All Related Questions of Cost Driver

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: 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: Surgery Center is an outpatient surgical clinic that was profitable for many

Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 40%. As a result, the clinic wants to better understand its co...

Q: Sara’s Salsa Company produces its condiments in two types: Extra Fine

Sara’s Salsa Company produces its condiments in two types: Extra Fine for restaurant customers and Family Style for home use. Salsa is prepared in department 1 and packaged in depart...

Q: Tent Pro produces two lines of tents sold to outdoor enthusiasts.

Tent Pro produces two lines of tents sold to outdoor enthusiasts. The tents are cut to specifications in department A. In department B the tents are sewn and folded. The activities, costs, and drivers...

Q: A company has two products: standard and deluxe. The company

A company has two products: standard and deluxe. The company expects to produce 36,375 standard units and 62,240 deluxe units. It uses activity-based costing and has prepared the following analysis sh...

Q: The following is taken from Ronda Co.’s internal records of

The following is taken from Ronda Co.’s internal records of its factory with two operating departments. The cost driver for indirect labor and supplies is direct labor costs, and the...

Q: Way Cool produces two different models of air conditioners. The company

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in...

Q: A company uses activity-based costing to determine the costs of

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and cost driver activity for each of the company’s three activity c...

Q: After reading an article about activity-based costing in a trade

After reading an article about activity-based costing in a trade journal for the furniture industry,Adria Lopez wondered if it was time to critically analyze overhead costs at Success Systems. In a re...

Q: Refer to the information in Exercise 4-6 to answer the

Refer to the information in Exercise 4-6 to answer the following requirements. Information from 4-6: Way Cool produces two different models of air conditioners. The company produces the mechanical sys...

Q: Refer to the information in Exercise 4-6 to answer the

Refer to the information in Exercise 4-6 to answer the following requirements. Information from Exercise 4-6: Way Cool produces two different models of air conditioners. The company produces the mech...

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: SnapOn makes snap-together button fasteners (a male top and

SnapOn makes snap-together button fasteners (a male top and female bottom) for designer clothes Each top and bottom consists of several metal parts that, when attached to the garment, allow the shirt,...

Q: GAMMA produces over a hundred different types of residential water faucets at

GAMMA produces over a hundred different types of residential water faucets at its Delta, Florida, plant. This plant uses activity-based costing to calculate product costs. The following table summariz...

Q: When the predetermined manufacturing overhead rate is calculated, why are estimated

When the predetermined manufacturing overhead rate is calculated, why are estimated costs and cost driver levels used instead of actual dollars and amounts?

Q: For each of the key activities, list a potential cost driver

For each of the key activities, list a potential cost driver for that activity and describe why this cost driver would be appropriate for the associated activity.

Q: How can using a single predetermined manufacturing overhead rate based on a

How can using a single predetermined manufacturing overhead rate based on a unit-level cost driver cause a high-volume product to be overcosted?

Q: Describe a potential cost driver for each of the variable and mixed

Describe a potential cost driver for each of the variable and mixed costs you listed. Explain why each cost driver would be appropriate for its associated cost.

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: 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: 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: 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: 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: 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: 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: Rocky Mountain Leatherworks, which manufactures saddles and other leather goods,

Rocky Mountain Leatherworks, which manufactures saddles and other leather goods, has three departments. The Assembly Department manufactures various leather products, such as belts, purses, and saddle...

Q: Suppose you are the controller for a company that produces handmade glassware

Suppose you are the controller for a company that produces handmade glassware. 1. Choose a volume-based cost driver upon which to base the application of overhead. Write a memo to the company presiden...

Q: Refer to the illustration of overhead application in the Midtown Advertising Agency

Refer to the illustration of overhead application in the Midtown Advertising Agency on pp. 104–105. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to eac...

Q: When a single, volume-based cost driver (or activity

When a single, volume-based cost driver (or activity base) is used to apply manufacturing overhead, what is the managerial accountant’s primary objective in selecting the cost driver?

Q: Tiana Shar, the controller for Caesar Glassware Company, is in

Tiana Shar, the controller for Caesar Glassware Company, is in the process of analyzing the overhead costs for the month of November. She has gathered the following data for the month. Labor Direc...

Q: Refer to the preceding problem regarding Bandway Company. Complete the job

Refer to the preceding problem regarding Bandway Company. Complete the job-cost record for Job number T79. (Assume that all of the labor hours for job T79 occurred during the week of 10/8 through 10/1...

Q: Cincinnati Cycle Company produces two subassemblies, JY-63 and RX

Cincinnati Cycle Company produces two subassemblies, JY-63 and RX-67, used in manufacturing motorcycles. The company is currently using an absorption costing system that applies overhead based on dire...

Q: Madison Electric Pump Corporation manufactures electric pumps for commercial use. The

Madison Electric Pump Corporation manufactures electric pumps for commercial use. The company produces three models, designated as regular, advanced, and deluxe. The company uses a job-order cost acco...

Q: Service-industry firms can make effective use of ABC systems as

Service-industry firms can make effective use of ABC systems as well as manufacturers. For each of the following businesses, list five key activities that are important in the provision of the firm’s...

Q: Precision Lens Company manufactures sophisticated lenses and mirrors used in large optical

Precision Lens Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability...

Q: Digitech, Ltd. manufactures various computer components in its Tokyo plant

Digitech, Ltd. manufactures various computer components in its Tokyo plant. The following costs are budgeted for January. (Yen is the Japanese monetary unit.) Insurance, plant ...........................

Q: Rainbow Spray Paints, Inc. has used a traditional cost accounting

Rainbow Spray Paints, Inc. has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 16 percent of direct-labor cost. Monthly direct-labor cos...

Q: Zodiac Model Rocketry Company sells model rocketry kits and supplies to retail

Zodiac Model Rocketry Company sells model rocketry kits and supplies to retail outlets and through its catalog. Some of the items are manufactured by Zodiac, while others are purchased for resale. For...

Q: Refer to the information given in the preceding problem for FiberCom,

Refer to the information given in the preceding problem for FiberCom, Inc., and two of its customers, Caltex Computer and Trace Telecom. Additional information for six of FiberCom’s...

Q: Refer to your solution to requirement (2) of the preceding

Refer to your solution to requirement (2) of the preceding problem. Exhibit 5-6: Required: Prepare an exhibit similar to Exhibit 5–6 in the text to explain the ABC calculations for...

Q: Rapid City Technology, Inc. manufactures chemicals used in agricultural pest

Rapid City Technology, Inc. manufactures chemicals used in agricultural pest control. The controller has established the following activity cost pools and cost drivers. An order for 1,000 boxes of a...

Q: Refer to the original data given in the preceding problem for Rapid

Refer to the original data given in the preceding problem for Rapid City Technology, Inc. Data from Rapid City Technology, Inc: An order for 1,000 boxes of a chemical product designated JLRP has the...

Q: Gourmet Specialty Coffee Company (GSCC) is a distributor and processor

Gourmet Specialty Coffee Company (GSCC) is a distributor and processor of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resa...

Q: Pensacola Air Industries (PAI) manufactures aircraft parts for small aircraft

Pensacola Air Industries (PAI) manufactures aircraft parts for small aircraft. Over the past decade, PAI’s management has met its goal of reducing its reliance on government contract work to 50 percen...

Q: Gigabyte, Inc., manufactures three products for the computer industry:

Gigabyte, Inc., manufactures three products for the computer industry: Gismos (product G): annual sales, 8,000 units Thingamajigs (product T): annual sales, 15,000 units Whatchamacallits (product W):...

Q: Refer to the new target prices calculated in the preceding problem for

Refer to the new target prices calculated in the preceding problem for Gigabyte’s three products, based on the new activity-based costing system. Data from previous problem: Requir...

Q: FiberCom, Inc., manufactures fiber optic cables for the computer and

FiberCom, Inc., manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently co...

Q: Why do product-costing systems based on a single, volume

Why do product-costing systems based on a single, volume-based cost driver tend to overcost high-volume products? What undesirable strategic effects can such distortion of product costs have?

Q: Explain a key difference in the interpretation of the ABC data in

Explain a key difference in the interpretation of the ABC data in Exhibit 5–7 (Patio Grill Company) and Exhibit 5–16 (Delaware Medical Center). Exhibit 5-7: Exhibi...

Q: Explain the concept of a pool rate in activity-based costing

Explain the concept of a pool rate in activity-based costing. (Refer to Exhibit 5–6 .) Exhibit 5-6:

Q: The following selected data were taken from the accounting records of Manitoba

The following selected data were taken from the accounting records of Manitoba Manufacturing Company. The company uses direct-labor hours as its cost driver for overhead costs. June’...

Q: Would each of the following characteristics be a volume-based or

Would each of the following characteristics be a volume-based or an operations-based cost driver in a college: a. Number of students b. Number of disciplines offered for study c. Urban versus rural l...

Q: Over the past 15 years, Anthony’s Auto Shop has developed a

Over the past 15 years, Anthony’s Auto Shop has developed a reputation for reliable repairs and has grown from a one-person operation to a nineperson operation, including one manager...

Q: Youngsborough Products, a supplier to the automotive industry, had seen

Youngsborough Products, a supplier to the automotive industry, had seen its operating margins shrink below 20% as its customers put continued pressure on pricing. Youngsborough produced four products...

Q: The Brinker Company uses a job order costing system at its local

The Brinker Company uses a job order costing system at its local plant. The plant has a machining department and a finishing department. The company uses machine hours to allocate machining department...

Q: Eastern Wood Products has two production departments: cutting and assembly.

Eastern Wood Products has two production departments: cutting and assembly. The company has been using a plantwide cost driver rate computed by dividing plantwide overhead costs by total plantwide dir...

Q: Morrison Company carefully records its costs because it bases prices on the

Morrison Company carefully records its costs because it bases prices on the cost of the goods it manufactures. Morrison also carefully records its machine usage and other operational information. Manu...

Q: Famous Flange Company manufactures a variety of special flanges for numerous customers

Famous Flange Company manufactures a variety of special flanges for numerous customers. Annual capacity-related (manufacturing overhead) costs are $4,000,000 and the practical capacity level of machin...

Q: Mackenzie Consulting computes the cost of each consulting engagement by adding a

Mackenzie Consulting computes the cost of each consulting engagement by adding a portion of firmwide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are assig...

Q: Modern Metalworks Company has two departments, milling and assembly. The

Modern Metalworks Company has two departments, milling and assembly. The company uses a job costing system with a plantwide cost driver rate that is computed by dividing plantwide overhead costs by to...

Q: Bravo Steel Company supplies 8structural steel products to the construction industry.

Bravo Steel Company supplies 8structural steel products to the construction industry. Its plant has three production departments: cutting, grinding, and drilling. The estimated overhead cost and pract...

Q: The Gonzalez Company uses a job order costing system at its plant

The Gonzalez Company uses a job order costing system at its plant in Green Bay, Wisconsin. The plant has a machining department and a finishing department. The company uses two cost driver rates for a...

Q: Connor Chemical Company’s plant processes batches of organic chemical products through three

Connor Chemical Company’s plant processes batches of organic chemical products through three stages after starting with raw materials: (1) Mixing and blending, (2) Reaction chamber...

Q: Sherman Company manufactures and sells small pumps made to customer specifications.

Sherman Company manufactures and sells small pumps made to customer specifications. It has two service departments and two production departments. Data on current year operations follow: Management a...

Q: Hoyt Company uses a plantwide cost driver rate with machine hours as

Hoyt Company uses a plantwide cost driver rate with machine hours as the cost driver. At the beginning of last year, Hoyt Company estimated its capacity-related (overhead) costs as $15,000,000 for a p...

Q: The Hillman Company sells and services lawn mowers, snow blowers,

The Hillman Company sells and services lawn mowers, snow blowers, and other equipment. The service department uses a job order cost system to determine the cost of each job, such as oil changes, tune-...

Q: The Leblanc Company employs a job order costing system to account for

The Leblanc Company employs a job order costing system to account for its costs. The company has three production departments. Separate departmental cost driver rates are employed because the demand f...

Q: What problem arises when cost driver rates are based on planned or

What problem arises when cost driver rates are based on planned or actual short-term usage?

Q: Why are predetermined cost driver rates used when recording job costs?

Why are predetermined cost driver rates used when recording job costs?

Q: “Use of a single cost driver rate when an indirect cost

“Use of a single cost driver rate when an indirect cost pool includes costs that have different cost drivers (causes of costs) leads to distortions in job costs.” Do you agree with this statement? Exp...

Q: How might computing the cost driver rate by using the planned level

How might computing the cost driver rate by using the planned level of the cost driver lead to a death spiral?

Q: The Redwood City plant of Crimson Components Company makes two types of

The Redwood City plant of Crimson Components Company makes two types of rotators for automobile engines: R361 and R572. The old cost accounting system at the plant traced support costs to four cost po...

Q: Ken’s Cornerspot, a popular university eatery in a competitive market,

Ken’s Cornerspot, a popular university eatery in a competitive market, has seating and staff capacity to serve about 600 lunch customers every day. For the past two months, demand has fallen from its...

Q: (Adapted from CMA, December 1990) Moss Manufacturing has just

(Adapted from CMA, December 1990) Moss Manufacturing has just completed a major change in its quality control (QC) process. Previously, products had been reviewed by QC inspectors at the end of each m...

Q: Smithers, Inc., manufactures and sells a wide variety of consumer

Smithers, Inc., manufactures and sells a wide variety of consumer products. The products are viewed as sufficiently profitable, but recently some product-line managers have complained about the charge...

Q: The Manhattan Company manufactures two models of compact disc players: a

The Manhattan Company manufactures two models of compact disc players: a deluxe model and a regular model. The company has manufactured the regular model for years; the deluxe model was introduced rec...

Q: Garber Company uses a traditional activity-based costing system to assign

Garber Company uses a traditional activity-based costing system to assign $600,000 of committed resource costs for customer service on the basis of the following information gathered from interviews w...

Q: Kronecker Company, a growing mail-order clothing and accessory company

Kronecker Company, a growing mail-order clothing and accessory company, is concerned about its growing MSDA expenses. It therefore examined its customer ordering patterns for the past year and identif...

Q: Bevans Co. makes two products, Product X and Product Y

Bevans Co. makes two products, Product X and Product Y. Bevans has produced Product X for many years without generating any hazardous wastes. Recently, Bevans developed Product Y, which is superior to...

Q: Grimes Grocery operates a chain of convenience stores in the Northwest.

Grimes Grocery operates a chain of convenience stores in the Northwest. As a result of a recent consultant’s visit, the company is in the beginning stages of implementing an activity-based costing sys...

Q: Wieters Industries manufactures several products including a basic case for a popular

Wieters Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The co...

Q: Clifton Informatics provides data processing services to small businesses in the Northeast

Clifton Informatics provides data processing services to small businesses in the Northeast. For years, the company has allocated the cost of the data storage department using the number of tape mounts...

Q: The Trust Department of First National Bank offers two types of service

The Trust Department of First National Bank offers two types of service, Basic and Premier. Trust customers with basic service do not grant trust officers any discretion in managing their accounts. Th...

Q: Voss Visuals produces tablets and books. Total overhead costs traditionally have

Voss Visuals produces tablets and books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the f...

Q: Ellis Perry is an electronics components manufacturer. Information about the company’s

Ellis Perry is an electronics components manufacturer. Information about the company’s two products follows: The company incurs $899,000 in overhead per year and has traditionally a...

Q: Refer to the information about Voss Visuals in Problem 7-20

Refer to the information about Voss Visuals in Problem 7-20. Voss’s managers have gathered the following information about selling and administrative costs. Reference from Problem 7...

Q: Chevis Consulting provides weekly payroll processing for a number of small businesses

Chevis Consulting provides weekly payroll processing for a number of small businesses. Gia Chevis, the company’s owner, has been using an activity-based costing system for several ye...

Q: Nancy’s Nut House is a processor and distributor of a variety of

Nancy’s Nut House is a processor and distributor of a variety of different nuts. The company buys nuts from around the world and roasts, seasons, and packages them for resale. Nancy&...

Q: Santamaria Skiffs manufactures three models of speedboats—Superior, Deluxe,

Santamaria Skiffs manufactures three models of speedboats—Superior, Deluxe, and Ultra—which are sold through marine retail stores. Budgeted information for the comi...

Q: Wilmington Composites, Inc., developed its overhead application rate from the

Wilmington Composites, Inc., developed its overhead application rate from the annual budget. The budget is based on an expected total output of 720,000 units requiring 3,600,000 machine hours. The com...

Q: Vermont Sky T ours is a small sightseeing tour company based in

Vermont Sky T ours is a small sightseeing tour company based in Burlington, Vermont. The firm specializes in aerial tours of the New England countryside during September and October, when the fall col...

Q: Med Tech, Inc. manufactures and sells diagnostic equipment used in

Med Tech, Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct lab...

Q: Galva set Industries manufactures and sells custom-made windows. Its

Galva set Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated s...

Q: What follows are a number of resources that are used by a

What follows are a number of resources that are used by a manufacturer of futons. Assume that the output measure or cost driver is the number of futons produced. All direct labor is paid on an hourly...

Q: The method of least squares was used to develop a cost equation

The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for th...

Q: Ben Pal man owns an art gallery. He accepts paintings and

Ben Pal man owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20% of the price of each piece as his fee. Space is limited, and there are costs involved, so Ben i...

Q: Travelcraft, Inc., manufactures a complete line of fiberglass suitcases and

Travelcraft, Inc., manufactures a complete line of fiberglass suitcases and attaché cases. The firm has three manufacturing departments: Molding, Component, and Assembly. There are also t...

Q: In addition to fine chocolate, International Chocolate Company also produces chocolate

In addition to fine chocolate, International Chocolate Company also produces chocolate-covered pretzels in its Savannah plant. This product is sold in five-pound metal canisters, which also are manufa...

Q: The Cheesecake Shoppe is a national bakery that is known for its

The Cheesecake Shoppe is a national bakery that is known for its strawberry cheesecake. It makes 12 different kinds of cheesecake as well as many other types of bakery items. It has recently adopted a...

Q: Tannhauser Financial is a banking services company that offers many different types

Tannhauser Financial is a banking services company that offers many different types of checking accounts. It has recently adopted an activity-based costing system to assign costs to various types of c...

Q: TriTech Company has been allocating overhead to individual product lines based on

TriTech Company has been allocating overhead to individual product lines based on each line’s relative shares of direct labor hours. For the upcoming year, the company estimated that...

Q: The Riverdale Printing Company prints limited edition art books with production runs

The Riverdale Printing Company prints limited edition art books with production runs of 15,000 to 100,000. It has recently adopted an activity-based costing system to assign manufacturing overhead to...

Q: QuantumTM manufactures electronic testing and measurement instruments. Many products are custom

QuantumTM manufactures electronic testing and measurement instruments. Many products are custom-designed with recent orders for function generators, harmonic analyzers, logic analyzers, temperature me...

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: 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: 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: Carly Davis, production manager, was upset and puzzled by the

Carly Davis, production manager, was upset and puzzled by the latest performance report, which indicated that she was $100,000 over budget. She and her staff had worked hard to beat the budget. Now sh...

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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: 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: Roadster Company (RC) designs and produces automotive parts. In

Roadster Company (RC) designs and produces automotive parts. In 2017, actual variable manufacturing overhead is $280,000. RC’s simple costing system allocates variable manufacturing...

Q: Sander Company produces mathematical and financial calculators and operates at capacity.

Sander Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here: Total manufacturing overhead costs are as follows: Total...

Q: DLN is an architectural firm that designs and builds buildings. It

DLN is an architectural firm that designs and builds buildings. It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $8,100,000. DLN’s simple costing system alloca...

Q: Decorative Doors, Inc., produces two types of doors, interior

Decorative Doors, Inc., produces two types of doors, interior and exterior. The company’s simple costing system has two direct-cost categories (materials and labor) and one indirect-...

Q: The Jerico store of Jiffy Mart, a chain of small neighborhood

The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity-based budget for January 2018. Jiffy Mart has three product categories: soft drinks (35% of...

Q: Marshall Devices manufactures metal products and uses activity-based costing to

Marshall Devices manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive biddin...

Q: LawnCare USA provides lawn care and landscaping services to commercial clients.

LawnCare USA provides lawn care and landscaping services to commercial clients. LawnCare USA uses activity-based costing to bid on jobs and to evaluate their profitability. LawnCare USA reports the fo...

Q: Lagoon is an amusement park that offers family-friendly entertainment and

Lagoon is an amusement park that offers family-friendly entertainment and attractions. The park boasts more than 25 acres of fun. The admission price to enter the park, which includes access to all at...

Q: Precision Laboratories evaluates the reaction of materials to extreme increases in temperature

Precision Laboratories evaluates the reaction of materials to extreme increases in temperature. Much of the company’s early growth was attributable to government contracts, but recent growth has come...

Q: Sleep Late, a large hotel chain, has been using activity

Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,&...

Q: Spirit Freightways is a leader in transporting agricultural products in the western

Spirit Freightways is a leader in transporting agricultural products in the western provinces of Canada. Reese Brown, a financial analyst at Spirit Freightways, is studying the behavior of transportat...

Q: Apollo Hospital specializes in outpatient surgeries for relatively minor procedures. Apollo

Apollo Hospital specializes in outpatient surgeries for relatively minor procedures. Apollo is a nonprofit institution and places great emphasis on controlling costs in order to provide services to th...

Q: KC Corporation manufactures an air-freshening device called GoodAir, which

KC Corporation manufactures an air-freshening device called GoodAir, which it sells to six merchandising firms. The list price of a GoodAir is $30, and the full manufacturing costs are $18. Salespeopl...

Q: Snappy Tiles is a small distributor of marble tiles. Snappy identifies

Snappy Tiles is a small distributor of marble tiles. Snappy identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details...

Q: Instant Service (IS) repairs printers and photocopiers for five multisite

Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tristate area. IS’s costs consist of the cost of technicians and equipment that are directly...

Q: Best Drugs is a distributor of pharmaceutical products. Its ABC system

Best Drugs is a distributor of pharmaceutical products. Its ABC system has five activities: Activity Area Cost Driver Rate in 2017 1. Order processing……â...

Q: Ware Manufacturing Company produced 2,000 units of inventory in January

Ware Manufacturing Company produced 2,000 units of inventory in January 2018. It expects to produce an additional 14,000 units during the remaining 11 months of the year. In other words, total product...

Q: Russell Department Stores, Inc. has three departments: women’s,

Russell Department Stores, Inc. has three departments: women’s, men’s, and children’s. The following are the indirect costs related to its operations. Vacation pay Sewer bill Staples Natural gas bill...

Q: Tyson Hats Corporation manufactures three different models of hats: Vogue,

Tyson Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Tyson expects to incur $480,000 of overhead cost during the next fiscal year. Other budget information f...

Q: Willey Company makes three products in its factory: plastic cups,

Willey Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include the following: Factory manager...

Q: Fanya Construction Company expects to build three new homes during a specific

Fanya Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Assume Fanya needs to allocate two maj...

Q: The Huffman School of Vocational Technology has organized the school training programs

The Huffman School of Vocational Technology has organized the school training programs into three departments. Each department provides training in a different area as follows: nursing assistant, dent...

Q: Camp Manufacturing Company makes tents that it sells directly to camping enthusiasts

Camp Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail order marketing program. The company pays a quality control expert $80,000 per year to inspect compl...

Q: What are the important factors in determining the appropriate cost driver to

What are the important factors in determining the appropriate cost driver to use in allocating a cost?

Q: Vulcan College School of Business is divided into three departments: accounting

Vulcan College School of Business is divided into three departments: accounting, marketing, and management. Relevant information for each of the departments follows: Vulcan is a private school that...

Q: Real Cool produces two different models of air conditioners. The company

Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly i...

Q: Refer to the information in Exercise C-1 to answer the

Refer to the information in Exercise C-1 to answer the following requirements. 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each pro...

Q: Health Co-op is an outpatient surgical clinic that wants to

Health Co-op is an outpatient surgical clinic that wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both genera...

Q: Tent Master produces two lines of tents sold to outdoor enthusiasts.

Tent Master produces two lines of tents sold to outdoor enthusiasts. The tents are cut to specifications in department A. In department B the tents are sewn and folded. The activities, costs, and driv...

Q: A company has two products: standard and deluxe. The company

A company has two products: standard and deluxe. The company expects to produce 34,300 standard units and 69,550 deluxe units. It uses activity-based costing and has prepared the following analysis sh...

Q: The following is taken from Mortan Co.’s internal records of

The following is taken from Mortan Co.’s internal records of its factory with two operating departments. The cost driver for indirect labor and supplies is direct labor costs, and th...

Q: After reading an article about activity-based costing in a trade

After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In...

Q: As you learned in previous chapters, Current Designs has two main

As you learned in previous chapters, Current Designs has two main product lines— composite kayaks, which are handmade and very labor-intensive, and rotomolded kayaks, which require l...

Q: East Valley Hospital is a primary medical care facility and trauma center

East Valley Hospital is a primary medical care facility and trauma center that serves 11 small, rural midwestern communities within a 40-mile radius. The hospital offers all the medical/surgical servi...

Q: VideoPlus, Inc. manufactures two types of DVD players, a

VideoPlus, Inc. manufactures two types of DVD players, a deluxe model and a standard model. The deluxe model is a multi-format progressive-scan DVD player with networking capability, Dolby digital, an...

Q: Merando Corporation produces two grades of wine from grapes that it buys

Merando Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 600,000 gallon jugs per year of a low-cost, high-volume product called V...

Q: Smith and Jones is a law firm that serves both individuals and

Smith and Jones is a law firm that serves both individuals and corporations. A controversy has developed between the partners of the two service lines as to who is contributing the greater amount to t...

Q: Spin Cycle Company uses three activity pools to apply overhead to its

Spin Cycle Company uses three activity pools to apply overhead to its products. Each activity has a cost driver used to allocate the overhead costs to the product. The activities and related overhead...

Q: Mason Company manufactures four products in a single production facility. The

Mason Company manufactures four products in a single production facility. The company uses activity-based costing. The following activities have been identified through the company’s activity analysis...

Q: Mordica Company identifies three activities in its manufacturing process: machine setups

Mordica Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated annual overhead cost for each activity is $150,000, $325,000, and $87,50...

Q: What makes a cost driver accurate and appropriate?

What makes a cost driver accurate and appropriate?

Q: Indicate whether the following statements are true or false. (

Indicate whether the following statements are true or false. (a) The reasoning behind ABC cost allocation is that products consume activities and activities consume resources. (b) Activity-based costi...

Q: Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant

Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The following costs are budgeted for the first quarter’s operations. Machine setup, indirect materials ……………………………...

Q: Danny Baden’s Verde Vineyards in Oakville, California, produces three varieties

Danny Baden’s Verde Vineyards in Oakville, California, produces three varieties of wine: Merlot, Viognier, and Pinot Noir. His winemaster, Russel Hansen, has identified the following activities as cos...

Q: Kinnard Electronics manufactures two home theater systems: the Elite which sells

Kinnard Electronics manufactures two home theater systems: the Elite which sells for $1,400, and a new model, the Preferred, which sells for $1,100. The production cost computed per unit under traditi...

Q: Rensing Groomers is in the dog-grooming business. Its operating

Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable)………………………… y = $0 1 $5x Direct labor (variable) ………………………………...

Q: Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional,

Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional, standard, and silver. It applies all indirect costs according to a predetermined rate based on direct labor-hours. A co...

Q: Huron Furniture is considering updating its cost system to an

Huron Furniture is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. The company’s cost accountant has identifi...

Q: Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2

Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $1,700,000. Information regarding resources for the month follows:In addition, Leidenheimer spent $50,000 on 5...

Q: Allcott Computer Services (ACS) provides computer training and repair services

Allcott Computer Services (ACS) provides computer training and repair services for schools and local businesses. Sales for year 1 totaled $1,350,000. Information regarding resources for the year inclu...

Q: The list of representative cost drivers in the right column of this

The list of representative cost drivers in the right column of this table are randomized with respect to the list of functions in the left column. That is, they do not match. Function ………………………………………...

Q: Pharmacare Inc. specializes in the distribution of pharmaceutical products. Pharmacare

Pharmacare Inc. specializes in the distribution of pharmaceutical products. Pharmacare operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. &ac...

Q: Pumpkin Bags (PB) is a designer of high-quality

Pumpkin 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. They use thes...

Q: Applewood Electronics, a division of Elgin Corporation, manufactures two large

Applewood Electronics, a division of Elgin Corporation, manufactures two large-screen television models: the Monarch, which has been produced since 2012 and sells for $1,700, and the Regal, a new mode...

Q: Korna Company manufactures a product, gizmo, that uses the following

Korna Company manufactures a product, gizmo, that uses the following direct inputs: Korna has no direct materials inventory. All manufacturing overhead costs are variable costs. The manufacturing ov...

Q: Electric Eels Company produces high-quality electric eels for Museums and

Electric Eels Company produces high-quality electric eels for Museums and Aquaria to sell in their gift shops. It accounts for the production of these eels with an ABC system. For 2015, Electric Eels...

Q: Saunders’ Electronics had the following results for the year just ended:

Saunders’ Electronics had the following results for the year just ended: Jeff Saunders, the owner of the store, is unhappy with the operating results. An analysis of other operat...

Q: / Select the terms from the above list to complete

Select the terms from the above list to complete the following sentences. One common _____________to a traditional or _ ____________costing system is called an_____________ . The single MOH cost pool...

Q: The following outlines a number of activities related to operations at Nordan

The following outlines a number of activities related to operations at Nordan Manufacturing Ltd.: a. Engineers design new products. b. Production workers set up machines. c. Completed goods are inspec...

Q: Car Parts (CP) designs, manufactures, and sells automotive

Car Parts (CP) designs, manufactures, and sells automotive parts. Actual variable manufacturing overhead costs for 2015 were $308,600. CP’s simple costing system allocates variable m...

Q: Noble Industries manufactures two models of tiffany-style lamps: a

Noble Industries manufactures two models of tiffany-style lamps: a table-top model and a floor model. Summary data for the two products for the most recent fiscal year showed the following: Under th...

Q: Heights Academy, a private school, serves 500 students: 200

Heights Academy, a private school, serves 500 students: 200 in the middle school (Grades 6 to 8) and 300 in the high school (Grades 9 to 12). Each school group has its own assistant principal, and the...

Q: Stanford Industries currently uses a normal job-costing system with a

Stanford Industries currently uses a normal job-costing system with a single overhead cost pool. It supplies parts to the aeronautic industry and, as a result, quality control is paramount. It current...

Q: The Parksville location of Your Mart (YM), a chain of

The Parksville location of Your Mart (YM), a chain of small neighborhood grocery stores, is preparing its activity-based budget for January 2016. YM has three product categories: soft drinks, fresh pr...

Q: Your Mart (YM) has a Kaizen (continuous improvement)

Your Mart (YM) has a Kaizen (continuous improvement) approach to budgeting activity area costs for each month of 2016. Each successive month, the budgeted cost driver rate decreases by 0.2% relative t...

Q: Jill Goldstein has been collecting data over the last year in an

Jill Goldstein has been collecting data over the last year in an effort to understand the cost drivers of distribution costs at Waterloo Corporation, a manufacturer of brass door handles. Distribution...

Q: Cutler Electronics makes a Blu-ray player, CE100, which

Cutler Electronics makes a Blu-ray player, CE100, which has 80 components. Cutler sells 7,000 units each month for $70 each. The costs of manufacturing CE100 are $45 per unit, or $315,000 per month. M...

Q: Best Test Laboratories evaluates the reaction of materials to extreme increases in

Best Test Laboratories evaluates the reaction of materials to extreme increases in temperature. Much of the company’s early growth was attributable to government contracts, but recent growth has come...

Q: Glat Corporation manufactures a product called the glat, which it sells

Glat Corporation manufactures a product called the glat, which it sells to merchandising firms such as International House of Glats (IHoG), Glats-R-Us (GRU), Glat Marcus (GM), Glat City (GC), Good Gla...

Q: Two graduates of the university run M&S Java, and

Two graduates of the university run M&S Java, and they have just opened their take-out coffee and snack bar on the university campus. At the end of their first month of operations they want to und...

Q: Ring Delights is a new company that manufactures custom jewellery. Ring

Ring Delights is a new company that manufactures custom jewellery. Ring Delights currently has six customers referenced by customer number: 01, 02, 03, 04, 05, and 06. Besides the costs of making the...

Q: Avery, Inc., manufactures two component parts for the television industry

Avery, Inc., manufactures two component parts for the television industry: â–  Tvez: Annual production and sales of 50,000 units at a selling price of $48.72 per unit. â–&nb...

Q: Snappy Tiles is a small distributor of marble tiles. Snappy identifies

Snappy Tiles is a small distributor of marble tiles. Snappy identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details...

Q: Screen Games (SG) distributes DVD games to retail stores and

Screen Games (SG) distributes DVD games to retail stores and game parlours. It has a simple business model: Order the DVD games, catalogue the games on SG’s website, deliver and prov...

Q: Ready Ride is a trucking company. It provides local, short

Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools. Apply ABC to a service company. Instructions a. Calculate th...

Q: International Fabrics has budgeted overhead costs of $955,000.

International Fabrics has budgeted overhead costs of $955,000. It has allocated overhead on a plant-wide basis to its two products (wool and cotton) using direct labour hours, which are estimated to b...

Q: Galavic Corporation manufactures snowmobiles in its Blue Mountain plant. It has

Galavic Corporation manufactures snowmobiles in its Blue Mountain plant. It has budgeted the following costs for the first quarter's operations. Identify activity cost pools and cost drivers. Instru...

Q: Peter Catalano's Verde Vineyards, in the Niagara Peninsula, produces three

Peter Catalano's Verde Vineyards, in the Niagara Peninsula, produces three varieties of wine: merlot, viognier, and pinot noir. His winemaster, Kyle Pohle, has identified the following activities as c...

Q: Fontillas Instrument, Inc. manufactures two products: missile range instruments

Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, it produced 50 range instruments and 300 pressure gauges and incurred estimated...

Q: H&Y Company uses four activity pools to apply overhead to

H&Y Company uses four activity pools to apply overhead to its products. Each activity has a cost driver used to allocate the overhead costs to the product. The activities and related overhead cost...

Q: International Steel Company has budgeted manufacturing overhead costs of $1,

International Steel Company has budgeted manufacturing overhead costs of $1,930,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours...

Q: Ayala Company manufactures four products in a single production facility. The

Ayala Company manufactures four products in a single production facility. The company uses activity-based costing. The company has identified the following activities through its activity analysis: (a...

Q: National Steel Company has budgeted manufacturing overhead costs of $2.

National Steel Company has budgeted manufacturing overhead costs of $2.5 million. It has allocated overhead on a plant-wide basis to its two products (Standard Steel and Deluxe Steel) using machine ho...

Q: B & B Electronics Company manufactures two large-screen television models

B & B Electronics Company manufactures two large-screen television models: the Deluxe, which has been produced for many years and sells for $900, and the Flat, a new model, which sells for $1,260....

Q: Snappy Tiles is a small distributor of marble tiles. Snappy identifies

Snappy Tiles is a small distributor of marble tiles. Snappy identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details...

Q: Instant Service (IS) repairs printers and photocopiers for five multisite

Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tristate area. IS’s costs consist of the cost of technicians and equipment that are directly...

Q: Figure Four is a distributor of pharmaceutical products. Its ABC system

Figure Four is a distributor of pharmaceutical products. Its ABC system has five activities: Rick Flair, the controller of Figure Four, wants to use this ABC system to examine individual customer pr...

Q: Annie Warbucks runs a dance studio with childcare and adult fitness classes

Annie Warbucks runs a dance studio with childcare and adult fitness classes. Annie’s budget for the upcoming year is as follows: Other budget information follows: Required: 1. De...

Q: Pharmacare, Inc., a distributor of special pharmaceutical products, operates

Pharmacare, 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-sto...

Q: Pumpkin Bags (PB) is a designer of high quality backpacks

Pumpkin 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 u...

Q: Nivag’s Netballs is a manufacturer of high quality basketballs and volleyballs.

Nivag’s Netballs is a manufacturer of high quality basketballs and volleyballs. Setup costs are driven by the number of batches. Equipment and maintenance costs increase with the num...

Q: Pet Luggage Company makes two pet carriers, the Cat-allac

Pet Luggage 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 6-33. Assume the

Refer to the information in Problem 6-33. Assume the following: Pet Luggage (PL) does not make any sales on credit. PL sells only to the public, and accepts cash and credit cards; 90% of its sales are...

Q: Snark Corporation manufactures a product called the snark, which it sells

Snark Corporation manufactures a product called the snark, which it sells to merchandising firms such as Snark Republic (SR), Snarks-R-Us (SRU), Neiman Snark-us (NS), Snark Buy (SB), Snark-Mart (SM),...

Q: Fitzgerald Manufacturing has been using activity-based costing to determine the

Fitzgerald Manufacturing has been using activity-based costing to determine the cost of product X-678. One of the activities, “Inspection,” occurs just before the p...

Q: Tilbert Toys (TT) makes the popular Floppin’ Freddy Frog and

Tilbert Toys (TT) makes the popular Floppin’ Freddy Frog and Jumpin’ Jill Junebug dolls in batches. TT has recently adopted activity-based costing. TT incurs setup...

Q: Bebe Williams wonders if she should run a multiple regression with both

Bebe Williams wonders if she should run a multiple regression with both number of setups and number of setup-hours, as cost drivers. Required: 1. Run a multiple regression to estimate the regression...

Q: Cutler Electronics makes an MP3 player, CE100, which has 80

Cutler Electronics makes an MP3 player, CE100, which has 80 components. Cutler sells 7,000 units each month for $70 each. The costs of manufacturing CE100 are $45 per unit, or $315,000 per month. Mont...

Q: Automotive Products (AP) designs and produces automotive parts. In

Automotive Products (AP) designs and produces automotive parts. In 2011, actual variable manufacturing overhead is $308,600. AP’s simple costing system allocates variable manufacturi...

Q: Parker Company produces mathematical and financial calculators and operates at capacity.

Parker Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here: Total manufacturing overhead costs are as follows: Req...

Q: Open Doors, Inc., produces two types of doors, interior

Open Doors, Inc., produces two types of doors, interior and exterior. The company’s simple costing system has two direct cost categories (materials and labor) and one indirect cost p...

Q: Idaho Potatoes (IP) operates at capacity and processes potatoes into

Idaho Potatoes (IP) operates at capacity and processes potatoes into potato cuts at its highly automated Pocatello plant. It sells potatoes to the retail consumer market and to the institutional marke...

Q: The Chelsea store of Family Supermarket (FS), a chain of

The Chelsea store of Family Supermarket (FS), a chain of small neighborhood grocery stores, is preparing its activity-based budget for January 2011. FS has three product categories: soft drinks, fresh...

Q: Doggone Groomers is in the dog-grooming business. Its operating

Doggone Groomers is in the dog-grooming business. Its operating costs are described by these formulas: Prepare a flexible budget report; compare flexible and static budgets. Grooming supplies (variab...

Q: Duo plc produces two products, A and B. Each has

Duo plc produces two products, A and B. Each has two components specified as sequentially numbered parts, i.e. product A (parts 1 and 2) and product B (parts 3 and 4). Two production departments (mach...

Q: A company sells and services photocopying machines. Its sales department sells

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after-sales service to its...

Q: Public sector organizations increasingly must account for their performance and provide quality

Public sector organizations increasingly must account for their performance and provide quality services at lower costs. To accomplish this many local authorities and public sector organizations have...

Q: Suppose we need to predict the cost of maintenance for Brush Valley

Suppose we need to predict the cost of maintenance for Brush Valley High School for the upcoming school year. From the school district records we gather weekly data about costs and volumes for two pot...

Q: The following scatter plot and simple regression results used revenue as a

The following scatter plot and simple regression results used revenue as a potential cost driver for research and development costs. Required (a) Discuss whether the scatter plot suggests that reve...

Q: Susan looked at her long-distance telephone bill with dismay.

Susan looked at her long-distance telephone bill with dismay. After leaving her job last year to become a self-employed consultant, her long-distance charges had grown considerably. She had not change...

Q: The Leyland Hospital Café has been reporting losses in past months.

The Leyland Hospital Café has been reporting losses in past months. In July, for example, the loss was $5000. The café purchases prepared food directly from Hospital Food S...

Q: Laura Mills is the controller of Peer Jets International, a manufacturer

Laura Mills is the controller of Peer Jets International, a manufacturer of small corporate jets. She has undertaken a project to study the behaviour of overhead cost. She has assembled factory overhe...

Q: Refer to the data and requirements of problem 2.23.

Refer to the data and requirements of problem 2.23. Required (a) Perform multiple regression using all three cost drivers. Compare the adjusted R-squares and cost functions for the multiple regressio...

Q: Discuss the importance of selecting an appropriate cost driver for cost allocation

Discuss the importance of selecting an appropriate cost driver for cost allocation.

Q: For each of the following activities undertaken to bake pastries and cakes

For each of the following activities undertaken to bake pastries and cakes, identify a suitable cost driver to allocate costs. (a) Mixing ingredients (b) Baking pastries and cakes (c) Decorating cakes...

Q: Data Processors provides credit card services for the banking industry. It

Data Processors provides credit card services for the banking industry. It is preparing its budget for 2020, and, as it has been using activity-based costing, it intends to develop an activity-based b...

Q: Continuing from exercise 5.23, the financial controller of Data

Continuing from exercise 5.23, the financial controller of Data Processors recently attended an accounting conference, which discussed the benefits of adopting kaizen budgeting within an activity-base...

Q: Data Processors Ltd performs credit card services for banks. The entity

Data Processors Ltd performs credit card services for banks. The entity uses an ABC system. Following is information for the past year: Required (a) Using standard values for costs and activity, ca...

Q: Following is a list of steps that must be performed in setting

Following is a list of steps that must be performed in setting up an ABC system: * Identify and sum the costs into activity-based cost pools. * Choose a cost driver for each activity. * For each ABC c...

Q: Vines Ltd produces custom machine parts on a job order basis.

Vines Ltd produces custom machine parts on a job order basis. The company has two direct product cost categories: direct materials and direct labour. In the past, indirect manufacturing costs were all...

Q: Water Feature Company manufactures kits for fish ponds. The managers recently

Water Feature Company manufactures kits for fish ponds. The managers recently set up an ABC system to identify and reduce non-value-added activities. The ABC system includes the following cost pools,...

Q: Data Processors performs credit card services for banks. The company uses

Data Processors performs credit card services for banks. The company uses an ABC system. The following information applies to the past year: Required (a) Are the activities listed likely to be the o...

Q: Shearwater Council owns and operates an animal shelter that performs three services

Shearwater Council owns and operates an animal shelter that performs three services: housing and finding homes for stray and unwanted animals, providing health care and neutering services for the anim...

Q: Following are lists of potential cost pools and cost drivers.

Following are lists of potential cost pools and cost drivers. Required Match each cost driver to the most appropriate cost pool. Use each cost driver only once. Explain your choice.

Q: Taylors Cheesecakes supplies cheesecakes to three large supermarket chains. Management has

Taylors Cheesecakes supplies cheesecakes to three large supermarket chains. Management has become concerned about the rising costs associated with the processing and dispatch of orders. An activity an...

Q: Applewood Electronics manufactures two large-screen television models, the Monarch

Applewood Electronics manufactures two large-screen television models, the Monarch, which has been produced since 20105 and sells for $900, and the Regal, a new model introduced in early 2016 that sel...

Q: Palmer Company uses an activity-based costing system. It has

Palmer Company uses an activity-based costing system. It has the following manufacturing activity areas, related drivers used as allocation bases, and cost allocation rates: During the month, 100 un...

Q: Kestral Manufacturing identified the following overhead costs and cost drivers for the

Kestral Manufacturing identified the following overhead costs and cost drivers for the current period. Kestral produces customised products that move through several different processes. Materials and...

Q: Refer to exercise 11.15. For each activity, name

Refer to exercise 11.15. For each activity, name a cost driver that might be used to assign activity costs to products. In exercise 11.15 Hartford Company manufactures five products in a single produ...

Q: Fruits on High Ltd uses three activity cost pools to assign costs

Fruits on High Ltd uses three activity cost pools to assign costs to customers in order to assess customer profitability. Each activity cost pool has a unique cost driver to apply indirect costs to cu...

Q: During 2022, Lavender Plantations Pty Ltd continued to grow. The

During 2022, Lavender Plantations Pty Ltd continued to grow. The manager decided to add detergents to its existing range of soap and candles. The management accountant, Nick Gee, expressed concern reg...

Q: Just Windows manufactures two product ranges: the standard range and the

Just Windows manufactures two product ranges: the standard range and the special range. During July, 300 standard windows and 50 special windows were manufactured and indirect production costs of $73...

Q: Regional Animal Services is located in rural Queensland and treats farm animals

Regional Animal Services is located in rural Queensland and treats farm animals and domestic pets. Providing veterinary care to farm animals requires travel to the individual farms in the area, while...

Q: Discuss the importance of selecting an appropriate cost driver in the cost

Discuss the importance of selecting an appropriate cost driver in the cost allocation process.

Q: The financial controller of Seats R Us has established indirect cost pools

The financial controller of Seats R Us has established indirect cost pools and cost drivers for the coming year as follows. The sales team has received an order for 1500 seats and produced them. The...

Q: Suppose that the director of lost dogs’ home is concerned about an

Suppose that the director of lost dogs’ home is concerned about an increase in number of adopted dogs returned to the home because of behaviour problems. When dogs are returned, the home incurs extra...

Q: Blue Hills Hospital is a major hospital that serves 11 small rural

Blue Hills Hospital is a major hospital that serves 11 small rural communities within a 40-kilometre radius. The hospital offers all the medical and surgical services of a typical small hospital. It h...

Q: Historically, The Travel Club has distributed advertising costs to its resort

Historically, The Travel Club has distributed advertising costs to its resort sites in Europe on the basis of the size of the resort budget. For this year, in round numbers, the budgets and allocation...

Q: Jet Green Airways historically distributes the indirect costs of lost and damaged

Jet Green Airways historically distributes the indirect costs of lost and damaged baggage to its three major hubs using a basis of annual number of flights in and out of each hub. Last year, $667,500...

Q: “I thought lean production was supposed to make us more efficient

“I thought lean production was supposed to make us more efficient” commented Ben Carrick, manufacturing vice president of Vorelli Industries. “But...

Q: Shroeder Machine Shop has the following activities: a. Machine

Shroeder Machine Shop has the following activities: a. Machine operation b. Machine setup c. Production scheduling d. Materials receiving e. Research and development f. Machine maintenance g. Product...

Q: Steve's Slop Shop, a small hamburger shop, has identified the

Steve's Slop Shop, a small hamburger shop, has identified the resources used in its operations: (assume each customer’s order is a batch for this example): a. Bread b. Hourly workers that cook hamburg...

Q: Hakara Company has been using direct labor costs as the basis for

Hakara Company has been using direct labor costs as the basis for assigning overhead to its products. Under this allocation system product A has been assigned overhead of $10.80 per unit while produce...

Q: Zeller Manufacturing Company produces four lines of high-quality lighting fixtures

Zeller Manufacturing Company produces four lines of high-quality lighting fixtures in a single manufacturing plant. Products are built to specific customer specifications. All products are made-to-ord...

Q: Colleen Company has gathered the following data pertaining to activities it performed

Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Colleen Company sells its products at $200 per unit. The firm’...

Q: Horton Manufacturing Inc. produces blinds and other window treatments for residential

Horton Manufacturing Inc. produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery, as maintenance...

Q: Ethan Manufacturing Inc. produces floor mats for automobiles. The owner

Ethan Manufacturing Inc. produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best...

Q: Albedo Inc. manufactures high-end replacement telescope lenses for amateur

Albedo Inc. manufactures high-end replacement telescope lenses for amateur and professional astronomers that are seeking to upgrade the performance of their telescopes. You have just become employed a...

Q: OFC Company of Kansas City prints business forms and other specialty paper

OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Business Services division offers inventory m...

Q: Ennis Inc. (EI; www.ennis.com)

Ennis Inc. (EI; www.ennis.com) is a Texas-based machine-intensive printing company that produces business forms. The resources demanded by a specific job depend on the type and amount of paper used an...

Q: Wallace Heating is attempting to estimate its costs of manufacturing heating ducts

Wallace Heating is attempting to estimate its costs of manufacturing heating ducts for the coming year using the High-Low method. The cost driver is number of labor hours. Wallace determines that the...

Q: The Meyers CPA firm has the following overhead budget for the year

The Meyers CPA firm has the following overhead budget for the year: The firm estimates total direct labor cost for the year to be $1,700,000. The firm uses direct labor cost as the cost driver to ap...

Q: EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use

EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home wood-working hobbyist, and in other applications. T...

Q: ADA Pharmaceutical Company produces three drugs—Diomycin, Homycin, and

ADA Pharmaceutical Company produces three drugs—Diomycin, Homycin, and Addolin—belonging to the analgesic (painkiller) family of medication. Since its inception fou...

Q: WasteTec is a large construction company that specializes in the construction of

WasteTec is a large construction company that specializes in the construction of large waste water treatment plants and recycling plants. A major cost driver in either type of facility is the capacity...

Q: Zenon Computer competes at the retail level on the basis of customer

Zenon Computer competes at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently, the company has installed a traditiona...

Q: Why would a manufacturing firm switch from direct labor hours to machine

Why would a manufacturing firm switch from direct labor hours to machine hours as the cost driver for factory overhead application?

Q: What is the best way to choose an appropriate cost driver or

What is the best way to choose an appropriate cost driver or cost drivers when applying factory overhead?

Q: Why do product costing systems using a single, volume-based

Why do product costing systems using a single, volume-based cost driver tend to over-cost high-volume products? Will there be any undesirable strategic effects from such product cost distortion?

Q: Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes

Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of indiv...

Q: Kentaro Corporation Manufactures Digital Video Recorders (DVRs) in its Tokyo

Kentaro Corporation Manufactures Digital Video Recorders (DVRs) in its Tokyo plant. The following costs are budgeted for January. (Yen is the Japanese monetary unit.) Required: Divide these costs int...

Q: The following selected data were taken from the accounting records of Metcalf

The following selected data were taken from the accounting records of Metcalf Manufacturing. The company uses direct-labour hours as its cost driver for overhead costs. March’s costs...

Q: Northwest Aircraft Industries (NAI) was founded 45 years ago by

Northwest Aircraft Industries (NAI) was founded 45 years ago by Jay Preston as a small machine shop producing machined parts for the aircraft industry, which is prominent in the Seattle/Tacoma area of...

Q: Newark Plastics Corporation developed its overhead application rate from the annual budget

Newark Plastics Corporation developed its overhead application rate from the annual budget. The budget is based on an expected total output of 720,000 units requiring 3,600,000 machine hours. The comp...

Q: Flaming Foliage Sky Tours is a small sightseeing tour company in New

Flaming Foliage Sky Tours is a small sightseeing tour company in New Hampshire. The firm specializes in aerial tours of the New England countryside during September and October, when the fall color is...

Q: As a group, discuss the activities of your college or university

As a group, discuss the activities of your college or university (e.g., admission, registration, etc.). List as many activities as you can. Required: Make a presentation to your class that includes t...

Q: In addition to fine chocolate, International Chocolate Company also produces chocolate

In addition to fine chocolate, International Chocolate Company also produces chocolate-covered pretzels in its Savannah plant. This product is sold in five-pound metal canisters, which also are manufa...

Q: Travel craft Company manufactures a complete line of fiberglass suitcases and attaché

Travel craft Company manufactures a complete line of fiberglass suitcases and attaché cases. The firm has three manufacturing departments: Molding, Component, and Assembly. There are also...

Q: Refer to the illustration of overhead application in the Small World Advertising

Refer to the illustration of overhead application in the Small World Advertising example. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each advertis...

Q: Tiana Shar, the controller for Bondi Furniture Company, is in

Tiana Shar, the controller for Bondi Furniture Company, is in the process of analyzing the overhead costs for the month of November. She has gathered the following data for the month. The firmâ&...

Q: Whitestone Company produces two subassemblies, JR-14 and RM-

Whitestone Company produces two subassemblies, JR-14 and RM-13, used in manufacturing trucks. The company is currently using an absorption costing system that applies overhead based on directlabor hou...

Q: Morelli Electric Motor Corporation manufactures electric motors for commercial use. The

Morelli Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models, designated as standard, deluxe, and heavy-duty. The company uses a job-order cost...

Q: Refer to the product costs developed in requirement 2 of the preceding

Refer to the product costs developed in requirement 2 of the preceding case. Prepare a table showing how Morelli Electric Motor Corporation’s traditional, volume-based product-costin...

Q: Gigabyte Inc. manufactures three products for the computer industry:

Gigabyte Inc. manufactures three products for the computer industry: Gismos (product G): annual sales, 8,000 units Thingamajigs (product T): annual sales, 15,000 units Whatchamacallits (product W): an...

Q: Sunrise Accounting provides basic tax services and “rent-a-

Sunrise Accounting provides basic tax services and “rent-a-controller” accounting services. Sunrise has identified three activity pools, the related costs per pool,...

Q: Refer to the information provided in M4–13. Barry Gold

Refer to the information provided in M4–13. Barry Gold, a tax client of Sunrise Accounting, requires 20 miles of transportation, 50 hours of processing time, and 3 hours of office su...

Q: Refer to the information provided in M4–13. Using activity

Refer to the information provided in M4–13. Using activity proportions, determine the amount of overhead assigned to Controller Services. Data from M4-13: Sunrise Accounting provide...

Q: Patterson makes electronic components for handheld games and has identified several activities

Patterson makes electronic components for handheld games and has identified several activities as components of manufacturing overhead: factory rent, factory utilities, quality inspections, materials...

Q: For each of the following activities, indicate the appropriate category (

For each of the following activities, indicate the appropriate category (unit, batch, product, or facility level) and suggest a possible cost driver for each pool: 1. Factory utilities. 2. Machine set...

Q: Match each of the definitions by inserting the appropriate term letter in

Match each of the definitions by inserting the appropriate term letter in the space provided. Not all terms will be used. Terms: A. Activity-Based Costing (ABC) B. Activity-Based Management C. Activit...

Q: Halsted Corp. has identified three cost pools in its manufacturing process

Halsted Corp. has identified three cost pools in its manufacturing process: equipment maintenance, setups, and quality control. Total cost assigned to the three pools is $214,500, $101,400, and $153,0...

Q: Acoma Co. has identified one of its cost pools to be

Acoma Co. has identified one of its cost pools to be quality control and has assigned $125,000 to that pool. Number of inspections has been chosen as the cost driver for this pool; Acoma performs 25,0...

Q: Refer to the information presented in M4–8. Suppose that

Refer to the information presented in M4–8. Suppose that Acoma manufacturers only the two products mentioned and they consume 100 percent of the company’s quality inspections. Using activity proportio...

Q: Heather Oak is trying to prepare a personal budget and has identified

Heather Oak is trying to prepare a personal budget and has identified the following list of monthly costs. Identify each cost as fixed, variable, or mixed. Indicate a possible cost driver for any vari...

Q: Harbour Company makes two models of electronic tablets, the Home and

Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Harbour has monthly overhead of $175,200, which is divided into the following cost...

Q: Keller Company makes two models of battery-operated boats, the

Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Keller has monthly overhead of $22,360, which is divided into the...

Q: Berry Good Company makes two types of energy drinks, cherry and

Berry Good Company makes two types of energy drinks, cherry and strawberry. Basic production information follows: Berry Good has monthly overhead of $159,670, which is divided into the following cost...

Q: Summit Company makes two models of snowboards, the Junior and the

Summit Company makes two models of snowboards, the Junior and the Expert. Its basic production information follows: Summit has monthly overhead of $484,746, which is divided into the following cost po...

Q: Lindwood Company manufactures coffee cups in several different sizes and has identified

Lindwood Company manufactures coffee cups in several different sizes and has identified the following activities in its manufacturing process: ∙ Storing inventory ∙ Creating molds ∙ Pouring plaster ∙...

Q: Bunker makes two types of briefcases, fabric and leather. The

Bunker makes two types of briefcases, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-ba...

Q: What is the difference between a volume-based cost driver and

What is the difference between a volume-based cost driver and a non-volume-based cost driver?

Q: Refer to E4–12. 1. Calculate the overhead

Refer to E4–12. 1. Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours. 2. Calculate the overhead assigned to th...

Q: Julio produces two types of calculators, standard and deluxe. The

Julio produces two types of calculators, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-ba...

Q: The University of Dental Health (UDH) is a state-

The University of Dental Health (UDH) is a state-run university focusing on the education and training of dentists, dental assistants, dental hygienists, and other dental professionals. The university...

Q: Rosehut Olive Oil Company makes two grades of olive oil: standard

Rosehut Olive Oil Company makes two grades of olive oil: standard and extra virgin. Rosehut has identified two activity cost pools, the related costs per pool, the cost driver for each pool, and the e...

Q: For each of the following support departments, identify a cost driver

For each of the following support departments, identify a cost driver that could be used for allocating the support department costs to the profit center: a. Legal b. Duplication services c. Electroni...

Q: For each of the following support departments, select the cost driver

For each of the following support departments, select the cost driver listed that is most appropriate for allocating support department costs to responsible units:

Q: Jake’s Gems mines and produces diamonds, rubies, and other gems

Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the M...

Q: Red Line Railroad Inc. has three regional divisions organized as profit

Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using operating income as a percent of revenues. Th...

Q: Blue Mountain Masterpieces produces pictures, paintings, and other home decor

Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial cost...

Q: Milkrageous, Inc., a large, private dairy products company,

Milkrageous, Inc., a large, private dairy products company, is determining cost allocations for performance evaluation purposes. Company bonuses are based on cost containment, so accurate costing numb...

Q: A Toyota analyst is preparing a presentation on cost drivers. Unfortunately

A Toyota analyst is preparing a presentation on cost drivers. Unfortunately, both the list of its business function areas and the accompanying list of representative cost drivers are accidentally rand...

Q: Pagnol-Carrelages SNC is a small distributor of marble tiles.

Pagnol-Carrelages SNC is a small distributor of marble tiles. Pagnol-Carrelages identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and reports the f...

Q: Nyborg Supermarkets has a kaizen (continuous improvement) approach to budgeting

Nyborg Supermarkets has a kaizen (continuous improvement) approach to budgeting monthly activity area costs for each month of 2018. February’s budgeted cost driver rate is 0.998 times the budgeted Jan...

Q: Komplex GmbH has four production lines, each of which operates for

Komplex GmbH has four production lines, each of which operates for 8,000 hours a year. Each line makes a number of products, which are based on size and colour. Therefore, many changeovers are require...

Q: Activity-based management is fine in theory but impossible in practice

Activity-based management is fine in theory but impossible in practice.’ Discuss. Answer: 1. An outline of ABM should be given including a summary of its benefits and an outline of the difficulti...

Q: Compare and contrast each of these management accounting techniques and then,

Compare and contrast each of these management accounting techniques and then, giving your reasons, select the one that in your opinion is most likely to be useful to a non-accounting manager: product...

Q: What is meant by the term overhead cost driver? How does

What is meant by the term overhead cost driver? How does a cost driver enter into the computation of an overhead application rate?

Q: Kelly Gray, production manager, was upset with the latest performance

Kelly Gray, production manager, was upset with the latest performance report, which indicated that she was $100,000 over budget. Given the efforts that she and her workers had made, she was confident...

Q: Deeds Company sells custom-made machine parts to industrial equipment manufacturers

Deeds Company sells custom-made machine parts to industrial equipment manufacturers by bidding cost plus 40 percent, where cost is defined as manufacturing cost plus order processing cost. There are t...

Q: Use the 2019 Form 10-K for Southwest Airlines to complete

Use the 2019 Form 10-K for Southwest Airlines to complete the requirements below. To obtain the Form 10-K you can use either the EDGAR system, or it can be found under “Investor Relations,” which is u...

Q: Vulcan College School of Business is divided into three departments: accounting

Vulcan College School of Business is divided into three departments: accounting, marketing, and management. Relevant information for each of the departments follows. Vulcan is a private school that ex...

Q: Bullions Enterprises Inc. (BEI) makes gold, silver,

Bullions Enterprises Inc. (BEI) makes gold, silver, and bronze medals used to recognize outstanding athletic performance in regional and national sporting events. The per-unit direct costs of producin...

Q: Brook Health Care Center Inc. has three clinics servicing the Birmingham

Brook Health Care Center Inc. has three clinics servicing the Birmingham metropolitan area. The company’s legal services department supports the clinics. Moreover, its computer servi...

Q: Conrad Corporation’s computer services department assists two operating departments in using the

Conrad Corporation’s computer services department assists two operating departments in using the company’s information system effectively. The annual cost of computer services is $600,000. The product...

Q: Kirby Health Care Center Inc. has three clinics servicing the Seattle

Kirby Health Care Center Inc. has three clinics servicing the Seattle metropolitan area. The company’s legal services department supports the clinics. Moreover, its computer services...

Q: Quinlan Trust Corporation has two service departments: actuary and economic analysis

Quinlan Trust Corporation has two service departments: actuary and economic analysis. Quinlan also has three operating departments: annuity, fund management, and employee benefit services. The annual...

Q: Ware Manufacturing Company produced 2,000 units of inventory in January

Ware Manufacturing Company produced 2,000 units of inventory in January Year 2. It expects to produce an additional 14,000 units during the remaining 11 months of the year. In other words, total produ...

Q: Tyson Hats Corporation manufactures three different models of hats: Vogue,

Tyson Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Tyson expects to incur $480,000 of overhead cost during the next fiscal year. Other budget information f...

Q: Willey Company makes three products in its factory: plastic cups,

Willey Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include the following. Factory manager’...

Q: Fanya Construction Company expects to build three new homes during a specific

Fanya Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Assume Fanya needs to allocate two major...

Q: Provide at least one example of an appropriate cost driver (allocation

Provide at least one example of an appropriate cost driver (allocation base) for each of the following activities: 1. Engineering drawings are produced for design changes. 2. Purchase orders are issue...

Q: Anniston Manufacturing incurred the following costs during Year 2 to produce its

Anniston Manufacturing incurred the following costs during Year 2 to produce its high-quality precision instruments. The company used an activity-based costing system and identified the following acti...

Q: A dialysis clinic provides two types of treatment for its patients.

A dialysis clinic provides two types of treatment for its patients. Hemodialysis (HD), an in-house treatment, requires that patients visit the clinic three times each week for dialysis treatments. Per...

Q: The administrative department of Lynch Consulting LLC provides office administration and professional

The administrative department of Lynch Consulting LLC provides office administration and professional support to its two operating departments. Annual administrative costs are $450,000. In Year 1, the...

Q: Kenta Manufacturing Company produced 800 units of inventory in January Year 2

Kenta Manufacturing Company produced 800 units of inventory in January Year 2. The company expects to produce an additional 7,200 units of inventory during the remaining 11 months of the year, for a t...

Q: Trista Company manufactures three different sizes of automobile sunscreens: large,

Trista Company manufactures three different sizes of automobile sunscreens: large, medium, and small. Trista expects to incur $300,000 of overhead costs during the next fiscal year. Other budget infor...

Q: Ascend Company makes three models of jump drives in its factory:

Ascend Company makes three models of jump drives in its factory: J512, J1G, and J4G. The expected overhead costs for the next fiscal year are as follows. Payroll for factory managers $ 150,000 Factory...

Q: On January 1, Lehmann Corporation paid the annual royalty of $

On January 1, Lehmann Corporation paid the annual royalty of $720,000 for rights to use patented technology to make batteries for laptop computers. Lehmann plans to use the patented technology to prod...

Q: Provide at least one example of an appropriate cost driver (allocation

Provide at least one example of an appropriate cost driver (allocation base) for each of the following activities: 1. Engineers design a product production layout. 2. Engineers set up machines to prod...

Q: Sentry Corporation, a furniture manufacturer, uses an activity-based

Sentry Corporation, a furniture manufacturer, uses an activity-based costing system. It has identified the following selected activities: 1. Packaging completed furniture in boxes for shipment. 2. Ins...

Q: Dean and Powell Tax Services Company has 31 branch offices in the

Dean and Powell Tax Services Company has 31 branch offices in the nation. Each office has about three to six professional accountants and one to two secretaries. In a busy season, the office manager,...

Q: The Huffman School of Vocational Technology has organized the school training programs

The Huffman School of Vocational Technology has organized the school training programs into three departments. Each department provides training in a different area as follows: nursing assistant, dent...

Q: Russell Department Stores Inc. has three departments: women’s, men’s

Russell Department Stores Inc. has three departments: women’s, men’s, and children’s. The following are the indirect costs related to its operations: Vacation pay Payroll taxes Sewer bill Paper rolls...

Q: The Redmond Management Association held its annual public relations luncheon in April

The Redmond Management Association held its annual public relations luncheon in April Year 2. Based on the previous year’s results, the organization allocated $25,290 of its operatin...

Q: Bombay Rug Company makes two types of rugs, seasonal and all

Bombay Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The a...

Q: Stan Fox, the production manager of Hollis Construction Components, is

Stan Fox, the production manager of Hollis Construction Components, is trying to figure out the cost behavior of his factory supplies cost. The company uses machine hours as the cost driver. Joe Parri...

Q: Fokine Research Institute has three departments: biology, chemistry, and

Fokine Research Institute has three departments: biology, chemistry, and physics. The institute’s controller wants to estimate the cost of operating each department. He has identifie...

Q: Copeland Door Corporation makes a particular type of door. The labor

Copeland Door Corporation makes a particular type of door. The labor cost is $120 per door and the material cost is $160 per door. Copeland rents a factory building for $80,000 a month. Copeland plans...

Q: Dickson Furniture Company incurred the following costs in the process of making

Dickson Furniture Company incurred the following costs in the process of making tables and chairs. Glue: Paint Supervisor salaries: Water bill Gas bill: Vacation pay Payroll taxes: Sewer bill Cost of...

Q: The Marketing Department of Barlett State University planned to hold its annual

The Marketing Department of Barlett State University planned to hold its annual distinguished visiting lecturer (DVL) presentation in October Year 4. The head of the department prepared the following...

Q: Since its inception, Batum Laboratory has produced a single product,

Since its inception, Batum Laboratory has produced a single product, Product S109. With the advent of automation, the company added the technological capability to begin producing a second product, Pr...

Q: What are the important factors in determining the appropriate cost driver to

What are the important factors in determining the appropriate cost driver to use in allocating a cost?

Q: Willis Cosmetics produces a variety of cosmetics and hair care products.

Willis Cosmetics produces a variety of cosmetics and hair care products. One popular shampoo is produced at the company’s Genoa Street Plant (GSP). The financial staff are in the pro...

Q: Goulburn, Inc. produces parts for heavy equipment used in mining

Goulburn, Inc. produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of fact...

Q: Heidelberg Fabrication manufactures two products, G-09 and G-

Heidelberg Fabrication manufactures two products, G-09 and G-35: Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow: Re...

Q: Armada Shipping is a global logistics company. The company is organized

Armada Shipping is a global logistics company. The company is organized into two divisions: Contracts and Retail. The Contracts Division, which is by far the larger division, handles customers who hav...

Q: Benton Corporation manufactures computer microphones, which come in two models:

Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow: Manufacturing overhead in the plant h...

Q: The Philip County Historical Society (PCHS) collects and displays historical

The Philip County Historical Society (PCHS) collects and displays historical artifacts from the local area. One of its services is dedicated tours. PCHS offers dedicated tours to two groups: the gener...

Q: Richard’s Events provides catering services, among other services. The company

Richard’s Events provides catering services, among other services. The company has adopted activity-based costing (ABC) for the catering services. The ABC system classifies activitie...

Q: Exeter Group is a large retail company that has brick-and

Exeter Group is a large retail company that has brick-and-mortar outlets throughout the Southeast. It has been in business for many years, but two years ago started an online sales channel to offset s...

Q: The following are various activities for Humphrey Insurance Agency. Required

The following are various activities for Humphrey Insurance Agency. Required Suggest a feasible cost driver base for each of the following, and explain why each selected cost driver base is feasible....

Q: The following are various activities for EMS Law School. Required

The following are various activities for EMS Law School. Required Suggest a feasible cost driver base for each of the following, and explain why each selected cost driver base is feasible. a. Course r...

Q: Hosmer Industries provides the following information about resources and usage:

Hosmer Industries provides the following information about resources and usage: Required a. Compute the cost driver rate for each resource. b. Describe what the term unused resource capacity means.

Q: WSM Corporation is considering offering an air shuttle service between Sao Paulo

WSM Corporation is considering offering an air shuttle service between Sao Paulo and Rio de Janeiro. It plans to offer four flights every day (excluding certain holidays) for a total of 1,400 flights...

Q: Fisher Fixtures manufactures three types of lighting fixtures, with model names

Fisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and Platinum. It applies all indirect costs according to an annual predetermined rate based on direct l...

Q: Warren Furniture produces three models of desk chairs: Basic, Ergo

Warren Furniture produces three models of desk chairs: Basic, Ergo, and Exec. The cost system at the Warren production facility allocates overhead cost on the basis of direct labor hours. The company...

Q: Kensington Electronics (KE) is a wholly owned subsidiary of CWD

Kensington Electronics (KE) is a wholly owned subsidiary of CWD Enterprises, a global manufacturing company. Unlike most CWD companies, KE uses a traditional costing system to compute product costs. A...

Q: Refer to Problem 9-63. The study team decides to

Refer to Problem 9-63. The study team decides to look more closely at the assembly activity and determines that it can be broken down into two activities: production and engineering. Production covers...

Q: Barr Plastics makes parts for a variety of manufacturing applications. Sales

Barr Plastics makes parts for a variety of manufacturing applications. Sales last year totaled $3,060,000. Information regarding resources for the month follows. In addition, Barr spent $90,000 on 60...

Q: Alpha Capital Company provides financial services to their clients. Recently,

Alpha Capital Company provides financial services to their clients. Recently, Alpha has experienced rapid growth rate due to expansion and is becoming concerned as to their rising costs, particularly...

Q: Carney Cabinets Ltd is a furniture manufacturing company with its factories located

Carney Cabinets Ltd is a furniture manufacturing company with its factories located in six cities in the United Kingdom. The company has recently introduced an automated system, but management is stil...

Q: Marshall’s Devices uses activity-based costing to allocate overhead costs to

Marshall’s Devices uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding. Direct ma...

Q: Yahama Ltd makes several spare parts for motorbikes including Suzuka and Yahama

Yahama Ltd makes several spare parts for motorbikes including Suzuka and Yahama parts. The company has recently switched from the traditional absorption costing to the activity-based costing system. T...

Q: Pharmassist, Inc., a distributor of special pharmaceutical products, operates

Pharmassist, 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-st...

Q: Shades & Hues (S&H) is a designer of

Shades & Hues (S&H) is a designer of high-quality curtains and bedsheets. Each design is made in small batches. Each spring, S&H comes out with new designs for the curtains and for the bed...

Q: Parker Manufacturing has been using activity-based costing to determine the

Parker Manufacturing has been using activity-based costing to determine the cost of product X-678. One of the activities, “Inspection”, occurs just before the produ...

Q: Unicorn Freightways is a leader in transporting agricultural products in the western

Unicorn Freightways is a leader in transporting agricultural products in the western provinces of Italy. Rita Bonnie, a financial analyst at Unicorn Freightways, is studying the behavior of transporta...

Q: Quick Test Laboratories evaluates the re- action of materials to extreme

Quick Test Laboratories evaluates the re- action of materials to extreme increases in temperature. Much of the company’s early growth was attribut- able to government contracts, but...