Questions and Answers of Fundamental Managerial Accounting Concepts 10th

Using the traditional overhead allocation technique described in the chapter, Lily Ice Cream Company’s Vanilla flavor has a gross profit of negative $155,000 (see Exhibit 6). Using the ABC system,
Overhead Allocation Problem in the Lily Ice Cream Company Example Which one of the following statements is true with respect to the Lily Ice Cream Company example described in the text of this
Characteristics of Traditional Overhead Allocation Systems Which one of the following statements is false with respect to a traditional overhead allocation system?a. A traditional overhead allocation
Traditional Overhead Allocation System The company expects to use 500,000 direct labor hours in the production of its only product. Using a traditional overhead allocation system based on direct
Overhead Allocation Problems Which one of the following statements is false?a. Facility support costs should not be allocated over each division.b. Facility support costs include direct labor and
Difference between a Traditional System and an ABC System Which one of the following statements best summarizes the difference between a traditional overhead allocation system and an ABC system?a.
General Categories of ABC Activities Which one of the following is not one of the four general categories of ABC activities?a. Facility support activitiesb. Batch-level activitiesc. Unit-level
Batch-Level Activities Which one of the following would not be an example of a batch activity for a manufacturing firm?a. Purchase ordersb. Special product warehouse manager’s salaryc. Number of
Product Line Activities Which one of the following is not an example of a product line activity?a. Property taxes on the production facilityb. Costs related to specialized materials warehousesc.
Facility Support Activities Which one of the following is not an example of a facility support activity?a. Manufacturing vice president’s salaryb. Property taxesc. Accountingd. Product engineer’s
Identifying Cost Drivers The company manufactures a variety of models of automobile transmissions. Which one of the following is the best cost driver to use with the activity “designing the parts
Unit-Level Activities The company has determined that $1,029,600 of its total manufacturing overhead costs related to unit-level activities such as electricity costs for running the manufacturing
Unit-Level, Batch-Level, Product Line, and Facility Support Costs The company has determined that its total manufacturing overhead cost of $900,000 is a mixture of unit-level, batch-level, product
Resolving Cost Distortions Which one of the following statements is false?a. In a manufacturing setting with several different types of products, a traditional overhead allocation system can cause a
Overhead Costs and Dropping a Product Line The company manufactures three products. Profit computations for these three products for the most recent year are as follows:The company traditionally
Product Costing Review Mad Dog Enterprises manufactures computer game control devices such as joysticks and steering wheels. Following is a list of the costs incurred by Mad Dog in 2009:Compute the
Importance of Manufacturing Overhead Allocation The percentages of product costs comprised by direct materials, direct labor, and manufacturing overhead for three companies are as follows:Based on
Product Cost Hierarchy For the following list of costs, indicate by the appropriate letter which category of activities each cost applies to: unit level (U), batch level (B), product line (P), or
Computing Profit Using ABC Cottrell Company manufactures three products. Gross margin computations for these three products for 2009 are given below.Cottrell has reexamined the factors that cause its
Computing Profit Using ABC Halsey, Inc. manufactures two types of baby car seats: standard and deluxe. Information for the year 2009 has been given as follows:Manufacturing overhead for the year
Allocating Batch-Level and Product Line Manufacturing Overhead Costs Giles Company has two divisions. Gross margin computations for these two divisions for 2009 are as follows:Giles has determined
Allocating Batch-Level and Product Line Manufacturing Overhead Costs Sundance Skis Company is preparing its end-of-year gross margin computations. Sundance Skis manufactures three types of products:
Problems from Allocating Facility Support Costs Blaine Avenue Company manufactures three products. Gross margin computations for these three products for 2009 are as follows:Blaine Avenue has
Problems from Allocating Facility Support Costs Wilken Sandwich Shop maintains three separate menus for breakfast, lunch, and dinner.Gross margin computations for the three menu lines for 2009 are as
Identifying Overhead Cost Activities Below is a list of overhead cost activities. For each activity, determine whether it is a unitlevel, batch-level, product line, or facility support activity.1.
Computing Cost Pools MaScare Company produces clothing and has identified five overhead cost activities. These activities are shown as the columns in the table below, along with the percentage of
Identifying and Using Volume-Based and Activity-Based Cost Allocation Rates Rane Company produces electronic fish finders. It makes two different fish finders: the standard model, which is produced
Computing Profit Using ABC Rockwell Company has three operating divisions. Gross margin computations for these three divisions for 2009 are given below.Rockwell has determined that its total
Allocating Unit-Level, Batch-Level, and Product Line Manufacturing Overhead Costs Solar Salt Company has two divisions. Gross margin computations for these two divisions for 2009 are as follows:Solar
Manufacturing Overhead Allocation Using Activity-Based Costing The following information is given for Greenbaum Manufacturing CompanyRequired:1. Determine the ABC allocation rate for each activity
Manufacturing Overhead Allocation Using Activity-Based Costing Rick’s Crane Company manufactures three different crane engines with 50 horsepower (hp), 60 horsepower, and 70 horsepower engines,
Manufacturing Overhead Allocation with Multiple Products Schmidt Electronics produces two products: CD105 and HD210. Relevant costing information for each product is as follows:Manufacturing overhead
Activity-Based Costing and Gross Margin Calculations Stafford Manufacturing, Inc., produces two different products. Product 1 sells for $950 each, and Product 2 sells for $700 each. Estimated annual
Allocation of Manufacturing Overhead with Multiple Products Geddy, Inc., is a manufacturing firm that manufactures two types of boat engines. The Type A engine is designed for a specific type of
Allocation of Manufacturing Overhead with Multiple Products Macey Sprinkling Company produces two types of pipe: (1) lawn sprinkler pipe and (2)building sprinkler pipe. Relevant information for the
Using ABC to Compute Product Cost and Make Decisions Yosef Company makes two products—guns and butter. Production cost data are as follows:Both the guns and the butter are manufactured in the same
Problems from Allocating Facility Support Costs Ashlyn Company manufactures three products. Gross margin computations for these three products for 2009 are as follows:Ashlyn has reexamined the
You Decide: Does cost information provide help in running a business, or is it only useful within the bounds of an accounting system?Your friends in the MBA program at your university seem to think
You Decide: Does activity-based costing (ABC) help a company revamp and improve its business operations, or is it too much of an administrative burden that takes away from the company’s primary
Microsoft Microsoft, like most other companies, is continually striving to appropriately allocate costs and to increase the quality of its products. Use your knowledge of Microsoft and your
Deluxe Corporation Deluxe Corporation (Deluxe) is the world’s largest printer of checks as well as a provider of electronic products and services to financial institutions and retail companies. The
5 billion checks written by American consumers and businesses annually than any other check printer. In fact, Deluxe printed enough checks in 2001 that if lined up end to end would stretch to the
Advantages and Disadvantages of ABC Your boss recently attended a conference where activity-based costing was discussed. She is intrigued by the ABC concept and wonders if the company is
ABC or Bust!As the text indicates, activity-based costing has received much attention from businesses around the world. Yet some firms still resist adopting an ABC system, and others have adopted ABC
ABC versus Traditional Product Costing Willett Company makes two types of products: Product A and Product B. The company’s management accountants accumulated the following production cost
Importance of Accurately Identifying Product Costs Which one of the following statements is false?a. A company wishing to enter a new market may decide not to enter the market because the prices
Manufacturing Overhead Components Which one of the following is not an example of manufacturing overhead?a. Tires used in the assembly of carsd. Staples used in assembling furnitureb. Production
Cost Flow Sequence Which one of the following sequences is the correct sequence for the flow of costs through a production process?a. Raw materials inventory, work-in-process inventory, cost of goods
Purchasing Raw Materials The company purchased plastic costing $23,000 and sheet metal costing $92,000. The company paid cash. Both of these materials are used in the production process. Make the
Direct Materials The company transferred plastic costing $4,000 and sheet metal costing $22,000 to the factory floor to be used as direct materials in production. Make the necessary journal entry or
Indirect Materials The company transferred plastic costing $1,700 and sheet metal costing $3,200 to the factory floor to be used in general maintenance projects. Because these materials will not be
Direct Labor Two workers worked six hours each to build a custom entertainment center. Each worker earns $12 per hour. Make the necessary journal entry to record this transaction. Note: The wages
Indirect Labor The company paid $5,000 in April to its production supervisor for her monthly salary. Make the necessary journal entry to record this transaction.
Recording Actual Manufacturing Overhead The cost of certain overhead items for the month was as follows:Payment for these items was as follows:a. The company is required to pay for one year’s rent
Applying Manufacturing Overhead The company used 130 direct labor hours to complete a certain job. The company applies manufacturing overhead based on direct labor hours at a rate of $6.80 per
Transferring the Cost of Completed Jobs The total cost of materials, labor, and overhead assigned to a job was $563. The company transferred this job to its finished goods warehouse. Make the
Transferring the Costs of Products That Are Sold Refer to the data in PE 16-11. The company sold for $1,250 the inventory produced in this job. Make the journal entry to record this transaction. The
Costs Transferred out of Work-in-Process Inventory The company spent a total of $102,340 in the current period in one of its production centers.In addition, when the production period began, there
Costs of Ending Work-in-Process Inventory The company spent a total of $309,203 in the current period in one of its production centers.In addition, when the production period began, there was
Calculating Predetermined Overhead Rates The company reports the following information from the budget for the coming year: Estimated total amount of manufacturing overhead $1,600,000 Average wage
Over- and Underapplied Manufacturing Overhead The company incurred $32,056 in manufacturing overhead and applied $32,537. The company uses the most common and simple method of handling differences
Computing Cost of Goods Manufactured Using the following information, compute cost of goods manufactured, which is the cost of inventory transferred to Finished Goods Inventory. Work-in-process
Cost of Goods Manufactured Schedule Using the following information, prepare a Cost of Goods Manufactured schedule. Work-in-process inventory, beginning balance Work-in-process inventory, ending
Computing Cost of Goods Sold Using the following information, compute cost of goods sold. Make sure to consider all necessary adjustments. Any over- or underapplied manufacturing overhead is closed
The Flow of Services and Costs in Service Companies Which one of the following statements is false?a. Service companies use predetermined overhead rates.b. Regarding the accounting for cost of
Units Started and Completed At the beginning of the month, the company had 80 units that were 35% complete in inventory. At the end of the month, the company had 70 units that were 95% complete in
Equivalent Units of Production Given the following information, compute the equivalent units of production. Beginning work-in-process Started and completed Ending work-in-process Physical Units
Product Costs per Unit Using the following information, compute the total product costs per unit for both beginning work-in-process inventory and for current period production. Total Equivalent Costs
Work-in-Process Analysis in a Manufacturing Organization Steven James, a recently hired internal auditor, is currently auditing the work-in-process inventory account. Steven has forgotten some basic
Flow of Manufacturing Costs Post the following cost data to the appropriate T-accounts to trace the flow of costs from the time they are incurred until the product is completed and sold. (Assume that
Assigning Manufacturing Costs to Jobs Farrer Manufacturing Company uses a job order costing system. All relevant information for Jobs #203 and #204, which were completed during May, is provided here.
Analyzing Manufacturing Costs The following T-accounts represent inventory costs as of December 31, 2009:1. Determine the direct labor costs for 2009.2. Determine the cost of goods manufactured for
Predetermined Manufacturing Overhead Rates The Boise Manufacturing Company uses a job order costing system. For Job #221, the production manager requisitioned $1,350 of direct materials and used 50
Predetermined Manufacturing Overhead Rates The Make-It-Right Company manufactures special wheelchairs for handicapped athletes. The company uses a job order costing system. Partial data for a
Predetermined Manufacturing Overhead Rates Chicago Corporation uses a job order costing system. Thus, management must establish a predetermined overhead rate for applying manufacturing overhead.
Predetermined Manufacturing Overhead Rates East Lake Corporation uses a job order costing system and applies manufacturing overhead using a predetermined overhead rate. The following data are
Applying Manufacturing Overhead Chris Company has four manufacturing subsidiaries (listed below). Each subsidiary keeps a separate set of accounting records. Manufacturing cost forecasts for 2009 for
Applying Manufacturing Overhead Valtec Company has three manufacturing divisions (listed below). Each division has its own job order costing system and forecasts the following manufacturing costs for
Assigning Manufacturing Costs to Jobs Cedar Company uses predetermined overhead rates in assigning manufacturing overhead costs to jobs. The rates are based on machine hours in the machining
Total Manufacturing Costs and Cost of Goods Manufactured The following information is for Kiev Derrald Company:1. Compute total manufacturing costs.2. Compute cost of goods manufactured.
Total Manufacturing Costs, Cost of Goods Manufactured, and Cost of Goods Sold The following information is for MTC Harry Company:1. Compute total manufacturing costs.2. Compute cost of goods
Service Cost Flows Xavier & Associates Law Firm estimated its total overhead costs for 2009 to be $1.8 million.It allocates overhead based on direct labor hours. Xavier employs a total of 11
Service Cost Flows Johnson Engineers incurred (but has not yet paid) the following costs in 2009:Prepare the journal entries to account for the costs given. Close the overhead account to Cost of
Predetermined Service Overhead Rates The following data are available for Haul-It-Away Truckers:1. Compute the predetermined overhead rate for each of the two years, if based on (a) direct labor
Applying Overhead Brown School teaches private accounting courses. It applies overhead based on instructor hours. The following information was forecasted for 2009:1. Calculate the predetermined
Service Costs The following information is available for a particular consulting contract performed by Newland Business Consultants in 2009:Newland applies overhead on the basis of client consulting
Equivalent Units—Process Costing Assume that you are the owner and sole employee of a lube, oil, and filter service business that you run out of your home. Currently, you are running a spring
Equivalent Units and Unit Costs—Process Costing A large factory that manufactures wooden furniture has several assembly lines. One of the assembly lines is dedicated to assembly of wooden kitchen
Equivalent Units and Unit Costs—Process Costing Heidi Corporation began producing quick-drying paper cement in June (i.e., there was no beginning work-in-process inventory on June 1). The
Job Order Costing in a Manufacturing Organization—Journal Entries Following are transactions for Itabuna Manufacturing Company. Assume that the company has no beginning work-in-process inventory or
59%;">6. Rent and utilities for the building of $33,000 and $9,000, respectively, were paid.Three-fourths of these expenses are applicable to manufacturing and the remainder to administration.7.
Manufacturing Cost Flows Ogden Corporation uses a job order costing system in its manufacturing operation. For the year 2009, Ogden’s predetermined overhead rate was 75% of direct labor costs. For
Using T-Accounts: Cost Flows in a Job Order Manufacturing Organization High Country Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs.
Applying Manufacturing Overhead Swenson Corporation has four independent manufacturing divisions. The following data apply to the divisions for the year ended December 31, 2009:Required:1. For each
Applying Manufacturing Overhead Openshaw Manufacturing Company made the following estimates at the beginning of the year:Manufacturing overhead is applied on the basis of machine hours in the
Unifying Concepts: Job Order Costing, Cost Flows, Journal Entries, and Predetermined Overhead Rates Dunn Manufacturing Company applies manufacturing overhead on the basis of direct materials costs.
Unifying Concepts: Job Order Costing Jones Custom Furniture Manufacturing, Inc., made the following estimates at the beginning of the year, 2009:Jones applies manufacturing overhead to specific job
Cost of Goods Manufactured The following data apply to Newton Company and Alexander Company (two independent companies):Required:Fill in the unknowns for the two cases. (Hint: Indirect materials are
Cost of Goods Manufactured Schedule(Note: This problem is a continuation of P 16-51.) Dunn Manufacturing Company’s journal entries and T-accounts for Manufacturing Overhead and Work-in-Process
Unifying Concepts: Job Order Costing and the Cost of Goods Manufactured Schedule Delta Manufacturing Company applies manufacturing overhead to jobs on the basis of machine hours. The 2009 estimates

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