Questions and Answers of Cornerstones Cost Management

Refer to the data in 4-2.Required:1. At the end of the year, how much overhead has been applied to production?2. Is overhead over- or underapplied and by how much?3. Assuming that any overhead
Randi Garner, owner of Garner Office Designs of 4-2, noticed that many of her clients had similar computers, and the desks for this part of the installation were virtually the same from one
Shevaneh Company uses a normal job-order cost system. Budgeted overhead for the com¬ing year is $950,000. Expected actual activity is 250,000 direct labor hours. During the year, Shevaneh worked a
Zander, Inc. costs products using a normal costing system. The following data are availablefor last year;Overhead is applied on the basis of direct labor hours.Required:1. What is the predetermined
Using the information from 4-6, suppose Zander, Inc. applied overhead to production on the basis of machine hours instead of direct labor hours.Required:1. What is the predetermined overhead rate?2.
Karol Company and Jason Company both use predetermined overhead rates to apply fac¬tory overhead to production. Karol's is based on machine hours and Jason's is based on ma¬terials cost. Budgeted
Kaycee, Inc., manufactures brown paper grocery bags. During the month of May, the fol¬lowing occurred;a. Materials were purchased on account for $23,175.b. Materials totaling $19,000 were
Cimino Company uses a predetermined overhead rate to assign overhead to jobs. Because Cimino's production is machine-dominated, overhead is applied on the basis of machine hours. The expected
Porter Company uses job-order costing. During January, the following data were reported:a. Materials purchased: direct materials, $82,000; indirect materials, $10,500.b. Materials issued: direct
Hamblin Products, Inc. provided the following data for the year:The company uses a predetermined overhead rate based on direct labor hours. The rate for the year was $5.20 per direct labor
Bryan Company uses a normal job-order cost system. Currently, a plantwide overhead rate is used, based on machine hours. Sam Perkins, the plant manager, has heard that depart¬mental overhead rates
During October, Tyson Company worked on two jobs. Data relating to these two jobs follow:Overhead is assigned on the basis of direct labor hours at a rate of $3.75. During October, Job 68 was
Golding Company applies overhead based on direct labor cost. During the first quarter, the following activity took place in each of the accounts listed below.Job 32 was the only job in process at the
Sanderson Company uses a predetermined overhead rate to apply overhead. Overhead is applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in Department 2. At
On March 1, Mangan Company had the following balances in its inventory accounts:Work in process is made up of three jobs with the following costs:During March, Mangan experienced the transactions
During February, the following transactions were completed and reported by Bixby Prod¬ucts, Inc.:a. Raw materials purchased on account, $43,500.b. Materials issued to production to fill job-order
At the beginning of the year. Poison Manufacturing Company had the following balances in its inventory accounts:Poison applies overhead on the basis of 150 percent of direct labor cost. During the
Chesbro Inc., manufactures customized pressure washers. The washers pass through two departments: fabrication and painting. Chesbro uses a normal costing system. Estimated overhead and direct labor
Jurgens Tailoring is a costume company located in Manhattan. Jurgens designs and creates costumes for theatrical presentations. Additionally, Jurgens alters and repairs costumes.Jurgens has three
Refer to the data in 4-22. Is Jurgens a manufacturing firm or a service firm? Explain.
Dr. Sherry Bird is employed by Dental Associates. Dental Associates recently installed a computerized job costing system to help monitor the cost of its services. Each patient is treated as a job and
Palace Lighting Fixtures Inc. uses a predetermined overhead rate to apply overhead. Over¬head is applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in
Jackson's Sporting Goods Store sells a variety of sporting goods and clothing. In a back room, Jackson's has set up heat-transfer equipment to personalize T-shirts for Little League teams. Typically,
Describe the basic characteristics of process costing, including cost flows, journal entries, and the cost of production report.
Describe process costing for settings without work in process inventories.
Define equivalent units, and explain their role in process costing.
Prepare a departmental production report using the FIFO method.
Prepare a departmental production report using the weighted average method.
Prepare a departmental production report with transferred-in goods and changes in output measures.
Describe the basic features of operation costing.
What are the similarities and differences in the manu¬facturing cost flows for job-order firms and process firms?
What are transferred-in costs?
Can process costing be used for a service organization?Explain.
Explain how process costing can be used for JIT man¬ufacturing firms.
What are equivalent units? Why are they needed in a process cost system?
What are the disadvantages of the weighted average method? Advantages?
What is the role of work orders in operation costing?
Explain the similarities and differences between financial accounting and cost management.
Describe the evolution of accounting.
Identify and discuss the current focus of cost management.
Discuss the importance of the accounting system for internal and external reporting.
Explain the need for cross¬functional expertise in today's cost accountant.
Describe the role of cost and management accountants in an organization.
Explain the importance of ethical behavior for managers and accountants.
Identify the three forms of certification available to internal accountants.
What is cost management, and how does it differ from management and cost accounting?
How has expanded global competition affected busi¬nesses' need for accounting information?
PCs significantly increase a manager's capabilities to process and use accounting information. Do you agree? Explain.
What is the role of the controller in an organization?
Describe some of the activities over which he or she has control.
What is ethical behavior? Is it possible to teach ethical behavior in a management accounting course?
In the 1400s Europeans valued the gold, gems, drugs, and spices that came from the Orient.However, these goods were very costly, since they could only be transported to Europe via long overland
A number of mail-order computer and software companies have set up customer service telephone lines. Some are toll-free, some are not. A customer can wait on hold anywhere from three seconds to
Consider the following scenario:MANAGER: "If I can increase my fourth quarter profit by $120,000, my division will show a profit 10 percent above the planned level, and I will receive a $30,000
Each of the following scenarios requires the use of accounting information to carry out one or more of the following managerial activities: planning, controlling (including performance evaluation),
Management accountants are actively involved in the process of managing the entity. This process includes making strategic, tactical, and operating decisions while helping to coor¬dinate the efforts
The job responsibilities of three employees of Barney Manufacturing are described next.Tyranna Davis, cost accounting manager, is responsible for measuring and collecting costs associated with the
Assess and comment on each of the following statements that have appeared in newspaper editorials:1. Business students come from all segments of society. If they have not been taught ethics by their
The Alert Company is a closely held investment service group that has been very success¬ful over the past five years, consistently providing most members of the top management group with 50 percent
Webson Manufacturing Company produces component parts for the airline industry and has recently undergone a major computersystem conversion. Michael Darwin, the controller, has established a
JLA Electronics is a U.S.-based, high-tech company that manufactures and distributes com¬puter and telecommunications equipment. JLA has developed a handheld, lightweight fax system, Porto-Fax, that
The external auditors for Heart Health Procedures'(HHP) are currently performing the an¬nual audit of HHP's financial statements. As part of the audit, the external auditors have prepared a
Using Internet resources, describe the CMA, CPA, and CIA. In describing the certifications, answer the following questions: What are the relative advantages of each certification for the internal
The Body Shop has been considered an ethical model for business. For example, it does not test products on animals and is known for paying first-world wages in third-world coun¬tries. Yet recently.
Describe a cost nnanagement information system, its objectives and major subsystems, and indicate how it relates to other operating and information systems.
Explain the cost assignment process.
Define tangible and intangible products, and explain why there are different product cost definitions.
Prepare income statements for manufacturing and service organizations.
Explain the differences between traditional and contemporary cost management systems.
What is a system?
Why should the cost management system be inte¬grated with the operational systems of the value chain?
Explain the difference between direct tracing and dri¬ver tracing.
What is allocation?
What are drivers? Resource drivers? Activity drivers?Give an example of a resource driver and an example of an activity driver.
What is a service?
Explain how services differ from tangible products.
Describe some of the major differences between a functional-based and an activity-based cost manage¬ment system.
When would a’ company choose an activity-based cost system over a functional-based system? What forces are moving more firms to implement activity-based management cost systems?
The following items are associated with a cost accounting information systema. Usage of direct materialsb. Cost Accountingb. Assignment of direct materials cost to each productc. Information Systemc.
Lehman Company produces parts for the automotive industry including: doors, manifolds, and fuel tanks. Recently, Lehman switched from a traditional departmental assembly line system to a
Shumard Company manufactures sundials. The following information was obtained for last yearDuring the year, materials purchases amounted to $199,200, direct labor cost was $170,000, and overhead cost
For each of the following independent situations, calculate the missing values.1. The Indianola plant purchased $143,000 of materials during May. Beginning inventory was $17,500 and direct materials
Morey Company manufactures desk lamps. At the beginning of March, the following information was supplied by its accountant:During March, direct labor cost was $17,000, raw materials purchases were
Wachman Inc. manufactures mugs decorated with the likenesses of famous cartoon char¬ acters. Last year 200,000 mugs were made and 207,000 were sold for $5 each. The actual unit cost for a mug is as
Ghajar Company, a manufacturing firm, has supplied the following information from its ac¬counting records for last year:Required:1. Prepare a cost of goods manufactured statement.2. Prepare a cost
Bill Johnson owns and operates three Frazer Speedo outlets in Wichita, Kansas. Frazer Speedo is an oil and lubrication service outlet—one of many franchise outlets popular throughout the Midwest.
The following items are associated with a functional-based cost accounting infonnation system, an activity-based cost accounting information system, or both (that is, some elements are com¬mon to
The actions listed next are associated with either an activity-based operational control system or a functional-based operational control system.a. Budgeted costs for the maintenance department are
lolanni Company produced 2,4(^teakwood screens during the past year. These screens sell for $^350 each. lolanni had 112 screens in finished goods inventory at the beginning of the year. At the end of
Whizbang Company creates, produces, and markets video games. Most of the games in¬volve some sort of brain teaser. Leonard Poison, the owner of Whizbang, is convinced that his employees must have
Kreative Company is a tax services firm. The firm is located in Chicago and employs ten professionals and five staff. The firm does tax work for small businesses and well-to-do in¬dividuals. The
Lamson Company produces circuit boards that are used by manufacturers of microcom¬puters. For 2001, Lamson reported the following:Lamson produced 50,000 units during 2001 and sold 62,000 units at
Gateway Construction Company is a family-operated business founded in 1970 by Samuel Gateway. In the beginning, the company consisted of Gateway and three employees laying gas, water, and sewage
Define and describe fixed, variable, and mixed costs.
Explain the use of resources and activities and their relationship to cost behavior.
Separate mixed costs into their fixed and variable components using the highlow method, the scatterplot method, and the method of least squares.
Evaluate the reliability of the cost formula.
Explain how multiple regression can be used to assess cost behavior.
Discuss the use of managerial judgment in determining cost behavior
Explain the difference between committed and discre¬tionary fixed expenses. Give examples of each.

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