow...

Q: Assume that Whee, Cheatham, and Howe is an auditing firm

Assume that Whee, Cheatham, and Howe is an auditing firm that has found that its summer interns are subject to a 90 percent learning curve for one of its important tasks, proofreading financial statem...

Q: Refer to the example in Appendix B. The numbers in Exhibit

Refer to the example in Appendix B. The numbers in Exhibit 5.21 for the fifth, sixth, and seventh units were given. In Appendix B Engineers have found the following mathematical relationship for the...

Q: The accounting department of a large limousine company is analyzing the costs

The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months are presented below: In addition to the abov...

Q: Obtain 13 years of data from the published financial statements of a

Obtain 13 years of data from the published financial statements of a company. You will be able to find the data on the Internet. Also, Moody’s, Standard & Poor’s, and Value-Line are good sources of fi...

Q: Consider a digital music service such as those provided by Amazon or

Consider a digital music service such as those provided by Amazon or Apple. What are some of the major cost categories? Are they mostly fixed or mostly variable?

Q: Using the same data source as in Problem 5-44,

Using the same data source as in Problem 5-44, collect a total of 20 years of data. In Problem 5-44 Obtain 13 years of data from the published financial statements of a company. You will be able to f...

Q: Cubicle Solutions sells productivity software such as word processors, spreadsheets,

Cubicle Solutions sells productivity software such as word processors, spreadsheets, and personal information managers. Cubicle prides itself on customer support and maintains a large call center wher...

Q: Academy Products manufactures a variety of custom components for use in aircraft

Academy Products manufactures a variety of custom components for use in aircraft navigation and communications systems. The controller has asked for your help in estimating fixed and variable overhead...

Q: Assume that Painless Dental Clinics, Inc., offers three basic dental

Assume that Painless Dental Clinics, Inc., offers three basic dental services. Here are its prices and costs: Variable costs include the labor costs of the dental hygienists and dentists. Fixed cost...

Q: Lima Company manufactured 30,000 units of product last month and

Lima Company manufactured 30,000 units of product last month and identified the following costs associated with the manufacturing activity: Variable costs: Direct materials used. . . . . . . . . . . ....

Q: How can one compensate for the effects of price instability when preparing

How can one compensate for the effects of price instability when preparing cost estimates using high-low or regression techniques?

Q: For each of the following costs incurred in a manufacturing firm,

For each of the following costs incurred in a manufacturing firm, indicate whether the costs are fixed (F) or variable (V) and whether they are period costs (P) or product costs (M) under full absorpt...

Q: When using past data to predict a cost that has fixed and

When using past data to predict a cost that has fixed and variable components, it is possible to have an equation with a negative intercept. Does this mean that at a zero production level, the company...

Q: Eagle Company makes the MusicFinder, a sophisticated satellite radio. Eagle

Eagle Company makes the MusicFinder, a sophisticated satellite radio. Eagle has experienced a steady growth in sales for the past five years. However, Ms. Luray, Eagle’s CEO, believes that to maintain...

Q: After doing an account analysis and giving the results to your boss

After doing an account analysis and giving the results to your boss, you discover an error in the data for 3 of the 24 months covered by your analysis. In 6 of the 24 months, your assistant had droppe...

Q: Why might an experienced executive prefer account analysis to statistical cost estimation

Why might an experienced executive prefer account analysis to statistical cost estimation methods?

Q: For each of the following statements, indicate whether it is true

For each of the following statements, indicate whether it is true, false, or uncertain. Explain why. Give examples in your answer. a. A cost is something used up to produce revenues in a particular ac...

Q: Some people claim that the scattergraph and the regression methods go hand

Some people claim that the scattergraph and the regression methods go hand in hand. Why?

Q: A decision maker is interested in obtaining a cost estimate based on

A decision maker is interested in obtaining a cost estimate based on a regression equation. There are no problems with changes in prices, costs, technology, or relationships between activity and cost....

Q: Consider the Business Application item “Using Statistical Analysis to Improve Profitability

Consider the Business Application item “Using Statistical Analysis to Improve Profitability.” Pick a favorite sports team or recurring cultural event (musical concert, opera, play, rock concert, etc)....

Q: Alameda Tile sells products to many people remodeling their homes and thinks

Alameda Tile sells products to many people remodeling their homes and thinks that they could profitably offer courses on tile installation, which might also increase the demand for their products. The...

Q: A friend comes to you with the following problem. “I

A friend comes to you with the following problem. “I provided my boss a cost equation using regression analysis. He was unhappy with the results. He told me to do more work and not return until I had...

Q: The dean of the Midstate University Business School is trying to understand

The dean of the Midstate University Business School is trying to understand the costs of the school’s two degree programs: Bachelors (BBA) and Masters (MBA). She has asked you for recommendations on h...

Q: What are the characteristics of the following three costing systems:

What are the characteristics of the following three costing systems: (a) Job costing, (b) Process costing, and (c) Operation costing?

Q: Custom Homebuilders (CH) designs and constructs high-end homes

Custom Homebuilders (CH) designs and constructs high-end homes on large lots owned by customers. CH has developed several formulas, which it uses to quote jobs. These include costs for materials, labo...

Q: Why do most companies use normal or standard costing? After all

Why do most companies use normal or standard costing? After all, actual costing gives the actual cost, so the firm could just wait until it knows what the cost will be.

Q: In doing cost analysis, you realize that there could be errors

In doing cost analysis, you realize that there could be errors in the accounting records. For example, maintenance costs were recorded as zero in December. However, you know that maintenance was perfo...

Q: Sundial, Inc., produces two models of sunglasses: AU and

Sundial, Inc., produces two models of sunglasses: AU and NZ. The sunglasses have the following characteristics: The total fixed costs per year for the company are $2,208,000. Required a. What is th...

Q: : McDonald’s, the fast-food restaurant, is known for

McDonald’s, the fast-food restaurant, is known for high employee turnover, high quality, and low costs. Using your knowledge of the learning phenomenon, how does McDonald’s get high quality and low c...

Q: What are the common methods of cost estimation?

What are the common methods of cost estimation?

Q: Which method of cost estimation is not usually based primarily on company

Which method of cost estimation is not usually based primarily on company accounting records?

Q: Refer to Exercise 2-42. In Exercise 2

Refer to Exercise 2-42. In Exercise 2-42 Karen Corporation has compiled the following information from the accounting system for the one product it sells: Sales price . . . . . . . . . . . . . . . ....

Q: What is the difference between simple and multiple regression?

What is the difference between simple and multiple regression?

Q: What is the difference between R2 and adjusted R2?

What is the difference between R2 and adjusted R2?

Q: For each of the following costs incurred in a manufacturing firm,

For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (F) or variable (V) and whether they are most likely period costs (P) or product cost...

Q: Van Goe produces paints. On January 1, it had no

Van Goe produces paints. On January 1, it had no work-in-process inventory. It starts production of 300,000 gallons of paint in January and completes 240,000 gallons. The costs of the resources used b...

Q: Why might two companies in the same industry have different cost systems

Why might two companies in the same industry have different cost systems?

Q: Opech, Inc., produces oil and ships it in a pipeline

Opech, Inc., produces oil and ships it in a pipeline. On May 1, it had no work-in-process inventory. It started production of 300 million barrels of oil in May and shipped 270 million barrels in the p...

Q: Oholics, Ltd., produces chocolate that it sells to candy makers

Oholics, Ltd., produces chocolate that it sells to candy makers. On April 1, it had no work-in-process inventory. It started production of 20,000 pounds of chocolate in April and completed production...

Q: What is the difference between outlay cost and opportunity cost?

What is the difference between outlay cost and opportunity cost?

Q: Clovis Supply sells two models of saddles to retail outfitters—basic

Clovis Supply sells two models of saddles to retail outfitters—basic and custom. Basic saddles sell for $1,000 each and custom saddles sell for $1,500. The variable cost of a basic saddle is $600 and...

Q: Give at least three applications of the learning phenomenon that were not

Give at least three applications of the learning phenomenon that were not mentioned in the text.

Q: Rex Santos, a cost accountant, prepares a product profitability report

Rex Santos, a cost accountant, prepares a product profitability report for Jane Gates, the production manager. Much to Rex’s surprise, almost one-third of the company’s products are not profitable. He...

Q: Tiger Furnishings produces two models of cabinets for home theater components,

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow: Required Compute the predetermined overhead...

Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. In Exercise 6-34 Tiger Furnishings prod...

Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the predetermined overhead rate assuming that Tiger Furnishings uses machine-hours to allocate overhead costs. In Exercise 6-34 Tiger Furnishings produces...

Q: Refer to the data in Exercise 6-34. Draw the

Refer to the data in Exercise 6-34. Draw the cost flow diagram assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. In Exercise 6-34 Tiger Furnishings produces two mode...

Q: Howrley-David, Inc., manufactures two models of motorcycles:

Howrley-David, Inc., manufactures two models of motorcycles: the Fatboy and the Screamer. Both models are assembled in the same plant and require the same assembling operations. The difference between...

Q: The Office Mart store in South Beach experienced the following events during

The Office Mart store in South Beach experienced the following events during the current year: 1. Incurred $400,000 in marketing costs. 2. Purchased $1,200,000 of merchandise. 3. Paid $40,000 for tran...

Q: S. Lee Enterprises produces two models of lawn tractor: SL1

S. Lee Enterprises produces two models of lawn tractor: SL1 and SL2. The models are both produced in the company’s Louisville factory and go through identical assembly operations. Th...

Q: Organic Grounds produces two brands of coffee: Star and Bucks.

Organic Grounds produces two brands of coffee: Star and Bucks. The two coffees are produced in one factory using the same production process. The only difference between the two coffees is the cost of...

Q: For each of the following costs incurred in a manufacturing operation,

For each of the following costs incurred in a manufacturing operation, indicate whether they are included in prime costs (P), conversion costs (C), or both (B): a. Property taxes on the factory. b. Di...

Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the individual product costs per unit assuming that Tiger Furnishings uses direct labor costs to allocate overhead to the products. In Exercise 6-34 Tiger...

Q: Larcker Manufacturing’s cost accountant has provided you with the following information for

Larcker Manufacturing’s cost accountant has provided you with the following information for January operations: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21 per...

Q: Assume that Limitless Labs, Inc., offers three basic drug-

Assume that Limitless Labs, Inc., offers three basic drug-testing services for professional athletes. Here are its prices and costs: Variable costs include the labor costs of the medical technicians...

Q: Star Buck, a coffee shop manager, has two major product

Star Buck, a coffee shop manager, has two major product lines—drinks and pastries. If Star allocates common costs on any objective basis discussed in this chapter, the drinks are profitable, but the p...

Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products. In Exercise 6-34 Tiger Furni...

Q: Are learning curves likely to affect materials costs per unit?

Are learning curves likely to affect materials costs per unit?

Q: Refer to the data in Exercise 6-34. The president

Refer to the data in Exercise 6-34. The president of Tiger Furnishings is confused about the differences in costs that result from using direct labor costs and machine-hours. In Exercise 6-34 Tiger F...

Q: Mets Products produces baseball caps and T-shirts. Most of

Mets Products produces baseball caps and T-shirts. Most of the production is done by machine. Data on operations and costs for October follow: Management asks the firm’s cost accou...

Q: What are the three categories of product cost in a manufacturing operation

What are the three categories of product cost in a manufacturing operation? Describe each element briefly.

Q: Owl-Eye Radiologists (OR) does various types of diagnostic

Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR’s management wants to compute the costs of performing...

Q: I don’t understand this. Last year [year 1], we

I don’t understand this. Last year [year 1], we decided to drop our highest-end Red model and only produce the Yellow and Green models, because the cost system indicated we were losi...

Q: Brunswick Parts is a small manufacturing firm located in eastern Canada.

Brunswick Parts is a small manufacturing firm located in eastern Canada. The company, founded in 1947, produces metal parts for many of the larger manufacturing firms located in both Canada and the Un...

Q: O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices

O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to c...

Q: How are product costing and cost allocation related?

How are product costing and cost allocation related?

Q: Why are cost flow diagrams useful in describing product costing systems?

Why are cost flow diagrams useful in describing product costing systems?

Q: Assume that the following events occurred at a division of Generic Electric

Assume that the following events occurred at a division of Generic Electric for March of the current year: 1. Purchased $45 million in direct materials. 2. Incurred direct labor costs of $24 million....

Q: Fill in the missing items for the following inventories:

Fill in the missing items for the following inventories:

Q: Fill in the missing items for the following inventories:

Fill in the missing items for the following inventories:

Q: Fill in the missing items for the following inventories:

Fill in the missing items for the following inventories:

Q: ABC Consultants works for only two clients: a large, for

ABC Consultants works for only two clients: a large, for-profit corporation and a small environmental not-for-profit agency. The fee charged for work is based on cost. In deciding how to allocate over...

Q: Enviro Corporation manufactures a special liquid cleaner at its Green plant.

Enviro Corporation manufactures a special liquid cleaner at its Green plant. Operating data for June follow: Materials . . . . . . . . . . . . . . . . . . . . $714,000 Labor . . . . . . . . . . . . ....

Q: Why is control of materials important from a managerial planning perspective?

Why is control of materials important from a managerial planning perspective?

Q: Pogue’s Pops produces a popular beverage. Operating data for October follow

Pogue’s Pops produces a popular beverage. Operating data for October follow: Materials . . . . . . . . . . . . . . . . . . . $ 650,000 Labor . . . . . . . . . . . . . . . . . . . . . . . . . 110,000 M...

Q: The typical cost-volume-profit graph assumes that profi ts

The typical cost-volume-profit graph assumes that profi ts increase continually as volume increases. What are some of the factors that might prevent the increasing profits that are indicated when line...

Q: Big City Bank processes the checks its customers write at Riverdale Operations

Big City Bank processes the checks its customers write at Riverdale Operations Center (ROC). ROC processed 2,800,000 checks in September. It takes only seconds to process a check, so none are left unp...

Q: Kim & Smith Refiners starts business on March 1. The following

Kim & Smith Refiners starts business on March 1. The following operations data are available for March for the one lubricant it produces: _________________________________Gallons Beginning inventory ....

Q: Cray-Z Consultants provides management accounting advice to not-for

Cray-Z Consultants provides management accounting advice to not-for-profit firms. It employs three levels of consultants, based on experience and education: partner, senior, and associate. When Cray-Z...

Q: What is the purpose of having two manufacturing overhead accounts, the

What is the purpose of having two manufacturing overhead accounts, the Manufacturing Overhead Control and Applied Manufacturing Overhead?

Q: The following data apply to the provision of psychological testing services:

The following data apply to the provision of psychological testing services: Sales price per unit (1 unit = 1 test plus feedback to client) ...................... $ 600 Fixed costs (per month): Sellin...

Q: Old Tyme Soda produces one flavor of a popular local soft drink

Old Tyme Soda produces one flavor of a popular local soft drink. It had no work in process on October 31 in its only inventory account. During November, Old Tyme started 10,000 barrels. Work in proces...

Q: Ideally, what does an allocation base reflect between the overhead cost

Ideally, what does an allocation base reflect between the overhead cost and the activity (production of a product, for example)?

Q: What is continuous flow processing? Give at least three examples of

What is continuous flow processing? Give at least three examples of products that might use continuous flow processing.

Q: Identify a particular support function in a business school (the library

Identify a particular support function in a business school (the library, for example). Discuss possible allocation bases that might be used to allocate costs in the function to programs (degrees) or...

Q: Place the number of the appropriate definition in the blank next to

Place the number of the appropriate definition in the blank next to each concept. Concept ____ Period cost ____ Indirect cost ____ Fixed cost ____ Opportunity cost ____ Outlay cost ____ Direct cost _...

Q: Refer to Exercise 2-44. In Exercise 2

Refer to Exercise 2-44. In Exercise 2-44 Larcker Manufacturing’s cost accountant has provided you with the following information for January operations: Direct materials . . . . . . . . . . . . . . ....

Q: The following transactions occurred in October at Pawnee Workshops, a custom

The following transactions occurred in October at Pawnee Workshops, a custom manufacturer of furniture: 1. Purchased $16,000 of materials. 2. Issued $800 of supplies from the materials inventory. 3. P...

Q: Is it possible for a company to have a two-stage

Is it possible for a company to have a two-stage allocation system but use, for example, direct labor-hours to allocate costs from all pools in the second stage? Will the resulting product costs be th...

Q: What are the three criteria for the design of cost management systems

What are the three criteria for the design of cost management systems?

Q: Describe the predetermined overhead rate. What is the role of the

Describe the predetermined overhead rate. What is the role of the predetermined overhead rate in product costing?

Q: Sydney Corporation estimated that machine-hours for the year would be

Sydney Corporation estimated that machine-hours for the year would be 20,000 hours and overhead (all fixed) would be $80,000. Sydney applies its overhead on the basis of machine-hours. During the year...

Q: Write out the profit equation and describe each term.

Write out the profit equation and describe each term.

Q: Valley Corporation estimated that direct labor for the year would be 58

Valley Corporation estimated that direct labor for the year would be 58,500 hours. Valley’s overhead (all fixed) is applied on the basis of direct labor-hours. The company estimates its overhead costs...

Q: The accounting records for Frankie’s Fixtures report the following production costs for

The accounting records for Frankie’s Fixtures report the following production costs for the past year: Direct materials . . . . . . . . . . . . . . . . . . . . . $420,000 Direct labor . . . . . . . ....

Q: The following T-accounts represent September activity: /

The following T-accounts represent September activity: Required Compute the missing amounts indicated by the letters (a) through (i).

Q: Terracotta, Inc., provides you with the following data for their

Terracotta, Inc., provides you with the following data for their single product: Sales price per unit ......................................................................................... $ 25 Fix...

Q: Simple regression results from the data of Adriana Corporation (Exercise 5

Simple regression results from the data of Adriana Corporation (Exercise 5-30) are as follows: Equation: Overhead = $217,610 + ($88.61 × Labor-hours) Statistical data Correlation coefficient . . . . ....

Q: What is each component of the basic cost flow model? Describe

What is each component of the basic cost flow model? Describe each component.

Q: The following T-accounts represent November activity: /

The following T-accounts represent November activity: Additional Data • Materials of $113,600 were purchased during the month, and the balance in the Materials Inventory account in...

Q: Kansas Company uses a job costing accounting system for its production costs

Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The compa...

Q: The following transactions occurred in June at Fast Wheels, Inc.,

The following transactions occurred in June at Fast Wheels, Inc., a custom bicycle manufacturer: 1. Purchased $20,000 of materials. 2. Issued $1,000 of supplies from the materials inventory. 3. Purcha...

Q: UCD Company uses a job costing accounting system for its production costs

UCD Company uses a job costing accounting system for its production costs. A predetermined overhead rate based on direct labor-hours is used to apply overhead to individual jobs. An estimate of overhe...

Q: A new computer virus (AcctBGone) destroyed most of the company

A new computer virus (AcctBGone) destroyed most of the company records at Backups RntUs. The computer experts at the company could recover only a few fragments of the company’s facto...

Q: Youth Athletic Services (YAS) provides adult supervision for organized youth

Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all marketi...

Q: What are some important assumptions commonly made in CVP analysis. Do

What are some important assumptions commonly made in CVP analysis. Do these assumptions impose serious limitations on the analysis? Why or why not?

Q: For the month of January, Bay Accountants worked 2,000

For the month of January, Bay Accountants worked 2,000 hours for Lake Lumber, 600 hours for Marty’s Marina, and 1,000 hours for the State Prison System. Bay bills clients at $160 an hour; its labor co...

Q: On September 1, two jobs were in process at Pete’s Patios

On September 1, two jobs were in process at Pete’s Patios. Details of the jobs follow: Materials Inventory on September 1 totaled $11,040, and $1,392 worth of materials was purchas...

Q: The following data are from the accounting records of Fremont Products for

The following data are from the accounting records of Fremont Products for year 2: Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500 Total revenues and costs Sal...

Q: Brighton Services repairs locomotive engines. It employs 100 full-time

Brighton Services repairs locomotive engines. It employs 100 full-time workers at $20 per hour. Despite operating at capacity, last year’s performance was a great disappointment to t...

Q: Apple, Inc. is developing a new product (the iWhatever

Apple, Inc. is developing a new product (the iWhatever). Managers at Apple are interested in estimating the impact of learning on the cost of producing the iWhatever. They plan to use data from previo...

Q: Prepare a scattergraph based on the overhead and machine-hour data

Prepare a scattergraph based on the overhead and machine-hour data in Exercise 5-30. In Exercise 5-30 Adriana Corporation manufactures football equipment. In planning for next year, the managers want...

Q: The following transactions occurred in January at Tarnsdale Fabricators, a manufacturer

The following transactions occurred in January at Tarnsdale Fabricators, a manufacturer of custom tools: 1. Purchased $17,000 of materials. 2. Issued $16,800 in direct materials to the production depa...

Q: Partially completed T-accounts and additional information for Cardinals, Inc

Partially completed T-accounts and additional information for Cardinals, Inc., for the month of November appear on the following page: Additional information for November follows: •...

Q: Selected information from the Blake Corporation accounting records for June follows:

Selected information from the Blake Corporation accounting records for June follows: Additional information for July follows: • Labor wage rate was $35 per hour. •...

Q: Partially completed T-accounts and additional information for Pine Ridge Corporation

Partially completed T-accounts and additional information for Pine Ridge Corporation for the month of February follow: Additional information for February follows: • Labor wage rat...

Q: Tappan, Inc., manufactures one product and accounts for costs using

Tappan, Inc., manufactures one product and accounts for costs using a job cost system. You have obtained the following information from the corporation’s books and records for the year ended December...

Q: Kim’s Asphalt does driveway and parking lot resurfacing work for large commercial

Kim’s Asphalt does driveway and parking lot resurfacing work for large commercial clients as well as small residential clients. An inventory of materials and equipment is on hand at...

Q: What is the difference between product costs and period costs?

What is the difference between product costs and period costs?

Q: It is your first day at a new job and you talk

It is your first day at a new job and you talk about the themes of cost system design. One of your new colleagues asks, “If different cost information is used for different purposes, does that mean we...

Q: Old Port Shipyards does work for both the U.S.

Old Port Shipyards does work for both the U.S. Navy and private shipping companies. Old Port’s major business is renovating ships, which it does at one of two company dry docks refer...

Q: The following balances are from the accounts of Hill Components:

The following balances are from the accounts of Hill Components: Direct materials used during the year amount to $59,800, and the cost of goods sold for the year was $68,900. Required Find the foll...

Q: Mark Corporation estimates its manufacturing overhead to be $90,000

Mark Corporation estimates its manufacturing overhead to be $90,000 and its direct labor costs to be $200,000 for year 1. The actual direct labor costs were $50,000 for Job 301, $75,000 for Job 302, a...

Q: “Cost allocation is arbitrary, so there is nothing gained by

“Cost allocation is arbitrary, so there is nothing gained by it. We should report only the costs that we know are direct.” Do you agree? Why?

Q: Refer to the information in Exercise 7-25. Prepare an

Refer to the information in Exercise 7-25. Prepare an entry to allocate the under- or overapplied overhead. Overhead applied in each of the inventory accounts is as follows: Work-in-process inventory...

Q: Aspen Company estimates its manufacturing overhead to be $625,000

Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be $500,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2,...

Q: Refer to the information in Exercise 7-27. Prepare an

Refer to the information in Exercise 7-27. Prepare an entry to allocate over- or underapplied overhead to: a. Work in Process. b. Finished Goods. c. Cost of Goods Sold. In Exercise 7-27 Aspen Company...

Q: Prepare a scattergraph based on the overhead and labor-hour data

Prepare a scattergraph based on the overhead and labor-hour data in Exercise 5-30. In Exercise 5-30 Adriana Corporation manufactures football equipment. In planning for next year, the managers want t...

Q: Mary’s Landscaping uses a job order cost system. The following debits

Mary’s Landscaping uses a job order cost system. The following debits (credits) appeared in Work-in-Process Inventory for August: Mary’s applies overhead to produ...

Q: Turco Products uses a job order cost system. The following debits

Turco Products uses a job order cost system. The following debits (credits) appeared in Work-in-Process Inventory for September: Turco applies overhead to production at a predetermined rate of 120 p...

Q: Tony’s Textiles uses a predetermined factory overhead rate based on machine-

Tony’s Textiles uses a predetermined factory overhead rate based on machine-hours. For May, Tony’s budgeted overhead was $210,000 based on a budgeted volume of 35,000 machine-hours. Actual overhead am...

Q: Carmen Beverages reports the following information for July: Units produced

Carmen Beverages reports the following information for July: Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,800 Per unit revenue and costs: Sales revenue . . . . ....

Q: At the beginning of the month, Arthur’s Olde Consulting Corporation had

At the beginning of the month, Arthur’s Olde Consulting Corporation had two jobs in process that had the following costs assigned from previous months: During the month, Jobs SY-40...

Q: Ross Enterprises maintains a fleet of agricultural equipment for rental to local

Ross Enterprises maintains a fleet of agricultural equipment for rental to local farmers. Ross maintains all its equipment in a company-owned facility. Data on maintenance costs and operating hours of...

Q: IYF Corporation manufactures miscellaneous parts for building construction and maintenance. IYF

IYF Corporation manufactures miscellaneous parts for building construction and maintenance. IYF uses a normal job costing system. The system applies manufacturing overhead on the basis of direct labor...

Q: When designing a cost system, what points should you consider before

When designing a cost system, what points should you consider before starting the design?

Q: For August, Royal Consulting and Mediation Practice (RCMP) worked

For August, Royal Consulting and Mediation Practice (RCMP) worked 900 hours for Alberta Company and 2,100 hours for Ontario Corporation. RCMP bills clients at the rate of $400 per hour; labor cost for...

Q: Allocation Busters (AB) is a dispute mediation firm offering services

Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 440 hours for Massive Airframes and 660...

Q: Chuck’s Brokerage Service (CBS) is a discount financial services firm

Chuck’s Brokerage Service (CBS) is a discount financial services firm offering clients investment advice, trading services, and a variety of mutual funds for investment. Chuck has co...

Q: TechMaster is an information technology (IT) consulting company offering services

TechMaster is an information technology (IT) consulting company offering services to small firms. TechMaster bills clients for its various services based on the hours its professionals spend. In Augus...

Q: What are the costs of a product using normal costing?

What are the costs of a product using normal costing?

Q: “Worrying about the choice of an overhead allocation base is a

“Worrying about the choice of an overhead allocation base is a waste of time. In the end, all the overhead is charged to production.” Do you agree? Why?

Q: Greg’s Diner has the following information for year 2, when several

Greg’s Diner has the following information for year 2, when several new employees were added to the waitstaff: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $...

Q: Currently, generally accepted accounting principles (GAAP) in the United

Currently, generally accepted accounting principles (GAAP) in the United States require firms to expense research and development (R&D) costs as period costs. Therefore, when the resulting product is...

Q: Interview the manager of a construction company (for example, a

Interview the manager of a construction company (for example, a company that does house construction, remodeling, landscaping, or street or highway construction) about how the company bids on prospect...

Q: Would a dentist, an architect, a landscaper, and a

Would a dentist, an architect, a landscaper, and a lawyer use job costing or process costing? Explain.

Q: Why might the operating profit calculated by CVP analysis differ from the

Why might the operating profit calculated by CVP analysis differ from the net income reported in financial statements for external reporting?

Q: When is the basic cost flow model used? Give an example

When is the basic cost flow model used? Give an example.

Q: Is a criminal trial a “job” for costing purposes?

Is a criminal trial a “job” for costing purposes?

Q: In one of its divisions, an aircraft components manufacturer produces experimental

In one of its divisions, an aircraft components manufacturer produces experimental navigational equipment for spacecraft and for private transportation companies. Although the products are essentially...

Q: Consider Question 7-15. What are some of the allocation

Consider Question 7-15. What are some of the allocation bases you considered? Why did you choose the one you used? Question 7-15 Assume that you have been asked to paint the inside walls of an apartm...

Q: What are characteristics of companies that are likely to use a job

What are characteristics of companies that are likely to use a job cost system?

Q: Direct labor-hours and direct labor dollars are the most common

Direct labor-hours and direct labor dollars are the most common allocation bases used in the United States (indeed, throughout the world). Why do you suppose they are used more than others?

Q: Paul’s Limo Service has the following information for June:

Paul’s Limo Service has the following information for June: Required a. Using the traditional income statement format, prepare a value income statement. b. What value would there b...

Q: Where2 Services is a small service firm that advises high school students

Where2 Services is a small service firm that advises high school students on college opportunities. Joseph Kapp, the founder and president, has collected the following information for March: Require...

Q: The following data are available for Jupiter Consultants for the year just

The following data are available for Jupiter Consultants for the year just ended: Gross margin ................................... $4,050,000 Operating profit .................................. 1,525,...

Q: Lead! Inc. offers executive coaching services to small business owners

Lead! Inc. offers executive coaching services to small business owners. Lead!’s operating profits average 20 percent of revenues and its marketing and administrative costs average 25 percent of the co...

Q: The following balances are from the accounts of Todd Machining Company:

The following balances are from the accounts of Todd Machining Company: Direct materials purchased during the year amount to $598,000, and the cost of goods sold for the year was $2,172,400. Requir...

Q: Simple regression results from the data of Adriana Corporation are as follows

Simple regression results from the data of Adriana Corporation are as follows: Equation: Overhead = $206,469 + ($45.83 × Machine-hours) Statistical data Correlation coefficient . . . . . . . . . . . ....

Q: Three entrepreneurs were looking to start a new brewpub near Sacramento,

Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customers—food from the...

Q: Is “cost-of-goods sold” an expense?

Is “cost-of-goods sold” an expense?

Q: Argentina Partners is concerned about the possible effects of inflation on its

Argentina Partners is concerned about the possible effects of inflation on its operations. Presently, the company sells 60,000 units for $30 per unit. The variable production costs are $15, and fixed...

Q: The controller at Emporia Precision Parts asks for your help in sorting

The controller at Emporia Precision Parts asks for your help in sorting out some cost information. She is called to a meeting, but hands you the following information for June: Prime costs, June . . ....

Q: “The assumptions of CVP analysis are so simplistic that no firm

“The assumptions of CVP analysis are so simplistic that no firm would make a decision based on CVP alone. Therefore, there is no reason to learn CVP analysis.” Comment.

Q: Sell Block prepares three types of simple tax returns: individual,

Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics: The total fixed costs per year for the...

Q: Why does the accountant use a linear representation of cost and revenue

Why does the accountant use a linear representation of cost and revenue behavior in CVP analysis? How is this justified?

Q: Pioneer Parts, a manufacturer of windows for commercial buildings, reports

Pioneer Parts, a manufacturer of windows for commercial buildings, reports the following account information for last year (all costs are in thousands of dollars): Information on January 1 (Beginning)...

Q: Butte Components produces a variety of hardware products, primarily for the

Butte Components produces a variety of hardware products, primarily for the do-it-yourself (DIY) market. As part of your job interview as a summer intern at Butte, the cost accountant provides you wit...

Q: Multiple regression results from the data of Adriana Corporation (Exercise 5

Multiple regression results from the data of Adriana Corporation (Exercise 5-30) are as follows: Equation: Overhead = $124,570 + ($31.93 × Labor-hours) + ($41.10 × Machine-hours) Statistical data Corr...

Q: Chuck Moore supervises two consulting jobs for the firm of Price and

Chuck Moore supervises two consulting jobs for the firm of Price and Waters, LLP, which is a consulting firm that helps organizations become more efficient. One of the consulting jobs is for the U.S....

Q: The administrative offices and manufacturing plant of Oakdale Tool & Die share

The administrative offices and manufacturing plant of Oakdale Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year: Administrative...

Q: The business school dean has asked the accounting club to help with

The business school dean has asked the accounting club to help with a product costing analysis for the school. How would we define the products? What questions would we ask the dean before we accept t...

Q: Coastal Computer operates two retail outlets in Oakview, one on Main

Coastal Computer operates two retail outlets in Oakview, one on Main Street and the other in Lakeland Mall. The stores share the use of a central accounting department. The cost of the accounting depa...

Q: Wayne Casting, Inc., produces a product made from a metal

Wayne Casting, Inc., produces a product made from a metal alloy. Wayne buys the alloy from two different suppliers, Chillicothe Metals and Ames Supply, in approximately equal amounts because of supply...

Q: The library at Pacific Business School (PBS) serves both undergraduate

The library at Pacific Business School (PBS) serves both undergraduate and graduate programs. The dean of PBS is interested in evaluating the profitability of the degree programs and has asked the hea...

Q: After a computer failure, you are trying to reconstruct some financial

After a computer failure, you are trying to reconstruct some financial results for the year just ended. While you know that backups are available, it will take too long to get the information you want...

Q: Mission Foods produces two flavors of tacos, chicken and fish,

Mission Foods produces two flavors of tacos, chicken and fish, with the following characteristics: Required The total fixed costs for the company are $117,000. a. What is the anticipated level of pr...

Q: “I am going to work for a hospital, which is

“I am going to work for a hospital, which is a not-for-profi t organization. Because there are no profits, I will not be able to apply any CVP analysis in my work.” Do you agree with this statement? W...

Q: Is “cost-of-goods” a product cost or

Is “cost-of-goods” a product cost or a period cost?

Q: Just before class starts, you realize that you have mistakenly recycled

Just before class starts, you realize that you have mistakenly recycled the second page of your cost accounting homework assignment. Fortunately, you still have the first page of the printout from you...

Q: The City of Imperial Falls contracts with Evergreen Waste Collection to provide

The City of Imperial Falls contracts with Evergreen Waste Collection to provide solid waste collection to households and businesses. Until recently, Evergreen had an exclusive franchise to provide thi...

Q: San Ysidro Company manufactures hiking equipment. The company’s administrative and manufacturing

San Ysidro Company manufactures hiking equipment. The company’s administrative and manufacturing operations share the company’s one building. Eighty percent of the...

Q: Mary’s Mugs produces and sells various types of ceramic mugs. The

Mary’s Mugs produces and sells various types of ceramic mugs. The business began operations on January 1, year 1, and its costs incurred during the year include these: Variable costs (based on mugs pr...

Q: What criteria are important in determining the choice of an allocation base

What criteria are important in determining the choice of an allocation base?

Q: Global Partners is a manufacturing company that produces parts both for inventory

Global Partners is a manufacturing company that produces parts both for inventory and to custom specifications. Parts produced for inventory are sold at prices determined in the market. Custom parts a...

Q: Cortez Company is planning to introduce a new product that will sell

Cortez Company is planning to introduce a new product that will sell for $96 a unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year: Direct mat...

Q: BS&T Partners has developed a new hubcap with the model

BS&T Partners has developed a new hubcap with the model name Spinnin’ Wheel. Production and sales started August 3. As of August 2, there were no direct materials in inventory. Data for the month of A...

Q: The following data refers to one month. Fill in the blanks

The following data refers to one month. Fill in the blanks.

Q: Scholes Systems supplies a particular type of office chair to large retailers

Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Pr...

Q: Durant Manufacturers has performed extensive studies on its costs and production and

Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 150,000 units (produced and sold): _________________________Total An...

Q: Consider a class in a business school where volume is measured by

Consider a class in a business school where volume is measured by the number of students in the class. Would you say the operating leverage is high or low? Why?

Q: Suburban Bus Lines operates as a not-for-profit organization

Suburban Bus Lines operates as a not-for-profit organization providing local transit service. As a not-for-profit, it refers to an excess of revenues over costs as a “surplus” and an excess of costs o...

Q: Sam’s Sushi serves only a fixed-price lunch. The price

Sam’s Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $4 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and...

Q: Cesar’s Bottlers bottles soft drinks in a factory that can operate either

Cesar’s Bottlers bottles soft drinks in a factory that can operate either one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on wee...

Q: What are the similarities between the Direct Materials Inventory account of the

What are the similarities between the Direct Materials Inventory account of the manufacturer and the Merchandise Inventory account of the merchandiser? Are there any differences between the two accoun...

Q: A consulting firm’s accounting records show the following costs for year 1

A consulting firm’s accounting records show the following costs for year 1: Direct materials supplies . . . . . . . . . . . . . . $ 540,000 Direct labor . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Odd Wallow Drinks is considering adding a new line of fruit juices

Odd Wallow Drinks is considering adding a new line of fruit juices to its merchandise products. This line of juices has the following prices and costs: Selling price per case (24 bottles) of juice . ....

Q: Frightproof Commuter Airlines is considering adding a new flight to its current

Frightproof Commuter Airlines is considering adding a new flight to its current schedule from Metro to Hicksville. This route has the following prices and costs: Selling price per passenger per flight...

Q: Accounting records for NIC Enterprises (NICE) for September show the

Accounting records for NIC Enterprises (NICE) for September show the following (each entry is the total of the actual entries for the account for the month): Note a: This entry does not include any...

Q: How does the accountant know what to record for direct materials for

How does the accountant know what to record for direct materials for a job or a client? For direct labor cost?

Q: A manager of a retailing firm says that he can lower his

A manager of a retailing firm says that he can lower his operating leverage by renting his stores rather than buying. Would you recommend this? Explain.

Q: A January 1, 2009, news report on msn.com

A January 1, 2009, news report on msn.com included the following sentence: “A report put out by brokerage house CLSA about Jet Airways said that the fall in ATF [fuel] prices has brought down the load...

Q: What is the difference between gross margin and contribution margin.

What is the difference between gross margin and contribution margin.

Q: Identify each of the following profit equation components on the graph presented

Identify each of the following profit equation components on the graph presented below: a. The total cost line. b. The total revenue line. c. The total variable costs area. d. Variable cost per unit...

Q: A local restaurant, Fred’s Fish Fry, is estimating nonfood kitchen

A local restaurant, Fred’s Fish Fry, is estimating nonfood kitchen costs (labor, supervision, utilities, etc.) based on food cost. Data were gathered for the past 24 months and analyzed using a spread...

Q: Lomas Electronics manufactures a portable testing device for use in oil exploration

Lomas Electronics manufactures a portable testing device for use in oil exploration. The product’s price and cost characteristics are: Selling price per unit . . . . . . . . . . . . . . $ 260 Variable...

Q: Identify the letter of each profit equation component on the graph that

Identify the letter of each profit equation component on the graph that follows.

Q: Assume that you have been asked to paint the inside walls of

Assume that you have been asked to paint the inside walls of an apartment. State specifically how you would estimate the cost of that job. Include payment for your own labor.

Q: Anu’s Amusement Center has collected the following data for operations for the

Anu’s Amusement Center has collected the following data for operations for the year: Total revenues . . . . . . . . . . . . . . . . . $1,600,000 Total fixed costs . . . . . . . . . . . . . . . . . $ 4...

Q: The cost accountant for Angie’s Apparel has compiled the following information for

The cost accountant for Angie’s Apparel has compiled the following information for last month’s operations: Administrative costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000...

Q: The manager of Kima’s Food Mart estimates operating costs for the year

The manager of Kima’s Food Mart estimates operating costs for the year will include $900,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of...

Q: Mark Ting desperately wants his proposed new product, DNA-diamond

Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a boy or girl friend, spouse, or other l...

Q: Cambridge, Inc., is considering the introduction of a new calculator

Cambridge, Inc., is considering the introduction of a new calculator with the following price and cost characteristics: Sales price . . . . . . . . . . . . . . . . . . . . $ 27 per unit Variable costs...

Q: Oak Island Amusements Center provides the following data on the costs of

Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years: Number of Visitors _____________Maintenance per Year: (thousan...

Q: Refer to the data for Cambridge, Inc. in Exercise 3

Refer to the data for Cambridge, Inc. in Exercise 3-25. Assume that the projected number of units sold for the year is 7,000. Consider requirements (b ), (c) , and (d ) independently of each other. I...

Q: Balance, Inc., is considering the introduction of a new energy

Balance, Inc., is considering the introduction of a new energy snack with the following price and cost characteristics: Sales price . . . . . . . . . . . . . . . $ 1.00 per unit Variable costs . . . ....

Q: Refer to the data for Balance, Inc., in Exercise 3

Refer to the data for Balance, Inc., in Exercise 3-27. Assume that the company plans to sell 600,000 units per month. Consider requirements (b), (c), and (d) independently of each other. In Exercise...

Q: LM Enterprises produces a single part for sale. The part sells

LM Enterprises produces a single part for sale. The part sells for $12 per unit. Fixed costs are $1,700,000 annually. Production and sales of 540,000 units annually results in profit before taxes of $...

Q: Brodie Company’s advertising manager wants to know whether the company’s advertising program

Brodie Company’s advertising manager wants to know whether the company’s advertising program is successful. The manager used a spreadsheet program to estimate the relation between advertising expendit...

Q: Cost allocation bases are ideally based on a cause-and-

Cost allocation bases are ideally based on a cause-and-effect basis, but they are used to allocate fixed overhead. Is this inconsistent?

Q: Provide a business example illustrating opportunity costs.

Provide a business example illustrating opportunity costs.

Q: Your company is preparing an estimate of its production costs for the

Your company is preparing an estimate of its production costs for the coming period. The controller estimates that direct materials costs are $45 per unit and that direct labor costs are $21 per hour....

Q: Why are accurate cost estimates important?

Why are accurate cost estimates important?

Q: The Business School at Eastern College is collecting data as a first

The Business School at Eastern College is collecting data as a first step in the preparation of next year’s budget. One cost that is being looked at closely is administrative staff a...

Q: Your company provides a variety of delivery services. Management wants to

Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company...

Q: Lerner, Inc., is accumulating data to prepare its annual profit

Lerner, Inc., is accumulating data to prepare its annual profit plan for the coming year. The behavior pattern of the maintenance costs must be determined. The accounting staff has suggested using reg...

Q: The following information on maintenance and repair costs and revenues for the

The following information on maintenance and repair costs and revenues for the last two years is available from the accounting records at Arnie’s Arcade & Video Palace. Arnie has...

Q: How is job costing in service organizations (for example, consulting

How is job costing in service organizations (for example, consulting firms) different from job costing in manufacturing organizations?

Q: Refer to the example in Appendix B. Assume that the company

Refer to the example in Appendix B. Assume that the company now finds that the learning rate is 90 percent, instead of 80 percent. The 90 percent learning rate coefficient is −0.1520...

Q: Pick a unit of a hospital (for example, intensive care

Pick a unit of a hospital (for example, intensive care or maternity). Name one example of a direct materials cost, one example of a direct labor cost, and one example of an indirect cost.

Q: Krylon Company purchases eight special tools annually from CO., Inc.

Krylon Company purchases eight special tools annually from CO., Inc. The price of these tools has increased each year, reaching $100,000 per unit last year. Because the purchase price has increased si...

Q: Hill Street Electronics has provided the following information for last year:

Hill Street Electronics has provided the following information for last year: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000,000 Store rent . . . . . . . ....

Q: Why does it matter what allocation base is used to determine the

Why does it matter what allocation base is used to determine the predetermined rate?

Q: Action Games has developed a new computer game that it plans to

Action Games has developed a new computer game that it plans to sell for $32. The variable costs associated with each game (for materials, shipping, and packaging) amount to $7. The fixed costs associ...

Q: Luke Corporation produces a variety of products, each within their own

Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. Th...

Q: Under what conditions is the engineering estimates technique preferred to other estimation

Under what conditions is the engineering estimates technique preferred to other estimation techniques?

Q: If one wishes simply to prepare a cost estimate using regression analysis

If one wishes simply to prepare a cost estimate using regression analysis and enters data into a program to compute regression estimates, what problems might be encountered?

Q: Why is it important to incorporate learning into cost estimates?

Why is it important to incorporate learning into cost estimates?

Q: When using cost estimation methods based on past data, what are

When using cost estimation methods based on past data, what are the trade-offs between gathering more data and gathering less?

Q: The following costs are labeled fixed or variable according to a typical

The following costs are labeled fixed or variable according to a typical designation in accounting. Under which circumstances would any of these costs behave in a manner opposite to that listed? a. Di...

Q: When preparing cost estimates for account analysis purposes, should the costs

When preparing cost estimates for account analysis purposes, should the costs be extracted from the historical accounting records?

Q: Mega Contractors sells to government agencies using a cost-plus contract

Mega Contractors sells to government agencies using a cost-plus contract and to private firms using fixed price contracts. What choices does Mega have in the design of its job costing system that affe...

Q: Brighton, Inc., manufactures kitchen tiles. The company recently expanded

Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month ban...

Q: We have discussed two methods for process costing, weighted average and

We have discussed two methods for process costing, weighted average and FIFO. Your colleague recommends last-in, first-out (LIFO) process costing to the controller as a new system. The controller is c...

Q: Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate

Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate candy bars. The firm has developed three distinct products: Almond Dream, Krispy Krackle, and Creamy Crunch. CBI is profitable, but man...

Q: Refer to Problem 9-51. Jean Sharpe decides to gather

Refer to Problem 9-51. Jean Sharpe decides to gather additional data to identify the cause of overhead costs and figure out which products are most profitable. She notices that $30,000 of the overhead...

Q: The following exchange occurred just after the finance staff at Diversified Electronics

The following exchange occurred just after the finance staff at Diversified Electronics rejected a capital investment proposal. David Parker (Product Development): I just don’t under...

Q: What are the advantages of divisional income as a business unit performance

What are the advantages of divisional income as a business unit performance measure? What are the disadvantages?

Q: How is divisional income like income computed for the firm? How

How is divisional income like income computed for the firm? How is it different?

Q: Give an example in which the use of ROI measures might lead

Give an example in which the use of ROI measures might lead the manager to make a decision that is not in the firm’s interests.

Q: How does residual income differ from ROI?

How does residual income differ from ROI?

Q: What impact does the use of gross book value or net book

What impact does the use of gross book value or net book value in the investment base have on the computation of ROI?

Q: What problems might there be if the same methods used to compute

What problems might there be if the same methods used to compute firm income are used to compute divisional income? Does your answer depend on the type of business a firm is in?

Q: The chapter identified some problems with ROI-type measures and suggested

The chapter identified some problems with ROI-type measures and suggested that residual income reduces some of them. Why do you think that ROI is a more common performance measure in practice than res...

Q: A friend owns and operates a consulting firm that works for a

A friend owns and operates a consulting firm that works for a single client under one consulting agreement. The consulting firm bills the client monthly for charges incurred. She asks you whether you...

Q: “Failure to invest in projects is not a problem when you

“Failure to invest in projects is not a problem when you use ROI. If there is a good project, corporate headquarters will just tell the division manager to invest.” What are the difficulties with this...

Q: How would you respond to the following comment? “Residual income

How would you respond to the following comment? “Residual income and economic value added are identical.”

Q: “I think that EVA is the best performance measure. I

“I think that EVA is the best performance measure. I am going to recommend that we evaluate all managers, of plants, divisions, subsidiaries, up to the chief executive officer (CEO), using it.” Do you...

Q: Management of Division A is evaluated based on residual income measures.

Management of Division A is evaluated based on residual income measures. The division can either rent or buy a certain asset. Might the performance evaluation technique have an impact on the rent-or-b...

Q: “Every one of our company’s divisions has a return on investment

“Every one of our company’s divisions has a return on investment in excess of our cost of capital. Our company must be a blockbuster.” Comment on this statement.

Q: “Residual income solves some of the problems with ROI, but

“Residual income solves some of the problems with ROI, but because it is an absolute number, it is difficult to compare divisions. We should use residual income divided by assets and then we would hav...

Q: Eastern Merchants shows the following information for its two divisions for year

Eastern Merchants shows the following information for its two divisions for year 1: Required Compute divisional operating income for the two divisions. Ignore taxes. How well have these divisions pe...

Q: Refer to Exercise 14-20. The results for year 2

Refer to Exercise 14-20. The results for year 2 have just been posted: In Exercise 14-20 Eastern Merchants shows the following information for its two divisions for year 1: Required Compute divisi...

Q: A division is considering the acquisition of a new asset that will

A division is considering the acquisition of a new asset that will cost $720,000 and have a cash flow of $252,000 per year for each of the four years of its life. Depreciation is computed on a straigh...

Q: The following data are available for two divisions of Solomons Company:

The following data are available for two divisions of Solomons Company: The cost of capital for the company is 8 percent. Ignore taxes. Required a. If Solomons measures performance using ROI, which...

Q: Under which of the following conditions will the first-in,

Under which of the following conditions will the first-in, first-out (FIFO) method of process costing produce the same cost of goods manufactured as the weighted-average method? a. When goods produced...

Q: Ocean Division currently earns $780,000 and has divisional assets

Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost...

Q: Refer to the information in Exercises 14-25 and 14-

Refer to the information in Exercises 14-25 and 14-26. In Exercises 14-25 and 14-26 Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is consider...

Q: Noonan Division has total assets (net of accumulated depreciation) of

Noonan Division has total assets (net of accumulated depreciation) of $3,300,000 at the beginning of year 1. One of the assets is a machine that has a net book value of $300,000. Expected divisional i...

Q: Refer to the facts in Exercise 14-28, but assume

Refer to the facts in Exercise 14-28, but assume that Noonan has been leasing the machine for $60,000 annually. Assume also that the machine generates income of $42,000 annually after the lease paymen...

Q: The Caribbean Division of Mega-Entertainment Corporation just started operations.

The Caribbean Division of Mega-Entertainment Corporation just started operations. It purchased depreciable assets costing $30 million and having a four-year expected life, after which the assets can b...

Q: Refer to the data in Exercise 14-30. Assume that

Refer to the data in Exercise 14-30. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. In Exercise 14-30 The Caribbean Division of Mega-Entertainment...

Q: Refer to the information in Exercise 14-30. In computing

Refer to the information in Exercise 14-30. In computing ROI, this division uses end-of-year asset values. Assume that all cash flows increase 10 percent at the end of each year. This has the followin...

Q: Upper Division of Lower Company acquired an asset with a cost of

Upper Division of Lower Company acquired an asset with a cost of $600,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows: Year __...

Q: Back Mountain Industries (BMI) has two divisions: East and

Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15%. Selected financial information (in thousands of dollars) for the first year of business follows: a...

Q: Refer to the data in Exercise 14-34.

Refer to the data in Exercise 14-34. In Exercise 14-34 Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15%. Selected financial information (in thousands...

Q: By mistake, the production supervisor transposed the digits on the production

By mistake, the production supervisor transposed the digits on the production report and reported a higher percentage of completion for each inventory component. Assume that there was no beginning inv...

Q: Refer to the data in Exercise 14-34.

Refer to the data in Exercise 14-34. In Exercise 14-34 Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15%. Selected financial information (in thousands...

Q: Oscar Clemente (Problem 14–37) is still assessing the

Oscar Clemente (Problem 14–37) is still assessing the problem of whether to acquire LSI’s assembly machine. He learns that the new machine could be acquired next year, but if he waits until then, it w...

Q: Refer to the facts in Problem 14–37. Assume that

Refer to the facts in Problem 14–37. Assume that Pitt’s performance measurement and bonus plans are based on residual income instead of ROI. Pitt uses a cost of capital of 12 percent in computing resi...

Q: Refer to the facts in Problem 14–39. Assume that

Refer to the facts in Problem 14–39. Assume that Pitt’s performance measurement and bonus plans are based on residual income instead of ROI. Pitt uses a cost of capital of 12 percent in computing resi...

Q: Division managers at Asher Company are granted a wide range of decision

Division managers at Asher Company are granted a wide range of decision authority. With the exception of managing cash, which is done at corporate headquarters, divisions are responsible for sales, pr...

Q: Several years ago, Seville Company acquired Salvador Components. Prior to

Several years ago, Seville Company acquired Salvador Components. Prior to the acquisition, Salvador manufactured and sold automotive components to third-party customers. Since becoming a division of S...

Q: Suwon Pharmaceuticals invests heavily in research and development (R&D

Suwon Pharmaceuticals invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in...

Q: Biddle Company uses EVA to evaluate the performance of division managers.

Biddle Company uses EVA to evaluate the performance of division managers. For the Wallace Division, after-tax divisional income was $400,000 in year 3. The company adjusts the after-tax income for adv...

Q: I thought evaluating performance would be easier than this. I have

I thought evaluating performance would be easier than this. I have three vice presidents, operating the same business in three different countries. I need to be able to compare them in order to prepar...

Q: What are the advantages of using an ROI-type measure rather

What are the advantages of using an ROI-type measure rather than the absolute value of division profits as a performance evaluation technique for business units?

Q: In computing the cost per equivalent unit, the weighted-average

In computing the cost per equivalent unit, the weighted-average method considers: a. Current costs only. b. Current costs plus costs in beginning WIP inventory. c. Current costs plus the cost of endin...

Q: How does EVA differ from residual income?

How does EVA differ from residual income?

Q: What are the dangers of using only business unit measures to evaluate

What are the dangers of using only business unit measures to evaluate the performance of business unit managers?

Q: A company prepares the master budget by taking each division manager’s estimate

A company prepares the master budget by taking each division manager’s estimate of revenues and costs for the coming period and entering the data into the budget without adjustment. At the end of the...

Q: “If every division manager maximizes divisional income, we will maximize

“If every division manager maximizes divisional income, we will maximize firm income. Therefore, divisional income is the best performance measure.” Comment.

Q: By using economic value-added, we avoid managers focusing on

By using economic value-added, we avoid managers focusing on short-term gains like they would with accounting income. Do you agree with this statement?

Q: What are the advantages of using an ROI-type measure rather

What are the advantages of using an ROI-type measure rather than the absolute value of division profits as a performance evaluation technique for business units?

Q: How does EVA differ from residual income?

How does EVA differ from residual income?

Q: What are the dangers of using only business unit measures to evaluate

What are the dangers of using only business unit measures to evaluate the performance of business unit managers?

Q: A company prepares the master budget by taking each division manager’s estimate

A company prepares the master budget by taking each division manager’s estimate of revenues and costs for the coming period and entering the data into the budget without adjustment. At the end of the...

Q: “If every division manager maximizes divisional income, we will maximize

“If every division manager maximizes divisional income, we will maximize firm income. Therefore, divisional income is the best performance measure.” Comment.

Q: When using the weighted-average method of process costing, total

When using the weighted-average method of process costing, total equivalent units produced for a given period equal: a. The number of units started and completed during the period plus the number of u...

Q: By using economic value-added, we avoid managers focusing on

By using economic value-added, we avoid managers focusing on short-term gains like they would with accounting income. Do you agree with this statement?

Q: Assume that all of the information is the same as in Integrative

Assume that all of the information is the same as in Integrative Case 15-43, but instead of receiving only one outside bid, Logistics receives two. The new bid is from World Services for $195 per hund...

Q: What are the limitations of market-based transfer prices? What

What are the limitations of market-based transfer prices? What are the limitations of cost-based transfer prices?

Q: When would you advise a firm to use direct intervention to set

When would you advise a firm to use direct intervention to set transfer prices? What are the disadvantages of such a practice?

Q: When would you advise a firm to use prices other than market

When would you advise a firm to use prices other than market prices for interdivisional transfers?

Q: What is the basis for choosing between actual and standard costs for

What is the basis for choosing between actual and standard costs for cost-based transfer pricing?

Q: What are the advantages and disadvantages of a negotiated transfer price system

What are the advantages and disadvantages of a negotiated transfer price system?

Q: What is the general transfer pricing rule? What is the transfer

What is the general transfer pricing rule? What is the transfer price that results from this rule when: a. There is a perfect market for the product? b. The selling division is operating below capacit...

Q: What should an effective transfer pricing system accomplish in a decentralized organization

What should an effective transfer pricing system accomplish in a decentralized organization?

Q: Alpha Division and Beta Division are both profit centers. Alpha has

Alpha Division and Beta Division are both profit centers. Alpha has no external markets for its one product, an electrical component. Beta uses the component but cannot purchase it from any other sour...

Q: Would process costing work well for a service firm? Why or

Would process costing work well for a service firm? Why or why not?

Q: How does the choice of a transfer price affect the operating profits

How does the choice of a transfer price affect the operating profits of both segments involved in an intracompany transfer? Why is the choice of a transfer price important if the total profits of the...

Q: When setting a transfer price for goods that are sold across international

When setting a transfer price for goods that are sold across international boundaries, what factors should management consider?

Q: In what ways is transfer pricing like cost allocation? In what

In what ways is transfer pricing like cost allocation? In what ways is it different?

Q: Best Practices, Inc., is a management consulting fi rm.

Best Practices, Inc., is a management consulting fi rm. Its Corporate Division advises private firms on the adoption and use of cost management systems. Government Division consults with state and loc...

Q: Mississippi Company has two decentralized divisions, Illinois and Iowa. Illinois

Mississippi Company has two decentralized divisions, Illinois and Iowa. Illinois always has purchased certain units from Iowa at $60 per unit. Because Iowa plans to raise the price to $80 per unit, Il...

Q: A company permits its decentralized units to “lease” space to

A company permits its decentralized units to “lease” space to one another. Uptown Division has leased some of its idle warehouse space to Downtown Division for $60 per square foot per month. Recently,...

Q: Division A offers its product to outside markets for $60.

Division A offers its product to outside markets for $60. It incurs variable costs of $22 per unit and fixed costs of $75,000 per month based on monthly production of 4,000 units. Division B can acqui...

Q: Seattle Transit Ltd. operates a local mass transit system. The

Seattle Transit Ltd. operates a local mass transit system. The transit authority is a state governmental agency. It has an agreement with the state government to provide rides to senior citizens for 5...

Q: Carmen Seville and Don Turco jointly own Bright Green Temp Services (

Carmen Seville and Don Turco jointly own Bright Green Temp Services (BGTS). Carmen owns 60 percent and Don owns 40 percent. The company provides temporary clerical services at a rate of $40 per hour....

Q: Trans Atlantic Metals has two operating divisions. Its forging operation in

Trans Atlantic Metals has two operating divisions. Its forging operation in Finland forges raw metal, cuts it, and then ships it to the United States where the company’s Gear Division uses the metal t...

Q: Clean Corporation manufactures liquid window cleaner. The following information concerns its

Clean Corporation manufactures liquid window cleaner. The following information concerns its work in process: • Beginning inventory, 12,000 partially complete gallons. • Transferred out, 63,000 gallon...

Q: Refer to the data in Exercise 15–17. Suppose that

Refer to the data in Exercise 15–17. Suppose that Government Division will charge the client interested in implementing an activity-based costing system by the hour based on cost plus a fixed fee, whe...

Q: Mountain Industries operates a Manufacturing Division and an Assembly Division. Both

Mountain Industries operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale....

Q: Refer to the information in Exercise 15-25. Suppose Manufacturing

Refer to the information in Exercise 15-25. Suppose Manufacturing is located in Country A with a tax rate of 60% and Assembly in Country B with a tax rate of 40%. All other facts remain the same. In...

Q: Leapin’ Larry’s Pre-Owned Cars has two divisions, Operations and

Leapin’ Larry’s Pre-Owned Cars has two divisions, Operations and Financing. Operations is responsible for selling Larry’s inventory as quickly as possible and purchasing cars for future sale. Financin...

Q: Perth Corporation has two operating divisions, a casino and a hotel

Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, reve...

Q: Athena Company has two divisions. Spartan Division, which has an

Athena Company has two divisions. Spartan Division, which has an investment base of $8,400,000, produces and sells 450,000 units of a product at a market price of $28 per unit. Its variable costs tota...

Q: Refer to the data in Problem 15-29. Division managers

Refer to the data in Problem 15-29. Division managers are evaluated using residual income using a 15 percent cost of capital. In Problem 15-29 Athena Company has two divisions. Spartan Division, whic...

Q: Skane Shipping Ltd. (SSL) operates a fleet of container

Skane Shipping Ltd. (SSL) operates a fleet of container ships in international trade between Sweden and Singapore. All of the shipping income (that is, that related to SSL’s ships) is deemed to be ear...

Q: Cochise Corporation’s Southern Division is operating at capacity. It has been

Cochise Corporation’s Southern Division is operating at capacity. It has been asked by Northern Division to supply it a thermal switch, which Southern sells to its regular customers for $60 each. Nort...

Q: Oriole, Inc. is a large consumer products company, which

Oriole, Inc. is a large consumer products company, which manufactures health and beauty products sold at grocery and drug stores throughout the country. One division, PS, does both manufacturing and s...

Q: Refer to the data in Exercise 8-16. Assume that

Refer to the data in Exercise 8-16. Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs. In Exercise 8-16. Clean...

Q: Western States Supply, Inc. (WSS), consists of three

Western States Supply, Inc. (WSS), consists of three divisions—California, Northwest, and Southwest—that operate as if they were independent companies. Each division has its own sales force and produc...

Q: Gage Corporation has two operating divisions in a semiautonomous organizational structure.

Gage Corporation has two operating divisions in a semiautonomous organizational structure. Adams Division, located in the United States, produces a specialized electrical component that is an input to...

Q: Mathes Corporation manufactures paper products. The company operates a landfill,

Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in tru...

Q: Refer to the data in Problem 15-39. At the

Refer to the data in Problem 15-39. At the end of the year, the following data are available on actual operations at the landfill. Volume of trash . . . . . . . . . . . . . . . . . . . . . . 1,250 to...

Q: CHS is a large multidivision fi rm. One division, Health

CHS is a large multidivision fi rm. One division, Health Services, is well known inside CHS for its efficient information technology (IT). A smaller division, Optics, has approached Health Services wi...

Q: Refer to Problem 15-41. Suppose Health Services could sell

Refer to Problem 15-41. Suppose Health Services could sell time on the machine to other companies in the area on a per-hour basis. Further, it can sell all the time available for $30 per hour. In Pro...

Q: “We can’t drop our prices below $210 per hundred pounds

“We can’t drop our prices below $210 per hundred pounds,” exclaimed Greg Berman, manager of Forwarders, a division of Custom Freight Systems. &aci...

Q: In the late 1980s, General Electric Company (GE), whose

In the late 1980s, General Electric Company (GE), whose CEO at the time was Jack Welch, acquired Kidder Peabody, an investment banking firm founded in 1824. In 1991, Kidder hired a bond trader named J...

Q: SPG Company manufactures and sells metal products that are used in many

SPG Company manufactures and sells metal products that are used in many manufacturing operations. The management at SPG believes strongly in decentralized decision making and using performance evaluat...

Q: Hall O’ Fame Products is a nationwide sporting goods manufacturer. The

Hall O’ Fame Products is a nationwide sporting goods manufacturer. The company operates with a widely based manufacturing and distribution system that has led to a highly decentraliz...

Q: Missouri Corporation shows the following information concerning the work in process at

Missouri Corporation shows the following information concerning the work in process at its plant: • Beginning inventory was partially complete (materials are 100 percent complete; conversion costs are...

Q: Paulista Corporation’s division managers have been expressing growing dissatisfaction with the methods

Paulista Corporation’s division managers have been expressing growing dissatisfaction with the methods the organization uses to measure division performance. Division operations are evaluated every qu...

Q: Your company has a travel policy that reimburses employees for the “

Your company has a travel policy that reimburses employees for the “ordinary and necessary” costs of business travel. Employees often mix a business trip with pleas...

Q: An article in The Wall Street Journal indicated that dressmaker Fallo Me

An article in The Wall Street Journal indicated that dressmaker Fallo Me (name changed) backdated invoices to record revenue in the quarter before sales were actually made. As long as sales remained s...

Q: Overview River Beverages is a food and soft drink company with

Overview River Beverages is a food and soft drink company with worldwide operations. The company is organized into five regional divisions with each vice president reporting directly to the CEO, Cindy...

Q: When the fraud at PepsiCo occurred, the company had five somewhat

When the fraud at PepsiCo occurred, the company had five somewhat diverse groups of divisions: food products, such as Frito-Lay, Inc.; transportation, such as northAmerican Van Lines, Inc.; sporting g...

Q: The board of directors of the Cortez Beach Yacht Club (CBYC

The board of directors of the Cortez Beach Yacht Club (CBYC) is developing plans to acquire more equipment for lessons and rentals and to expand club facilities. The board plans to purchase about $50,...

Q: Hamilton Corp. manufactures a component used in a popular gaming console

Hamilton Corp. manufactures a component used in a popular gaming console. Demand has been strong and the executive staff at Hamilton is planning for next year. On October 1, they call you into a budge...

Q: The Casings Plant of Wyoming Machines makes plastics shells for the company’s

The Casings Plant of Wyoming Machines makes plastics shells for the company’s calculators. (Each calculator requires one shell.) For each of the next two years, Wyoming expects to sell 160,000 calcula...

Q: Westile Company buys plain ceramic tiles and prints different designs on them

Westile Company buys plain ceramic tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock e...

Q: White Products wishes to purchase goods in one month for sale in

White Products wishes to purchase goods in one month for sale in the next. On March 31, the company has 8,000 portable music players in stock, although sales for the next month (April) are estimated t...

Q: What are the characteristics of industries most likely to use process costing

What are the characteristics of industries most likely to use process costing?

Q: Refer to the data in Exercise 8-18.

Refer to the data in Exercise 8-18. In Exercise 8-18. Missouri Corporation shows the following information concerning the work in process at its plant: • Beginning inventory was partially complete (m...

Q: Ashland Corporation, a merchandising fi rm, is preparing its cash

Ashland Corporation, a merchandising fi rm, is preparing its cash budget for October. The following information is available concerning its inventories: Inventories at beginning of October . . . . ....

Q: Duluth Company is preparing its cash budget for December. The following

Duluth Company is preparing its cash budget for December. The following information is available concerning its accounts receivable: Estimated credit sales for December . . . . . . . . . . . . . . ....

Q: Nassau Products is preparing a cash budget for April. The following

Nassau Products is preparing a cash budget for April. The following information on accounts receivable collections is available from past collection experience: Percent of current month’s sales collec...

Q: Scare-2-B-U (S2BU) specializes in

Scare-2-B-U (S2BU) specializes in costumes for all occasions. The average price of each of its costumes is $240. For each occasion, S2BU receives a 20 percent deposit two months before the occasion, 5...

Q: Varmit-B-Gone is a pest control service that operates

Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes...

Q: Refer to the data in Exercise 13-31. Varmit-

Refer to the data in Exercise 13-31. Varmit-B-Gone estimates that the number of subscribers in September should fall 10 percent below August levels, and the number of service calls per subscriber shou...

Q: Rhodes, Inc., is a fast-growing start-up

Rhodes, Inc., is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for July: Sales revenue (200 units @ $500 per unit) . . . . $100,000 Less Manufact...

Q: Carreras Café is a Spanish restaurant in a college town. The

Carreras Café is a Spanish restaurant in a college town. The owner expects that the number of meals served in June will be 40 percent below those served in May, because so many students leave for the...

Q: BK Consulting is a management consulting fi rm. Other than the

BK Consulting is a management consulting fi rm. Other than the senior leadership (who manage the firm, but do not actively consult), the managers and staff are billed to clients on an hourly basis. Th...

Q: The controller of Northwest Hardware has just received two forecasts for sales

The controller of Northwest Hardware has just received two forecasts for sales in the Montana District for the coming year. Based on an econometric analysis of consumer spending and economic trends, a...

Q: Bears, Inc., adds materials at the beginning of the process

Bears, Inc., adds materials at the beginning of the process in Department MO. The following information on physical units for Department MO for the month of July is available: Work in process, July 1...

Q: Elizabeth Jablonski is the director of Research and Development for Galaxy Electronics

Elizabeth Jablonski is the director of Research and Development for Galaxy Electronics. Last week, she submitted the following funding request as part of the annual budget process. Project __________...

Q: Sanjana’s Sweet Shoppe operates on the boardwalk of a New England coastal

Sanjana’s Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer season and the business is heavily dependent on the weather and th...

Q: Bay Area Limos operates transportation services to Bay City airport. The

Bay Area Limos operates transportation services to Bay City airport. The price of service is fixed at a flat rate for each trip and most costs of providing the service are fixed for each trip. Betty S...

Q: Refer to the data in Problem 13-40. Estimate the

Refer to the data in Problem 13-40. Estimate the cash from operations expected in year 2. In Problem 13-40 The following information is available for year 1 for Dancer Components: Sales revenue (300,...

Q: Refer to the data in Problem 13-42. Estimate the

Refer to the data in Problem 13-42. Estimate the cash from operations expected in year 2. In Problem 13-42 Cameron Parts has the following data from year 1 operations, which are to be used for develo...

Q: Lotus Fixtures, Inc. (LFI), manufactures steel fittings.

Lotus Fixtures, Inc. (LFI), manufactures steel fittings. Each fitting requires both steel and an alloy that allows the fitting to be used under extreme conditions. The following data apply to the prod...

Q: Capstone Corporation has just received its sales expense report for January,

Capstone Corporation has just received its sales expense report for January, which follows. Item _____________________Amount Sales commissions . . . . . . . . . . . . . . . . . $121,500 Sales staff sa...

Q: Delhi, Inc., seeks your assistance in developing cash and other

Delhi, Inc., seeks your assistance in developing cash and other budget information for August, September, and October. At July 31, the company had cash of $22,000, accounts receivable of $1,748,000, i...

Q: The following information pertains to the Davenport plant for the month of

The following information pertains to the Davenport plant for the month of May (all materials are added at the beginning of the process): Required Compute the cost per equivalent unit for materials...

Q: Refer to the data in Exercise 8-22.

Refer to the data in Exercise 8-22. In Exercise 8-22. The following information pertains to the Davenport plant for the month of May (all materials are added at the beginning of the process): Requi...

Q: Materials are added at the beginning of the production process at Santiago

Materials are added at the beginning of the production process at Santiago Company, which uses a FIFO process costing system. The following information on the physical flow of units is available for t...

Q: Refer to the data in Exercise 8-24. Cost

Refer to the data in Exercise 8-24. Cost data for April show the following: Beginning WIP inventory Direct materials costs . . . . . . . . . . . . . . $ 24,300 Conversion costs . . . . . . . . . . ....

Q: The Matsui Lubricants plant uses the weighted-average method to account

The Matsui Lubricants plant uses the weighted-average method to account for its work-in process inventories. The accounting records show the following information for a particular day: Beginning WIP...

Q: Refer to the data in Exercise 8-26. Compute the

Refer to the data in Exercise 8-26. Compute the cost of goods transferred out and the ending inventory using the weighted-average method. In Exercises 8-26 The Matsui Lubricants plant uses the weight...

Q: Using the data in Exercise 8-26, compute the cost

Using the data in Exercise 8-26, compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. In Exercises 8-26 The Matsui Lubricants plant uses the weigh...

Q: A manufacturing company has records of its activity during the month in

A manufacturing company has records of its activity during the month in work-in-process inventory and of its ending work-in-process inventory; however, the record of its beginning inventory has been l...

Q: Refer to the data in Exercises 8-26 and 8-

Refer to the data in Exercises 8-26 and 8-28. Compute the cost of goods transferred out and the ending inventory using the FIFO method. In Exercises 8-26 and 8-28 The Matsui Lubricants plant uses the...

Q: Pacific Ink had beginning work-in-process inventory of $

Pacific Ink had beginning work-in-process inventory of $744,960 on October 1. Of this amount, $304,920 was the cost of direct materials and $440,040 was the cost of conversion. The 48,000 units in the...

Q: Refer to the data in Exercise 8-30. Compute the

Refer to the data in Exercise 8-30. Compute the costs of goods transferred out and the ending inventory using the weighted-average method. In Exercise 8-30 Pacific Ink had beginning work-in-process i...

Q: Refer to the data in Exercise 8-30. Compute the

Refer to the data in Exercise 8-30. Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. In Exercise 8-30 Pacific Ink had beginning work-in-proces...

Q: Refer to the data in Exercise 8-30. Compute the

Refer to the data in Exercise 8-30. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. Is the ending inventory higher or lower under the weighted-average...

Q: Assume that El Paso Corporation provides you with the following information for

Assume that El Paso Corporation provides you with the following information for one of its department’s operations for September (no new material is added in Department B): WIP inventory—Department B...

Q: Refer to the information in Exercise 8-34.

Refer to the information in Exercise 8-34. In Exercise 8-34 Assume that El Paso Corporation provides you with the following information for one of its department’s operations for September (no new ma...

Q: Calgary Corporation produces a liquid solvent in two departments: Mixing and

Calgary Corporation produces a liquid solvent in two departments: Mixing and Finishing. Assume that Calgary Corporation provides you with the following information for Finishing operations for Novembe...

Q: Refer to the information in Exercise 8-36.

Refer to the information in Exercise 8-36. In Exercise 8-36 Calgary Corporation produces a liquid solvent in two departments: Mixing and Finishing. Assume that Calgary Corporation provides you with t...

Q: Brokia Electronics manufactures three cell phone models, which differ only in

Brokia Electronics manufactures three cell phone models, which differ only in the components included: Basic, Photo, and UrLife. Production takes place in two departments, Assembly and Special Packagi...

Q: If costs increase from one period to another, will costs that

If costs increase from one period to another, will costs that are transferred out of one department under FIFO costing be higher or lower than costs transferred out using weighted-average costing? Why...

Q: Ferdon Watches, Inc., makes four models of watches, Gag

Ferdon Watches, Inc., makes four models of watches, Gag-Gift, Commuter, Sport, and Retirement. Ferdon manufactures the watches in four departments: Assembly, Polishing, Special Finishing, and Packagin...

Q: Select the best answer for each of the following independent multiple-

Select the best answer for each of the following independent multiple-choice questions. a. Adams Company’s production cycle starts in Department A. The following information is avai...

Q: The following pertains to the Cereal Division of McKenzie Corporation. Conversion

The following pertains to the Cereal Division of McKenzie Corporation. Conversion costs for this division were 80 percent complete as to beginning work-in-process inventory and 50 percent complete as...

Q: Douglas Toys is a manufacturer that uses the weighted-average process

Douglas Toys is a manufacturer that uses the weighted-average process costing method to account for costs of production. It produces a plastic toy in three separate departments: Molding, Assembling, a...

Q: Refer to the facts in Problem 8-42.

Refer to the facts in Problem 8-42. In Problem 8-42 Douglas Toys is a manufacturer that uses the weighted-average process costing method to account for costs of production. It produces a plastic toy...

Q: Cost allocation allocates only a given amount of costs to products.

Cost allocation allocates only a given amount of costs to products. The total allocated is the same; therefore the choice of the system does not matter. True or false? Explain.

Q: In its Department R, Recyclers, Inc., processes donated scrap

In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation re...

Q: Why are cost drivers based on direct labor widely used?

Why are cost drivers based on direct labor widely used?

Q: Saline Solutions uses process costing to account for production of its unique

Saline Solutions uses process costing to account for production of its unique compound BG at its River Plant. The River Plant has two departments: R and S. Raw materials are added at two points in the...

Q: Refer to the information in Problem 8-47. Department R

Refer to the information in Problem 8-47. Department R uses FIFO process costing to account for production. In January, beginning work-in-process inventory consisted of 50,000 units, 80 percent comple...

Q: What is the distinction between equivalent units under the FIFO method and

What is the distinction between equivalent units under the FIFO method and equivalent units under the weighted-average method?

Q: For each of the following independent cases, use FIFO costing to

For each of the following independent cases, use FIFO costing to determine the information requested. a. The ending inventory included $87,000 for conversion costs. During the period, 42,000 equivalen...

Q: For each of the following independent cases, determine the units or

For each of the following independent cases, determine the units or equivalent units requested (assuming weighted-average costing). a. The WIP Inventory account had a beginning balance of $11,400 for...

Q: “Activity-based costing is the same as department costing.”

“Activity-based costing is the same as department costing.” Is this true, false, or uncertain? Explain.

Q: Miller Outdoor Equipment (MOE) makes four models of tents.

Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. MOE manufactures the tents in two departments: Stitching and Customizing. All four mod...

Q: Pacific Siding Incorporated produces synthetic wood siding used in the construction of

Pacific Siding Incorporated produces synthetic wood siding used in the construction of residential and commercial buildings. Pacific Siding’s fiscal year ends on March 31, and the we...

Q: Vermont Company uses continuous processing to produce stuffed bears and FIFO process

Vermont Company uses continuous processing to produce stuffed bears and FIFO process costing to account for its production costs. It uses FIFO because costs are quite unstable due to the volatile pric...

Q: Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens

Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens sells the solvent to both U.S. military services and commercial airlines. The solvent is produced in a single pla...

Q: “It is clear after reading this chapter that activity-based

“It is clear after reading this chapter that activity-based costing is the best system. Whenever someone asks, I’ll recommend its adoption.” Do you agree? Explain.

Q: “One of the lessons learned from activity-based costing is

“One of the lessons learned from activity-based costing is that all costs are really a function of volume of output.” Is this true, false, or uncertain? Explain.

Q: “Activity-based costing breaks down the indirect costs into several

“Activity-based costing breaks down the indirect costs into several activities that cause costs (cost drivers). These should be the same for each department in an organization.” Is this true, false, o...

Q: It has been said that a prior department’s costs behave similarly to

It has been said that a prior department’s costs behave similarly to direct materials costs. Under what conditions are the costs similar? Why account for them separately?

Q: You have been asked to determine whether a company uses an activity

You have been asked to determine whether a company uses an activity-based cost system. What information would you look for to answer the question?

Q: “Activity-based costing is just another inventory valuation method.

“Activity-based costing is just another inventory valuation method. It isn’t relevant for making operating decisions.” Do you agree with this statement? Explain.

Q: Howard Rockness was worried. His company, Rockness Bottling, showed

Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past several years despite an increase in revenues. With profits declining and revenues increasing, Rockn...

Q: The product costs reported using either plantwide or department allocation are the

The product costs reported using either plantwide or department allocation are the same. The only difference is in the number of cost drivers used. True or false? Explain.

Q: Why do companies commonly use direct labor-hours or direct labor

Why do companies commonly use direct labor-hours or direct labor cost but not the number of units to allocate overhead?

Q: What are the costs of moving to an activity-based cost

What are the costs of moving to an activity-based cost system? What are the benefits?

Q: What are the basic steps in computing costs using activity-based

What are the basic steps in computing costs using activity-based costing?

Q: What type of organization is most likely to benefit from using activity

What type of organization is most likely to benefit from using activity-based costing for product costing? Why?

Q: In what ways is implementing an activity-based costing system in

In what ways is implementing an activity-based costing system in a manufacturing firm’s personnel department the same as implementing it in the plant? In what ways is it different?

Q: “Activity-based costing does a better job of allocating both

“Activity-based costing does a better job of allocating both direct and indirect cost than traditional methods do.” Is this statement true, false, or uncertain? Explain.

Q: The more important individual unit costs are used for decisions, the

The more important individual unit costs are used for decisions, the more likely it is that process costing will be preferred to job costing. Do you agree?

Q: “Activity-based costing could not be applied in a business

“Activity-based costing could not be applied in a business school.” Do you agree? Explain.

Q: Jim, the vice president of marketing, says the company should

Jim, the vice president of marketing, says the company should not adopt activity-based costing because it will result in the costs of some of the products going up but the market will not allow for ra...

Q: “We all know that cost allocation can distort decision making.

“We all know that cost allocation can distort decision making. We should stop doing this and just report direct costs.” Do you agree? Explain.

Q: Select an administrative function commonly found in a fi rm. Examples

Select an administrative function commonly found in a fi rm. Examples include personnel, accounts payable, purchasing, and so on. Outline an activity-based costing system for the function, including m...

Q: A manager tells you that her company’s cost accounting system divides overhead

A manager tells you that her company’s cost accounting system divides overhead into two pools: (1) Inspect material and (2) Assemble product. The inspect material pool is allocated on the basis of dir...

Q: Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B

Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B produces the baseball bats, and Department T produces the tennis rackets. Munoz currently uses plantwide allocation...

Q: Main Street Ice Cream Company uses a plantwide allocation method to allocate

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Departm...

Q: The Personnel Department at Drumm Corporation is centralized and provides services to

The Personnel Department at Drumm Corporation is centralized and provides services to the two operating units: Illinois and Ohio. The Illinois unit is the original unit of Drumm and is well establishe...

Q: Refer to exercise 9-24. Kurt, the manager of

Refer to exercise 9-24. Kurt, the manager of the Ohio unit, is unhappy with the results of the controller’s study. He asks the controller to develop separate rates for fixed and vari...

Q: After reviewing the new activity-based costing system that Janis McGee

After reviewing the new activity-based costing system that Janis McGee has implemented at Joplin Industries’s Port Arthur manufacturing facility, Kris Kristoff, the production superv...

Q: Give examples of cost drivers commonly used to allocate overhead costs to

Give examples of cost drivers commonly used to allocate overhead costs to products and services.

Q: Cathy, the manager of Cathy’s Catering, Inc., uses activity

Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires four people to...

Q: Rodent Corporation produces two types of computer mice, wired and wireless

Rodent Corporation produces two types of computer mice, wired and wireless. The wired mice are designed as low-cost, reliable input devices. The company only recently began producing the higher-qualit...

Q: Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant

Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing. The two mode...

Q: We-Clean, Inc., is a home-cleaning service

We-Clean, Inc., is a home-cleaning service. It originally specialized in serving small residential clients but recently started contracting for work in large apartment and office buildings. Julie Lodg...

Q: Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used

Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has rec...

Q: Wendy Chen established Windy City Coaching (WCC) to provide teen

Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services to its clients. WCC charges a $300 fee per hour for each service. The revenues and costs for...

Q: Delta Parts, Inc., recently switched to activity-based costing

Delta Parts, Inc., recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost drivers and rates: Direct ma...

Q: Carolina Fashions, a shirt manufacturer, recently switched to activity-

Carolina Fashions, a shirt manufacturer, recently switched to activity-based costing from the department product costing method. The manager of Building S, which manufactures the shirts, has identifie...

Q: The Personnel Department at LastCall Enterprises handles many administrative tasks for the

The Personnel Department at LastCall Enterprises handles many administrative tasks for the two divisions that make up LastCall: LaidBack and StressedOut. LaidBack division manages the companyâ&#...

Q: John’s Custom Computer Shop (JCCS) assembles computers for both individual

John’s Custom Computer Shop (JCCS) assembles computers for both individual and corporate customers. The company is organized into two divisions: Personal and Business. Once a compute...

Q: The management of a liquid cleaning product company is trying to decide

The management of a liquid cleaning product company is trying to decide whether to install a job or process costing system. The manufacturing vice president has stated that job costing gives the best...

Q: EZ-Seat, Inc., manufactures two types of reclining chairs

EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid dama...

Q: Bob’s Baskets, Inc., manufactures and sells two types of baskets

Bob’s Baskets, Inc., manufactures and sells two types of baskets, deluxe and standard. Last year, Bob’s Baskets had the following costs and revenues: Bobâ&#...

Q: Refer to Problem 9-38. Assume that you have prepared

Refer to Problem 9-38. Assume that you have prepared financial statements that show the operating profit for each of the two baskets manufactured by Bob’s Baskets. Further assume tha...

Q: College Supply Company (CSC) makes three types of drinking glasses

College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company em...

Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc

Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a separate division within the company. Most manufacturing plants at MM use an ABC system, but UM has always...

Q: Cain Components manufactures and distributes various plumbing products used in homes and

Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were di...

Q: Refer to Problem 9-45. The intern decides to look

Refer to Problem 9-45. The intern decides to look more closely at the manufacturing activity and determines that it can be broken down into two activities: production and engineering. Production cover...

Q: Cawker Products has two manufacturing facilities—Lucas plant and Russell plant

Cawker Products has two manufacturing facilities—Lucas plant and Russell plant—that produce the same product. Until recently, the production process in both plants has been the same. Last year, the Ru...

Q: ACE Industries is a manufacturer of machined parts located in the midwestern

ACE Industries is a manufacturer of machined parts located in the midwestern United States. Its primary customers are suppliers to the automobile industry, although it has diversified its customer bas...

Q: California Circuits Company (3C) manufactures a variety of components.

California Circuits Company (3C) manufactures a variety of components. Its Valley plant specializes in two electronic components used in circuit boards. These components serve the same function and pe...

Q: TL Division of Giant Bank has assets of $14.4

TL Division of Giant Bank has assets of $14.4 billion. During the past year, the division had profits of $1.8 billion. Giant Bank has a cost of capital of 6 percent. Ignore taxes. Required a. Compute...

Q: Refer to the data in Exercise 14-25. The division

Refer to the data in Exercise 14-25. The division manager learns that he has the option to lease the asset on a year-to-year lease for $148,000 per year. All depreciation and other tax benefits would...

Q: Assume that the number of units transferred out of a department is

Assume that the number of units transferred out of a department is unknown. What is the formula to solve for units transferred out using the basic cost flow model?

Q: How does management accounting differ from financial accounting?

How does management accounting differ from financial accounting?

Q: What are three different types of inventory that manufacturing companies hold?

What are three different types of inventory that manufacturing companies hold?  

Q: Portal Corporation produces the same power generator in two Illinois plants,

Portal Corporation produces the same power generator in two Illinois plants, a new plant in Peoria and an older plant in Moline. The following data are available for the two plants: All fixed...

Q: The Stackpole Company retails two products: a standard and a deluxe

The Stackpole Company retails two products: a standard and a deluxe version of a luggage carrier. The budgeted income statement for next period is as follows: Required: 1. Compute the breake...

Q: The Museum of America is preparing for its annual appreciation dinner for

The Museum of America is preparing for its annual appreciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit r...

Q: Marketing Docs prepares marketing plans for growing businesses. For 2017,

Marketing Docs prepares marketing plans for growing businesses. For 2017, budgeted revenues are $1,500,000 based on 500 marketing plans at an average rate per plan of $3,000. The company would like...

Q: J.T. Brooks and Company, a manufacturer of quality

J.T. Brooks and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brooks, the president, to...

Q: The Derby Shoe Company produces its famous shoe, the Divine Loafer

The Derby Shoe Company produces its famous shoe, the Divine Loafer, that sells for $70 per pair. Operating income for 2017 is as follows: Sales revenue ($70 per pair)………&hellip...

Q: The HighStep Shoe Company operates a chain of shoe stores that sell

The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a pair of...

Q: Refer to requirement 3 of Problem 3-43. In this

Refer to requirement 3 of Problem 3-43. In this problem, assume the role of the owner of HighStep. Required: 1. As owner, which sales compensation plan would you choose if forecasted annual sale...

Q: Corporate Printing Company currently leases its only copy machine for $1

Corporate Printing Company currently leases its only copy machine for $1,500 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based....

Q: Classical Glasses operates a kiosk at the local mall, selling sunglasses

Classical Glasses operates a kiosk at the local mall, selling sunglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays two full-time employees to each work 1...

Q: Distinguish between inventoriable costs and period costs.

Distinguish between inventoriable costs and period costs.

Q: Thompson Engine Company manufactures and sells diesel engines for use in small

Thompson Engine Company manufactures and sells diesel engines for use in small farming equipment. For its 2017 budget, Thompson Engine Company estimates the following: Selling price…………………………..$ 7,000...

Q: Zahner Corporation manufactures housewares products that are sold through a network of

Zahner Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing the s...

Q: The Ronowski Company has three product lines of belts—A,

The Ronowski Company has three product lines of belts—A, B, and C— with contribution margins of $3, $2, and $1, respectively. The president foresees sales of 200,000 units in the coming period, consis...

Q: Crystal Clear Products produces two types of water filters. One attaches

Crystal Clear Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cum-filter that only purifies water m...

Q: Define the following: direct material costs, direct manufacturing-labor

Define the following: direct material costs, direct manufacturing-labor costs, manufacturing overhead costs, prime costs, and conversion costs.

Q: Define direct costs and indirect costs.

Define direct costs and indirect costs.

Q: Why do managers consider direct costs to be more accurate than indirect

Why do managers consider direct costs to be more accurate than indirect costs?

Q: Define variable cost and fixed cost. Give an example of each

Define variable cost and fixed cost. Give an example of each.

Q: What is a cost driver? Give one example.

What is a cost driver? Give one example.

Q: Describe how manufacturing-, merchandising-, and service-sector companies differ

Describe how manufacturing-, merchandising-, and service-sector companies differ from one another.

Q: As a new controller, reply to this comment by a plant

As a new controller, reply to this comment by a plant manager: “As I see it, our accountants may be needed to keep records for shareholders and Uncle Sam, but I don’t want them sticking their noses in...

Q: Give an example of how a manager can decrease variable costs while

Give an example of how a manager can decrease variable costs while increasing fixed costs.

Q: Give an example of how a manager can increase variable costs while

Give an example of how a manager can increase variable costs while decreasing fixed costs.

Q: There is no such thing as a fixed cost. All costs

There is no such thing as a fixed cost. All costs can be ‘unfixed’ given sufficient time.” Do you agree? What is the implication of your answer for CVP analysis?

Q: Describe the assumptions underlying CVP analysis.

Describe the assumptions underlying CVP analysis.

Q: Distinguish between operating income and net income.

Distinguish between operating income and net income.

Q: Describe three methods that managers can use to express CVP relationships.

Describe three methods that managers can use to express CVP relationships.

Q: Why is it more accurate to describe the subject matter of this

Why is it more accurate to describe the subject matter of this chapter as CVP analysis rather than as breakeven analysis?

Q: “CVP analysis is both simple and simplistic. If you want

“CVP analysis is both simple and simplistic. If you want realistic analysis to underpin your decisions, look beyond CVP analysis.” Do you agree? Explain.

Q: Describe sensitivity analysis. How has the advent of the electronic spreadsheet

Describe sensitivity analysis. How has the advent of the electronic spreadsheet affected the use of sensitivity analysis?

Q: Define cost pool, cost tracing, cost allocation, and cost

Define cost pool, cost tracing, cost allocation, and cost-allocation base.

Q: Describe the overtime-premium and idle-time categories of indirect

Describe the overtime-premium and idle-time categories of indirect labor.

Q: Comment on the following statement: “In a normal-costing

Comment on the following statement: “In a normal-costing system, the amounts in the Manufacturing Overhead Control account will always equal the amounts in the Manufacturing Overhead Allocated account...

Q: Describe three different debit entries to the Work-in-Process

Describe three different debit entries to the Work-in-Process Control T-account under normal costing.

Q: Describe three alternative ways to dispose of under- or overallocated overhead

Describe three alternative ways to dispose of under- or overallocated overhead costs.

Q: Why might an advertising agency use job costing for an advertising campaign

Why might an advertising agency use job costing for an advertising campaign by PepsiCo, whereas a bank might use process costing to determine the cost of checking account deposits?

Q: Describe the seven steps in job costing.

Describe the seven steps in job costing.

Q: Describe three major source documents used in job-costing systems.

Describe three major source documents used in job-costing systems.

Q: Give two reasons why most organizations use an annual period rather than

Give two reasons why most organizations use an annual period rather than a weekly or monthly period to compute budgeted indirect-cost rates.

Q: Distinguish between actual costing and normal costing.

Distinguish between actual costing and normal costing.

Q: What is broad averaging, and what consequences can it have on

What is broad averaging, and what consequences can it have on costs?

Q: Describe four signs that help indicate when ABC systems are likely to

Describe four signs that help indicate when ABC systems are likely to provide the most benefits.

Q: Name the four areas in which standards of ethical conduct exist for

Name the four areas in which standards of ethical conduct exist for management accountants in the United States. What organization sets forth these standards?

Q: What are the main costs and limitations of implementing ABC systems?

What are the main costs and limitations of implementing ABC systems?

Q: Increasing the number of indirect-cost pools is guaranteed to sizably

Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of product or service costs.” Do you agree? Why?

Q: The controller of a retail company has just had a $50

The controller of a retail company has just had a $50,000 request to implement an ABC system quickly turned down. A senior vice president, in rejecting the request, noted, “Given a choice, I will alwa...

Q: What is costing system refinement? Describe three guidelines for refinement.

What is costing system refinement? Describe three guidelines for refinement.

Q: Describe four levels of a cost hierarchy.

Describe four levels of a cost hierarchy.

Q: Why is it important to classify costs into a cost hierarchy?

Why is it important to classify costs into a cost hierarchy?

Q: What are the key reasons for product cost differences between simple costing

What are the key reasons for product cost differences between simple costing systems and ABC systems?

Q: Department indirect-cost rates are never activity-cost rates.”

Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.

Q: What are the four elements of the budgeting cycle?

What are the four elements of the budgeting cycle?

Q: How can sensitivity analysis be used to increase the benefits of budgeting

How can sensitivity analysis be used to increase the benefits of budgeting?

Q: What steps should a management accountant take if established written policies provide

What steps should a management accountant take if established written policies provide insufficient guidance on how to handle an ethical conflict?

Q: Describe how nonoutput-based cost drivers can be incorporated into budgeting

Describe how nonoutput-based cost drivers can be incorporated into budgeting.

Q: Explain how the choice of the type of responsibility center (cost

Explain how the choice of the type of responsibility center (cost, revenue, profit, or investment) affects behavior.

Q: What are some additional considerations that arise when budgeting in multinational companies

What are some additional considerations that arise when budgeting in multinational companies?

Q: Cash budgets must be prepared before the operating income budget.” Do

Cash budgets must be prepared before the operating income budget.” Do you agree? Explain.

Q: Strategy, plans, and budgets are unrelated to one another.”

Strategy, plans, and budgets are unrelated to one another.” Do you agree? Explain.

Q: Production managers and marketing managers are like oil and water. They

Production managers and marketing managers are like oil and water. They just don’t mix.” How can a budget assist in reducing conflicts between these two areas?

Q: Define rolling budget. Give an example.

Define rolling budget. Give an example.

Q: Outline the steps in preparing an operating budget.

Outline the steps in preparing an operating budget.

Q: Describe three reasons for an unfavorable direct manufacturing labor efficiency variance.

Describe three reasons for an unfavorable direct manufacturing labor efficiency variance.

Q: How does variance analysis help in continuous improvement?

How does variance analysis help in continuous improvement?

Q: Which of the following is not a primary function of the management

Which of the following is not a primary function of the management accountant? a. Communicates financial results and position to external parties. b. Uses information to develop and implement business...

Q: Why might an analyst examining variances in the production area look beyond

Why might an analyst examining variances in the production area look beyond that business function for explanations of those variances?

Q: Comment on the following statement made by a plant manager: “

Comment on the following statement made by a plant manager: “Meetings with my plant accountant are frustrating. All he wants to do is pin the blame on someone for the many variances he reports.”

Q: When inputs are substitutable, how can the direct materials efficiency variance

When inputs are substitutable, how can the direct materials efficiency variance be decomposed further to obtain useful information?

Q: Benchmarking against other companies enables a company to identify the lowest-

Benchmarking against other companies enables a company to identify the lowest-cost producer. This amount should become the performance measure for next year.” Do you agree?

Q: What is the key difference between a static budget and a flexible

What is the key difference between a static budget and a flexible budget?

Q: Describe the steps in developing a flexible budget.

Describe the steps in developing a flexible budget.

Q: How might a manager gain insight into the causes of a flexible

How might a manager gain insight into the causes of a flexible-budget variance for direct materials?

Q: List three causes of a favorable direct materials price variance.

List three causes of a favorable direct materials price variance.

Q: Define cost object and give three examples.

Define cost object and give three examples.

Q: Define cost–volume–profit analysis.

Define cost–volume–profit analysis.

Q: Comprehensive Care Nursing Home is required by statute and regulation to maintain

Comprehensive Care Nursing Home is required by statute and regulation to maintain a minimum 3 to 1 ratio of direct service staff to residents to maintain the licensure associated with the Nursing Home...

Q: How does a job-costing system differ from a process-

How does a job-costing system differ from a process-costing system?

Q: Name three factors that will affect the classification of a cost as

Name three factors that will affect the classification of a cost as direct or indirect.

Q: Define contribution margin, contribution margin per unit, and contribution margin

Define contribution margin, contribution margin per unit, and contribution margin percentage.

Q: Give examples of two cost objects in companies using job costing.

Give examples of two cost objects in companies using job costing.

Q: What is the relevant range? What role does the relevant-

What is the relevant range? What role does the relevant-range concept play in explaining how costs behave?

Q: Describe the five-step decision-making process.

Describe the five-step decision-making process.

Q: How does an increase in the income tax rate affect the breakeven

How does an increase in the income tax rate affect the breakeven point?

Q: What three guidelines help management accountants provide the most value to managers

What three guidelines help management accountants provide the most value to managers?

Q: Knowledge of technical issues such as computer technology is a necessary but

Knowledge of technical issues such as computer technology is a necessary but not sufficient condition to becoming a successful management accountant.” Do you agree? Why?

Q: What is operating leverage? How is knowing the degree of operating

What is operating leverage? How is knowing the degree of operating leverage helpful to managers?

Q: Frisco Corporation is analyzing its fixed and variable costs within its current

Frisco Corporation is analyzing its fixed and variable costs within its current relevant range. As its cost driver activity changes within the relevant range, which of the following statements is/are...

Q: Where does the management accounting function fit into an organization’s structure?

Where does the management accounting function fit into an organization’s structure?

Q: Define product cost. Describe three different purposes for computing product costs

Define product cost. Describe three different purposes for computing product costs.

Q: What are three common features of cost accounting and cost management?

What are three common features of cost accounting and cost management?

Q: How can a company with multiple products compute its breakeven point?

How can a company with multiple products compute its breakeven point?

Q: In CVP analysis, gross margin is a less-useful concept

In CVP analysis, gross margin is a less-useful concept than contribution margin.” Do you agree? Explain briefly.

Q: Describe two ways in which a house-construction company may use

Describe two ways in which a house-construction company may use job-cost information.

Q: When might a company use budgeted costs rather than actual costs to

When might a company use budgeted costs rather than actual costs to compute direct-labor rates?

Q: Describe briefly why Electronic Data Interchange (EDI) is helpful to

Describe briefly why Electronic Data Interchange (EDI) is helpful to managers.

Q: Fill in the blanks for each of the following independent cases.

Fill in the blanks for each of the following independent cases.

Q: ABC systems only apply to manufacturing companies.” Do you agree?

ABC systems only apply to manufacturing companies.” Do you agree? Explain.

Q: Year 1 financial data for the ABC Company is as follows:

Year 1 financial data for the ABC Company is as follows: Sales $5,000,000  Direct materials 850,000  Direct manufacturing labor 1,700,000  Variable manufacturing overhead 400,000  Fixed m...

Q: Activity-based costing is the wave of the present and the

Activity-based costing is the wave of the present and the future. All companies should adopt it.” Do you agree? Explain.

Q: Why should managers worry about product overcosting or undercosting?

Why should managers worry about product overcosting or undercosting?

Q: What is an activity-based approach to designing a costing system

What is an activity-based approach to designing a costing system?

Q: Westover Motors is a small car dealership. On average, it

Westover Motors is a small car dealership. On average, it sells a car for $32,000, which it purchases from the manufacturer for $28,000. Each month, Westover Motors pays $53,700 in rent and utilities...

Q: Define Kaizen budgeting.

Define Kaizen budgeting.

Q: Define master budget.

Define master budget.

Q: Budgeted performance is a better criterion than past performance for judging managers

Budgeted performance is a better criterion than past performance for judging managers.” Do you agree? Explain.

Q: Budgets meet the cost–benefit test. They force managers to

Budgets meet the cost–benefit test. They force managers to act differently.” Do you agree? Explain.

Q: For each of the following items, identify which of the management

For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purpos...

Q: For each of the following items, identify which of the management

For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purpos...

Q: Management accounting should not fit the straitjacket of financial accounting.” Explain

Management accounting should not fit the straitjacket of financial accounting.” Explain and give an example.

Q: The following information was extracted from the accounting records of Roosevelt Manufacturing

The following information was extracted from the accounting records of Roosevelt Manufacturing Company: Direct materials purchased 80,000  Direct materials used 76,000  Direct manufacturing labo...

Q: What are two possible sources of information a company might use to

What are two possible sources of information a company might use to compute the budgeted amount in variance analysis?

Q: Distinguish between a favorable variance and an unfavorable variance.

Distinguish between a favorable variance and an unfavorable variance.

Q: Why might managers find a flexible-budget analysis more informative than

Why might managers find a flexible-budget analysis more informative than a static-budget analysis?

Q: List four reasons for using standard costs.

List four reasons for using standard costs.

Q: What is the advantage of using computerized source documents to prepare job

What is the advantage of using computerized source documents to prepare job-cost records?

Q: Describe four decisions for which ABC information is useful.

Describe four decisions for which ABC information is useful.

Q: The sales forecast is the cornerstone for budgeting.” Why?

The sales forecast is the cornerstone for budgeting.” Why?

Q: What is the relationship between management by exception and variance analysis?

What is the relationship between management by exception and variance analysis?

Q: Minnesota Office Products (MOP) produces three different paper products at

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 cur...

Q: California Tires manufactures two types of tires that it sells as wholesale

California Tires manufactures two types of tires that it sells as wholesale products to various specialty retail auto supply stores. Each tire requires a three-step process. The first step is mixing....

Q: Market Focus is a marketing research firm that organizes focus groups for

Market Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $60 per session to provide comments on new pro...

Q: Band Box Entertainment (BBE) operates a large store in Atlanta

Band Box Entertainment (BBE) operates a large store in Atlanta, Georgia. The store has both a movie (DVD) section and a music (CD) section. BBE reports revenues for the movie section separately from t...

Q: The Cooper Furniture Company of Potomac, Maryland, assembles two types

The Cooper Furniture Company of Potomac, Maryland, assembles two types of chairs (Recliners and Rockers). Separate assembly lines are used for each type of chair. Required: Classify each cost item (A...

Q: Maria Mendez is division controller and James Dalton is division manager of

Maria Mendez is division controller and James Dalton is division manager of the Hestor Shoe Company. Mendez has line responsibility to Dalton, but she also has staff responsibility to the company cont...

Q: Hannah Gilpin is the controller of Blakemore Auto Glass, a division

Hannah Gilpin is the controller of Blakemore Auto Glass, a division of Eastern Glass and Window. Blakemore replaces and installs windshields. Her division has been under pressure to improve its divisi...

Q: Gummy Land Candies manufactures jaw-breaker candies in a fully automated

Gummy Land Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 5,000 per month. The machine costs $6,500 and is...

Q: Torrance Technology Company (TTC) is developing a new touch-

Torrance Technology Company (TTC) is developing a new touch-screen smartphone to compete in the cellular phone industry. The company will sell the phones at wholesale prices to cell phone companies, w...

Q: How can a management accountant help formulate strategy?

How can a management accountant help formulate strategy?

Q: The representative cost drivers in the right column of this table are

The representative cost drivers in the right column of this table are randomized so they do not match the list of functions in the left column. Function………………………………………..Representative Cost Driver 1....

Q: National Training recently started a business providing training events for corporations.

National Training recently started a business providing training events for corporations. In order to better understand the profitability of the business, the owners asked you for an analysis of costs...

Q: Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $

Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $28 per hour. A glass blower blows 10 flanges per hour. Fixed man...

Q: Each of the following cost items pertains to one of these companies

Each of the following cost items pertains to one of these companies: Best Buy (a merchandising-sector company), KitchenAid (a manufacturing-sector company), and HughesNet (a service-sector company): a...

Q: Bridget Ashton is getting ready to open a small restaurant. She

Bridget Ashton is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans: Plan A: Pay 10 cents per minute of long-distance c...

Q: Consolidated Motors specializes in producing one specialty vehicle. It is called

Consolidated Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to easily fit multiple surfboards in its back area and top-mounted storage racks. Consolidated has...

Q: Juicy Beauty manufactures and sells a face cream to small specialty stores

Juicy Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement shown here to George Lopez, a potential i...

Q: Kindmart is an international retail store. Kindmart’s managers are considering implementing

Kindmart is an international retail store. Kindmart’s managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system co...

Q: Garrett Manufacturing sold 410,000 units of its product for $

Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2017. Variable cost per unit is $60, and total fixed costs are $1,640,000. Required: 1. Calculate (a) contribution margin a...

Q: Sunset Travel Agency specializes in flights between Toronto and Jamaica. It

Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Hamilton Air. Sunset’s fixed costs are $23,500 per month. Hamilton Air charges passengers $1,500 per rou...

Q: Describe the business functions in the value chain.

Describe the business functions in the value chain.

Q: The Deli-Sub Shop owns and operates six stores in and

The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year: Revenues…………………..$11,000,000 Fixed costs…………………$ 3,000,000 Va...

Q: CVP exercises. The Doral Company manufactures and sells pens. Currently

CVP exercises. The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit. Cons...

Q: The Home Style Eats has two restaurants that are open 24 hours

The Home Style Eats has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee to full meals. The avera...

Q: Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers

Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of $50 with $35 in variable costs of goods sold. The company has fixed ma...

Q: Suppose Morrison Corp.’s breakeven point is revenues of $1

Suppose Morrison 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 a...

Q: Cover Rugs is holding a 2-week carpet sale at Josh’s

Cover Rugs is holding a 2-week carpet sale at Josh’s Club, a local warehouse store. Cover Rugs plans to sell carpets for $950 each. The company will purchase the carpets from a local distributor for $...

Q: Braided Rugs, Inc., is considering three possible countries for the

Braided Rugs, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Italy, Portugal, and Thailand. All area rugs are to be sold to retail outlets in the...

Q: Chartz 1-2-3 is a top-selling electronic

Chartz 1-2-3 is a top-selling electronic spreadsheet product. Chartz is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previousl...

Q: The Kenosha Company has three product lines of beer mugs—A

The Kenosha Company has three product lines of beer mugs—A, B, and C—with contribution margins of $5, $4, and $3, respectively. The president foresees sales of 175,000 units in the coming period, cons...

Q: Genesee Music Society is a not-for-profit organization that

Genesee 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...

Q: Explain the term supply chain and its importance to cost management.

Explain the term supply chain and its importance to cost management.

Q: Welch Men’s Clothing’s revenues and cost data for 2017 are as follows

Welch Men’s Clothing’s revenues and cost data for 2017 are as follows: Mr. Welch, the owner of the store, is unhappy with the operating results. An analysis of oth...

Q: Applewhite Corporation, a manufacturing company, is analyzing its cost structure

Applewhite Corporation, a manufacturing company, is analyzing its cost structure in a project to achieve some cost savings. Which of the following statements is/are correct? I. The cost of the direct...

Q: Jack’s Jax has total fixed costs of $25,000.

Jack’s Jax has total fixed costs of $25,000. If the company’s contribution margin is 60%, the income tax rate is 25% and the selling price of a box of Jax is $20, how many boxes of Jax would the compa...

Q: During the current year, XYZ Company increased its variable SG&

During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: a. Contribution margin and gross margin will be lower. b. Cont...

Q: Under the contribution income statement, a company’s contribution margin will be

Under the contribution income statement, a company’s contribution margin will be: a. Higher if fixed SG&A costs decrease. b. Higher if variable SG&A costs increase. c. Lower if fixed manufacturing ove...

Q: A company needs to sell 10,000 units of its only

A company needs to sell 10,000 units of its only product in order to break even. Fixed costs are $110,000, and the per unit selling price and variable costs are $20 and $9, respectively. If total sale...

Q: Once a company exceeds its breakeven level, operating income can be

Once a company exceeds its breakeven level, operating income can be calculated by multiplying: a. The sales price by unit sales in excess of breakeven units. b. Unit sales by the difference between th...

Q: Which of the following does not accurately describe the application of job

Which of the following does not accurately describe the application of job-order costing? a. Finished goods that are purchased by customers will directly impact cost of goods sold. b. Indirect manufac...

Q: Sturdy Manufacturing Co. assembled the following cost data for job order

Sturdy Manufacturing Co. assembled the following cost data for job order #23: Direct manufacturing labor………………………..$80,000 Indirect manufacturing labor……………………….12,000 Equipment depreciation…………………………...

Q: For which of the following industries would job-order costing most

For which of the following industries would job-order costing most likely not be appropriate? a. Small business printing. b. Cereal production. c. Home construction. d. Aircraft assembly.

Q: Management accounting deals only with costs.” Do you agree? Explain

Management accounting deals only with costs.” Do you agree? Explain.

Q: ABC Company uses job-order costing and has assembled the following

ABC Company uses job-order costing and has assembled the following cost data for the production and assembly of item X: Direct manufacturing labor wages…………….$35,000 Direct material used…………………………………....

Q: Under Stanford Corporation’s job costing system, manufacturing overhead is applied to

Under Stanford Corporation’s job costing system, manufacturing overhead is applied to work in process using a predetermined annual overhead rate. During November, Year 1, Stanford’s transactions inclu...

Q: Conroe Company is reviewing the data provided by its management accounting system

Conroe Company is reviewing the data provided by its management accounting system. Which of the following statements is/are correct? I. A cost driver is a causal factor that increases the total cost o...

Q: Nobis Company uses an ABC system. Which of the following statements

Nobis Company uses an ABC system. Which of the following statements is/are correct with respect to ABC? I. Departmental costing systems are a refinement of ABC systems. II. ABC systems are useful in m...

Q: Which of the following statements is correct regarding the components of the

Which of the following statements is correct regarding the components of the master budget? a. The cash budget is used to create the capital budget. b. Operating budgets are used to create cash budget...

Q: Which of the following statements is correct regarding the drivers of operating

Which of the following statements is correct regarding the drivers of operating and financial budgets? a. The sales budget will drive the cost of goods sold budget. b. The cost of goods sold budget wi...

Q: Superior Industries sales budget shows quarterly sales for the next year as

Superior Industries sales budget shows quarterly sales for the next year as follows: Quarter 1–10,000; Quarter 2–8,000; Quarter 3–12,000; Quarter 4–14,000. Company policy is to have a target finished-...

Q: Elmhurst Corporation is considering changes to its responsibility accounting system. Which

Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system. I. In a cost center, manag...

Q: Mary Jacobs, the controller of the Jenks Company is working on

Mary Jacobs, the controller of the Jenks Company is working on Jenks’ cash budget for year 2. She has information on each of the following items: I. Wages due to workers accrued as of December 31, yea...

Q: Metal Shelf Company’s standard cost for raw materials is $4.

Metal Shelf Company’s standard cost for raw materials is $4.00 per pound and it is expected that each metal shelf uses two pounds of material. During October Year 2, 25,000 pounds of materials are pur...

Q: How can management accountants help improve quality and achieve timely product deliveries

How can management accountants help improve quality and achieve timely product deliveries?

Q: All of the following statements regarding standards are accurate except:

All of the following statements regarding standards are accurate except: a. Standards allow management to budget at a per-unit level. b. Ideal standards account for a minimal amount of normal spoilage...

Q: Amalgamated Manipulation Manufacturing’s (AMM) standards anticipate that there will be

Amalgamated Manipulation Manufacturing’s (AMM) standards anticipate that there will be 3 pounds of raw material used for every unit of finished goods produced. AMM began the month of May with 5,000 po...

Q: Atlantic Company has a manufacturing facility in Brooklyn that manufactures robotic equipment

Atlantic Company has a manufacturing facility in Brooklyn that manufactures robotic equipment for the auto industry. For Year 1, Atlantic collected the following information from its main production l...

Q: Basix Inc. calculates direct manufacturing labor variances and has the following

Basix Inc. calculates direct manufacturing labor variances and has the following information: Actual hours worked……………….200 Standard hours……………………...250 Actual rate per hour…………………$12 Standard rate pe...

Q: PostNews.com offers its subscribers several services, such as an

PostNews.com offers its subscribers several services, such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main revenue sources are fees for banner...

Q: Consider the following series of independent situations in which a firm is

Consider the following series of independent situations in which a firm is about to make a strategic decision. Decisions a. Julian Phones is about to decide whether to launch production and sale of a...

Q: Consider the following series of independent situations in which a firm is

Consider the following series of independent situations in which a firm is about to make a strategic decision. Decisions a. A running shoe manufacturer is weighing whether to purchase leather from a...

Q: George Jimenez is the controller at Balkin Electronics, a manufacturer of

George Jimenez is the controller at Balkin Electronics, a manufacturer of devices for the computer industry. The company may promote him to chief financial officer. Required: 1. In this table, indica...

Q: Chris Jackson was recently promoted to Controller of Research and Development (

Chris Jackson was recently promoted to Controller of Research and Development (R&D) for BrisCor, a Fortune 500 pharmaceutical company that manufactures prescription drugs and nutritional supplements....

Q: Linda Butler is the new division controller of the snack-foods

Linda Butler is the new division controller of the snack-foods division of Daniel Foods. Daniel Foods has reported a minimum 15% growth in annual earnings for each of the past 5 years. The snack-foods...

Q: Explain why unit costs must often be interpreted with caution.

Explain why unit costs must often be interpreted with caution.

Q: Phoenix Press produces consumer magazines. The house and home division,

Phoenix Press 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 9 months,...

Q: Contemporary Interiors (CI) manufactures high-quality furniture in factories

Contemporary Interiors (CI) manufactures high-quality furniture in factories in North Carolina for sale to top American retailers. In 1995, CI purchased a lumber operation in Indonesia, and shifted fr...

Q: Consider the following account balances (in thousands) for the Carolina

Consider the following account balances (in thousands) for the Carolina Corporation: Required: 1. Prepare a schedule for the cost of goods manufactured for 2017. 2. Revenues (in thousands) for 2017...

Q: The Howell Corporation has the following account balances (in millions):

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,...

Q: Required: 1. How would the answer to Problem 2

Required: 1. How would the answer to Problem 2-39 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....

Q: The following items (in millions) pertain to Schaeffer Corporation:

The following items (in millions) pertain to Schaeffer Corporation: Schaeffer’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturin...

Q: Required: 1. Calculate total prime costs and total conversion

Required: 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 f...

Q: David Letterman works in the production department of Northeast Plastics (NEP

David Letterman works in the production department of Northeast Plastics (NEP) as a machine operator. David, a long-time employee of NEP, is paid on an hourly basis at a rate of $24 per hour. David wo...

Q: Ron Howard recently took over as the controller of Johnson Brothers Manufacturing

Ron Howard 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....

Q: Atlanta Office Equipment manufactures and sells metal shelving. It began operations

Atlanta Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2017. Costs incurred for 2017 are as follows (V stands for variable; F stands for fixed): Direct mater...

Q: Distinguish planning decisions from control decisions.

Distinguish planning decisions from control decisions.

Q: There are at least 3 different purposes for which we measure product

There are at least 3 different purposes for which we measure product costs. They are (1) pricing and product mix decisions, (2) determining the appropriate charge for a government contract, and (3) fo...

Q: Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant

Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Howard receives a year-end bonus of 11.5% of the plant...

Q: An auditor for the Internal Revenue Service is trying to reconstruct some

An auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by...

Q: The following data are for Marvin Department Store. The account balances

The following data are for Marvin Department Store. The account balances (in thousands) are for 2017. Marketing, distribution, and customer-service costs………..$ 37,000 Merchandise inventory, January 1...

Q: The following data are for Arizona Retail Outlet Stores. The account

The following data are for Arizona Retail Outlet Stores. The account balances (in thousands) are for 2017. Marketing and advertising costs……………………..$ 55,200 Merchandise inventory, January 1, 2017……………...

Q: Renka’s Heaters selected data for October 2017 are presented here (in 

Renka’s Heaters selected data for October 2017 are presented here (in millions): Direct materials inventory 10/1/2017………………………………$ 105 Direct materials purchased………………………………………………365 Direct materials...

Q: Consider the following account balances (in thousands) for the Peterson

Consider the following account balances (in thousands) for the Peterson Company: Required: 1. Prepare a schedule for the cost of goods manufactured for 2017. 2. Revenues for 2017 were $310 million....

Q: Lifetime Escapes generates average revenue of $7,500 per person

Lifetime Escapes generates average revenue of $7,500 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows: Airfare……………………………$1,600 Hotel acco...

Q: Spotted Turtle provides daycare for children Mondays through Fridays. Its monthly

Spotted Turtle provides daycare for children Mondays through Fridays. Its monthly variable costs per child are as follows: Lunch and snacks……………………………………………$130 Educational supplies…………………………………………......

Q: Megaphone Corporation produces a molded plastic casing, M&M101,

Megaphone Corporation produces a molded plastic casing, M&M101, for many cell phones currently on the market. Summary data from its 2017 income statement are as follows: Revenues………………….$5,000,000 Var...

Q: Dell Computer incurs the following costs: a. Utility costs

Dell Computer incurs the following costs: a. Utility costs for the plant assembling the Latitude computer line of products b. Distribution costs for shipping the Latitude line of products to a retail...

Q: Johnson & Johnson, a health care company, incurs the following

Johnson & Johnson, a health care company, incurs the following costs: a. Payment of booth registration fee at a medical conference to promote new products to physicians b. Cost of redesigning...

Q: Burger King, a hamburger fast-food restaurant, incurs the

Burger King, a hamburger fast-food restaurant, incurs the following costs: a. Cost of oil for the deep fryer b. Wages of the counter help who give customers the food they order c. Cost of the cos...

Q: Dominion Consulting has issued a report recommending changes for its newest manufacturing

Dominion Consulting has issued a report recommending changes for its newest manufacturing client, Gibson Engine Works. Gibson currently manufactures a single product, which is sold and distributed n...

Q: Vargas Construction Company provides construction services for major projects. Managers at

Vargas Construction Company provides construction services for major projects. Managers at the company believe that construction is a people-management business, and they list the following as facto...

Q: Gregor Company makes and sells brooms and mops. It takes the

Gregor Company makes and sells brooms and mops. It takes the following actions, not necessarily in the order given. For each action (a–e), state whether it is a planning decision or a control...

Q: Gavin Adams is the president of Trusted Pool Service. He takes

Gavin Adams is the president of Trusted Pool Service. He takes the following actions, not necessarily in the order given. For each action (a–e) state whether it is a planning decision or a con...

Q: Madison Foods makes frozen dinners that it sells through grocery stores.

Madison Foods makes frozen dinners that it sells through grocery stores. Typical products include turkey, pot roast, fried chicken, and meatloaf. The managers at Madison have recently proposed a lin...

Q: Sizemore Landscaping is a firm that provides commercial landscaping and grounds maintenance

Sizemore Landscaping is a firm that provides commercial landscaping and grounds maintenance services. Derek Sizemore, the owner, is trying to find new ways to increase revenues. Mr. Sizemore perform...

Q: La Mia’s Casas builds replicas of residences of famous and infamous people

La Mia’s Casas builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant owner has decided to use machine hours as the basis for predicting m...

Q: The April 2010 income statement for Fabio’s Fashions has just been received

The April 2010 income statement for Fabio’s Fashions has just been received by Diana Caffrey, Vice-President of Marketing. The firm uses a variable costing system for internal report...

Q: Canyon City Co. uses a job order costing system that

Canyon City Co. uses a job order costing system that combines actual direct material and actual direct labor costs with a predetermined overhead charge based on machine hours. Expected overhead and m...

Q: Describe how the following occurrences should be accounted for based on the

Describe how the following occurrences should be accounted for based on the fact pattern presented: a. Certain amounts of spoilage and waste are normal in the production system and affect all jobs. b....

Q: Calista London, after spending 20 years working for a large engineering

Calista London, after spending 20 years working for a large engineering firm, has decided to start her own business. She has designed a product to remove jar lids with minimal physical effort. London...

Q: Salem Corp. contracted for a specialized production machine from Quindo Industries

Salem Corp. contracted for a specialized production machine from Quindo Industries, a tool company. The contract specified a price equal to “production cost plus 15% of production cost.” A sales execu...

Q: Nottaway Flooring produces custom-made floor tiles. The company’s Raw

Nottaway Flooring produces custom-made floor tiles. The company’s Raw Material Inventory account contains both direct and indirect materials. Until the end of April 2010, the company worked solely on...

Q: Croftmark Co. began operations on May 1, 2010. Its

Croftmark Co. began operations on May 1, 2010. Its Work in Process Inventory account on May 31 appeared as follows: The company applies overhead on the basis of direct labor cost. Only one job was sti...

Q: The following costs were incurred in February 2010 by Container Corp.,

The following costs were incurred in February 2010 by Container Corp., which produces customized steel storage bins: The balance in Work in Process Inventory on February 1 was $16,800, which consisted...

Q: Blaine Corp. makes floats for Mardi Gras in New Orleans.

Blaine Corp. makes floats for Mardi Gras in New Orleans. The company’s fiscal year ends on March 31. On January 1, 2010, the company’s WIP Inventory account appeare...

Q: On September 25, 2010, a hurricane destroyed the work in

On September 25, 2010, a hurricane destroyed the work in process inventory of Biloxi Corporation. At that time, the company was in the process of manufacturing two custom jobs (B325 and Q428). Althoug...

Q: You have applied for a cost accounting position with Chelsea Containers.

You have applied for a cost accounting position with Chelsea Containers. The company controller has asked all candidates to take a quiz to demonstrate their knowledge of job order costing. Chelsea&aci...

Q: Porta Light manufactures a highquality LED flashlight for home/office use

Porta Light manufactures a highquality LED flashlight for home/office use. Data pertaining to the company’s 2010 operations are as follows: Production for the year …………………………………………………45,000 units Sale...

Q: All jobs at Frankfurt Inc., which uses a job order costing

All jobs at Frankfurt Inc., which uses a job order costing system, go through two departments (Fabrication and Assembly). Overhead is applied to jobs based on machine hours in Fabrication and on labor...

Q: Edward Nabors owns Enclose, which designs and manufactures perimeter fencing for

Edward Nabors owns Enclose, which designs and manufactures perimeter fencing for large retail and commercial buildings. Each job goes through three stages: design, production, and installation. Three...

Q: Gigi LeBlanc is an advertising consultant who tracks costs for her jobs

Gigi LeBlanc is an advertising consultant who tracks costs for her jobs using a job order costing system. During September, LeBlanc and her staff worked on and completed jobs for the following compani...

Q: Lincoln Construction Company builds bridges. In October and November 2010,

Lincoln Construction Company builds bridges. In October and November 2010, the firm worked exclusively on a bridge spanning the Calamus River in northern Nebraska. Lincoln Construction’s Precast Depar...

Q: Pip Squeaks Inc. is a manufacturer of furnishings for infants and

Pip Squeaks Inc. is a manufacturer of furnishings for infants and children. The company uses a job order cost system. Pip Squeaks’ Work in Process Inventory on April 30, 2010, consis...

Q: Modern Convenience specializes in making robotic conveyor systems to move materials within

Modern Convenience specializes in making robotic conveyor systems to move materials within a factory. Model #89 accounts for approximately 60 percent of the company’s annual sales. Because the company...

Q: During July 2010, Pull-Along worked on two production runs

During July 2010, Pull-Along worked on two production runs ( Jobs #918 and #2002) of the same product, a trailer hitch component. Job #918 consisted of 1,200 units of the product, and Job #2002 contai...

Q: Two types of contracts are commonly used when private firms contract to

Two types of contracts are commonly used when private firms contract to provide services to governmental agencies: cost-plus and fixed-price contracts. The cost-plus contract allows the contracting fi...

Q: Timbuk2 is a San Francisco company that makes a variety of messenger

Timbuk2 is a San Francisco company that makes a variety of messenger, cyclist, and laptop bags. The company’s Web site (Timbuk2.com) allows customers to design their own size, color, and fabric bags w...

Q: One of the main rationales for using a job order costing system

One of the main rationales for using a job order costing system is to achieve profitability by charging a price for each job that is proportionate to the related costs. The fundamental underlying conc...

Q: Because your professor is scheduled to address a national professional meeting at

Because your professor is scheduled to address a national professional meeting at the time your class ordinarily meets, the class has been divided into teams to discuss selected issues. Your team’s as...

Q: Prudoe Compounds produces a variety of chemicals that are used by auto

Prudoe Compounds produces a variety of chemicals that are used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compound...

Q: PlastiCo produces plastic pipe to customer specifications. Losses of less than

PlastiCo produces plastic pipe to customer specifications. Losses of less than 5 percent are considered normal because they are inherent in the production process. The company applies overhead to prod...

Q: Summer Shade installs awnings on residential and commercial structures. The company

Summer Shade installs awnings on residential and commercial structures. The company had the following transactions for February 2010: • Purchased $790,000 of building (raw) material on account. • Issu...

Q: Polaski Inc. uses an actual cost, job order system.

Polaski Inc. uses an actual cost, job order system. The following transactions are for August 2010. At the beginning of the month, Direct Material Inventory was $2,000, Work in Process Inventory was $...

Q: Ialani Corp. uses a job order costing system for the yachts

Ialani Corp. uses a job order costing system for the yachts it constructs. On September 1, 2010, the company had the following account balances: Raw Material Inventory …………………………………$ 332,400 Work in P...

Q: Stockman Co. began 2010 with three jobs in process:

Stockman Co. began 2010 with three jobs in process: During 2010, the following transactions occurred: 1. The firm purchased and paid for $542,000 of raw material. 2. Factory payroll records revealed t...

Q: Production data for the first week in November 2010 for Florida Fabricators

Production data for the first week in November 2010 for Florida Fabricators were as follows: Finished Goods Inventory, Nov. 1: $23,800 Finished Goods Inventory, Nov. 5: $0 Direct labor hours worked in...

Q: In a job order costing system, what key documents support the

In a job order costing system, what key documents support the cost accumulation process and what is the purpose of each?

Q: In using standard costing in a job order costing system, are

In using standard costing in a job order costing system, are standards established for material and labor costs and quantities?

Q: How can the variance information provided by standard costing be used to

How can the variance information provided by standard costing be used to improve cost control?

Q: Grand Island Brake Co. budgeted the following variable and fixed overhead

Grand Island Brake Co. budgeted the following variable and fixed overhead costs for 2010: Variable indirect labor …………………………………………$100,000 Variable indirect materials ………………………………………20,000 Variable ut...

Q: If normal spoilage is generally anticipated to occur on all jobs,

If normal spoilage is generally anticipated to occur on all jobs, how should the cost of that spoilage be treated?

Q: Why are normal and abnormal spoilage accounted for differently? Typically,

Why are normal and abnormal spoilage accounted for differently? Typically, how does one determine which spoilage is normal and which is abnormal?

Q: In choosing a product costing system, what are the two choices

In choosing a product costing system, what are the two choices available for a cost accumulation system? How do these systems differ?

Q: In choosing a product costing system, what are the three valuation

In choosing a product costing system, what are the three valuation method alternatives? Explain how these methods differ.

Q: How can information produced by a job order costing system assist managers

How can information produced by a job order costing system assist managers in operating their firms more efficiently?

Q: In a team of three or four people, choose a company

In a team of three or four people, choose a company whose mass production process you would like to study. Use the library, the Internet, and (if possible) personal resources to gather information. Pr...

Q: Use the information in Exercise 27 except assume that BeGone uses FIFO

Use the information in Exercise 27 except assume that BeGone uses FIFO process costing. Prepare a schedule showing the BeGone August 2010 computation of FIFO equivalent units of production and cost pe...

Q: Use the information in Exercise 15 except assume that Waltham Mfg.

Use the information in Exercise 15 except assume that Waltham Mfg. uses FIFO costing. Prepare a schedule showing the August 2010 computation of FIFO equivalent units of production and cost per equival...

Q: The following production and cost per EUP data are available for Vendome

The following production and cost per EUP data are available for Vendome Corp. for February 2010: Units completed during February ……………………………………………………390,000 Units in ending inventory (100% complete a...

Q: During August 2010, Berman Company’s Department Y equivalent unit product costs

During August 2010, Berman Company’s Department Y equivalent unit product costs, computed under the weighted average method, were as follows: Material …………………………$2 Conversion ………………………6 Transferred in...

Q: Wisconsin Dairy determined that the total predetermined OH rate for costing purposes

Wisconsin Dairy determined that the total predetermined OH rate for costing purposes is $26.80 per cow per day (referred to as an animal day). Of this, $25.20 is the variable portion. Overhead cost in...

Q: In October 2010, Tibbetts Company had the following production and cost

In October 2010, Tibbetts Company had the following production and cost data: Beginning inventory units (80% complete as to DM; 45% complete as to DL; 30% complete as to OH)……………………….42,600 October co...

Q: In November 2010, Angerstein Co. computed its equivalent unit costs

In November 2010, Angerstein Co. computed its equivalent unit costs under FIFO process costing as follows: Direct material ………………………….$29.50 Packaging …………………………………….3.00 Direct labor …………………………………10....

Q: Found Sound Company mass-produces miniature speakers for personal sound systems

Found Sound Company mass-produces miniature speakers for personal sound systems. The following cost information is available for June 2010: Beginning inventory direct material cost …………………………$ 4,133.2...

Q: Lamb Inc. produces calendars in a two-process, two

Lamb Inc. produces calendars in a two-process, two-department operation. In the Printing Department, calendars are printed and cut. In the Assembly Department, the material received from Printing is a...

Q: Use the information in Exercise 36 and assume that Lamb Inc.

Use the information in Exercise 36 and assume that Lamb Inc. uses the FIFO method of process costing. For the Assembly Department, compute the following: a. equivalent units of production for each cos...

Q: Baum Co. has two processing departments: Fabrication and Assembly.

Baum Co. has two processing departments: Fabrication and Assembly. In the Fabrication Department, metal is cut and formed into various components, which are then transferred to Assembly. The component...

Q: Alberton Co. uses a standard costing system to account for its

Alberton Co. uses a standard costing system to account for its production of toys. Plastic is added at the start of production; labor and overhead are incurred at equal rates throughout the process. T...

Q: Najm Company uses a standard costing system to account for its pita

Najm Company uses a standard costing system to account for its pita bread manufacturing process. The bread is sold in packages of one dozen pieces. The company has set the following cost standards for...

Q: Batwings makes one-size-fits-most capes. Each

Batwings makes one-size-fits-most capes. Each cape goes through the same conversion process, but three types of fabric (Dacron, denim, and cotton) are available. The company uses a standard costing sy...

Q: Pat Koontz makes necklaces from glass beads, metal beads, and

Pat Koontz makes necklaces from glass beads, metal beads, and natural beads. After reading about hybrid costing, she realized that the different types of necklaces did not cost the same amount of mone...

Q: Green Shade manufactures insulated windows. The firm’s repair and maintenance (

Green Shade manufactures insulated windows. The firm’s repair and maintenance (R&M) cost is mixed and varies most directly with machine hours worked. The following data have been...

Q: Oehkle Inc. produces paint in a process in which spoilage occurs

Oehkle Inc. produces paint in a process in which spoilage occurs continually. Spoilage of 2 percent or fewer of the gallons of raw material placed into production is considered normal. The following o...

Q: Hebert Industries uses a weighted average process costing system. Management has

Hebert Industries uses a weighted average process costing system. Management has specified that the normal loss from shrinkage cannot exceed 3 percent of the units started in a period. All raw materia...

Q: In manufacturing its products, Trevano Corp. adds all direct material

In manufacturing its products, Trevano Corp. adds all direct material at the beginning of the production process. The company’s direct labor and overhead are considered to be continuously at the same...

Q: O’Malley Corp. uses a weighted average process costing system. Material

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 ind...

Q: For each of the following situations, use the weighted average method

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...

Q: Assume that Trevano Corp. in Exercise 15 uses the FIFO method

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 eq...

Q: Assume that O’Malley Corp. in Exercise 16 uses the FIFO method

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 fo...

Q: Using the information in Exercise 4 and assuming a FIFO method of

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 follo...

Q: Funtime Inc. makes small toys in a one-department production

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 availa...

Q: Ynugai Corp. uses a process costing system to assign costs to

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...

Q: Bon Voyage provides charter cruises in the eastern Caribbean. Tina Louise

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 n...

Q: On April 30, 2010, Alvira Co. had 21,

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,...

Q: In October 2010, Rojo Inc.’s production was 53,

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 mate...

Q: Assume that Rojo Inc. in Exercise 24 had 7,200

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...

Q: Pylonic Mfg. produces concrete garden border sections. All material is

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 …………………...

Q: BeGone manufactures spray cans of insect repellent. On August 1,

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...

Q: Waltham Mfg. makes skateboards and uses a weighted average process costing

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 com...

Q: Octavia Corp.’s products are manufactured in three separate departments:

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....

Q: Use the information for Octavia Corp. in Problem 56, except

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....

Q: Always Christmas makes artificial Christmas trees in two departments: Cutting and

Always Christmas makes artificial Christmas trees in two departments: Cutting and Boxing. In the Cutting Department, wire wrapped with green “needles” is placed int...

Q: Elijah Inc. produces accent stripes for automobiles in 50-inch

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. Produ...

Q: Joe’s Lawn Care Service primarily mows lawns for residential customers. Management

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...

Q: KeepIn makes fencing in a two-stage production system. In

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...

Q: Donbrowski Co. manufactures reflective lenses and uses a standard process costing

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 materia...

Q: Be-at-Ease Industries manufactures a series of three models

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...

Q: Turkburg produces frozen turkey patties. In the Forming Department, ground

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...

Q: Gary’s Tools manufactures one of its products in a two-department

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 weig...

Q: Strongarm manufactures various lines of bicycles. Because of the high volume

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 cost...

Q: LaToya Company produces door pulls, which are inspected at the end

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 c...

Q: Use the LaToya Company data given in Problem 20. However,

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 FI...

Q: Ro-Day-O Inc. manufactures belt buckles in a

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 an...

Q: Spangenberg Products manufactures computer cases. All material is added at the

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 beginn...

Q: The Splash makes large fiberglass swimming pools and uses machine hours and

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...

Q: Fresh Seasons is a contract manufacturer for Delectable Dressing Company. Fresh

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...

Q: Delacroix Co. had 800 units of inventory at the beginning of

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 F...

Q: Itzgood makes a variety of healthy snack foods. The following information

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 dire...

Q: Use the Fresh Seasons information from Problem 4, except assume that

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 beginn...

Q: Use the information from Problem 4 for Delacroix Co. a

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 pr...

Q: What is meant by the phrase units started and completed? Why

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?

Q: What is meant by the term transferred-out cost? Why

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?

Q: How is the cost of ending inventory calculated in a process costing

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

Q: A company has two sequential processing departments. On the cost of

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 p...

Q: Why does standard costing make process costing more clerically and computationally efficient

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

Q: Tom Snider is a staff accountant for BigBiz. Snider was recently

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...

Q: What is a hybrid costing system? In what circumstances are hybrid

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

Q: (Appendix 2) What is meant by the “method of

(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 as...

Q: What are the characteristics of a company that would be more likely

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

Q: How do the weighted average and first-in, first-

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?

Q: Is one equivalent unit computation sufficient for all cost components? Explain

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

Q: Which cost component can be found in a downstream department of a

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.

Q: (Appendix 2) In a process costing system, how are

(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 a...

Q: What is an “equivalent unit of production,” and why is

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

Q: Contact a local company that uses a standard cost system. Make

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 prese...

Q: As a three-person team, choose an activity that is

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 performin...

Q: Refer to the information in Exercise 22 for Wyoming Wholesale.

Refer to the information in Exercise 22 for Wyoming Wholesale. a. Using the least squares method, develop the equation for predicting weekly receiving report costs based on the number of shipments rec...

Q: Georgia Shacks produces small outdoor buildings. The company began operations in

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 yea...

Q: The manager of the Texas Department of Transportation has determined that it

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 o...

Q: Kemp Manufacturing set 70,000 direct labor hours as the 2010

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...

Q: Munich Ltd. uses a combined overhead rate of $2.

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 require...

Q: Li Corporation’s flexible budget formula for total overhead is $360,

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 fo...

Q: Bobcat Inc.’s total predetermined overhead rate is $50 per

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...

Q: At year-end 2010, the trial balance of Pennopscott Corp

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 entri...

Q: McNeal Concrete makes precast concrete steps for use with manufactured housing.

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,...

Q: Many companies face the prospect of paying workers overtime wages; some

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. Obvious...

Q: An HMO medical program began reimbursing hospitals according to diagnostic-related

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 hospit...

Q: Auto Brakes Inc. manufactures brake rotors and has always applied overhead

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...

Q: Bird’s Eye View manufactures satellite dishes used in residential and commercial installations

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...

Q: Svenson Technology considers direct labor cost too insignificant to separately account for

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 t...

Q: Hennessey Company produces 12-ounce cans of mixed pecans and cashews

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...

Q: Coffen Corp. employs engineers and draftspeople. The average hourly rates

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 ho...

Q: Bernie Services has three labor classes: administrative assistants, paralegals,

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; an...

Q: One of Sure-Bet Sherbet’s bestselling products is raspberry sherbet,

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...

Q: In November 2010, DayTime Publishing Company’s costs and quantities of paper

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 …………………………………...

Q: Cave Company produces a product called Lem. The standard direct material

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 w...

Q: Ayesha Inc. manufactures a product that requires 5 pounds of material

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....

Q: A&G makes wrought iron table and chair sets. During

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 produc...

Q: Heath Construction builds standard prefabricated wooden frames for walls. Each frame

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...

Q: Since opening in 2009, Akron Aviation has built light aircraft engines

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...

Q: Information on Hanley’s direct labor costs for January 2010 is as follows

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 hou...

Q: Calista & Lane, CPAs, set the following standard for its

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 au...

Q: For each independent case, fill in the missing figures.

For each independent case, fill in the missing figures.

Q: In July 2010, Zinger Corp. purchased 20,000 gallons

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 followi...

Q: Madzinga’s Draperies manufactures curtains. Curtain #4571 requires the following:

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 ………………………………………..$1...

Q: Green Tee produces 100 percent cotton t-shirts, with the

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

Q: Edina Co. manufactures a product that requires 3.5 machine

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...

Q: Quinan Carpentry Co. makes wooden shelves. A small fire on

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...

Q: ALOHA Corp., started in January 2004, manufactures Hawaiian muumuus.

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 …………...

Q: N Joy makes wooden picnic tables, swings, and benches.

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...

Q: Prior to the start of fiscal 2010, managers of MultiTech hosted

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...

Q: During December 2010, Amin Corp. manufactured products requiring 8,

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...

Q: Terkelsen Mfg. produces comforter sets with the following standard cost information

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 $...

Q: For 2010, Riguilio Inc. set predetermined variable and fixed overhead

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 require...

Q: Hellier Contractors paints interiors of residences and commercial structures. The firm’s

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 g...

Q: The following variances existed at year-end 2010 for Muckstadt Production

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 varianc...

Q: Namathe Industries manufactures children’s footballs with the following standard costs per unit

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

Q: Ripper Corp. uses a standard cost system for its aircraft component

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 purchasi...

Q: The May budget for the Auberage Company shows $1,080

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. Durin...

Q: Kieffer Company makes men’s suit alterations for a major clothing store chain

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...

Q: Polermo Inc. produces three-topping, 18-inch frozen

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, discreti...

Q: Tomm’s T’s is a New York–based company that produces and

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 costi...

Q: Haddas Ltd. makes Healthy Life, a nutritional aid. For

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 bat...

Q: Schmidt Co. has the following standard material and labor quantities and

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 @ ……………………………………….....

Q: Griffon Corp. makes small plastic dog toys with the following material

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, 50,12...

Q: Aquatica uses a standard cost system for materials and labor in producing

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...

Q: Surgical Products produces latex surgical gloves. Machines perform the majority of

Surgical Products produces latex surgical gloves. Machines perform the majority of the processing for 1,000 pairs of gloves per hour. Each pair of gloves requires 0.85 square foot of latex, which has...

Q: How are insignificant variances closed at the end of an accounting period

How are insignificant variances closed at the end of an accounting period? How are significant variances closed at the end of an accounting period? Why is there a difference in treatment?

Q: What are the three primary uses of a standard cost system?

What are the three primary uses of a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful?

Q: What is management by exception? Why is a standard cost system

What is management by exception? Why is a standard cost system useful when managers control “by exception”?

Q: Why do managers care about capacity utilization? Are managers controlling costs

Why do managers care about capacity utilization? Are managers controlling costs when they control utilization?

Q: (Appendix) What variances can be computed for direct material and

(Appendix) What variances can be computed for direct material and direct labor when some materials or labor inputs are substitutes for others? What information does each of these variances provide? A...

Q: Last June, Lacy Dalton had just been appointed CFO of Garland

Last June, Lacy Dalton had just been appointed CFO of Garland & Wreath when she received some interesting reports about the profitability of the company’s three most important pr...

Q: What is a standard cost card? What information does it contain

What is a standard cost card? What information does it contain? How does it relate to a bill of materials and an operations flow document?

Q: How is the material standard developed? Why are the quantities shown

How is the material standard developed? Why are the quantities shown in the bill of materials not always the same quantities shown in the standard cost card?

Q: A total variance can be calculated for each cost component of a

A total variance can be calculated for each cost component of a product. Into what variances can this total be separated and to what does each relate? (Discuss separately for material and labor.)

Q: The overhead spending and overhead efficiency variances are said to be controllable

The overhead spending and overhead efficiency variances are said to be controllable, but the volume variance is said to be noncontrollable. Explain.

Q: How are actual and standard costs recorded in a standard cost system

How are actual and standard costs recorded in a standard cost system?

Q: What is meant by the term standard hours? Does the term

What is meant by the term standard hours? Does the term refer to inputs or outputs?

Q: Hard Core had budgeted sales of 190,000 feet of its

Hard Core had budgeted sales of 190,000 feet of its concrete culvert products for June 2010. Each foot of product requires 4 pounds of concrete ($0.10 per pound) and 7.5 pounds of gravel ($0.04 per po...

Q: The treasurer of Homeyra Corp. needs to estimate cash collections from

The treasurer of Homeyra Corp. needs to estimate cash collections from accounts receivable for September, October, and November 2011. Forty percent of the company’s customers pay in cash and the rest...

Q: Miriam Irby is president of MI Corp. Irby has decided to

Miriam Irby is president of MI Corp. Irby has decided to take a month’s vacation with her family to South Africa, Zimbabwe, and Angola. Irby has researched the trip and determined that the total cost...

Q: Total June 2010 sales for Roy’s Catering are expected to be $

Total June 2010 sales for Roy’s Catering are expected to be $450,000. Of each month’s sales, 80 percent is expected to be on credit. The Accounts Receivable balance at May 31 is $119,600, of which $90...

Q: Sunny Systems manufactures solar panels. The company has a theoretical capacity

Sunny Systems manufactures solar panels. The company has a theoretical capacity of 50,000 units annually. Practical capacity is 80 percent of theoretical capacity, and normal capacity is 80 percent of...

Q: The October 1, 2010, Accounts Receivable balance for Darin Landscaping

The October 1, 2010, Accounts Receivable balance for Darin Landscaping is $632,500. Of that balance, $480,000 represents remaining accounts receivable from September billings. The normal collection pa...

Q: Campbell Manufacturing intends to start business on January 1, 2011.

Campbell Manufacturing intends to start business on January 1, 2011. Production plans for the first four months of operations are as follows: January …………………………..20,000 units February ………………………….50,00...

Q: The following budgeted May 2010 cash information is available for Salado Corp

The following budgeted May 2010 cash information is available for Salado Corp.: Net after-tax income …………………………………..$336,000 Depreciation expense ……………………………………..56,200 Accrued income tax expense …………...

Q: The following budgeted information about Reeves Co. is available for September

The following budgeted information about Reeves Co. is available for September 2010: Sales for September ………………………………………………………..$2,700,000 Gross profi t on sales ………………………………………………………………….40% Decrease...

Q: The following cash budget is for the third quarter of 2011.

The following cash budget is for the third quarter of 2011. Solve for the missing numbers on the cash budget, assuming that the accountant has requested a minimum cash balance of $7,000 at the start o...

Q: Compute the required answer for each of the following independent situations.

Compute the required answer for each of the following independent situations. a. For next year, Penny Suits projects $8,000,000 of sales and total fixed manufacturing costs of $2,000,000. Variable man...

Q: Last year’s income statement for Cooper Company is as follows:

Last year’s income statement for Cooper Company is as follows: This year, unit sales are expected to increase by 25 percent; material and labor costs are expected to increase by 10 p...

Q: The operating results in summarized form for a retail computer store for

The operating results in summarized form for a retail computer store for 2010 are: Revenue: Hardware sales ………………………………………………….$ 4,800,000 Software sales ………………………………………………………2,000,000 Maintenance co...

Q: Alyssa Co. is planning to purchase a new piece of production

Alyssa Co. is planning to purchase a new piece of production equipment. The equipment will increase fixed overhead by $700,000 per year in depreciation but reduce variable expenses per unit by 20 perc...

Q: Many managers believe that if all amounts in their spending budgets are

Many managers believe that if all amounts in their spending budgets are not spent during a period, they will lose allocations in future periods and that they will receive little or no recognition for...

Q: Battle Creek Storage Systems budgeted the following factory overhead costs for the

Battle Creek Storage Systems budgeted the following factory overhead costs for the upcoming year to help calculate variable and fixed predetermined overhead rates. Indirect material: $2.50 per unit pr...

Q: You own a small boat manufacturing company. At a recent manufacturers’

You own a small boat manufacturing company. At a recent manufacturers’ association meeting, you overheard one of the other company owners say that he liked using a continuous budgeting process. Discus...

Q: Before a budget can be prepared, company management considers “what

Before a budget can be prepared, company management considers “what if ” changes that might occur during the forecast period. Prepare a list of five possible questions about changes that you might wan...

Q: When engaging in strategic planning, company management often prepares a SWOT

When engaging in strategic planning, company management often prepares a SWOT analysis. a. What is a SWOT analysis and why is it useful in the planning process? b. Choose an organization with which yo...

Q: People, as well as businesses, need to budget. Assume

People, as well as businesses, need to budget. Assume that you and your spouse are having difficulties living within your combined incomes. Prepare a list of at least 10 recommendations on how to “do...

Q: High-level executives have often indicated that competitors’ actions are the

High-level executives have often indicated that competitors’ actions are the top external factor affecting their businesses and their business plans. a. Why are competitors’ actions so important to bu...

Q: Pataky Co.’s sales manager estimates that 2,000,

Pataky Co.’s sales manager estimates that 2,000,000 units of product RI#698 will be sold in 2011. The product’s selling price is expected to decline as the result o...

Q: Seguin Inc. has the following projected unit sales for the first

Seguin Inc. has the following projected unit sales for the first four months of 2011: January ……………………………………..102,400 February …………………………………….96,000 March ……………………………………….128,000 April ………………………………………...

Q: Gerrad Manufacturing has projected sales of its product for the next six

Gerrad Manufacturing has projected sales of its product for the next six months as follows: January ………………………………………..300 units February ……………………………………….700 units March …………………………………………1,000 units Apri...

Q: Gap’O has projected sales of 325,000 hospital gowns in October

Gap’O has projected sales of 325,000 hospital gowns in October. Each gown requires 2.5 yards of fabric. The beginning inventory of fabric and gowns, respectively, are 5,000 yards and 21,000 gowns. Gap...

Q: The following budget information is available for Sluyter Corp. for May

The following budget information is available for Sluyter Corp. for May 2011: • Sales are expected to be $400,000. All sales are on account, and a provision for bad debts is accrued monthly at 3 perce...

Q: Idaho Mechanical Systems has two departments: Fabrication and Finishing. Three

Idaho Mechanical Systems has two departments: Fabrication and Finishing. Three workers oversee the 25 machines in Fabrication. Finishing uses 35 crafters to hand-polish output, which is then run throu...

Q: Find the Web page for a charitable organization that operates internationally as

Find the Web page for a charitable organization that operates internationally as well as domestically. a. Prepare a list of activities in which this organization is currently involved. b. What would b...

Q: In 2010, Grand Falls Bank (GFB) had $4

In 2010, Grand Falls Bank (GFB) had $4,000,000 in business loans at an average interest rate of 3.5 percent as well as $3,200,000 in consumer loans with an average rate of 8 percent. GFB also has $750...

Q: Nafari Company’s sales budget has the following unit sales projections for each

Nafari Company’s sales budget has the following unit sales projections for each quarter of calendar year 2011: January–March …………………………………1,080,000 April–June …………………………………………1,360,000 July–September...

Q: Grenfell Company is preparing a cash budge for 2010 for purchases of

Grenfell Company is preparing a cash budge for 2010 for purchases of Calvos. Budgeted data are as follows: Cost of goods sold for the year 2010 .…………………………..$600,000 Accounts payable, 1/1/10 ………………………...

Q: In preparing its budget for July, Wade Inc. has the

In preparing its budget for July, Wade Inc. has the following information available: Accounts Receivable at June 30 ……………………………………………………………………………….$750,000 Estimated credit sales for July ………………………………...

Q: Davide’s Arrangements purchases, wholesales, and retails fresh flowers. Company

Davide’s Arrangements purchases, wholesales, and retails fresh flowers. Company estimates reveal the following for the first three months of the company’s 2011 fisc...

Q: GJO Corp. manufactures decorative, high-quality nutcrackers. Selling

GJO Corp. manufactures decorative, high-quality nutcrackers. Selling price of a nutcracker is full production cost plus 25 percent (rounded to the nearest dollar). Variable production cost is $55 per...

Q: The projected October 31, 2011, balance sheet for Blanco Co

The projected October 31, 2011, balance sheet for Blanco Co. follows: ASSETS Cash ..…………………………………………………………………………………………………………..$ 28,000,000 Accounts Receivable (net of Allowance for Uncollectibles of...

Q: Clarenville Kitchen Products produces and sells upscale mixers and breadmakers. In

Clarenville Kitchen Products produces and sells upscale mixers and breadmakers. In October 2010, Clarenville’s budget department gathered the following data to meet budget requiremen...

Q: Kalogridis Corp. manufactures industrial dye. The company is preparing its

Kalogridis Corp. manufactures industrial dye. The company is preparing its 2011 master budget and has presented you with the following information: a. The projected December 31, 2010, balance sheet fo...

Q: Red River Farm Machine makes a wide variety of products, all

Red River Farm Machine makes a wide variety of products, all of which must be processed in the Cutting and Assembly departments. For the year 2010, Red River budgeted total overhead of $993,000, of wh...

Q: Norton Weymer & Collins, LLP, a local accounting firm,

Norton Weymer & Collins, LLP, a local accounting firm, has a formal budgeting system. The firm has five partners, two managers, four seniors, two secretaries, and two bookkeepers. The budgeting proces...

Q: Attala Co., a division of Jackson Industries ( JI), offers

Attala Co., a division of Jackson Industries ( JI), offers consulting services to clients for a fee. JI’s corporate management is pleased with the performance of Attala Co. for the f...

Q: Preparing budgets for a multinational organization is significantly more complex than doing

Preparing budgets for a multinational organization is significantly more complex than doing so for a solely domestic organization. What costs might managers find in budgets for international companies...

Q: Caleb Corp. has prepared the following unit sales forecast for 2011

Caleb Corp. has prepared the following unit sales forecast for 2011: Estimated ending Finished Goods Inventories are 50,000 units at December 31, 2010; 72,000 units at June 30, 2011; and 120,000 units...

Q: Narisho Supply is in the process of preparing the budget for the

Narisho Supply is in the process of preparing the budget for the first quarter of 2011. The following projections for unit sales have been made: Each finished unit requires three direct materials: 4 p...

Q: Atkinson’s Reliable Tools makes two products that use similar raw materials:

Atkinson’s Reliable Tools makes two products that use similar raw materials: #587Q and #253X. Estimated production needs for a unit of each product follow. Estimated sales in units b...

Q: Corner Brook Furniture Co. makes bookstands and expects sales and collections

Corner Brook Furniture Co. makes bookstands and expects sales and collections for the first three months of 2011 to be as follows: The December 31, 2010, balance sheet revealed the following selected...

Q: Butler Inc. has projected Cost of Goods Sold (CGS)

Butler Inc. has projected Cost of Goods Sold (CGS) for June 2011 of $1,500,000. Of this amount, $80,000 represents fixed overhead costs. Total variable costs for the company each month average 70 perc...

Q: Cute and Cuddly Inc. sells teddy bears in walk-by

Cute and Cuddly Inc. sells teddy bears in walk-by kiosks in shopping malls. The company’s balance sheet on March 31, 2010, showed the following balances related to Accounts Receivable and inventories:...

Q: Stabler Co.’s projected March 31, 2011, balance sheet

Stabler Co.’s projected March 31, 2011, balance sheet follows. Additional information about the company is as follows: • Expected sales for April and May are $240,0...

Q: UpTop Mining has compiled the following data to analyze utility costs:

UpTop Mining has compiled the following data to analyze utility costs: Use the least squares method to develop a formula for budgeting utility cost.

Q: How does absorption costing differ from variable costing in cost accumulation and

How does absorption costing differ from variable costing in cost accumulation and income statement presentation?

Q: Collegiate Management Education (CME) Inc. is a nonprofit organization

Collegiate Management Education (CME) Inc. is a nonprofit organization that sponsors a wide variety of management seminars throughout the Southwest. In addition, it is heavily involved in research int...

Q: Blackman Corp., a rapidly expanding crossbow distributor, is in the

Blackman Corp., a rapidly expanding crossbow distributor, is in the process of formulating plans for 2011. Cara Jordan, director of marketing, has completed her 2011 forecast and is confident that sal...

Q: Shredder Manufacturing has the following projected unit sales (at $18

Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations: January ……………………………………………25,000 February ………………………………………….30,000 March ………………………………………………...

Q: Differentiate between the operating and financial budgets that are contained in a

Differentiate between the operating and financial budgets that are contained in a master budget. Why are both types needed?

Q: Discuss the sequence in which the major components of the master budget

Discuss the sequence in which the major components of the master budget are prepared. Why is it necessary to prepare the components in such a sequence?

Q: Why is a firm’s production budget influenced by the finished goods inventory

Why is a firm’s production budget influenced by the finished goods inventory policy?

Q: Assume that in preparing the cash budget, the accountant discovers that

Assume that in preparing the cash budget, the accountant discovers that a cash shortage will likely occur in a specific month. What actions might the accountant recommend to management to deal with th...

Q: The cash budget and the budgeted statement of cash flows both provide

The cash budget and the budgeted statement of cash flows both provide information about cash. What information about cash is common to these two sources, and what information is unique to the two sour...

Q: Why is continuous (rolling) budgeting becoming more popular than it

Why is continuous (rolling) budgeting becoming more popular than it was in the past for organizational managers?

Q: If the majority of companies find that their forecasts are inaccurate,

If the majority of companies find that their forecasts are inaccurate, why should managers engage in budgeting at all?

Q: What is meant by classifying costs (a) functionally and (

What is meant by classifying costs (a) functionally and (b) behaviorally? Why would a company be concerned about functional and behavioral classifications?

Q: What is budgetary slack, and what might top managers do to

What is budgetary slack, and what might top managers do to rid their firms’ budgets of slack?

Q: (Appendix) Why is it helpful for a company to prepare

(Appendix) Why is it helpful for a company to prepare a budget manual? Appendix: Most companies combine many materials and various classes of direct labor to produce goods. In such settings, the mate...

Q: How does the strategic plan influence preparation of the master budget?

How does the strategic plan influence preparation of the master budget?

Q: Distinguish between a strategic plan and a tactical plan. How are

Distinguish between a strategic plan and a tactical plan. How are these plans related?

Q: After a master budget has been prepared, what is its role

After a master budget has been prepared, what is its role in managerial control?

Q: How does budgeting provide important information to managers and operating personnel?

How does budgeting provide important information to managers and operating personnel?

Q: Lansing Mfg. prepared the following 2010 abbreviated flexible budget for different

Lansing Mfg. prepared the following 2010 abbreviated flexible budget for different levels of machine hours: Each product requires 4 hours of machine time, and the company expects to produce 10,000 uni...

Q: Use the information in Exercise 11 and assume that Lansing Mfg.

Use the information in Exercise 11 and assume that Lansing Mfg. has decided to use units of production to apply overhead to production. In April 2010, the company produced 875 units and incurred $7,50...

Q: For 2010, Omaha Mechanical has a monthly overhead cost formula of

For 2010, Omaha Mechanical has a monthly overhead cost formula of $42,900+$6 per direct labor hour. The firm’s 2010 expected annual capacity is 78,000 direct labor hours, to be incurred evenly each mo...

Q: Langston Automotive Accessories applies overhead using a combined rate for fixed and

Langston Automotive Accessories applies overhead using a combined rate for fixed and variable overhead. The rate is 250 percent of direct labor cost. During the first three months of the current year,...

Q: Is variable or absorption costing generally required for external reporting? Why

Is variable or absorption costing generally required for external reporting? Why is this method preferred to the alternative?

Q: Roddickton Manufacturing Co. has gathered the following information to develop predetermined

Roddickton Manufacturing Co. has gathered the following information to develop predetermined OH rates for 2010. The company produces a wide variety of energy-saving products that are processed through...

Q: At the end of 2010, Jackson Tank Company’s accounts showed a

At the end of 2010, Jackson Tank Company’s accounts showed a $66,000 credit balance in Manufacturing Overhead Control. In addition, the company had the following account balances: Work in Process Inve...

Q: Davidson’s Dolls had the following information in its Work in Process Inventory

Davidson’s Dolls had the following information in its Work in Process Inventory account for June 2010: All workers are paid the same rate per hour. Factory overhead is applied to Wor...

Q: At year-end 2010, Dub’s Wind Generator Co. had

At year-end 2010, Dub’s Wind Generator Co. had a $40,000 debit balance in its Manufacturing Overhead Control account. Overhead is applied to products based on direct labor cost. Rele...

Q: For 2010, Milltown Iron Manufacturing has estimated its production capacities as

For 2010, Milltown Iron Manufacturing has estimated its production capacities as follows: Theoretical capacity ………………………………400,000 units Practical capacity ………………………………….300,000 units Normal capacity...

Q: Alberton Electronics makes inexpensive GPS navigation devices and uses a normal cost

Alberton Electronics makes inexpensive GPS navigation devices and uses a normal cost system that applies overhead based on machine hours. The following 2010 budgeted data are available: Variable facto...

Q: Information about Indiana Industrial’s utility cost for the last six months of

Information about Indiana Industrial’s utility cost for the last six months of 2010 follows. The high–low method will be used to develop a cost formula to predict 2...

Q: Wyoming Wholesale has gathered the following data on the number of shipments

Wyoming Wholesale has gathered the following data on the number of shipments received and the cost of receiving reports for the first seven weeks of 2010. Number of Weekly Cost of Shipments Re...

Q: La Mia’s Casas builds replicas of residences of famous and infamous people

La Mia’s Casas builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant owner has decided to use machine hours as the basis for predicting m...

Q: Why does variable costing provide more useful information than absorption costing for

Why does variable costing provide more useful information than absorption costing for making internal decisions?

Q: What are the income relationships between absorption and variable costing when production

What are the income relationships between absorption and variable costing when production volume differs from sales volume? What causes these relationships to occur?

Q: What is the difference between variable and mixed costs, considering that

What is the difference between variable and mixed costs, considering that both change in total with changes in activity levels?

Q: The high–low method of analyzing mixed costs uses only two

The high–low method of analyzing mixed costs uses only two observation points: the high and the low points of activity. Are these always the best points for prediction purposes? Why or why not?

Q: Discuss the reasons a company would use a predetermined overhead rate rather

Discuss the reasons a company would use a predetermined overhead rate rather than actual overhead to determine cost of products or services.

Q: Why are departmental predetermined OH rates more useful for managerial decision making

Why are departmental predetermined OH rates more useful for managerial decision making than plantwide OH rates? Why do firms use separate variable and fixed rates rather than total rates?

Q: Why would regression analysis provide a more accurate cost formula than the

Why would regression analysis provide a more accurate cost formula than the high– low method for a mixed cost?

Q: The Sioux City Storage System’s plant prepared the following flexible overhead budget

The Sioux City Storage System’s plant prepared the following flexible overhead budget for three levels of activity within the plant’s relevant range. After discussi...

Q: Lin Products manufactures special-order office cubicle systems. Production time

Lin Products manufactures special-order office cubicle systems. Production time is two days, but the average cycle time for any order is three weeks. The company president has asked you, as the new co...

Q: For each of the following cost pools in a temporary employment agency

For each of the following cost pools in a temporary employment agency, identify a cost driver and explain why it is appropriate. a. Accounts receivable department b. Payroll department c. Advertising...

Q: For each of the following costs commonly incurred in a manufacturing company

For each of the following costs commonly incurred in a manufacturing company, identify a cost driver and explain why it is an appropriate choice. a. Machine setup cost b. Computer operations c. Freigh...

Q: DaSilva Co. has a casting machine that is used for three

DaSilva Co. has a casting machine that is used for three of the company’s products. Each setup of the machine costs was $18,760 and the casting machine was set up in June for six dif...

Q: Three clients (A, B, and C) use Kingsley

Three clients (A, B, and C) use Kingsley Call Service’s call center. During October, Kingsley initiated four new equipment advancements. The following information indicates the cost...

Q: Leopold & Olney LLP has 5 partners and 12 staff accountants.

Leopold & Olney LLP has 5 partners and 12 staff accountants. The partners each work 2,100 hours per year and earn $350,000 annually. The staff accountants each work 2,600 hours per year and earn $80,0...

Q: Wyeth Corp. has decided to implement an activity-based costing

Wyeth Corp. has decided to implement an activity-based costing system for its in-house legal department. The legal department’s primary expense is professional salaries, which are estimated for associ...

Q: Regis Place is a health-care facility that has been allocating

Regis Place is a health-care facility that has been allocating its overhead costs to patients based on number of patient days. The facility’s overhead costs total $3,620,400 per year...

Q: Briones Books is concerned about the profitability of its regular dictionaries.

Briones Books is concerned about the profitability of its regular dictionaries. Company managers are considering producing only the top-quality, hand-sewn dictionaries with gold-edged pages. Briones i...

Q: Rice Inc. manufactures lawn mowers and garden tractors. Lawn mowers

Rice Inc. manufactures lawn mowers and garden tractors. Lawn mowers are relatively simple to produce and are made in large quantities. Garden tractors are customized to individual wholesale customer s...

Q: Tom’s Shoe Repair provides a variety of shoe and repair services.

Tom’s Shoe Repair provides a variety of shoe and repair services. Analysis of monthly costs revealed the following cost formulas when direct labor hours are used as the basis of cost determination: Su...

Q: Starshine Company is in the process of analyzing and updating its cost

Starshine Company is in the process of analyzing and updating its cost information and pricing practices. Since the company’s product line changed from general paints to specialized marine coatings, t...

Q: The cost systems at many companies selling multiple products have become less

The cost systems at many companies selling multiple products have become less than adequate in today’s global competition. Managers often make important product decisions based on distorted cost infor...

Q: Many manufacturers are deciding to service only customers that buy $10

Many manufacturers are deciding to service only customers that buy $10,000 or more of products from the manufacturers annually. Manufacturers defend such policies by stating that they can provide bett...

Q: The following activities take place in Usher’s Department Store. Upon receipt

The following activities take place in Usher’s Department Store. Upon receipt, Usher’s discounts all products 25 percent from the manufacturer’s suggested retail price. Only after the goods have been...

Q: The Raleigh plant manager of Allentown Corp. has noticed the plant

The Raleigh plant manager of Allentown Corp. has noticed the plant frequently changes the schedule on its production line. He has gathered the following information on the activities, estimated times,...

Q: Farrah Westin plans to build a concrete walkway for her home during

Farrah Westin plans to build a concrete walkway for her home during her vacation. The following schedule shows how project time will be allocated: Hours Purchase materials …………………………………………………....5 Obt...

Q: Log Cabins Unlimited constructs vacation houses in the North Carolina mountains.

Log Cabins Unlimited constructs vacation houses in the North Carolina mountains. The company has developed the following value chart: Operations Average Number of Days Receiving materials...

Q: Spice-a-licious produces creole seasoning using the following process

Spice-a-licious produces creole seasoning using the following process for each batch: Function Time (Minutes) Receiving ingredients ………………………………………………....60...

Q: The following costs are incurred in a fast-food restaurant that

The following costs are incurred in a fast-food restaurant that relies on computer-controlled equipment to prepare customers’ food. Classify each cost as unit level (U), batch level (B), product/proce...

Q: Carpenter Inc. designs industrial tooling parts and makes the molds for

Carpenter Inc. designs industrial tooling parts and makes the molds for those parts. The following activities take place when the company creates a new mold. Classify each cost as unit level (U), batc...

Q: Pete’s Plant Stands manufactures wooden stands used by plant nurseries. In

Pete’s Plant Stands manufactures wooden stands used by plant nurseries. In May 2010, the company manufactured 18,000 and sold 16,560 stands. The cost per unit for the 18,000 stands produced was as fol...

Q: Elaydo Inc. makes flavored water and performs the following tasks in

Elaydo Inc. makes flavored water and performs the following tasks in the beverage manufacturing process: Hours Receiving and transferring ingredients to storage …………………………….9.0 Storing ingredients ………...

Q: Hurley Corporation has identified the following overhead costs and cost drivers for

Hurley Corporation has identified the following overhead costs and cost drivers for the coming year: The following information was collected on three jobs that were completed during the year: Budgeted...

Q: Believing that its traditional cost system may be providing misleading information,

Believing that its traditional cost system may be providing misleading information, Dover Corporation is considering an activity-based costing (ABC) approach. Dover Corporation employs a full-cost sys...

Q: Clare’s Super Cake Company makes very elaborate wedding cakes to order.

Clare’s Super Cake Company makes very elaborate wedding cakes to order. The company’s owner, Clare Cole, has provided the following data concerning the activity rat...

Q: Treffle Molding Company manufactures two products: large jar covers and small

Treffle Molding Company manufactures two products: large jar covers and small bottle caps. Large jar covers require special handling. Each cover must be individually sanded on a special machine to rem...

Q: Strategic Supply is a world leader in the production of electronic test

Strategic Supply is a world leader in the production of electronic test and measurement instruments. The company experienced almost uninterrupted growth through the 1990s, but in the 2000s, the low-pr...

Q: Companies that want to be more globally competitive can consider the implementation

Companies that want to be more globally competitive can consider the implementation of activity-based management (ABM). Such companies often have used other initiatives that involve higher efficiency,...

Q: As the chief executive officer of a large corporation, you have

As the chief executive officer of a large corporation, you have decided after discussion with production and accounting personnel to implement activity-based management concepts. Your goal is to reduc...

Q: Shirtz Community Hospital has been under increasing pressure to be accountable for

Shirtz Community Hospital has been under increasing pressure to be accountable for its patient charges. The hospital’s current pricing system is ad hoc, based on pricing norms for th...

Q: Balfore Office makes metal five-drawer desks and, occasionally,

Balfore Office makes metal five-drawer desks and, occasionally, takes custom orders. The company’s overhead costs for a month in which no custom desks are produced are as follows: Purchasing Departmen...

Q: Reese’s Tot Toy Boxes uses variable costing to manage its internal operations

Reese’s Tot Toy Boxes uses variable costing to manage its internal operations. The following data relate to the company’s first year of operation, when 25,000 units were produced and 21,000 units were...

Q: Illiad Inc. has a total of $2,362,

Illiad Inc. has a total of $2,362,500 in production overhead costs. The company’s products and related statistics follow. Additional data: The 330,000 pounds of material were purchas...

Q: Louisiana Leisure makes umbrellas, gazebos, and chaise lounges. The

Louisiana Leisure makes umbrellas, gazebos, and chaise lounges. The company uses a traditional overhead allocation scheme and assigns overhead to products at the rate of $30 per direct labor hour. The...

Q: Casito Corp. manufactures multiple types of products; however, most

Casito Corp. manufactures multiple types of products; however, most of the company’s sales are from Product #347 and Product #658. Product #347 has been a standard in the industry fo...

Q: West Virginia Concepts provides a wide range of engineering and architectural consulting

West Virginia Concepts provides a wide range of engineering and architectural consulting services through its three offices in Charleston, Morgantown, and Martinsburg. The company allocates resources...

Q: Bernie Lipscomb owns and manages a commercial cold-storage warehouse that

Bernie Lipscomb owns and manages a commercial cold-storage warehouse that has 100,000 cubic feet of storage capacity. Historically, he has charged customers a flat rate of $0.16 per pound per month fo...

Q: Moriarity Manufacturing produces two product models: Regular and Special. The

Moriarity Manufacturing produces two product models: Regular and Special. The following information was taken from the accounting records for the first quarter of 2010: Moriarity currently uses a trad...

Q: If five people from the same organization calculated manufacturing cycle efficiency for

If five people from the same organization calculated manufacturing cycle efficiency for one specific process, would each compute the same MCE? Why or why not?

Q: Do cost drivers exist in a traditional accounting system? Are they

Do cost drivers exist in a traditional accounting system? Are they designated as such? How, if at all, does the use of cost drivers in a traditional accounting system differ from those in an activity-...

Q: Why do more traditional methods of overhead assignment “overload” standard

Why do more traditional methods of overhead assignment “overload” standard high volume products with overhead costs. How does ABC improve overhead assignments?

Q: Once an activity-based costing system has been developed and implemented

Once an activity-based costing system has been developed and implemented in a company, will that system be appropriate for the long term? Why or why not?

Q: Ollie’s Olive Oil began business in 2010, during which it produced

Ollie’s Olive Oil began business in 2010, during which it produced 104,000 quarts of olive oil. In 2010, the company sold 100,000 quarts of olive oil. Costs incurred during the year were as follows: I...

Q: Are all companies likely to benefit to an equal extent from adopting

Are all companies likely to benefit to an equal extent from adopting ABC? Discuss.

Q: Significant hurdles, including a large time commitment, are often encountered

Significant hurdles, including a large time commitment, are often encountered in adopting ABC. What specific activities associated with ABC adoption require large investments of time?

Q: What is activity-based management (ABM), and what specific

What is activity-based management (ABM), and what specific management tools are used in ABM?

Q: What is activity analysis, and how is it used with cost

What is activity analysis, and how is it used with cost driver analysis to manage costs?

Q: Why are value-added activities defined from a customer viewpoint?

Why are value-added activities defined from a customer viewpoint?

Q: In a televised football game, what activities are value-added

In a televised football game, what activities are value-added? What activities are nonvalue-added? Would everyone agree with your choices? Why or why not?

Q: Following are specific types of information that can be located in a

Following are specific types of information that can be located in a particular account (such as WIP Inventory) or on a particular document (such as an employee time card). For each item listed, ident...

Q: For each of the following firms, determine whether it is more

For each of the following firms, determine whether it is more likely to use job order or process costing. This firm a. provides legal services. b. is a health-care clinic. c. manufactures shampoo. d....

Q: The law firm of Taub & Lawson, LLP, currently has

The law firm of Taub & Lawson, LLP, currently has four cases in process. Following is information related to those cases as of the end of March 2010: Taub & Lawson allocates overhead to cases...

Q: Mystic Inc. uses a job order costing system and applies overhead

Mystic Inc. uses a job order costing system and applies overhead to jobs at a predetermined rate of $4.25 per direct labor dollar. During April 2010, the company spent $29,600 on direct material and $...

Q: Tennessee Tack manufactures horse blankets. In 2010, fixed overhead was

Tennessee Tack manufactures horse blankets. In 2010, fixed overhead was applied to products at the rate of $8 per unit. Variable cost per unit remained constant throughout the year. In July 2010, inco...

Q: Rio Valde Co. uses a normal cost, job order costing

Rio Valde Co. uses a normal cost, job order costing system. In the Mixing Department, overhead is applied using machine hours; in Paving, overhead is applied using direct labor hours. In December 2009...

Q: Country Products manufactures quilt racks. Pine is introduced in Department 1

Country Products manufactures quilt racks. Pine is introduced in Department 1, where the raw material is cut and assembled. In Department 2, completed racks are stained and packaged for shipment. Depa...

Q: Routine maintenance services are provided by Latamore Industries to oil and gas

Routine maintenance services are provided by Latamore Industries to oil and gas firms in their production facilities. Although many of the client services are relatively unique, some services are repe...

Q: Weingold Inc. engages in routine and customer print jobs for customers

Weingold Inc. engages in routine and customer print jobs for customers. In November 2010, a client specified the use of one of the company’s standard papers for a large job, but asked for a high level...

Q: Harvey Inc. uses a standard cost system for labor. Standard

Harvey Inc. uses a standard cost system for labor. Standard costs for material cannot be used because customers require unique materials and all jobs are different sizes. One of the company’s jobs exp...

Q: Bonivo Inc. manufactures computers from commodity components to client specifications.

Bonivo Inc. manufactures computers from commodity components to client specifications. The company has historically tracked only the cost of components to computers, and computer selling prices, or bi...

Q: Attorney Maria Conroe uses a job order costing system to collect costs

Attorney Maria Conroe uses a job order costing system to collect costs of client engagements. Conroe is currently working on a case for Stacie Olivgra. During the first three months of 2010, Conroe lo...

Q: Juneau Container makes steel storage canisters for various chemical products. The

Juneau Container makes steel storage canisters for various chemical products. The company uses a job order costing system and obtains jobs based on competitive bidding. For each project, a budget is d...

Q: Companies use time sheets for two primary reasons: to know how

Companies use time sheets for two primary reasons: to know how many hours an employee works and, in a job order production situation, to trace work hours to products. An article (“Altering of Worker T...

Q: San Angelo Corp. uses a job order costing system for client

San Angelo Corp. uses a job order costing system for client contracts related to custom-manufactured pulley systems. Elmore Mechanical recently ordered 20,000 pulleys, and the job was assigned #BA468....

Q: “I’m going to focus on the customers of my business and

“I’m going to focus on the customers of my business and leave cost-allocation issues to my accountant.” Do you agree with this comment by a division president? Explain.

Q: Describe three key components in doing a strategic analysis of operating income

Describe three key components in doing a strategic analysis of operating income.

Q: Pharmahelp, Inc., a distributor of special pharmaceutical products, operates

Pharmahelp, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. Mom-and-pop single-...

Q: Pastel Bags (PB) is a designer of high-quality

Pastel Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company us...

Q: Crosstown Health Center runs two programs: drug addict rehabilitation and aftercare

Crosstown Health Center runs two programs: drug addict rehabilitation and aftercare (counseling and support of patients after release from a mental hospital). The center’s budget for...

Q: Zarson’s Netballs is a manufacturer of high-quality basketballs and volleyballs

Zarson’s Netballs is a manufacturer of high-quality basketballs and volleyballs. Setup costs are driven by the number of setups. Equipment and maintenance costs increase with the num...

Q: Archer Pro manufactures two models of sport bows, Basic and Deluxe

Archer Pro manufactures two models of sport bows, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect manufacturing...

Q: Plum Electronics, a division of Berry Corporation, manufactures two large

Plum Electronics, a division of Berry Corporation, manufactures two large-screen television models: The Mammoth, which has been produced since 2013 and sells for $990, and the Maximum, a newer model i...

Q: Mountain Outfitters operates a large outdoor clothing and equipment store with three

Mountain Outfitters operates a large outdoor clothing and equipment store with three main product lines: clothing, equipment, and shoes. Mountain Outfitters operates at capacity and allocates selling,...

Q: Hale Specialties manufactures, among other things, woolen blankets for the

Hale Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased fr...

Q: US Apparel (USA) manufactures plain white and solid-colored

US Apparel (USA) manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following: Budgeted sales and selling price per unit are as follows: USA has the opportunity to swit...

Q: The Chen Corporation manufactures and sells two products: Thingone and Thingtwo

The Chen Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2016, Chen’s budget department gathered the following data to prepare budgets for 2017: The...

Q: “A branch office or business segment that shows negative operating income

“A branch office or business segment that shows negative operating income should be shut down.” Do you agree? Explain briefly.

Q: Smart Video Company is a manufacturer of videoconferencing products. Maintaining the

Smart Video Company is a manufacturer of videoconferencing products. Maintaining the videoconferencing equipment is an important area of customer satisfaction. A recent downturn in the computer indust...

Q: Paula Beane owns a restaurant franchise that is part of a chain

Paula Beane owns a restaurant franchise that is part of a chain of “southern homestyle” restaurants. One of the chain’s popular breakfast items is biscuits and gravy. Central Warehouse makes and freez...

Q: Animal Gear Company makes two pet carriers, the Cat-allac

Animal Gear Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the mo...

Q: Refer to the information in Problem 6-40. Assume the

Refer to the information in Problem 6-40. Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are...

Q: Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a

Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2017, Skulas’s management accountant gathered the following data to prepare bu...

Q: Refer to the information in Problem 6-42. Budgeted balances

Refer to the information in Problem 6-42. Budgeted balances at January 31, 2018 are as follows: Cash…………â€&br...

Q: Hazlett, Inc., operates at capacity and makes plastic combs and

Hazlett, Inc., operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1:1. Hazlett&acir...

Q: Refer to the information in Problem 6-44. All purchases

Refer to the information in Problem 6-44. All purchases made in a given month are paid for in the following month, and direct material purchases make up all of the accounts payable balance and are ref...

Q: Jayzee Company manufactures a variety of products in a variety of departments

Jayzee Company manufactures a variety of products in a variety of departments and evaluates departments and departmental managers by comparing actual cost and output relative to the budget. Department...

Q: Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah

Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per qu...

Q: How does an engineered cost differ from a discretionary cost?

How does an engineered cost differ from a discretionary cost?

Q: Tyva makes a very popular undyed cloth sandal in one style,

Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing it...

Q: Emerald Statuary manufactures bust statues of famous historical figures. All statues

Emerald Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static bu...

Q: Joyce Brown has run Medical Maids, a specialty cleaning service for

Joyce Brown has run Medical Maids, a specialty cleaning service for medical and dental offices, for the past 10 years. Her static budget and actual results for April 2017 are shown below. Joyce has on...

Q: Give two examples in which the difference in the costs of two

Give two examples in which the difference in the costs of two products or services is much smaller than the difference in their prices.

Q: What are three benefits of using a product life-cycle reporting

What are three benefits of using a product life-cycle reporting format?

Q: Define predatory pricing, dumping, and collusive pricing.

Define predatory pricing, dumping, and collusive pricing.

Q: Describe two alternative approaches to long-run pricing decisions.

Describe two alternative approaches to long-run pricing decisions.

Q: Give two examples of a value-added cost and two examples

Give two examples of a value-added cost and two examples of a non-value-added cost.

Q: “A company should not allocate costs that are fixed in the

“A company should not allocate costs that are fixed in the short run to customers.” Do you agree? Explain briefly.

Q: How should a company decide on the number of cost pools it

How should a company decide on the number of cost pools it should use to allocate costs to divisions, channels, and customers?

Q: “Managers will always choose the alternative that maximizes operating income or

“Managers will always choose the alternative that maximizes operating income or minimizes costs in the decision model.” Do you agree? Why?

Q: Show how managers can gain insight into the causes of a sales

Show how managers can gain insight into the causes of a sales-volume variance by subdividing the components of this variance.

Q: How can the concept of a composite unit be used to explain

How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?

Q: How can the sales-quantity variance be decomposed further?

How can the sales-quantity variance be decomposed further?

Q: “A customer-profitability profile highlights those customers a company should

“A customer-profitability profile highlights those customers a company should drop to improve profitability.” Do you agree? Explain.

Q: Give examples of three different levels of costs in a customer-

Give examples of three different levels of costs in a customer-cost hierarchy.

Q: “A company should not allocate all of its corporate costs to

“A company should not allocate all of its corporate costs to its divisions.” Do you agree? Explain.

Q: What criteria might managers use to guide cost-allocation decisions?

What criteria might managers use to guide cost-allocation decisions? Which are the dominant criteria?

Q: “Once a company allocates corporate costs to divisions, these costs

“Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.

Q: Distinguish between the single-rate and the dual-rate methods

Distinguish between the single-rate and the dual-rate methods.

Q: What are the challenges of using the incremental cost allocation method when

What are the challenges of using the incremental cost allocation method when allocating common costs and how might they be overcome?

Q: Why might an analyst incorporate the industry-market-size factor

Why might an analyst incorporate the industry-market-size factor and the interrelationships among the growth, price-recovery, and productivity components into a strategic analysis of operating income?...

Q: Distinguish between the stand-alone and the incremental revenue-allocation

Distinguish between the stand-alone and the incremental revenue-allocation methods.

Q: Identify and discuss arguments that individual product managers may put forward to

Identify and discuss arguments that individual product managers may put forward to support their preferred revenue-allocation method. 

Q: Why might a manager prefer that budgeted rather than actual cost-

Why might a manager prefer that budgeted rather than actual cost-allocation rates be used for costs being allocated to his or her department from another department?

Q: Distinguish among the three methods of allocating the costs of support departments

Distinguish among the three methods of allocating the costs of support departments to operating departments.

Q: Why is the constant gross-margin percentage NRV method sometimes called

Why is the constant gross-margin percentage NRV method sometimes called a “joint-cost-allocation and a profit-allocation” method?

Q: “Managers must decide whether a product should be sold at splitoff

“Managers must decide whether a product should be sold at splitoff or processed further. The sales value at splitoff method of joint-cost allocation is the best method for generating the information m...

Q: “Managers should consider only additional revenues and separable costs when making

“Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further.” Do you agree? Explain.

Q: Why might managers seeking a monthly bonus based on attaining a target

Why might managers seeking a monthly bonus based on attaining a target operating income prefer the sales method of accounting for byproducts rather than the production method?

Q: Distinguish between a joint product and a byproduct.

Distinguish between a joint product and a byproduct.

Q: “We are already measuring total factor productivity. Measuring partial productivities

“We are already measuring total factor productivity. Measuring partial productivities would be of no value.” Do you agree? Comment briefly.

Q: Why might the number of products in a joint-cost situation

Why might the number of products in a joint-cost situation differ from the number of outputs? Give an example.

Q: Provide three reasons for allocating joint costs to individual products or services

Provide three reasons for allocating joint costs to individual products or services.

Q: Describe a situation in which the sales value at splitoff method cannot

Describe a situation in which the sales value at splitoff method cannot be used but the NRV method can be used for joint-cost allocation.

Q: Distinguish between the sales value at splitoff method and the NRV method

Distinguish between the sales value at splitoff method and the NRV method.

Q: Give two limitations of the physical-measure method of joint-

Give two limitations of the physical-measure method of joint-cost allocation.

Q: “The standard-costing method is particularly applicable to process-

“The standard-costing method is particularly applicable to process-costing situations.” Do you agree? Why?

Q: Why should the accountant distinguish between transferred-in costs and additional

Why should the accountant distinguish between transferred-in costs and additional direct materials costs for each subsequent department in a process-costing system?

Q: “There’s no reason for me to get excited about the choice

“There’s no reason for me to get excited about the choice between the weighted-average and FIFO methods in my process-costing system. I have long-term contracts with my materials suppliers at fixed pr...

Q: In process costing, why are costs often divided into two main

In process costing, why are costs often divided into two main classifications?

Q: Explain equivalent units. Why are equivalent-unit calculations necessary in

Explain equivalent units. Why are equivalent-unit calculations necessary in process costing?

Q: What are the five types of conditions to consider when evaluating a

What are the five types of conditions to consider when evaluating a strategy map?

Q: What problems might arise in estimating the degree of completion of semiconductor

What problems might arise in estimating the degree of completion of semiconductor chips in a semiconductor plant?

Q: Name the five steps in process costing when equivalent units are computed

Name the five steps in process costing when equivalent units are computed.

Q: Describe the distinctive characteristic of FIFO computations in assigning costs to units

Describe the distinctive characteristic of FIFO computations in assigning costs to units completed and to units in ending work in process.

Q: “In job costing, the costs of normal spoilage that occur

“In job costing, the costs of normal spoilage that occur while a specific job is being done are charged to the specific job.” Do you agree? Explain.

Q: “Abnormal rework costs should be charged to a loss account,

“Abnormal rework costs should be charged to a loss account, not to manufacturing overhead.” Do you agree? Explain.

Q: How do managers use information about scrap?

How do managers use information about scrap?

Q: Distinguish among spoilage, rework, and scrap.

Distinguish among spoilage, rework, and scrap.

Q: “Total input includes abnormal as well as normal spoilage and is

“Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a basis for computing normal spoilage.” Do you agree? Explain.

Q: “When evaluating alternative ways to improve quality, managers need to

“When evaluating alternative ways to improve quality, managers need to consider the fully allocated costs of quality.” Do you agree? Explain.

Q: Distinguish between customer-response time and manufacturing cycle time.

Distinguish between customer-response time and manufacturing cycle time.

Q: What are three important pitfalls to avoid when implementing a balanced scorecard

What are three important pitfalls to avoid when implementing a balanced scorecard?

Q: “There is no tradeoff between customer-response time and on

“There is no tradeoff between customer-response time and on-time performance.” Do you agree? Explain.

Q: Give two reasons why delays occur.

Give two reasons why delays occur.

Q: “Companies should always make and sell all products whose selling prices

“Companies should always make and sell all products whose selling prices exceed variable costs.” Assuming fixed costs are irrelevant, do you agree? Explain.

Q: “When evaluating a company’s performance on the time dimension, managers

“When evaluating a company’s performance on the time dimension, managers should only consider financial measures.” Do you agree? Explain.

Q: Distinguish between internal failure costs and external failure costs.

Distinguish between internal failure costs and external failure costs.

Q: Describe three methods that companies use to identify quality problems.

Describe three methods that companies use to identify quality problems.

Q: “Companies should focus on financial measures of quality because these are

“Companies should focus on financial measures of quality because these are the only measures of quality that can be linked to bottom-line performance.” Do you agree? Explain.

Q: Give two examples of nonfinancial measures of customer satisfaction relating to quality

Give two examples of nonfinancial measures of customer satisfaction relating to quality.

Q: Give two examples of nonfinancial measures of internal-business-process

Give two examples of nonfinancial measures of internal-business-process quality.

Q: Why do better decisions regarding the purchasing and managing of goods for

Why do better decisions regarding the purchasing and managing of goods for sale frequently cause dramatic percentage increases in net income?

Q: Roberta, Inc., manufactures elliptical machines for several well-known

Roberta, Inc., manufactures elliptical machines for several well-known companies. The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were in...

Q: “You should always choose the supplier who offers the lowest price

“You should always choose the supplier who offers the lowest price per unit.” Do you agree? Explain.

Q: What is supply-chain analysis, and how can it benefit

What is supply-chain analysis, and how can it benefit manufacturers and retailers?

Q: What are the main features of JIT production, and what are

What are the main features of JIT production, and what are its benefits and costs?

Q: Distinguish inventory-costing systems using sequential tracking from those using backflush

Distinguish inventory-costing systems using sequential tracking from those using backflush costing.

Q: Describe three different versions of backflush costing.

Describe three different versions of backflush costing.

Q: Discuss the differences between lean accounting and traditional cost accounting.

Discuss the differences between lean accounting and traditional cost accounting.

Q: What assumptions are made when using the simplest version of the economic

What assumptions are made when using the simplest version of the economic-order-quantity (EOQ) decision model?

Q: Give three examples of opportunity costs that typically are not recorded in

Give three examples of opportunity costs that typically are not recorded in accounting systems, although they are relevant when using the EOQ model in the presence of demand uncertainty.

Q: What are the steps in computing the cost of a prediction error

What are the steps in computing the cost of a prediction error when using the EOQ decision model?