Questions and Answers of Horngrens Cost Accounting

22. (Cost per EUP; FIFO) Assume that Flickering Figurines in Exercise 21 had 3,600 EUP for direct material in October’s beginning inventory, 4,000 EUP for direct labor, and 3,960 EUP for overhead.
21. (Cost per EUP; weighted average) Flickering Figurines manufactures wax figurines.In October 2000, company production is 26,800 equivalent units for direct material, 24,400 equivalent units for
20. (EUP; weighted average & FIFO) McArthur Corporation makes toy metal soldiers in a one-department production process. All metal is added at the beginning of the process. Paint for the figures and
19. (EUP; FIFO) Assume that Newton Quiches in Exercise 18 uses the FIFO method of process costing.a. What are the equivalent units of production for direct material?b. What are the equivalent units
18. (EUP; weighted average) Newton Quiches uses a weighted average process costing system. All material is added at the start of the production process. Direct labor and overhead are added at the
17. Find five companies, in different industries, on the Internet that you believe use process costing. Name these companies, provide their Web addresses, indicate what products they make, and
16. What is a hybrid costing system? Under what circumstances is the use of such a system appropriate?
15. How are inventories accounted for under a standard process costing system?What information is provided to management when inventories are accounted for in this manner?
14. Why are the EUP calculations made for standard process costing the same as the EUP calculations for FIFO process costing?
13. How does process costing in a multidepartmental manufacturing environment differ from that of a single-department manufacturing environment? Why does this difference exist?
12. Why does the “Transferred Out” section of the FIFO method cost of production report include multiple computations, whereas the same section for the weighted average report only includes one
11. Would it be correct to subtract the cost computed for EWIP from the total costs to account for as a shortcut to determine the cost of goods transferred out? If you answered yes, is there a risk
10. What is the purpose of the cost of production report? How would such a report assist accountants in making journal entries for a period?
9. How is the unit cost for each cost component assigned to the units produced during the current period under (a) the weighted average method and (b) the FIFO method?
8. In which of the six basic steps used in process costing are physical units used and in which are equivalent units of production used? Are there steps in which neither physical nor equivalent units
7. How are units “started and completed” in the current period calculated? Is this figure used in both weighted average and FIFO cost assignment? Why or why not?
6. Why is it necessary to calculate separate equivalent units of production for each cost component of a product? Are there times when separate EUP schedules are not necessary and, if so, why?
5. What creates the difference between weighted average and FIFO equivalent units of production? Which EUP calculation more accurately portrays the actual flow of units through a manufacturing
4. Why are equivalent units of production used as an output measure in process costing? In your answer, be sure to address the problems created by partially completed inventories.
3. How are job order and process costing similar? How do they differ?
2. Why is the process of assigning costs to products essentially an averaging process?
1. What are the typical characteristics of a company that should employ a process costing system?
7(Appendix) What alternative methods can be used to calculate equivalent units of production?
6 Why would a company use a hybrid costing system?
5 How can standard costs be used in a process costing system?
4 How are unit costs and inventory values determined using the weighted average and FIFO methods of process costing?
3 How are equivalent units of production determined using the weighted average and FIFO methods of process costing?
2 Why are equivalent units of production used in process costing?
1 How is process costing different from job order costing?
60. Two types of contracts are commonly used when private firms contract to provide services to governmental agencies: cost-plus and fixed-price contracts. The cost-plus contract allows the
59. Cyclemakers Group of Washdyke near Timaru (New Zealand) is lifting its profile locally and overseas in the cycling world through its custom-built bike service.Although the prospect of sitting
58. From William J. Fife Jr., chairman of Giddings & Lewis Inc.:“The labor content of a product today is probably less than 15%. So, I don’t care how much I cut [direct] labor, it’s not going
57. In 1995, British steelmaker Ispat purchased Kazakhstan’s largest steel plant:Little known outside the steel world, Ispat has in recent months assumed a new visibility—as an example of Western
56. One of the main points of using a job order costing system is to achieve profitability by charging a price for each job that is proportionate to the related costs. The fundamental underlying
55. (Missing amounts) Downstream Manufacturing Company realized too late that it had made a mistake locating its controller’s office and its electronic data processing system in the basement.
53. (Comprehensive; job cost sheet) The Big Plains Construction Company builds bridges. For the months of October and November 2001, the firm worked exclusively on a bridge spanning the Niobrara
52. (Standard costing) Trailer Solutions uses a job order costing system. During July 2002, the company worked on two production runs of the same product, a trailer hitch component. These units were
51. (Standard costing) One of the products made by Factory Logistics is a robotic conveyor system. A single model (Model No. 89) accounts for approximately 60 percent of the company’s annual sales.
49. (Comprehensive) In May 2002, Aztec Construction Company was the successful bidder on a contract to build a pedestrian overpass in Flagstaff, Arizona.The firm utilizes a job order costing system,
48. (Departmental rates) The Houston Custom Tile Corporation has two departments:Mixing and Drying. All jobs go through each department, and the company uses a job order costing system. The company
47. (Job cost sheet analysis) As a candidate for a cost accounting position with Global Construction, you have been asked to take a quiz to demonstrate your knowledge of job order costing. Global’s
46. (Simple inventory calculation) Production data for the first week in November 2002 for Illinois Lighting were as follows:WORK IN PROCESS INVENTORY Job No. Material Labor Machine Time
45. (Journal entries, cost flows) Specialty Components began 2002 with three jobs in process:TYPE OF COST Job No. Direct Material Direct Labor Overhead Total 247 $ 77,200 $ 91,400 $ 34,732 $ 203,332
43. (Journal entries) Canton Refrigeration uses a job order costing system based on actual costs. The following transactions relate to a single period in which the beginning Direct Material Inventory
42. (Journal entries) Sunny Day Awning Company installs awnings on residential and commercial structures. The company had the following transactions for February 2002:• Purchased $440,000 of
41. (Cost management) A focus on the customer may lead companies to join forces with erstwhile competitors. “If a customer is looking for a solution to a business problem, then it’s quite common
40. (Cost manipulation) Excel Communications is a direct sales marketer of longdistance phone services. The company earns revenues by selling long-distance services to new subscribers. The company is
39. (Production and marketing environment) When it comes to tortillas, Americans and Mexicans have distinctly different tastes. Americans are content to purchase mass-produced, prepackaged tortillas
38. (Cost control) Baltimore Fabricated Steel Products Company produces a variety of steel drums that are used as storage containers for various chemical products.One of the products the firm
37. (Standard costing) Gone To The Birds employs a job order costing system based on standard costs. For one of its products, a small teak-rimmed concrete bird bath (Product No. 17), the standard
36. (Standard costing) Carolina Mfg. uses a standard cost system. The company experienced the following results related to direct labor in December 2002:Actual hours worked 45,500 Actual direct labor
35. (Standard costing) Corner Kopy, Inc., incurred the following direct material costs in November 2002 for high-volume routine print jobs:Actual unit purchase price $0.015 per sheet Quantity
34. (Assigning costs to jobs) Ace Show is an advertising consultant. Recently, he has been working with his accountant to develop a formal accounting system.His accountant has suggested the use of a
33. (Assigning costs to jobs, cost flows) Martha’s Interiors, an interior decorating firm, uses a job order costing system and applies overhead to jobs using a predetermined rate of 60 percent of
32. (Assigning costs to jobs) Westside Racing uses a job order costing system in which overhead is applied to jobs at a predetermined rate of $2.20 per direct labor dollar. During April 2001, the
31. (Underapplied or overapplied overhead) For 2001, Ainsworth Rafter Co. applied overhead to jobs using a predetermined overhead rate of $23.20 per machine hour. This rate was derived by dividing
30. (Job cost and pricing) Jason Hart is an attorney who employs a job order costing system related to his client engagements. Hart is currently working on a case for Janice Keene. During the first
29. (Departmental overhead rates) Ashford Paving Company uses a predetermined overhead rate to apply overhead to jobs, and the company employs a job order costing system. Overhead is applied to jobs
27. (Normal versus actual costing) For fiscal year 2001, Lazlow Metalworks estimated it would incur total overhead costs of $1,200,000 and work 40,000 machine hours. During January 2001, the company
26. (Cost flows) Custom Landscapes began operations on March 1, 2001. Its Work in Process Inventory account on March 31 appeared as follows:Work in Process Inventory Direct material 554,400 Cost of
25. (Journal entries; cost flows) U Store It produces customized storage buildings that serve the midwest U.S. market. For February 2001, the company incurred the following costs:Direct material
24. (Journal entries) Olson Inc. produces custom-made floor tiles. During June 2001, the following information was obtained relating to operations and production:1. Direct material purchased on
23. (Classifying) For each of the following firms, determine whether it is more likely to use job order or process costing. This firma. does custom printing.b. manufactures paint.c. is involved in
22. How can the implementation of a job order costing system help improve managerial decision making?
21. How does a firm use information on “variances” in a standard costing system to control costs?
20. If a company produces a given type of product only one time, will standard costing be as useful as if the company continually produces the same type of product? Explain.
19. What differences exist between job order costing based on actual costs and job order costing based on standard costs? Why would a company use a standard cost job order system?
18. Many software companies produce custom programs for computerized accounting applications. Search the Internet and find two or more companies that make software for job order costing (job
17. How are the advancement of technology and the development of new software affecting the accounting function in job order costing systems?
16. How is the cost of goods sold determined in a company that uses job order costing?
15. What is the principal difference in job order costing between service and manufacturing firms?
14. What creates underapplied or overapplied overhead when applying overhead to jobs?
13. Is an actual overhead application rate better than a predetermined overhead rate? Why or why not?
12. Which document in a job order costing system would show the amount of overtime worked by a specific individual? Explain.
11. “Because the costs of each job are included in the job order cost sheet, they do not need to be recorded in the general ledger.” Is this statement true or false, and why?
10. Of what use to management are job order cost sheets? Why do some job order cost sheets contain columns for both budgeted and actual costs?
9. What is a job order cost sheet, and what information does it contain? How do job order cost sheets relate to control accounts for Work in Process, Finished Goods, and Cost of Goods Sold?
8. Why is the material requisition form an important document in a company’s audit trail?
7. What are the principal documents used in a job order costing system and what are their purposes?
6. What are the three stages of production of a job? Of what use is cost information pertaining to completed jobs?
5. In a job order costing system, what is a job?
4. Identify the three valuation methods discussed in the chapter. What are the differences among these methods?
3. What is the alternative to the use of a job order costing system? In what type of production environment would this alternative costing system be found?
2. What production conditions are necessary for a company to use job order costing?
1. When a company produces custom products to the specifications of its customers, why should it not aggregate costs across customer orders to determine the prices to be charged?
9. Advanced Exploration is a newly formed firm that conducts marine research in the Gulf of Mexico for contract customers. Organizationally, the firm is composed of two departments: Offshore
8 How does information from a job order costing system support management decision making?
7 How are standard costs used in a job order costing system?
6 How do technological changes impact the gathering and use of information in job order costing systems?
5 What journal entries are used to accumulate costs in a job order costing system?
4 What purposes are served by the primary documents used in a job order costing system?
3 What constitutes a “job” from an accounting standpoint?
2 In what production situations is a job order costing system appropriate and why?
1 How do job order and process costing systems and how do actual, normal, and standard costing valuation methods differ?
46. As the chief executive officer of a large corporation, you have made a decision after discussion with production and accounting personnel to implement activity-based management concepts. Your
45. 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
44. 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
43. (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
40. (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
39. (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

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