Questions and Answers of Management And Cost Accounting

It was decided in the first quarter of fiscal 2016 that Commercial Metals Company Ltd would change the accounting method it used to value its inventories. This change would be for its Americas Mills,
Capturing labour costs accurately includes capturing time worked on customer orders, jobs or projects. In some cases, this is a reasonably easy task – such as in a supervised factory setting. In
According to the Plex website, in their Enterprise Resource Planning Systems cost accounting software modules you can:● Set up a flexible, detailed cost structure for each operation and for each
Salvador SA assembles motorcycles and uses long-run (defined as 3–5 years) average demand to set the budgeted production level and costs for pricing. Prices are then adjusted only for large changes
Thor-Equip AS specialises in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately two years ago, Knut Solbær, president of Thor-Equip, decided to
Mikkeli Oy has three operating divisions. The managers of these divisions are evaluated on their divisional operating profit, a figure that includes an allocation of corporate overhead proportional
User Friendly Computer is one of the largest personal computer companies in the world. The board of directors was recently (March 2023) informed that User Friendly’s president, Felix Lechat, was
Faulkenheim GmbH is a manufacturer of tool and die machinery. Faulkenheim is a vertically integrated company that is organised into two divisions. The Frankfurt Steel Division manufactures alloy
Define strategy.
Give examples of non-financial measures of customer satisfaction.
La Quinta Ltd manufactures corrugated cardboard boxes. It competes and plans to grow by producing high-quality boxes at a low cost that are delivered to customers in a timely manner. There are many
Meredith Ltd makes a special-purpose machine D4H used in the textile industry. Meredith has designed the D4H machine for 2022 to be distinct from its competitors. It has been generally regarded as a
Snyder & Partners is a small information systems consulting firm that specialises in helping companies implement sales management software. The market for Snyder’s products is very
Caltex GmbH refines petrol and sells it through its own Caltex petrol stations.On the basis of market research, Caltex determines that 60% of the overall petrol market consists of ‘serviceoriented
Lee SA manufactures various types of colour laser printer in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the
Alcazarquivir Lda manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 2021 and 2022 (in €000):Required1 Classify the cost items
Anna-Greta Lantto, the assistant controller of Kiruna AB had recently prepared the following quality report comparing 2022 and 2021 quality performances.Just two days after preparing the report, Lars
Assume the same facts as in Exercise 21.11. Now assume that there is only one trigger point, the completion of good finished units of product, which are debited to Finished Goods Control at standard
Kari-Klær AS buys and sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier
Range-Tout SARL builds and distributes industrial storage racks using a just-in-time system and maintaining minimal stocks. Range-Tout’s earnings increased sharply in 2021 and earnings-based
Gardini Chocolates makes custom-labelled, high-quality, specialty candy bars for special events and advertising purposes. The company employs several chocolatiers who were trained in Germany. The
Comtex Company provides cable and internet services in the Greater Boston area. There are many competitors that provide similar services. Comtex believes that the key to financial success is to offer
WrightAir is a no-frills airline that services the Midwest. Its mission is to be the only short-haul, low-fare, high-frequency, point-to-point carrier in the Midwest. However, there are several large
Describe the distinctive characteristic of weighted-average computations in assigning costs to units completed and closing work in progress.
Europe Electronics SNC manufactures microchips in large quantities. Each microchip undergoes assembly and testing. The total assembly costs during January 2022 were:Required 1 Assume there was no
Refer to requirement 2 of Exercise4.11.Required Prepare summary journal entries for the use of direct materials and conversion costs. Also prepare a journal entry to transfer out the cost of goods
Consider the following data for the satellite Assembly Division of Aéro-France:Exercise4.11Europe Electronics SNC manufactures microchips in large quantities. Each microchip undergoes assembly and
Le Roi du Plastique Sarl has two processes – extrusion and thermo-assembly. Consider the June 2022 data for physical units in the thermo-assembly process of Le Roi du Plastique: opening work in
Telemark-Kjemi AS manufactures an industrial solvent in two departments – mixing and cooking.This question focuses on the Cooking Department. During June 2022, 90 tonnes of solvent were completed
Refer to the information in Exercise4.17. Suppose Telemark-Kjemi determines standard costs of NKr 1050 per (equivalent) tonne of transferred-in costs, NOK 390 per (equivalent) tonne of direct
Required Do Exercise4.20 using the FIFO method of process costing. Explain any difference between the cost of work completed and transferred out and cost of closing work in progress in the Assembly
Sligo Toys Ltd manufactures one type of wooden toy figure. It buys wood as its direct material for the Forming Department of its Ballinode plant. The toys are transferred to the Finishing Department,
Required Do Exercise4.22 (1) using FIFO and four decimal places for unit costs. Explain any difference between the cost of work completed and transferred out and cost of closing work in progress in
Sligo Toys Ltd manufactures wooden toy figures at its Ballinode plant. It has two departments –the Forming Department and the Finishing Department. Consider now the Finishing Department, which
1. Using the FIFO process-costing method, do the requirements of Exercise4.24. The transferred in costs from the Forming Department for the April opening work in progress are €17 520. During April,
Germinal et Associés provides tax advice to multinational firms. Germinal charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct
Azu-Cena Ltda is a manufacturer of motorcycles. Production and cost data for 2022 are as follows: Units produced Direct manufacturing labour-hours per unit Machine-hours per unit 500 cc model 1000 cc
Jyvaskyla Oy is a retail chain of supermarkets. For many years, it has used gross margin (selling price minus cost of goods sold) to guide it in deciding on which products to emphasise or
Brian McGarrigle went to Les Arcs for his annual winter vacation. Unfortunately, he suffered a broken ankle while skiing and had to spend two days at the Hôpital de Grasse. McGarrigle’s insurance
Alxenor SA has a power plant designed and built to serve its three factories. Data for 2022 are as follows:Actual fixed costs of the power plant were €1 million in 2022; actual variable costs, €2
Rolf, Ilse and Ulrich are members of the Frankfurt Fire Brigade. They share an apartment that has a lounge with the latest wide-screen TV. Ulrich owns the apartment, its furniture and the wide-screen
Olympiakos SA provides outsourcing services and advice to both government and corporate clients.For costing purposes, Olympiakos classifies its departments into two support
Euro-Medi Plc manufactures a wide range of medical instruments. Two testing instruments (101 and 201) are produced at its highly automated Limerick plant. Data for December 2022 are as
Koala Ltd has only two divisions: A and B. The following data apply to Division A.Required 1 Prepare a segment report for Division A that differentiates between the performance of the manager and the
Laser Tecnologia Srl develops, assembles and sells two product lines:Product Line A is sold exclusively to the Italian Department of Defence under a cost-plus reimbursement contract. Product Line B
What is a joint cost?
Terms a Split-off point b Joint cost c Separable cost d By-product e Joint product f Product Definitions 1 Product with low sales value compared with the sales value of the main or joint
Miljø-Såpe AS produces two joint products, cooking oil and soap oil, from a single vegetable oil refining process. In July 2022, the joint costs of this process were NOK 24 000 000. Separable
Galinha-Esquina SA grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2022 is as follows:Joint costs of production in July
Claude Deux-Bussy is the owner and operator of Boissons Barbe-Bleue Sarl, a bulk soft-drink producer. A single production process yields two bulk soft drinks, Pelléas (the main product) and
Flori-Dante Srl grows, processes, packages and sells three joint apple products:(a) sliced apples that are used in frozen pies,(b) apple sauce, and(c) apple juice. The apple peel, processed as animal
Flori-Dante classifies animal feed as a by-product. The by-product is inventoried at its selling price when produced; the net realisable value of the product is used to reduce the joint production
Langholmen-Sverige AB crushes and refines mineral ore into three products in a joint-cost operation. Costs and production for 2022 were as follows:better off by selling Vätervik that way or
Alternative methods of joint-cost allocation, product-mix decisions (40 minutes)Schmidsendl GmbH buys crude vegetable oil. Refining this oil results in four products at the splitoff point: A, B, C
Nor-Pharma AS manufactures three joint products from a joint process: Altox, Lorex and Hycol.Data regarding these products for the fiscal year ended 31 May 2022 are as follows:The joint production
‘The main trouble with variable costing is that it ignores the increasing importance of fixed costs in modern manufacturing.’ Do you agree? Why?
Forza San Marino Srl installed standard costs and a flexible budget on 1 January 2022. The president had been pondering how fixed manufacturing overhead should be allocated to products.Machine-hours
Starzmann GmbH assembles and sells motor vehicles. It uses an actual-costing system, in which unit costs are calculated on a monthly basis. Data relating to April and May of 2022 are:The selling
Svenborg AS manufactures and sells wide-screen television sets. It uses an actual-costing system, in which unit costs are calculated on a monthly basis. Data relating to January, February and March
Ericsson AB manufactures and sells a single product. The following data cover the two latest years of operations:Required1 Prepare two income statements for 2023, one under variable costing and one
Bières Ronsard SA recently purchased a brewing plant from a bankrupt company. The brewery is in Montpazier, France. It was constructed only two years ago. The plant has budgeted fixed manufacturing
In 2022, the Montpazier brewery of Bières Ronsard showed these results:The sales division of Bières Ronsard purchased 2 400 000 barrels in 2022 at the €68 perbarrel rate.All manufacturing
It is the end of 2023. Ginnungagap Oy began operations in January 2022. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output.Ginnungagap is
Audumla Oy began operations in 2022 and differs from Ginnungagap in only one respect: it has both variable and fixed manufacturing costs. Its variable manufacturing costs are €7 per tonne, and its
Koninklijke BolsWessanen NV has fixed costs of €300 000 and a variable-cost percentage of 80%.The company earns net profit of €84 000 in 2022. The income tax rate is 40%.Required Calculate (1)
Bomuldstaft AS is considering two new colours for their umbrella products – emerald green and shocking pink. Either can be produced using present facilities. Each product requires an increase in
GF is a company that manufactures clothes for the fashion industry. The fashion industry is fast moving and consumer demand can change quickly due to the emergence of new trends.GF manufactures three
Bellingwolde BV operates car rental agencies at over 20 airports. Customers can choose from one of three contracts for car rentals of one day or less: Contract 1: 50 for the day. Contract 2: 30 for
Lorenzo-Netto, Srl, operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. Cars are washed as the conveyor belt carries the car from the start
Assume the same information for Genève Défense Systèmes as in Exercise9.17 except that Genève Défense Systèmes uses a 90% incremental unit-time learning curve as a basis for forecasting direct
Pauline Raphaël, executive assistant to the principal of Ecole Supérieure des Mines de St Etienne, is concerned about the overhead costs at her university. Cost pressures are severe, so controlling
Required 1 Given your findings in Exercise9.19, should Raphaël use multiple regression analysis to better understand the cost drivers of overhead costs? Explain your answer.2 Raphaël decides that
‘A component part should be purchased whenever the purchase price is less than its total unit manufacturing cost.’ Do you agree? Why?
Define opportunity cost.
Ennerdale Ltd has been asked to quote a price for a one-off contract. The company’s management accountant has asked for your advice on the relevant costs for the contract. The following information
Why should managers worry about product over- or undercosting?
Starkuchen GmbH has been in the food-processing business for three years. For its first two years(2021 and 2022), its sole product was raisin cake. All cakes were manufactured and packaged in 1 kg
Wolfgang Iser, the accountant of Starkuchen, wants to further examine the relative profitability of raisin cake and layered carrot cake. He questions the accuracy of the activity-based normal costing
CJD Ltd manufactures plastic components for the car industry. The following budgeted infomation is available for three of their key plastic components: W X Y per unit per unit per unit Selling
Baden-Möbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based approach. There are two direct-cost categories (direct materials and
1 Discuss the conditions under which the introduction of ABC is likely to be most effective, paying particular attention to:2 Explain why ABC might lead to a more accurate assessment of management
Alexon SL is an electronics business with eight product lines. Profit data for one of the products(XT-107) for the month just ended (June 2022) are as follows:Xuclà Mecàniques Fluvià SA, an
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
Hospedeiras de Portugal Lda, a large labour contractor, supplies contract labour to building construction companies. For 2022, Hospedeiras has budgeted to supply 80 000 hours of contract labour. Its
Overloon BV is a repair-service company specialising in the rapid repair of photocopying machines. Each of its 10 clients pays a fixed monthly service fee (based on the type of photocopying machines
Spring Distribution has decided to analyse the profitability of another five customers. It buys bottled water at €0.50 per bottle and sells to wholesale customers at a list price of €0.60 per
Euro-Jouets SNC sells neon-coated ‘Feu-Follet’ cars to several local toy stores. It has the capacity to make 250 000 of these units per year, but during the year ending 31 December 2022, it made
Aalesund Fotballklubb is a Norwegian football team with a long tradition of winning. However, the last three years have been traumatic. The team has not won a major championship, and attendance at
The manager of the Robin Hood Company is considering two investment projects that are mutually exclusive. The after-tax required rate of return of this company is 10%, and the anticipated cash flows
The board of directors of a company is considering two mutually exclusive projects. Both projects necessitate buying new machinery, and both projects are expected to have a life of five years.Project
ST operates in a highly competitive market and is considering introducing a new product to expand its current range. The new product will require the purchase of a specialised machine costing £825
Embutidos Vallina SA has two direct-cost categories: direct materials and direct manufacturing labour. Its single indirect-cost category (manufacturing overhead) is allocated on the basis of
Lux-Ernster expects 2022 sales of 100 000 units of serving trays. Lux-Ernster’s opening stock for 2022 is 7000 trays; target closing stock, 11 000 trays.RequiredCalculate the number of trays
Europa-Dyonisos SA produces wine. The company expects to produce 1.5 million two-litre bottles of Chablis in 2022. Europa-Dyonisos purchases empty glass bottles from an outside supplier. Its target
Jacek Zielinski, the budget manager at Jelenia-Silesia, a manufacturer of child furniture and carriages, is working on the 2022 annual budget. In discussions with Sylwester Czereszewski, the sales
Castelo Branco Lda is a manufacturer of video-conferencing products. Regular units are manufactured to meet marketing projections, and specialised units are made after an order is
On 1 December 2022, Tire-Lire, SNC, is attempting to project cash receipts and disbursements to 31 January 2023. On this latter date, a note will be payable in the amount of €100 000. This amount
M plc designs, manufactures and assembles furniture. The furniture is for home use and therefore varies considerably in size, complexity and value. One of the departments in the company is the
Nyborg Supermarkets AS is preparing its activity-based budget for January 2022 for its operating costs (that is, its non-cost of goods purchased for resale costs). Its current concern is with its
Nyborg Supermarkets has a kaizen (continuous improvement) approach to budgeting monthly activity area costs for each month of 2022. February’s budgeted cost driver rate is 0.998 times the budgeted

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