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horngrens cost accounting a managerial emphasis

Questions and Answers of Horngrens Cost Accounting A Managerial Emphasis

Certain costs associated with inventory policies do not appear on formal accounting records. Enumerate at least three. lop5
“Identical space costs for inventory can be zero during some months and sizable during other months.” Explain. lop5
Define economic order quantity. lop5
“The practical approach to determining economic order quantity is concerned with locating a minimum cost range rather than a minimum cost point.” Explain. lop5
Define: lead time, reorder point. lop5
What is a safety stock? What techniques are used to compute safety stocks? lop5
Describe a “two-bin” inventory system. lop5
What are the major responsibilities of the purchasing department? lop5
Distinguish between the moving-average and the werghted-average inventory methods. lop5
“Standard costing is superior to both LIFO and FIFO for isolating and measuring the effects of price fluctuations as special managerial problems.” Why? lop5
Comparison of LIFO and FIFO The Dowell Coal Co. does not maintain a perpetual-inventory system. The inventory of coal on June 30 shows 1,000 tons at $6 per ton. The following purchases were made
Inventory Card, Moving-Average (SIA) Steel Stores Limited is a dealer in steel products.The company purchases its steel from various mills. Prices are f.o.b. point of shipment. On January 1, freight
Name two methods other than the moving-average cost method that could have been used in pricing the issue transactions above.Multiple Choice; Comparison of Inventory Methods (CPA) The Berg
Reconciliation of Inventory Records As part of a test of inventory control, you examined the perpetual-inventory records of stockroom M. A full set of records (subsidiary and control) is maintained
Economic Order Quantity Compute the economic order quantity for an inventory item with the following relevant data: annual requirements, 20,000 units; ordering cost, $16; and inventory carrying cost,
Reorder Point (SIA) Compute the reorder point in units and days, given the following.a. A time period of 35 days in which the full inventory is used, except the safety level.b. A safety level of 150
EOQ and Reorder Point (CMA) ‘The Robney Company is a restaurant supplier that sells a number of products to various restaurants in the area. One of their products is a special meat cutter with a
Relevant and Irrelevant Costs of Carrying A firm is introducing an inventorycontrol system designed to minimize inventory costs, subject to required customer service levels that are influenced, but
Economic Order Quantity; Price Discounts A medium-sized manufacturing company uses 50 barrels of soap a year in one of their plants. It costs them $1 a year to store a barrel, and a purchase order
Make or Buy ‘The Gamma Company is considering the feasibility of purchasing from a nearby jobber a component that it now makes. The jobber will furnish the component in the necessary quantities at
economic production lot size.2. Assuming that the sales manager’s recommendations can be implemented, calculate the divisional savings of warehousing costs in 19_4 over 19_3 for finished-goods and
Reorder Point, Uncertainty, and Safety Stock (CMA) ‘The Starr Company manufactures several products. One of its main products requires an electric motor. The management of Starr Company uses the
Cost of Prediction Error Ralph Menard has used the classic economic-lot-size model (with no stockouts) to compute an optimal order quantity for each of his raw materials and acquired parts. He
Prediction Error (J. Demski) Ralph Swash, an aggressive entrepreneur, is working on some make-or-buy decisions and a related inventory system. For one such product (and you may assume, for purposes
Performance and Motivation Refer to Problem 14-27.1. Assume that Ralph is approached at the beginning of the period and offered 2,000 units at $44 each as a bargain one-shot purchase. The units will
Comprehensive Study of Inventory Planning and Control ‘The Ward Company is trying to obtain better means of controlling inventory levels and attendant costs for an expensive part that they have
Relevant Costs of Inventory Planning; Sensitivity Analysis (G. Feltham) The Super Corporation distributes widgets to the upper delta region of the Sunswop River. The demand for widgets is very
“A given cost allocation may be performed for one or more purposes.” List Chapter 15 The rates used in Exhibit 15-2 were combined and not predetermined. That is, no distinction was made between
“There are essentially three facets of cost allocation.” What are they? lop2
What is a cost pool? Give an example. lop2
Give four examples of cost objectives. lop2
What is the major reason for having a cost-allocation base? lop2
For what purpose of cost allocation does equity or fairness become a dominant .criterion? lop2
“Central corporate costs should never be allocated because no cause-and-effect relationships can be established.” Do you agree? Explain. lop2
‘In order to save time and effort, we use a single reallocation plan to fulfill both product-costing and control purposes.” Discuss. lop2
A prominent economist once said, “Not even Almighty God can tell a railroad the cost of moving a hundred tons of freight from Boston to New York.” Do you agree? Why? lop2
Indirect Costs and Government Contracts ‘The president of a large university commented on the previous year’s operations as follows:“I should point out that, if the Congress had not recently
Allocation of Advertising (SIA) The H Company allocates national magazine advertising cost to territories on the basis of circulation, weighted by an index that measures relative buying power in the
Retailing and Costs for Decision Making (CPA) You have a client who operates a large retail self-service grocery store that has a full range of departments. The management has encountered difficulty
Cost of Servicing a Bank Account (CPA) A bank stated that the service charge it makes on accounts is based upon the cost of handling each account.A customer states that he does not see how it is
Allocation of Travel Costs John Atherton, a graduating senior at a university near San Francisco, received an invitation to visit a prospective employer in Omaha. A few days later he received a
Three Allocation Methods (W. Crum) Linda Company constructed its own power plant capable of producing 6,000,000 kilowatt-hours of power per year.It has three producing departments expected to consume
Overhead Disputes (Suggested by Howard Wright) The Azure Ship Company works on U.S. Navy vessels and commercial vessels. General yard overhead (for example, the cost of the purchasing department) is
Approaches to Allocation A computer service department of a large university serves two major users, the School of Engineering and the School of Humanities and Sciences (H&S).When the computer
Using Revenue as a Basis for Allocating Costs ‘The Mideastern Transportation Company has had a long-standing policy of fully allocating all costs to its various divisions. Among the costs allocated
Cost Allocation and Variances (H. Schaefer) The Coe Company produces its own power for use in operating Departments I and II. At denominator activity, Departments I and II consume 30,000 and 50,000
Evaluating a Reallocation Method The Daden Company has a service department that provides production departments with power. The budget for the power department was based on its normal anticipated
Cost Behavior and Cost-Allocation Alternatives “Joe, how do you think we ought to charge ourselves for the operation and upkeep on our new airplane?It seems to me there are several ways we could
Dispute Regarding Fair Rate ‘The following series of memos recently passed through the mail of the Worldwide Enterprise Corporation. Exhibit 15-4 is an organization chart.eee lio: Tom Tumbas,
Should We Allocate? Solve Problem 6-28, which could logically have been placed here. lop2
Allocation of Computer Costs Salquist, Inc., is an international ethical pharmaceutical manufacturer that specializes in hormone research and the de- velopment and marketing of hormone-base products.
What is the essential difficulty in applying fixed overhead to product? lop5
“There should be an efficiency variance for fixed overhead. A foreman can inefficiently use his fixed resources.” Comment. lop5
Fundamentals of Overhead Variances The Allen Company has a standard absorption costing and flexible budgeting system. The standard costs of its two products differ slightly because the direct
Journal Entries Refer to Problem 9-3. Prepare the necessary journal entries to record the overhead transactions described in requirement 4. lop5
Variance Analysis and Journal Entries for Overhead he Starr Company uses a standard-cost system. Denominator output per month is 5,000 units. lop5 Standard Costs:Direct labor, 3 hrs. @ $5.00 $15.00
Comprehensive, Straightforward Problem on a Standard-Cost System The Brandon Company uses a standard cost system. The month’s data regarding its lone product follows:Fixed-overhead costs incurred,
Straightforward Overhead Analysis The Crum Company uses a standard-cost system. Its standard cost of Product Y, based on a denominator activity of 40,000 units per year, included six hours of
Characteristics of Fixed-Overhead Variances The Clive Company is preparing revised standards for the forthcoming year, 19_5. The standard time allowed for manufacturing one unit of product is thirty
Analysis of Fixed Overhead; Choice of Denominator The fixed overhead items of the lathe department of The Clancy Company include, for the month of January, 19_4: lop5 ITEM : ACTUAL BUDGET Supervision
Find the Unknowns Consider each of the following situations independently.Data refer to operations for a week in April. For each situation assume a standard product-cost system. Also assume the use
The assembly department has concentrated on one product, a transformer, during the past week. The following standard rates were applicable: directlabor rate, $9.00 per hour; combined overhead rate,
Overhead Analysis (SIA, adapted) The Ballentine Company produces a single product—spaghetti. The product unit is 100 pounds (cwt.) of spaghetti.Monthly flexible-budget data follow:Volume in units
Combined Overhead Rate The Wright-Peterson Air Force Base contained an extensive repair facility for jet engines. It had developed standard costing and flexible budgets for this activity. Budgeted
Controllable Variances and Bonus (SIA, adapted) At Stephens’ Limited all departmental standard cost variances are classified as being controllable or noncontrollable by the department foreman in
Normal Costing and Overhead Analysis The Blaney Company had budgeted the following performance for 19_4:Units 10,000 Sales $120,000 Total variable production costs, including variable factory
Variance Analysis; Find Standard Time per Unit The Mahon Electrical Company manufactures special electrical equipment in Kowloon. The management has established standard costs for many of its
Multiple Choice (CMA adapted) The Organet Stamping Company manufactures a variety of products made of plastic and aluminum components.During the winter months substantially all of the production
Working Backwards Reliance, Inc., utilizes a standard-cost system for budget and control purposes. Flexible budgets are determined, and all indirect costs are assigned on the basis of standard
Effects of Choice of Denominator (SIA, adapted) In setting up the annual the factory budget at the Talisman Company, the production manager and the sales manager spent much time discussing the volume
Combined Overhead Variances (SIA, adapted) The Weser Company uses a predetermined total overhead rate of $4.00 per unit based on a denominator capacity of 600,000 units a year or 50,000 units a
Hospital Cost Control The Sharon Hospital, a large metropolitan health-care complex, has had much trouble in controlling its accounts receivable. Bills for patients, for various government agencies,
Overhead Variances In 19_4 the Howard Company used a predetermined total factory overhead rate of $7 per standard direct-labor hour allowed for product costing. Prior to 19_4 the company had used a
Variance Analysis from Fragmentary Evidence Being a bright young person, you have just landed a wonderful job as assistant controller of Gyp-Clip, a new and promising division of Croding Metals
Review of Chapters 8 and9 (H. Schaefer) The manager of the Victory Divi- sion received the following report for the year 19_4:Sales (100,000 units) $3,000,000 Manufacturing cost of sales (at
Two Plants and Standard Costs The Orose Glass Company is organized into three divisions. The Industrial Glass Division, headed by Bill Carder, general manager, has seven plants, located in various
Define responsibility accounting. lop4
Define controllable cost. What two major factors help an evaluation of whether a given cost is controllable? lop4
What guides are available in deciding the appropriate costs to be charged to a person? lop4
An action once taken cannot be changed by subsequent events.” What implications does this have for the cost accountant? lop4
List five common complaints about control budgets. lop4
“Budgets are wonderful vehicles for communication.”” Comment. lop4
Define motivation. How does it differ from need? lop4
Give an example of how a control system can motivate a manager to behave against the best interests of the company as a whole. lop4
“I’m majoring in accounting. This study of human relations is fruitless. You’ve got to be born with a flair for getting along with others. You can’t learn it!”Do you agree? Why? lop4
“Interpretation is essential for understanding accounting reports.” Suggest how the accounting function may be organized to emphasize interpretation. lop4
Budgets as Motivators “Budgets and responsibility accounting and other modern accounting techniques foster a policed, departmental orientation rather than a positive, overall organizational
Budgets as Pressure Devices Sord and Welsch have stated: “It should be recognized that pressure on supervisors need not come from control techniques, assuming that standards of performance are not
Budgets as Motivators “To accept budgets as motivators is to imply that supervisors do not have adequate interest in their job. This is seen as an insult to a man’s integrity, and the factory
Attitudes Toward the Accountant A prominent financial analyst, who became very successful with his Wall Street investments, once commented:“My experience with the accountant is that for him
Auto Dealership Profit Centers Many automobile dealers divide their businesses into two major divisions: (a) parts and service and (b) vehicle sales. The gross profit of the parts and service
Computation of Gross Profits on Car Sales Many auto dealers use the “washout” concept. Washout is the method for computing gross profits on a series of deals starting with the sale of a new unit
Controllable-Cost Concepts; Fillin Blanks Assume the same organization chart as shown in Exhibit 1-2. For each item listed, indicate by “Yes” or “No”whether it would be classified as a
Responsibility for Downtime Two of several departments performed successive operations in the manufacture of automobile frames. The frames were trans- ported from department to department via an
Responsibility of Purchasing Agent?® Richards had just taken a new job as the production planning and control department. Every six months, Sampson gives Richards a general purchasing program.
A Study in Responsibility Accounting The David Machine Tool Company is in the doldrums. Production volume has fallen to a ten-year low. The company has a nucleus of skilled tool-and-die men who could
Fixing Responsibility (Adapted from a description by Harold Bierman, Jr.)The City of Mountainvale had hired its first city manager four years ago. She favored a “management by objectives”
Budgets and Incentives You are working as a supervisor in a manufacturing department that has substantial amounts of men and equipment. You are paid a “base” salary that is actually low for this
Sales Incentives (CMA) The Parsons Co. compensates its field sales force on a commission and year-end bonus basis. The commission is 20 percent of budgeted gross margin (planned selling price less
Objectives of Public Accounting Firm All personnel, including partners, of public accounting firms must usually turn in biweekly time reports, showing how many hours were devoted to their various

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