Questions and Answers of Fundamentals Cost Accounting

In manufacturing its products, Trevano Corp. adds all direct material at the beginning of the production process. The company's direct labor and overhead are considered to be continuously at the same
For each of the following situations, use the weighted average method to determine the equivalent units of production for labor and overhead, assuming that they are continuously at the same
Lazer Inc. makes small toys in a one-department production process. Plastic is added at the beginning of the process; all other materials are considered indirect. The following information is
Use the information in Exercise E6-27 except assume that BeGone uses FIFO process costing. Prepare a schedule showing the BeGone August computation of FIFO equivalent units of production and cost per
Units Compute equivalent units of production for the period for each of the following separate scenarios. In your calculations, simply calculate work done during the period, ignoring the application
In manufacturing its products, Russell Corp. adds all direct material at the beginning of the production process. The company's direct labor and overhead are considered to be continuously at the same
Reischman Co. uses a standard costing system to account for its production of toys. Plastic is added at the start of production; labor and overhead are incurred at equal rates throughout the process.
Oehkle Inc. produces paint in a process in which spoilage occurs continually. Spoilage of 2 percent or fewer of the gallons of raw material placed into production is considered normal. The following
Lilliputian Inc. produces dog food. All direct material is entered at the beginning of the process. Some shrinkage occurs during the production process, but management considers any shrinkage of less
Hebert Industries uses a weighted average process costing system. Management has specified that the normal loss from shrinkage cannot exceed 3 percent of the units started in a period. All raw
GitAlong Inc. manufactures belt buckles in a single-step production process. The following information is available for June:All material is added at the start of the production process. Beginning
Itzgood makes a variety of healthy snack foods. The following information for January relates to a trail mix. Materials are added at the beginning of processing; overhead is applied based on direct
Use the Fresh Seasons information from Problem E6-51, except assume that the company uses a FIFO process costing system.a. How many gallons of dressing ingredients were started in April?b. What is
FIFO cost of production report Use the information from Problem E6-52 for Delacroix Co.a. Prepare a cost of production report for March using the FIFO method.b. In general, what differences exist
Use the information for Octavia Corp. in Problem E6-58, except assume that the company uses FIFO costing. Prepare, in good form, a FIFO cost of production report for the Curing Department for
Compute equivalent units of production for the period for each of the following separate scenarios. In your calculations, simply calculate work done during the period, ignoring the application of any
Lathrop Inc. mass produces filters for drinking water. The following cost information is available for October:On October 1, the company had 1,200 units in process, which were 80 percent complete as
Holley Inc. produces shelving in a two-process, two-department operation. In the Manufacturing Department, shelving components are made. In the Assembly Department, the material received from
M5 Inc. makes customized equipment components from aluminum, steel, or some combination of the two. The parts generally take the same amount of time and effort to assemble. M5 Inc. developed the
In manufacturing its products, Fritz Corp. adds all direct material at the beginning of the production process. The company's direct labor and overhead are considered to be continuously at the same
Randall Co. uses a standard costing system to account for its production of kitchenware. Plastic is added at the start of production; labor and overhead are incurred at equal rates throughout the
Best Foods manufactures cereal in a continuous, mass production process. Cereal mix is added at the beginning of the process. Normal losses are minimal and abnormal losses infrequently occur when
Fraser is a full service yacht brokerage company, specializing in yachts over $30 \mathrm{~m}$. Access the company's Web site (https://www. fraseryachts.com) and locate one of the yachts that is
For each of the following firms, determine whether it is more likely to use job order or process costing. This firma. Provides tax servicesb. Produces smart phonesc. Produces granola cereald.
Match each of the following terms 1 to 9 (listed in alphabetical order) with the most appropriate description. Term 1. Cost of goods sold 2. Cost-plus contract 3. Employee time sheet 4. Finished
The following costs were incurred in April by Riders Corp., which produces customized bicycles:The balance in Work in Process Inventory on April 1 was $\$ 10,920$, which consisted of $\$ 7,280$
Specialized Products Inc. manufactures customized products for collegiate bookstores. Profits for the current months are $\$ 22,000$ based on sales of $\$ 118,000$, less total manufacturing costs
Atlantae Corp. uses a job order costing system for client contracts related to custom-manufactured blinds. A customer recently ordered 15 blinds, and the job was assigned \#380. Information for Job
During July, Zap's Inc. worked on two production runs (Jobs \#202 and \#506) of the same product, a component of recreational equipment. Job \#202 consisted of 1,000 units of the product, and Job
The Chrysler Fiat 500X offers customers a variety of combinations of model types, exterior colors (up to 13 colors), seat colors (up to 9 colors), and wheel styles (source: https://www.fiatusa.com/).
Activity analysis; SCE Following are the activities that occur during a patient visit to a physician's office.a. Classify each of the above activities as value-added or non-value-added.b. Determine
Outerwear Inc. is concerned about the profitability of its regular gloves. Company managers are considering producing only the top-quality, fleece lined, gloves.The company is currently assigning the
MyBattery Inc. makes alkaline batteries and performs the following activities in the manufacturing process to produce a tray of 1,000 batteries.Identify each of the tasks listed above as a
Using the information from Review 4-1, answer the following questions.a. Calculate the total cycle time of this manufacturing process.b. Calculate the manufacturing cycle efficiency of this
For each of the following costs that are commonly incurred in a manufacturing company, identify which cost driver would likely be the more appropriate choice. Support your answer. Type of Cost 1.
Manufacturing Inc. is concerned about the profitability of orders for athletic apparel. Orders consist of standard items and custom items. Custom orders allow the customer to add a fogo or request a
Using the information from Review 4-4, answer the following questions.a. Determine the total profit for standard items and custom items using the current allocation system.b. Determine the total
How does absorption costing differ from variable costing in cost accumulation and income statement presentation? Why is FOH treated differently in the methods?
Tomm's T's is a New York-based company that produces and sells t-shirts. The firm uses variable costing for internal purposes and absorption costing for external purposes. At year-end, financial
Blair Manufacturing $\mathrm{Co}$. has gathered the following information to develop predetermined $\mathrm{OH}$ rates for the year. The company produces a wide variety of houseware products that
At the end of the year, Siri Company's accounts showed a $\$ 50,000$ debit balance in Manufacturing Overhead Control. In addition, the company had the following account balances:a. Prepare the
Holley Inc. uses a normal cost system that applies overhead based on machine hours. The following budgeted data are available for the year:Practical capacity is 118,000 machine hours; expected
Northwest Inc. has gathered the following data on the number of shipments received and the cost of receiving reports for the first seven weeks of the year.a. Using the high-low method, develop the
Alterations Inc. provides a variety of clothing alterations. Analysis of monthly costs revealed the following cost formulas when direct labor hours are used as the basis of cost
In the first year of business, Shalton Inc. produced 55,000 products. During its first year, the company sold 50,000 products. Costs incurred during the year were as follows:a. What was the actual
In the first year of business, Shalton Inc. produced 55,000 products. During its first year, the company sold 50,000 products. Costs incurred during the year were as follows:The products were sold
Appalachia inc. has compiled the following data to analyze maintenance costs:Use the least squares method to develop a formula for budgeting maintenance cost. Month January February. Labor Hours
A local band will perform at your fraternity's charity event for free at your school's basketball arena (25,000-person capacity) on January 28. The school is charging your fraternity $\$ 37,500$
Lawrence & Sluyter CPAs often use factors that change in a consistent pattern with costs to explain or predict cost behavior.a. As a team of three or four, select factors to predict or explain the
Cost of services rendered The following information is related to North Zulch Veterinary Clinic for April, the firm's first month of operation: Veterinarian salaries for April $8,100 Assistants'
Following is a list of raw materials that might be used in the production of a baseball: cork, glue, rubber, wool yarn used for layering, thread for stitching, leather, miscellaneous supplies for
JR Landscape Services pays $\$ 5,000$ per month for equipment rental. In addition, variable charges incurred average $\$ 400$ for each customer landscaping project.a. Determine the total cost and
Moore Company purchased an $\$ 800,000$ welding machine to use in production of commercial tooling. The welding machine was expected to have a life of 10 years and a salvage value at time of
For each of the three companies listed, indicate if the company is characterized by a high, low, or moderate degree of conversion and indicate which inventory account(s), if any, is likely to be
The following factory costs were incurred by Diaz Inc. for the manufacture of tennis shoes for the month of July. Classify each cost as one of the following: (a) direct material, (b) direct labor, or
Lazer Corp. makes one product line. During the month of January, the company transferred costs of $\$ 302,000$ to finished goods. January 1 and January 31 Work in Process balances were \(\$
Crafters Inc. produces custom cabinetry. The company's Raw Material Inventory account includes the costs of both direct and indirect materials. Account balances for the company at the beginning and
Indicate which type of accounting (financial or cost) best applies to each statement. More than one type of accounting may apply to a statement. Statement a. Focus is primarily on external users of
For each of the following excerpts from company strategy, mission, purpose, value, or related statements (obtained from the company’s website), indicate whether the company has a more dominant (1)
Match each of the seven activities listed with one of the components of the value chain, a through g. Value Chain Components Activities a. Research and development b. Design c. Supply d. Production
Match each of the following measures, a through h, with the most appropriate section of the balanced enn, Scorecard: (1) Learning and growth perspective, (2) Internal business perspective, (3)
For each scenario, assume that you are an accounting staff member working for a large, publicly traded manufacturer in the cost accounting department. Indicate whether each of the following scenarios
What ethical issues might affect a U.S. company considering opening a business in Venezuela?
Mission statement; writing You have managed Indiana's Best Appliances franchises for 15 years and have 100 employees. Business has been profitable, but you are concerned that the Indianapolis
Value chain; writing You are the management accountant for a small company that makes and distributes hot sauce. You have been asked to prepare a presentation that will illustrate the company's value
Refer to Exercises 11-28 (University Printers).Requireda. Which method do you think is best? Why?b. How much would it be worth to the company to use the best method compared to the worst of the three
Assume that all of the information is the same as in Integrative Case 15-49, but instead of receiving only one outside bid, Logistics Services receives two. The new bid is from World Services for
Refer to Problem 15-47. Suppose Health Services could sell time on the machine to other companies in the area on a per-hour basis. Further, it can sell all the time available for $30 per
Refer to the data in Problem 15-45. At the end of the year, the following data are available on actual operations at the landfill.
Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in
Gage Corporation has two operating divisions in a semiautonomous organizational structure. Adams Division, located in the United States, produces a specialized electrical component that is an input
Skane Shipping Ltd. (SSL) operates a fleet of container ships in international trade between Sweden and Singapore. All of the shipping income (that is, that related to SSL’s ships) is deemed to be
Refer to the data in Problem 15-34. Division managers are evaluated using residual income using a 13 percent cost of capital.Requireda. What is the residual income for Thames without the transfer to
Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered,
Leapin’ Larry’s Pre-Owned Cars has two divisions, Operations and Financing. Operations is responsible for selling Larry’s inventory as quickly as possible and purchasing cars for future sale.
Refer to the information in Exercise 15-30. Suppose Manufacturing is located in Country X with a tax rate of 65 percent and Marketing in Country Y with a tax rate of 35 percent. All other facts
aintRefer to the information in Exercise 15-28. Suppose Manufacturing is located in Country A with a tax rate of 60 percent and Assembly in Country B with a tax rate of 40 percent. All other facts
Refer to the data in Exercise 15–20. Suppose that Government Division will charge the client interested in implementing an activity-based costing system by the hour based on cost plus a fixed fee,
Southwest Division offers its product to outside markets for $30. It incurs variable costs of $11 per unit and fixed costs of $37,500 per month based on monthly production of 4,000 units. Northeast
Mid-Atlantic Company permits its decentralized units to “lease” space to one another. Maryland Division has leased some of its idle warehouse space to Virginia Division for $120 per square foot
Refer to Question 15-13. What type of responsibility center would you recommend the company make Alpha Division? Beta Division? Explain your reasons.Data From Question 15-13:Alpha Division and Beta
Biddle Company uses EVA to evaluate the performance of division managers. For the Wallace Division, after-tax divisional income was $600,000 in year 3.The company adjusts the after-tax income for
Bisbee Health Products invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage
Hy’s is a nationwide hardware and furnishings chain. The manager of the Hy’s Store in Boise is evaluated using ROI. Hy’s headquarters requires an ROI of 8 percent of assets. For the coming
Pharmaceutical firms, oil and gas companies, and other ventures inevitably incur costs on unsuccessful investments in new projects (e.g., new drugs or new wells). For oil and gas firms, a debate
Refer to the facts in Problem 14-45. Assume that Pitt’s performance measurement and bonus plans are based on residual income instead of ROI. Pitt uses a cost of capital of 12 percent in computing
Refer to the facts in Problem 14-43. Assume that Pitt’s performance measurement and bonus plans are based on residual income instead of ROI. Pitt uses a cost of capital of 12 percent in computing
Oscar Clemente (Problem 14-43) is still assessing the problem of whether to acquire LSI’s assembly machine. He learns that the new machine could be acquired next year, but if he waits until then,
Refer to the data in Problems 14-40 and 14-41. Al, the manager of the AC Division, complains that the calculation of EVA is unfair, because a much longer life is assumed for the SO Division in
Refer to the data in Exercise 14-36. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI.Requireda. Compute ROI, using net book value.b. Compute ROI,
The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $45 million and having a four-year expected life, after which the assets can be
Refer to the facts in Exercise 14-34, but assume that Harbor has been leasing the machine for $12,000 annually. Assume also that the machine generates income of $5,400 annually after the lease
Refer to the information in Exercises 14-31 and 14-32.a. What is the division’s residual income before considering the project?b. What is the division’s residual income if the asset is
Refer to the data in Exercise 14-31. The division manager learns that he has the option to lease the asset on a year-to-year lease for $740,000 per year. All depreciation and other tax benefits would
Refer to the data in Exercise 14-28.RequiredEvaluate the performance of the two divisions assuming BMI uses economic value added.Data From Exercise 14-28:Back Mountain Industries (BMI) has two
Refer to the data in Exercise 14-28.RequiredEvaluate the performance of the two divisions assuming BMI uses residual income.Data From Exercise 14-28:Back Mountain Industries (BMI) has two divisions:
Refer to Exercise 14-22. The results for year 2 have just been posted: RequiredCompute divisional operating income for the
By using economic value added, we avoid managers focusing on short-term gains like they would with accounting income. Do you agree with this statement? Explain.
Lucas Company is considering investing in a new machine. The machine costs $10,000 and has an economic life of four years. The machine will generate cash flows of $3,000 (cash revenues less cash
Bell & Porter has the following average times (in hours):Inspecting product . . . . . . . . . . . 0.30Manufacturing product . . . . . . . 2.10Storing inventory . . . . . . . . . . . .

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