Questions and Answers of Horngrens Cost Accounting

60. Ferdows and De Meyer argue that long-term cost improvement is the result of having first achieved improvement in quality, then dependability, and finally speed. There is a cumulative effect by
59. (Analyzing cost control) The financial results for the Continuing Education Department of BusEd Corporation for November 2001 are presented in the schedule at the end of the case. Mary Ross,
58. (Cost control) The following graph indicates where each part of the dollar that a student pays for a new college textbook goes.Students are frustrated with the cost of their textbooks, but most
(Cash budget) The accountant for Georgia Pizza prepared the following cash budget for the third quarter of 2000. When the owner was reviewing it, he was eating a deep-dish pizza loaded with extra
(Special order) Hastings Group is a multiproduct company with several manufacturing plants. The Cincinnati Plant manufactures and distributes two household cleaning and polishing compounds, regular
(Product line) Festival Packing Company sells two major lines of products, fish and chicken, to grocery chains and food wholesalers. Income statements showing revenues and costs of fiscal year 2000
(Sales mix with scarce resources) Hartford Furniture makes three unique wood products: desks, chairs, and footstools. These products are made wholly by hand; no electric or hydraulic machinery is
(Asset replacement) Sandhills Energy Company provides electrical services to several rural Nebraska counties. The company’s efficiency has been greatly affected by changes in technology. Most
(Appendix) Janet Terwilliger is a college student and has set a budget of $120 per month for food. She wants to get a certain level of nutritional benefits from the food she has selected to buy. The
(Product line) Johnson Metal Products produces three products: wire, tubing, and sheet metal. The company is currently contemplating the elimination of the tubing product line because it is showing a
(Product line) Online Toy Co.’s operations are separated into two geographical divisions: United States and Mexico. The operating results of each division for 2001 are shown below:Corporate fixed
46. (Multiproduct; hybrid costing) Be-At-Ease Industries manufactures a series of three models of molded plastic chairs: standard (can be stacked), deluxe (with arms), and executive (with arms and
44. (Comprehensive; two departments) Safe-N-Sound makes a backyard fencing system for pet owners in a two-stage production system. In Process 1, wood is cut and assembled into six-foot fence
43. (Cost flows: multiple departments) Sharp Corporation produces accent stripes for automobiles in 50-inch rolls. Each roll passes through three departments(Striping, Adhesion, and Packaging) before
42. (Two departments; weighted average) The Best of the Season Corporation makes plastic Christmas trees in two departments: Cutting and Boxing. In the Cutting Department, wire wrapped with green
41. (FIFO; second department) Bixby Company makes porcelain kitchen sinks in a process requiring operations in three separate departments: Molding, Curing, and Finishing. Materials are first
40. (Weighted average & FIFO) In a single-process production system, the Cleopatra Corporation produces press-on fingernails. For October 2000, the company’s accounting records reflected the
29. (EUP; weighted average & FIFO; two departments) Jones Metals has two processing departments, Fabrication and Assembly. Metal is placed into production in the Fabrication Department, where it
28. (EUP; cost per EUP; cost assignment; FIFO & weighted average) Berne Company mass produces miniature speakers for portable CD players. The following Taccount presents the firm’s cost
23. (Cost per EUP; weighted average & FIFO) Garden Edges manufactures concrete garden border sections. May 2001 production and cost information are as follows:All material is added at the
8. The Sporting Bag Company manufactures golf bags in a two-department process:Assembly and Finishing. The Assembly Department uses weighted average costing;the cost driver for overhead in this
54. (Comprehensive) Young Stuff is a manufacturer of furnishings for infants and children. The company uses a job order cost system. Young Stuff’s Work in Process Inventory on April 30, 2002,
50. (Comprehensive) Enforcer Inc. designs and manufactures perimeter fencing for large retail and commercial buildings. Each job goes through three stages:design, production, and installation. Three
44. (Journal entries, assigning costs to jobs) Alpha Mechanical uses a job order costing system. On September 1, 2002, the company had the following account balances:Raw Material Inventory $ 332,400
42. (Activity-based costing) Miami Valley Architects Inc. provides a wide range of engineering and architectural consulting services through its three branch offices in Columbus, Cincinnati, and
41. (Activity-based costing) Kendall Corporation manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company’s sales. The
35. (Activity-based costing) Williams Components Company manufactures two products. Following is a production and cost analysis for each product for the year 2000.Roberto Lopez, the firm’s cost
22. (Activity analysis) Conveyance Systems is investigating the costs of schedule changes in its factory. Following is a list of the activities, estimated times, and average costs required for a
54. (Cost behavior) A company’s cost structure may contain numerous different cost behavior patterns. Below are descriptions of several different costs; match these to the appropriate graphs. On
Compare ABC and department-costing systems
Cost products or services using activity-based costing (ABC)
Describe a four-part cost hierarchy
Apply variations of normal costing
Prorate end-of-period under- or overallocated indirect costs using alternative methods
Distinguish actual costing from normal costing
Understand the importance of professional ethics to management accountants
Understand how cost accounting fits into an organization's structure
63. Kirsh Guilory pumped out Cajun music, vendors hawked Creole crafts, but the crawfish delicacies dished out along food row at the New Orleans Jazz and Heritage Festival were not from the bayous
62. For Caesar O’Neal, a nausea-free day is priceless. But for the hospital treating the 6-foot-8-inch University of Florida football player for liver cancer, the price of delivering that relief is
61. The cost of “people” constitutes 75 percent to 80 percent of the total costs of operating a public accounting firm. In periods of economic contractions (such as the late 1980s and early
57. (Cash management) As the economy enters the new millennium, Internet companies are competing head-to-head in many markets with established, traditional retailers for the consumer’s dollar. In
56. (Activity-based budgeting) Several years ago, Kingsley Electronic Systems adopted activity-based management and activity-based costing. This year the firm also prepared an activity-based budget
55. (Appendix) Joe Cannon is the controller of Winston Labs, a manufacturer and distributor of generic prescription pharmaceuticals. He is currently preparing the annual budget and reviewing the
54. (Budget-to-actual comparison) Lighting Systems, Inc., evaluates performance in part through the use of flexible budgets. Selling expense budgets at three activity levels within the relevant range
53. (Efficiency versus effectiveness) The health-care industry has recently found itself in a new era that is characterized by cost competition. As a result of the new emphasis on cost management,
52. (Effectiveness/efficiency) Top management of RX Hospital Administrators observed that the budget for the EDP department had been growing far beyond what was anticipated for the past several
51. (Efficiency standards) Tory Kline has been asked to monitor the efficiency and effectiveness of a newly installed machine. The specialized machine has been guaranteed by the manufacturer to
50. (Use of temporaries) Temporary or part-time employees may be used rather than full-time employees in each of the following situations:a. To teach undergraduate accounting courses at a
49. (Cost consciousness) Tony and Keri Calihan are preparing their household financial budget for December. They have started with their November budget and are adjusting it to reflect the difference
48. (Cash management) Data extracted from a recent balance sheet of Huntington Tire Company follow. The firm manufactures tires that are sold both to car manufacturers and tire wholesalers.Current
47. (Activity-based budgeting) As a newly hired staff person in the accounting department of Midwest Technical Products, you have been invited to help the controller and her staff prepare for a
46. (Cost control and financial records) Robotic Solutions is a medium-sized manufacturing plant in a capital-intensive industry. The corporation’s profitability is very low at the moment. As a
45. (Cost control) The California State University system once placed a purchase order (PO) for a book published by a small New Canaan, Conn., company, The Information Economics Press. The following
44. (Cost consciousness; team activity) All organizations seek to be aware of and control costs. In a team of three or four, choose one of the following industries and do research to identify methods
43. (Variance analysis) Cost control in the Personnel Office of Minnesota Wholesale is evaluated based on engineered cost concepts. The office incurs both variable and fixed costs. The variable costs
42. (Cost changes) Alyssa Enterprises has been in existence since 1996. The company board of directors is interested in how well certain office costs have been controlled from 1996 to 2001. Following
41. (Budgeting concepts; includes appendix) Select the letter of the budget category from the list below that best corresponds to items a through j.T traditional budgeting Z zero-base budgeting P
40. (Revenue variances) “Tot Toons” is a videotape series that is marketed to day care centers and parents. The series has been found to make babies who watch it extremely content and quiet. In
39. (Revenue variances) The manager of a lumber mill has been asked to explain to the company president why sales of scrap firewood were above budget by$4,200. He requests your help. On examination
38. (Engineered cost variances) Management at Rivertown Electronics has estimated that each quality control inspector should be able to make an average of 12 inspections per hour. Retired factory
37. (Engineered cost variances) Candyland Courier employs three drivers who are paid an average of $16 per hour for regular time and $24 for overtime. A pickup and delivery requires, on average, one
36. (Effectiveness and efficiency measures) The president at Midland State University has formed a new department to recruit top out-of-state students. The department’s funding for 2001 is $400,000
35. (Surrogate measures of output) The Coast Casino and Hotel has established performance objectives for each major operational area for the budget year.Some of the major objectives that were
34. (Effectiveness measures) Lakeside Wellness Center has used funds during 2001 for the following purposes. Provide nonmonetary, surrogate measures that would help evaluate the effectiveness of the
33. (Committed versus discretionary costs) Choose letter C (for committed cost) or D (for discretionary cost) to indicate which type of cost each of the sentences below best relates. Explain the
32. (Committed versus discretionary costs) A list of committed and discretionary costs follows:Annual audit fees Internal audit salaries Annual report preparation and printing Marketing research
31. (Cost control activities) Kendra Smith has just been appointed the new director of Youth Hot-Line, a not-for-profit organization that operates a phone bank for individuals experiencing emotional
30. (Cost control activities) The firm of Kanton Associates, CPAs, hires full- and part-time clerical employees. Full-time clerical staff can be hired for $27,500 per year; fringe benefit costs for
29. (Matching) Match the following lettered terms on the left with the appropriate numbered description on the right.a. Appropriation 1.. An attitude regarding costb. Committed cost understanding,
28. (Appendix) What problems are encountered in using zero-base budgeting? Why might such problems arise?
27. (Appendix) What problems are encountered in using program budgeting? Why might such problems arise?
26. (Appendix) Compare and contrast a programmed budget, a zero-base budget, and a traditional budget.
25. For what purposes do firms hold cash balances? Why do some firms require larger cash balances than other firms?
24. How is activity-based budgeting an improvement over traditional financial budgeting?
23. Why is the budget used for planning purposes not necessarily the best budget to use for evaluating cost control?
22. Is a budget-to-actual comparison essential in the control of discretionary costs?Provide reasoning for your answer.
21. How can variance analysis be used to investigate the control of engineered costs?
20. What types of discretionary costs are subject to control as engineered costs?Provide several examples.
19. What is an engineered cost? How can engineered costs be used in controlling some discretionary costs?
18. Why does performance encompass the spectrum from organizational goals to inputs to outputs?
17. Define efficiency and effectiveness and distinguish one from the other. Why is measuring the efficiency of discretionary costs often difficult? Explain how effectiveness of discretionary cost
16. What are surrogate measures of output and how are they used in conjunction with discretionary costs?
15. Why is it difficult to measure the output of activities funded by discretionary costs?
14. Why are income levels generally more important considerations for budget decisions about discretionary costs than for committed costs?
13. What issues does management need to consider when setting the budget appropriations for discretionary costs?
12. Is an investment in expensive, automated technology wise in an industry characterized by wide variations in demand? What if that industry were highly competitive?Provide underlying reasons for
11. Are all discretionary costs fixed? If yes, justify your answer. If no, provide an example to prove your point.
10. Differentiate between committed and discretionary costs. Could a cost be considered discretionary by one firm and committed by another? If so, discuss and give an example. If not, discuss why not.
9. What are some reasons supporting the use of temporaries in what used to be full-time labor positions? What are some reasons against such usage?
8. How are cost avoidance and cost reduction related? How do they differ?
7. “A company will always experience reduced costs if long-term or single-source contracts are signed.” Is this statement true or false? Discuss the rationale for your answer.
6. How might members of the supply chain be helpful in an organization’s quest for cost containment activities?
5. Compare and contrast general and specific price-level changes.
4. What factors can cause costs to change? Which of these are subject to cost containment and which are not? What creates the difference in controllability?
3. When is cost control for any specific organizational activity exercised? Why are these points of cost control important?
2. The general control model begins with planning activities. Why?
1. How does the cost control system interact with the overall cost management system?
1. Cantrell Manufacturing just purchased an evolutionary metal stamping machine. It operated for 130 hours during the first month. Management wants to know the efficiency and effectiveness of the
1. (Appendix) Why is zero-base budgeting useful in cost control?
1. (Appendix) How is program budgeting used in not-for-profit entities?

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