Questions and Answers of Horngrens Cost Accounting

38. (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
37. (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
36. (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
34. (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
33. (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
32. (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
31. (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
30. (Controlling overhead) Industrial Paints Inc. has engaged you to help the company analyze and update its costing and pricing practices. The company product line has changed over time from general
29. (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
28. (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.
27. (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
26. (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
25. (Cost drivers) For each of the following important costs in manufacturing companies, identify a cost driver and explain why it is appropriate.a. Equipment maintenanceb. Building utilitiesc.
24. (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.
23. (Cycle time and MCE) The following functions are performed in making salad dressing at A-1 Toppings.Function Time (Minutes)Receiving ingredients 45 Moving ingredients to stockroom 15 Storing
21. (Terminology) Match the following lettered terms on the left with the appropriate numbered description on the right.a. Activity analysis 1. Setup costb. Activity-based costing 2. A costing system
20. (Terminology) Match the following lettered terms on the left with the appropriate numbered description on the right.a. Activity driver 1. Non-value-added use of timeb. Cost driver analysis 2.
19. Significant hurdles are often encountered in adopting ABC including a large time commitment. What specific activities associated with ABC adoption require large investments of time?
18. Are all companies likely to benefit to an equal extent from adopting ABC?Discuss.
17. How does attribute-based costing extend the concept of activity-based costing?
16. Traditional costing systems often differentiate between fixed and variable costs.How does the ABC philosophy address fixed and variable costs?
15. List the benefits of activity-based costing. How could these reduce costs?
14. Why does activity-based costing require that costs be aggregated at different levels?
13. What characteristics of a company would generally indicate that activity-based costing might improve product costing?
12. Why do the more traditional methods of overhead assignment “overload” standard, high-volume products with overhead costs, and how does ABC improve overhead assignments?
11. What is activity-based costing? How does it differ from traditional product costing approaches?
10. What is activity analysis and how is it used in concert with cost driver analysis to manage costs?
To evaluate different planning techniques used to develop strategic plans, The Futures Group recently interviewed senior corporate executives at more than 100 U.S. companies. According to 43% of the
Find the Web page for the International Red Cross. Review the variety of activities in which this organization is currently involved. What would be the greatest challenges in budgeting for such an
Many companies prepare a simplified cash budget as follows: Beginning cash Cash receipts Cash disbursements Ending cash. Discuss the advantages of the model presented in Exhibit 13–16 when
(Planning versus control) Your colleague, who loves riddles, has asked you the following question: “Is planning an extension of control or is control an extension of planning?” Prepare a reply.
(Continuous budgeting) You own a small boat manufacturing company. At a recent manufacturers’ association meeting, you overheard one of the other company owners saying how he liked using a
(Key variables) A consultant mentioned to Alpha Company’s CEO that key variables are significant if the company is to control its destiny. The CEO has asked you to prepare a brief memo explaining
Many managers believe that, if all amounts in their budgets are not spent during a period, they will lose allocations in future periods and that little or no recognition will result from cost
(Revising and analyzing an operating budget) The Mason Agency, a division of General Service Industries, offers consulting services to clients for a fee. The corporate management at General Service
(Preparing a cash budget) Collegiate Management Education (CME), Inc., is a nonprofit organization that sponsors a wide variety of management seminars throughout the Southwest. In addition, it is
(Preparing and analyzing a budget) Harvey & Company, a local accounting firm, has a formal budgeting system. The firm is comprised of five partners, two managers, four seniors, two secretaries, and
(Master budget preparation) Sopchoppy Company manufactures a red industrial dye. The company is preparing its 2000 master budget and has presented you with the following information.1.. The December
(Comprehensive) Reliable Appliance Company produces and sells two kitchen appliances: mixers and doughmakers. In July 1999, Reliable’s budget department gathered the following data to meet budget
(Pro forma results) The James Company is attempting to set a new selling price for its single product, a metal file cabinet, for the upcoming year. The current variable production cost is $40 per
(Budgeted sales and S&A; other computations) Grecian Urns has projected Cost of Goods Sold for June 2000 of $960,000. Of this amount, $60,000 represents fixed overhead costs. Total variable costs for
(Cash budget) Andrews Manufacturing has incurred substantial losses for several years and has decided to declare bankruptcy. The company petitioned the court for protection from creditors on March
(Cash budget) Tim’s Department Store typically makes 50 percent of its sales on credit. Sales are billed twice monthly, on the 10th of the month for the last half of the prior month’s sales and
(Cash budget) The January 31, 1999, balance sheet of Sara’s Plaques follows:Liabilities and Assets Stockholders’ Equity Cash $ 12,000 Accounts Payable $ 70,200 Accounts Receivable (Net of
(Production, purchases, cash budgets) Pop’s Tops makes one style of men’s hats.Sales and collections for the first three months of 2001 are expected to be January February March Total Sales
(Production, purchases, cash disbursements) West Indies Tea Company has budgeted sales of 300,000 cans of iced tea mix during June 2000 and 375,000 cans during July. Production of the mix requires 14
(Production and purchases budgets) Aurora Products has prepared the following unit sales forecast for 2000:January–June July–December Total Sales 380,000 420,000 800,000 Estimated ending finished
(Pro forma income) Joan Wilson, president of Fresh Fashions, is considering buying a new piece of equipment for her plant. This piece of equipment will increase her fixed overhead by $300,000 per
(Pro forma income statement) Bennett Novelty Wholesale Store has prepared the following budget information for May 2001:• Sales of $300,000. All sales are on account and a provision for bad debts
(Budgeted income, cash, accounts receivable) In preparing its budget for July 2000, Expert Legal Services has the following accounts receivable information available:Accounts Receivable at June 30
(Projected income statement) Last year’s income statement for Marano Company is presented below:Sales (50,000 $10) $500,000 Cost of goods sold:Direct material $200,000 Direct labor 100,000
(Various budgets) The following are four independent situations.a. Tasty Frozen Foods is planning to produce two products: frozen dinners and frozen desserts. Sales of frozen dinners are expected to
(Cash disbursements) In trying to decide whether it was feasible for the company to acquire treasury stock during May 2000, Wyatt Jones, president of Dallas Leather, Inc., requested information on
(Cash balance) Jackson Fabrics has prepared a forecast for May 2000. Some of the projected information follows:Income after tax $260,000 Accrued Income Tax Expense 62,000 Increase in Accounts
(Cash collections, accounts receivable) Atlanta Waterworks is developing a forecast of June 2001 cash receipts from sales. Total sales for June 2001 are expected to be $650,000. Of each month’s
(Cash budget) The Accounts Receivable balance at October 1, 2000, for Skyscraper Architects was $606,900. Of that balance, $450,000 represents remaining Accounts Receivable from September billings.
(Cash collections) Bentham Company is developing its first-quarter monthly cash budget for 2000 and is having difficulty determining its expected cash collections. On investigation, the following
(Production and related schedules) The Jansen Company manufactures and sells two products: plastic boxes and plastic trays. Estimated needs for a unit of each are Boxes Trays Material A 2 pounds 1
(Material purchases budget) San Diego Culvert Company has budgeted sales of 190,000 feet of its concrete culvert products for June 2000. Each foot of product requires 12 pounds of concrete ($0.10 per
If Brennan has no beginning or ending Work in Process Inventory, how many yards of leather must the company purchase in September?
(Material purchases budget) Brennan Ski Company has projected sales of 21,480 ski boots in September. Each pair of boots requires 2.5 linear feet of leather.The beginning inventory of leather and
(Production budget) The sales budget for Leno Company shows the following sales projections (in units) for the quarters of the calendar year of 2000:January–March 270,000 April–June 340,000
(Production schedule) The projected sales, in units, for Einstein Inc. by month for the first four months were January 8,000 February 12,000 March 16,000 April 19,200 Inventory of finished goods on
Go to the Internet to find a company that either uses an annual budget or claims it does not. What reasons does it give either for using an annual budget or for using some alternative?
(Appendix) What does the budget manual provide for everyone involved in the budgeting process? What does it reflect about top management?
(Appendix) What are the various sections of the budget manual and why is each section necessary?
Why is employee participation in developing the budget important to an organization?
What is budget slack? What induces managers to build slack into their budgets?
What benefits should arise from a process of continuous budgeting?
How are the budgeted Statement of Cash Flows and the cash budget similar?How are they different?
Why is it useful to complete the budgeting process with a presentation of pro forma financial statements?
Although managers are not clairvoyant, budgeting may assist in viewing the future. How might this be so?
How does the cash budget interface with the sales budget and budgeted accounts receivable?
Why would a company wish to maintain a minimum cash balance?
Why is the cash budget so important to an organization? If the cash budget identifies a period in which a cash shortage is expected, what actions can the organization take?
In estimating the overhead budget, why is it necessary to separate overhead into its variable and fixed components?
How are the production budgets and material purchasing budgets similar? How are they different? When is each used?
Explain how managers estimate collections from sales. Why is this information important in the budgeting process?
It is said that the master budget is “demand driven.” What does this mean?
The master budget contains both operational and financial budgets. What is the difference between an operating budget and a financial budget? How do they relate to each other?
How are budgets used as both planning and control tools?
How does the process of budgeting assist managers in conducting the management control function?
A major management function is planning. How does budgeting facilitate management planning?
Managers formulate strategic plans that have time horizons of 5 to 10 years.Why do managers also formulate shorter term plans?
What major factors are taken into account in formulating an organization’s strategic plan?
Discuss what is meant by the following comment: Budgeting is a process of translation.
Why is a budget considered a communication device?
Outline the basic budgeting process.
Why do businesses formally document their plans?
Bass Lighting Fixtures’ July 31, 2001, balance sheet includes the following:Cash $30,000 debit Accounts Receivable 92,000 debit Allowance for Uncollectible Accounts 2,044 credit Merchandise
In 1987 EEOC’s [Equal Opportunity Employment Commission] local field office wrote me a letter saying they had reason to believe I didn’t have enough women “food servers” and “busers.” No
Carter’s Computers manufactures computers and all components. The purchasing agent informed the company owner, Abraham Carter, that another company has offered to supply keyboards for Carter’s
In Japan, the decision to stop production of a product or to close down a plant has different cost consequences than in the United States. One principal difference is that Japanese managers are much
Some evidence suggests consumers are less than thrilled with what they are purchasing. American consumers are notoriously finicky, and pleasing them has always been difficult. But the latest results
(Special order) Hydraulic Engineering, located in Toronto, manufactures a variety of industrial valves and pipe fittings that are sold to customers in the United States. Currently, the company is
(Sales and profit improvement) Sixteen Candles is a retail organization that sells upscale clothing to girls and young women in the Northeast. Each year, store managers, in consultation with their
(Comprehensive) Eastern Glass Products has processing plants in Ohio and New Jersey. Both plants use recycled glass to produce jars that are used in food canning by a variety of food processors. The
(Outsourcing) Omaha Building Systems manufactures steel buildings for agricultural and commercial applications. Currently, the company is trying to decide between two alternatives regarding a major
(Outsourcing) Clothes Solutions Inc. manufactures vinyl-clad wire storage systems.Each system requires two to six standard fasteners to attach it to structural members of closets. Historically, the
(Asset replacement) The manager of the Plastics Fabrication Division of Gulf Chemical Corp., Kathy Johnson, has heard about a new extruding machine that could replace one of her existing machines.

Showing 600 - 700 of 1382