Questions and Answers of Fundamentals Cost Accounting

Consider a locally owned coffee shop, a Starbucks store for example, and a retail gas station that offers fresh coffee in its convenience stores. Characterize these stores according to the Porter
Refer to the information in Problem 17-45.RequiredWrite a memo to the managers at Matthews & Bros. recommending which variances they should investigate this period, along with your reasons.Data
Refer to the data for the Peninsula Candy Company (Problem 17-42). Break down the total activity variance into sales mix and quantity parts.Data From Problem 17-42:Peninsula Candy Company makes three
Refer to the information in Problem 17-40.RequiredWrite a memo to the managers at Bay Area Bank recommending which variances they should investigate this period, along with your reasons.Data From
Refer to the information in Exercise 17-34.RequiredWrite a memo to Harry recommending which variances he should investigate this period along with your reasons.Data From Exercise 17-34:The standard
Refer to the data in Exercise in 17-30. Prepare a profit variance analysis for K&B like the one in Exhibit 16.5 of the previous chapter.Exhibit 16.5:
Refer to the data in Exercise 17-30. Prepare a sales activity variance analysis like the one in Exhibit 16.4 of the previous chapter.Exhibit 16.4:
Refer to the data in Problem 13-49. Estimate the cash from operations expected in year 2.Data From Exercise 13-49:Gulf States Manufacturing has the following data from year 1 operations, which are to
Refer to the data in Problem 13-47. Estimate the cash from operations expected in year 2.Data From Problem 13-47:The following information is available for year 1 for Pepper Products:
Refer to the data in Exercise 13-36. Varmit-B-Gone estimates that the number of subscribers in September should fall 10 percent below August levels, and the number of service calls per subscriber
Using the data for the consulting firm in Exercise 12-35, what is the cost allocation if fixed computer costs of $7 million are allocated on the basis of number of consultants and the remaining costs
Is a division president ever a principal in the principal–agent relationship as discussed in the chapter? Explain.
Is the CEO ever an agent in the principal–agent relationship as discussed in the chapter? Explain.
Refer to the facts in Problem 11-54. The cost accountant at Great Eastern Credit Union estimates that the cost structures in its departments are as follows:
Refer to the facts in Problem 11-49. BluStar estimates that the cost structure in its operations is as follows:
Using the reciprocal method spreadsheet (shown in Exhibit 11.21), show the costs allocated to production for Steamco. Use the data in Problem 11-52.Exhibit 11.21:Data From Exercise 22-52:Steamco is
Refer to the facts in Exercise 11-45. After the publication of recent scientific test results, the government has banned the sale of product KC. IF KC is produced, it must be disposed of in an
Refer to the facts in Exercises 11-42 and 11-43.RequiredWhich, if any, of the four products would you recommend Deming & Sons sell at split-off (and not process further)? Explain. Does your
Refer to the facts in Exercise 11-42.RequiredAssuming that total joint costs of $384,000 were allocated using the physical quantities method, what joint costs were allocated to each product?Data From
Refer to the facts in Exercise 11-28. University Printers estimates that the variable costs in the Personnel Department total $7,000 and in the Maintenance Department variable costs total $3,000.
Refer to the facts in Exercise 11-26. Caro estimates that the variable costs in the Maintenance Department total $14,500, and in the Cafeteria variable costs total $16,000. Avoidable fixed costs in
Refer to the data for University Printers in Exercise 11-28.RequiredAllocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two
Refer to the data for University Printers in Exercise 11-28.RequiredAllocate the service department costs using the step method, starting with the Maintenance Department. What effect does using this
What is a limitation of the direct method of allocating service department costs?
Refer to the data in Problem 16-53. Prepare a profit variance analysis for Brahms & Sons like the one in Exhibit 16.5.Exhibit 16.5:
Refer to the data in Problem 16-53. Prepare a sales activity variance analysis for Brahms & Sons like the one in Exhibit 16.4.Exhibit 16.4:
Refer to the data in Problem 16-50. Prepare a sales activity variance analysis for Odessa, Inc., like the one in Exhibit 16.4.Exhibit 16.4:
Find Data for Profit Variance Analysis RequiredFind the values of the missing items (a) through (x). Assume
Find Missing Data for Profit Variance Analysis RequiredFind the values of the
Refer to the data in Exercise 16-39. Management would like to see results reported graphically.RequiredPrepare a graph like that shown in Exhibit 16.14.Exhibit 16.14:
The following data reflect the current month’s activity for Vickers Corporation: Variable overhead is applied based on
Use the information from Exercise 16-27 to prepare a profit variance analysis for Osage, Inc., like the one in Exhibit 16.5.Exhibit 16.5:
Refer to the data in Exercise 16-27. Prepare a sales activity variance analysis for Osage, Inc.,like the one in Exhibit 16.4.Exhibit 16.4:Data From Exercise 16-27:Osage, Inc., manufactures and sells
Refer to the data in Exercises 16-21 and 16-22. Prepare a profit variance analysis like the one in Exhibit 16.5.Exhibit 16.5:Data From Exercise 16-21:The master budget at Western Company last period
Refer to the data in Exercise 16-21. Prepare a sales activity variance analysis like the one in Exhibit 16.4.Exhibit 16.4:
Refer to Integrative Case 9-65 in Chapter 9. Assume that all of the facts in Case 9-65 still hold except that the practical capacity of the machinery is 20,000 hours instead of 10,000
Refer to Problems 10-59 and 10-60. In discussing their business, Cathy and Tom realize that there are really three seasons instead of two, the third being the fall and spring (as a combined season).
Refer to the information in Problem 10-59. The ice cream business has two seasons, summer and winter. Each season lasts exactly six months. Chuck’s orders 4,500 gallons in the summer and 4,500
Consider the information in Problem 10-56. The sales manager of Red Oak Chemicals has proposed to the purchasing manager at JFI that Red Oak be given an exclusive contract to supply the feedstock. If
JFI Foods produces processed foods. Its basic ingredient is a feedstock that is mixed with other ingredients to produce the final packaged product. JFI purchases the feedstock from two suppliers, Rex
Using the costs calculated in Exercise 10-48, construct a cost of quality report for year 1 and year 2.Data From Exercise 10-48:Nuke-It-Now manufactures microwave ovens. The following represents the
Using the costs calculated in Exercise 10-46, construct a cost of quality report for March and April.Data From Exercise 10-46:The following represents the financial information for Domingo
Refer to Exercise 10-40. Sales revenue totaled $240,000.a. Prepare a traditional income statement like the one in Exhibit 10.10.b. Prepare an activity-based income statement like the one in Exhibit
Refer to Exercise 10-38. Sales revenue from finishing totaled $30,000.Requireda. Prepare a traditional income statement like the one in Exhibit 10.10.b. Prepare an activity-based income statement
Refer to the data in Exercise 10-36.Requireda. Assume all else remains the same. What bid by Tappan would make Kinnear indifferent between buying from Tappan or Hill?b. Why, given the information, do
Refer to the data in Exercise 10-34.RequiredAssume all else remains the same. What percentage of late deliveries by Milan would make Hult indifferent between buying from Milan Components and Dundee
Refer to the data in Exercise 10-30.Requireda. How can RSB&T use the information from the activity-based costing analysis to manage its costs?b. What does RSB&T need to consider before
Consider the following actions of a hotel chain trying to manage the costs of its check-in process.RequiredMatch each of the process improvements listed with how it delivers cost reductions.
Under what conditions should the cost of excess capacity be assigned to products or customers? When should excess capacity costs not be assigned to products or customers?
Refer to Case 9-63. Jean Sharpe decides to gather additional data to identify the cause of overhead costs and figure out which products are most profitable. She notices that $30,000 of the overhead
Refer to Problem 9-49. Assume that you have prepared financial statements that show the operating profit for each of the two toys manufactured by Pepper’s Products. Further assume that under the
Refer to the facts in Problem 8-51.Requireda. Prepare a production cost report; the company uses weighted-average process costing.b. Show the flow of costs through T-accounts. Assume that current
Refer to the facts in Problem 8-48.Requireda. Prepare a production cost report using FIFO.b. Answer requirement (b) in Problem 8-48.Data From Problem 8-48:Kansas Supplies is a manufacturer of plastic
Refer to the facts in Problem 8-48.Requireda. Prepare a production cost report using FIFO.b. Answer requirement (b) in Problem 8-48.Data From Problem 8-48:Kansas Supplies is a manufacturer of plastic
Refer to the information in Exercise 8-41.Requireda. Prepare a production cost report using the FIFO method.b. Is the ending inventory higher using FIFO or the weighted-average method? Why?c. Would
Yarmouth Company produces a liquid solvent in two departments: Mixing and Finishing. Accounting records at Yarmouth show the following information for Finishing operations for February (no new
Refer to the data in Exercise 8-35. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. Is the ending inventory higher or lower under the
Refer to the data in Exercise 8-35. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. Is the ending inventory higher or lower under the
Refer to the data in Exercise 8-35. Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.Data from Exercise 8-35:Pacific Ink had beginning
Refer to the data in Exercise 8-35. Compute the costs of goods transferred out and the ending inventory using the weighted-average method.Data from Exercise 8-35:Pacific Ink had beginning
Refer to the data in Exercises 8-31 and 8-33. Compute the cost of goods transferred out and the ending inventory using the FIFO method.Data From Exercise 8-31:The Matsui Lubricants plant uses the
Using the data in Exercise 8-31, compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.Data From Exercise 8-31:The Matsui Lubricants plant uses the
Refer to the data in Exercise 8-31. Compute the cost of goods transferred out and the ending inventory using the weighted-average method.Data From Exercise 8-31:The Matsui Lubricants plant uses the
Refer to the data in Exercise 8-28. Cost data for November show the following:
Materials are added at the beginning of the production process at Campo Company. Campo uses a FIFO process costing system. The following information on the physical flow of units is available for the
Refer to the data in Exercise 8-26.RequiredCompute the cost per equivalent unit for materials using the FIFO method.Data From Exercise 8-26:The following information pertains to the Moline Facility
Refer to the data in Exercise 8-20.Requireda. Compute the equivalent units for materials using FIFO.b. Compute the equivalent units for conversion costs using FIFO.Data From Exercise 8-20:Pierce
Refer to the data in Exercise 8-18. Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs.Requireda. Compute the
The following transactions occurred in January at Apex Manufacturing, a custom parts supplier. Apex uses job costing:1. Purchased $75,180 in materials on account.2. Issued $2,100 in supplies from the
The following T-accounts represent September activity:
Refer to the information in Exercise 7-30. Prepare an entry to allocate over- or underapplied overhead to:a. Work in Process.b. Finished Goods.c. Cost of Goods Sold.Data From Exercise 7-30:Aspen
Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be $500,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2,
Refer to the information in Exercise 7-28. Prepare an entry to allocate the under- or overapplied overhead. Overhead applied in each of the inventory accounts is as follows:
Consider Question 7-18. What are some of the allocation bases you considered? Why did you choose the one you used?Data From Question 7-18:Assume that you have been asked to paint the inside walls of
Refer to the data in Exercise 6-39. The president of Tiger Furnishings is confused about the differences in costs that result from using direct labor costs and machine-hours.Requireda. Explain why
Refer to the data in Exercise 6-39. Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products.Data From Exercise 6-39:Tiger
Refer to the data in Exercise 6-39. Compute the individual product costs per unit assuming that Tiger Furnishings uses direct labor costs to allocate overhead to the products.Data From Exercise
Refer to the data in Exercise 6-39. Draw the cost flow diagram assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs.Data From Exercise 6-39:Tiger Furnishings produces
Refer to the data in Exercise 6-39. Compute the predetermined overhead rate assuming that Tiger Furnishings uses machine-hours to allocate overhead costs.Data From Exercise 6-39:Tiger Furnishings
Refer to the data in Exercise 6-39. Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs.Data From Exercise 6-39:Tiger
What is continuous flow processing? Give at least three examples of products that might use continuous flow processing.
Recall the analysis for Davis Stores in Exercises 5-39, 5-40, and 5-41. During a discussion of those results, one of the managers suggests that number of employees might be better at explaining cost
Using the same data source as in Problem 5-50, collect a total of 20 years of data.Requireda. Using the latest 10 years of data, perform a regression analysis in which the dependent variable is cost
Multiple regression results from the data of Adriana Corporation (Exercise 5-33) are as follows:
Simple regression results from the data of Adriana Corporation (Exercise 5-33) are as follows:
Simple regression results from the data of Adriana Corporation (Exercise 5-33) are as follows: RequiredEstimate overhead if the
Prepare a scattergraph based on the overhead and labor-hour data in Exercise 5-33.Data From Exercise 5-33:Adriana Corporation manufactures football equipment. In planning for next year, the managers
Prepare a scattergraph based on the overhead and machine-hour data in Exercise 5-33.Data From Exercise 5-33:Adriana Corporation manufactures football equipment. In planning for next year, the
Refer to the facts in Exercise 4-46. Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from
Consider the opportunity costs you identified in Question 4-27. Are they relevant to the decision of the airline to upgrade certain people? Which, if any, of these would be likely to be included in
Consider the Business Application item, referred to in Question 4-19. Suppose the company had signed a lease for five years and had two years remaining on the contract. Would the remaining lease
What is a special order?
Anu’s Amusement Center has collected the following data for operations for the year: Requireda.
Consider the Business Application, “Cost-Volume-Profit Analysis and On-Demand Services”. Would you advise Luxe to use the per unit lease cost when deciding which parking space to use for a car?
A January 1, 2009 news report on msn.com included the following sentence: “A report put out by brokerage house CLSA about Jet Airways said that the fall in ATF [fuel] prices has brought down the
Columbia Products produced and sold 900 units of the company’s only product in March. You have collected the following information from the accounting records:
The following information comes from the accounting records for Chelsea, Inc., for May:
Refer to Exercise 2-46.RequiredCompute:a. Product costs per unit.b. Period costs for the period.Data From Exercise 2-46:Madrid Corporation has compiled the following information from the accounting
Madrid Corporation has compiled the following information from the accounting system for the one product it sells:
The following data refer to one year for Monroe Fabricators. Fill in the blanks.

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