Questions and Answers of Horngrens Cost Accounting

28. (Missing information for materials and labor) For each of the independent cases, fill in the missing figures. Case A Case B Case C Case D Units produced 800 ? 240 1,500 Standard hours per unit 3
29. (Four-variance approach; journal entries) For 2001, Blankly Manufacturing has set 60,000 direct labor hours as the annual capacity measure for computing its predetermined variable overhead rate.
30. (Computation of all overhead variances) The manager of the Automobile Registration Division of the state of Nebraska has determined that it typically takes 30 minutes for the department’s
31. (Missing data, three-variance approach) The flexible budget formula for total overhead for the Windlass Corporation is $720,000 $16 per direct labor hour.The combined overhead rate is $40 per
32. (Variances and cost control) North Diamond Inc. applies overhead on a direct labor hour basis. Each unit of product requires 12 machine hours. Overhead is applied on a 30 percent variable and 70
33. (Journal entries) Miami Chemical had the following balances in its trial balance at year-end 2001:Assume that the variances, taken together, are believed to be significant. Prepare the journal
34. (Variances and conversion cost category) Baltimore Brake makes brake rotors.Until recently, the company used a standard cost system and applied overhead to production based on direct labor hours.
35. (Appendix) Genine Nut Company produces 12-ounce cans of mixed pecans and cashews. Standard and actual information follows.Standard quantities and costs (12-oz. can):Pecans: 6 ounces at $3.00 per
36. (Appendix) Righting Moment Inc. is a mechanical engineering firm. The firm employs both engineers and draftspeople. The average hourly rates are $80 for engineers and $40 for draftspeople. For
38. (Behavioral implications of standard costing) Contact a local company that uses a standard cost system. Make an appointment with a manager at that company to interview him or her on the following
39. (Flexible budget, variances, and cost control) Overland Corp. planned to produce at the 8,000-unit level for its single type of product. Because of unexpected demand, the firm actually operated
41. (Cost control evaluation) The Arizona Concrete Company makes precast concrete steps for use with manufactured housing. The plant had the following 2001 budget based on expected production of
42. (Appendix) Buffin Legal Services has three labor classes: secretaries, paralegals, and attorneys. The standard wage rates are shown in the standard cost system as follows: secretaries, $25 per
43. (Material and labor variances) Mississippi Marine uses a standard cost system for materials and labor in producing fishing boats. Production requires three materials: fiberglass, paint, and a
44. (Variance calculation and journal entries) Montreal Toy Co. makes small plastic toys. Standard quantities and standard costs follow for material and labor.Standard Quantity Standard Cost Material
45. (Incomplete data) Surgical Supply manufactures latex surgical gloves. It takes 0.85 square feet of latex to manufacture a pair of gloves. The standard price for material is $0.80 per square foot.
46. (Incomplete data) Learning Products, Inc., makes wooden lap desks. A small fire on October 1 partially destroyed the books and records relating to September’s production. The charred remains of
47. (Adjusting standards) Maui Muumuus manufactures traditional Hawaiian dresses.The company was started early in 1995, and the following standards for materials and labor were developed at that
48. (Calculation of four variances) Candy’s Ceramics utilizes a standard cost system.Data for October are presented below:Standard Cost per Unit(1 Unit Takes 1 Labor Hour)Direct material $ 9.00
49. (Four-variance approach; journal entries) Laramie Lumber produces picnic tables, swings, and benches and uses direct labor hours to apply overhead.Standard hours allowed for each product are as
50. (Variance analysis with unknowns) ATTENTION Products manufactures a neon lamp sign with the following standard conversion costs:Direct labor (4 hours @ $12 per hour) $ 48 Factory overhead (10,000
51. (Combined overhead rates) Rocky Mountain Industries manufactures a downfilled sleeping bag with the following standard cost information for 2001:• Each sleeping bag requires 1 hour of machine
52. (Comprehensive) Aluma Corporation manufactures metal screen doors for commercial buildings. The standard costs per screen door follow:Direct Materials:Aluminum 4 sheets at $2 $ 8 Copper 3 sheets
53. (Comprehensive; all variances; all methods) Rainbow Painting Services Inc.paints interiors of residences and commercial structures. The firm’s management has established cost standards based on
54. (Variance disposition) Ito Manufacturing had the following variances at yearend 2001:Material price variance $23,400 U Material quantity variance 24,900 F Labor rate variance 5,250 F Labor
55. (Conversion cost variances) Sanchez Mfg. budgeted $1,080,000 of variable conversion costs and $360,000 of fixed conversion costs for May 2001. When the budget was developed, Sanchez estimated
56. (Appendix) Pablo’s three-topping 18-inch frozen pizzas are produced by Quintella Food Industries in Los Angeles. The company uses a standard cost system.The three toppings (in addition to
57. (Appendix) Colson Products makes NOTAM, a new health food. For a 50-pound batch, the standard costs for materials and labor are as follows:Quantity Unit Price Total Wheat 25 pounds $0.20 per
58. (Standards revision) Westlake Company produces a component for aircraft manufacturers. A standard cost system has been used for years with good results.Unfortunately, Westlake’s original direct
59. (Variances and variance responsibility) Hobby Horse, Inc., began operations in 2000. In 2001, the company manufactured only one product, a handpainted toy horse. The 2001 standard cost per unit
60. In the mid-1940s, a young man named Donald Roy was working on a Ph.D.at the University of Chicago. As part of his dissertation project, Mr. Roy posed(anonymously) for eleven months as a
62. In 1993, when nearly 9 million people couldn’t find jobs, other Americans were putting in the most overtime since the government started keeping records in the 1950s. With factory workers
64. National standards for U.S. schools covering 13 subjects have been devised by educators in the arts, mathematics, history, English and the sciences. . . .Academic professional groups, meanwhile,
(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 Dayton.
(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 first of
(Determining product cost) Belton Furniture Corporation has identified activity centers to which overhead costs are assigned. The cost pool amounts for these centers and their selected activity
(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 single
Define value-added activities and non-value-added activities. Compare and give three examples of each type.
What is activity-based management (ABM) and what are the specific management tools that fall beneath the ABM umbrella?
(Terminology) Match the following lettered terms on the left with the appropriate numbered description on the right.a. Activity driverb. Cost driver analysisc. Cycle time cost driversd. Idle timee.
(Terminology) Match the following lettered terms on the left with the appropriate numbered description on the right.a. Activity analysisb. Activity-based costingc. Attribute-based costing cost
(Cycle time and MCE) The following functions are performed in making saladdressing at A-1 Toppings.Function Time (Minutes)Receiving ingredients 45Moving ingredients to stockroom 15Storing ingredients
(Identifying cost drivers) The Fast Lane is a highly automated, fast-food restaurant that relies on sophisticated, computer-controlled equipment to prepare and deliver food to customers.
(Cost allocation using cost drivers) Peterson Wholesale has an in-house legal department whose activities fall into one of three major categories. Recently, operating costs in the department have
(Activity-based costing) Management at Cooper Steel Co. has decided to institute a pilot activity-based costing project in its eight-person purchasing department.Annual departmental costs are
(Product profitability) Lawn Management Systems (LMS) manufactures two products: lawnmowers and garden tractors. Lawnmowers are relatively simple to produce and are made in large quantities. Garden
(Value chart) You are the new controller of a small shop that manufactures special-order desk nameplate stands. As you review the records, you find that all the orders are shipped late, the average
(Traditional vs. ABC methods) Many companies now recognize that their cost systems are inadequate in the context of today’s powerful global competition.Managers in companies selling multiple
(Identifying non-value-added activities) Stacy Kroger is planning to build a concrete walkway for her home during her annual vacation. She has prepared the following schedule of how her time on the
(Activity analysis; MCE) Southern Living constructs log cabin vacation houses in the Tennessee mountains for customers. As the company’s consultant, you developed the following value
(Activity-based costing) Patio Solutions makes umbrellas, gazebos, and lawn chairs. The company uses a traditional overhead allocation scheme and assigns overhead to products at the rate of $10 per
(Using ABC to set price) The budgeted manufacturing overhead costs of Garage Door Company for 2001 are as follows:Type of Cost Cost Amount Electric power $ 500,000 Work cells 3,000,000 Material
(Activity driver analysis and decision making) High Plains Manufacturing Products is concerned about its ability to control factory labor-related costs. The company has recently finished an analysis
(Activity-based costing and pricing) Covington Community Hospital has found itself under increasing pressure to be accountable for the charges it assesses its patients. Its current pricing system is
(Product complexity) Tektronix Inc. is a world leader in the production of electronic test and measurement instruments. The company experienced almost uninterrupted growth through the 1980s, but in
(Activity-based costing and pricing) Joey Lutz owns and manages a commercial cold-storage warehouse. He stores a vast variety of perishable goods for his customers. Historically, he has charged
Many manufacturers are deciding to no longer service small retailers. For example, some companies have policies to serve only customers who purchase $10,000 or more of products from the companies
Evidence suggests that ABM implementations are more likely to succeed in more open organizations. The ground is especially fertile for companies that have a stated interest in becoming world-class
When is activity-based costing appropriate in an organization?
What is attribute-based costing and how does it extend activity-based costing?
How does the installation of an activity-based costing system affect behavior?
How does activity-based costing differ from a traditional cost accounting system?
Why must cost drivers be designated in an activity-based costing system?
Why do non-value-added activities cause costs to increase unnecessarily?
What is the focus of activity-based management?
Achilles Auto makes and sells batteries. In 2017, it made 100,000 batteries and sold 75,000 of them, at an average selling price of $60 per unit. The following additional information relates to
ZB Toys started 2017 with no inventories. During the year, their expected and actual production was 30,000 units, of which they sold 24,000 units at $50 each. Cost data for the year is as
Potter Replica produces a specialty statue for sale to collectors. In 2017, Potter’s expected and actual output was 12,000 statues. Potter sold 10,000 statues at an average selling price of $425.
Swift Feet, Inc. can produce 1,000 pairs of sneakers per hour at maximum efficiency. There are three 8-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units
Assume Stassen Company on January 1, 2017, decides to contract with another company to preassemble a large percentage of the components of its telescopes. The revised manufacturing cost structure
Write a linear cost function equation for each of the following conditions. Use y for estimated costs and X for activity of the cost driver.a. Direct materials cost is $$1.70$ per pound.b. Total
The Mortise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Mortise has heard about a method of measuring cost
Maude Designs manufactures various picture frames. Each new employee takes 6 hours to make the first picture frame and 4.8 hours to make the second. The manufacturing overhead charge per hour is
What is a linear cost function, and what types of cost behavior can it represent?
What is the most important issue in estimating a cost function?
What are the different methods that can be used to estimate a cost function?
What are the steps to estimate a cost function using quantitative analysis?
How should a company evaluate and choose cost drivers?
What is a nonlinear cost function, and in what ways do learning curves give rise to nonlinear costs?
What are the common data problems a company must watch for when estimating costs?
The Rainier Company provides landscaping services to corporations and businesses.All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to
The Rainier Company provides landscaping services to corporations and businesses. All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to
The Rainier Company provides landscaping services to corporations and businesses.All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to
Irving Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2017 is as follows:The equipment has zero disposal value.Required 1. By closing down the
What is the five-step process that managers can use to make decisions?
When is a revenue or cost item relevant for a particular decision and what potential problems should managers avoid in relevant-cost analysis?
What is an opportunity cost and why should managers consider it when making insourcing versus-outsourcing decisions?
When a resource is constrained, how should managers choose which of multiple products to produce and sell?
What steps can managers take to manage bottlenecks?
In deciding to add or drop customers or to add or discontinue branch offices or business divisions, what should managers focus on and how should they take into account allocated overhead costs?
Is book value of existing equipment relevant in equipment-replacement decisions?
How can conflicts arise between the decision model a manager uses and the performanceevaluation model top management uses to evaluate that manager?
Nile is an online, mail-order company, which provides customers with a wide variety of products. The managers of Nile have identified their financial objectives as: grow operating income and increase
Strategic analysis of operating income. Ronaldo Associates is a construction engineering firm that prepares detailed construction drawings for single-family homes. The market for this service is very
Refer to the information on Ronaldo Associates in Try It! 12-2.Data from Try it 12-2Strategic analysis of operating income. Ronaldo Associates is a construction engineering firm that prepares
Following a strategy of product differentiation, Westwood Corporation makes a high-end kitchen range hood, KE8. Westwood’s data for 2016 and 2017 are:In 2017, Westwood reduced direct material usage
What are two generic strategies a company can use?
How can an organization translate its strategy into a set of performance measures?
How can a company analyze changes in operating income to evaluate the success of its strategy?
How can a company identify and manage unused capacity?

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