Refer to the description of Black Meter's cost accounting system in Appendix A and consider the following:
1. Trace through the cost accounting procedures described so that you are able to show how the numbers in each illustration are derived from, and/or help derive, the other illustrations.
2. Try to imagine what an actual cost system for Black Meter would look like. How would it compare with the standard cost system in terms of
a. Recordkeeping effort required?
b. Usefulness of cost information to Black Meter's management?
3. Develop a flowchart for Black Meter's system similar to the one in Illustration 19-2. Do not use dollar amounts, but indicate flows between accounts and show whether entries are at standard or actual costs. In what respects, if any, do these two flowcharts differ?
4. Suppose that the direct labor rates for Departments 120A and 131 were each increased by $1.00 per hour. What effect would these changes have on the succeeding illustrations and on the total standard cost of 100 5/8-inch HF meters?
5. As a consultant to Black Meter Company's controller, what would be your evaluation of the present system?