Questions and Answers of Horngrens Cost Accounting

6. To which type of joint process output is joint cost allocated? Why? Is all of the joint process cost allocated to that type of output?
5. How are separate costs distinguished from joint costs?
4. When do the multiple products of a joint process gain separate identity? Does the joint process stop there?
3. How does management determine into which category to classify each type of output from a joint process? Is this decided before or after production?
2. What are joint products, by-products, and scrap? How do they differ? Which of these product categories provides the greatest incentive or justification to produce?
1. What is a joint production process? If managers wanted to produce only one of the main outputs of a joint process, could they? Explain. Give several examples of joint processes.
Rolling Meadow Farms incurred $65,000 of production cost in 2000 in a joint process to grow a crop with two joint products, Alpha and Beta. The following are data related to 2000 operations:(1) (2)
How should not-for-profit organizations account for joint costs?
How are by-products treated in accounting systems?
How are joint costs allocated to products?
What management decisions must be made before a joint process is begun?
At what point in a joint process are joint products identifiable?
How are the outputs of a joint process classified?
62. Several years ago, Sony Corp., the consumer electronics and entertainment giant, halted shipments of its much-ballyhooed 18-inch digital satellite dish system following a rash of consumer
61. Words of wisdom from Dennis K. Pawley, retired manufacturing chief of the former Chrysler Corp. and now a management consultant, are as follows:1. “The biggest reason companies fail is a
60. In a move that clears the way for a wave of high-tech interactive gadgets in cars and trucks, five of the world’s biggest automakers announced they are pursuing a common wiring standard for new
59. Just how tired were Delta Air Lines Capt. Roscoe McMillan and his crew last Wednesday when he diverted his Atlanta-to-Tokyo flight to Portland, Oregon, and called it a day? Too tired, in his
58. Find The Benchmarking Exchange on the Internet. What are the top five business processes that are currently the focus of benchmarking by members of The Benchmarking Exchange? Why have
57. Find the Web page for Collins Printed Circuits of Rockwell Avionics. What products does this company make? How does the company use statistical process controls to control the quality of output?
56. Increasing numbers of U.S. businesses have been seeking to comply with the ISO 9000 standards simply because of real or perceived market forces. Some of the most commonly given reasons for
55. Sometimes a company, in its efforts to reduce costs, might also reduce quality.a. What kinds of costs could be reduced in an organization that would almost automatically lower product/service
54. Assume that you are in charge of a social service agency that provides counseling services to welfare families. The agency’s costs have been increasing with no corresponding increase in
53. By building quality into the process, rather than making quality inspections at the end of the process, certain job functions (such as that of quality control inspector) can be eliminated.
52. Institutions of higher education have a variety of internal and external customers.Use a team of three or four individuals to answer the following.a. List three internal and two external
51. Use the Internet to find four definitions of quality.a. Compare and contrast each of the four definitions, with specific emphasis on whether the definition is conformity or customer oriented.b.
50. (Cost of quality) Tanks-a-Lot Ltd. is very aware that its scuba diving tanks must be of high quality to maintain its reputation of excellence and safety. You have been retained as a consultant by
49. (Cost of quality) Golf courses are demanding in their quest for high-quality carts because of the critical need for lawn maintenance. Ride-in-Style manufactures golf carts and is a recognized
48. (Cost of quality) ClearTone makes portable telephones, and produced 20,000 phones during 2000, its first year of operations. It sold all it produced that first year but 500 phones had a
47. (Cost of quality) Lampposts-R-Us, Ltd., manufactures hardwood lampposts for the discriminating homeowner. The firm produced 3,000 lampposts during its first year of operations. At year-end, there
46. (Pareto analysis) Select Refrigerators has identified the following warranty costs during 2000 according to the type of product failure as follows:Model Electrical Motor Structural Mechanical
44. (Differences from benchmarks) For a benchmark, assume that the average firm incurs quality costs in the following proportions:Prevention 25%Appraisal 25%Internal failure 25%External failure
43. (Supplier quality) Assume that Toyota paid for a full-page advertisement in The Wall Street Journal. The ad did not tout Toyota products nor was it in reference to year-end earnings or a new
42. (Quality information system; team activity) Your company is interested in developing information about quality, but has a traditional accounting system that does not provide such information
41. (Control of quality costs; team activity) The following summary numbers have been taken from a quality cost report of North Carolina Fine Furniture Inc., for 2000. The firm manufactures a variety
40. (Cost of quality) Klein Computers is evaluating its quality control costs for 2000 and preparing plans and budgets for 2001. The 2000 quality costs incurred in the CPU Division follow:Prevention
39. (Cost of quality) Alpine Sunglasses Company has gathered the following information pertaining to quality costs of production for June 2000 of heavy-duty sunglasses for skiing:Total defective
38. (Cost of quality) Mathes Company wants to determine its cost of quality. The company has gathered the following information from records pertaining to August 2000:Defective units 2,500 Units
37. (Cost of quality) Sparticus Electronics’ accounting system reflected the following costs related to quality for 1999 and 2000:1999 2000 Customer refunds for poor product quality $24,000 $18,000
36. (Cost of quality) Bronson’s BronzeWorks has gathered the following data on its quality costs for 1999 and 2000:Defect Prevention Costs 1999 2000 Quality training $8,000 $9,500 Quality
35. (Definition of quality; quality characteristics) In a team of three, role-play the following individuals who are visiting a car dealership in your community: (1)a 19-year-old college student, (2)
34. (Quality characteristics) Prepare a five-by-eight matrix of the five characteristics of service quality (horizontal axis) and the eight characteristics of product quality (vertical axis). Place a
33. (Control chart) Pareto Pizza’s has recently hired several college students to work part time making pizzas. Angelo Pareto, the owner, has a policy of putting 36 slices of pepperoni on a pizza,
32. (True/false) Mark each of the following statements as true or false and explain why the false statements are incorrect.a. The total quality cost is the sum of prevention cost plus failure cost.b.
31. (Terminology) Match the following lettered terms on the left with the appropriate numbered description on the right.a. Appraisal cost 1. Method to rank causes of variationb. Benchmarking in a
30. (Appendix) What is a quality audit?
29. (Appendix) What role is served by the International Organization for Standardization?
28. (Appendix) Why do countries establish quality standards? Why is it desirable to have a common set of global quality standards?
27. What are the four stages or levels on the quality continuum? Where is TQM located on the continuum?
26. Use the Internet to find five companies that have a “quality culture.” Compare and contrast these cultures.
25. How does strategic cost management link information to corporate strategies?
24. Describe some additional accounts that can be added to financial records to attempt to better capture the costs of quality in the accounting records. Provide some examples of costs contained in
23. How can Pareto analysis help focus managerial efforts in reducing the costs of quality-related problems?
22. In the production–sales cycle, what are the four time phases in which quality costs are incurred? How are these costs interrelated through the phases?
21. What are the sources of information for product quality costs within a firm(both financial and nonfinancial)?
20. What constructive adjustments can management make based on information learned from a company’s internal and external failures?
19. What are the two types of costs that comprise the total quality cost of a firm?What are the two subtypes within each type? Given the trade-off between the two main types of quality costs, is
18. What is the Malcolm Baldrige National Quality Award? What are the categories of entrants? What are the award criteria categories?
17. Use the Internet or other resources to find a company that has recently experienced quality problems. Discuss that company’s problems and indicate what costs were incurred, why these costs were
16. Why is TQM significant? What must a company do to make it work?
15. What is TQM? What are the three important tenets of TQM and why are they important?
14. Describe the eight steps in benchmarking that can be used to improve a specific production process.
13. How does benchmarking allow a company to evaluate the quality of its processes?
12. Use the Internet to find a company that has engaged in benchmarking. Describe the type of benchmarking used and the benefits and costs of the company’s experience.
11. Define benchmarking. Describe the two types of benchmarking presented in the chapter.
10. You, your parents, and Bill Gates are all in the market for a new residence.Would each of you define “high quality” the same way? In making a choice of residence, would each of you assess the
9. “If a company has a high-quality manufacturing process, customers will naturally view the output of that process as high quality.” Explain why this statement is true or false.
8. Locate a product that is well described on the Internet. Discuss how that product exemplifies the eight product quality characteristics.
7. What are the eight characteristics that comprise product quality from the consumer’s perspective? What are the five characteristics that comprise service quality from the customer’s
6. How can statistical process control techniques be used to evaluate the quality of a production process?
5. What variables can management manipulate to improve production process quality? How will these changes improve product quality?
4. In conducting activity analyses, the presence of certain activities indicates low production process quality. List five of these activities.
3. What is meant by the term quality? In defining quality, from what two perspectives can a definition be formulated? Why are both important?
2. Is the quality movement likely to fade away? Discuss the reasons for your conclusion.
1. Why are high-quality products and services so important in today’s global business environment?
Scott Company’s quality report for October 2000 showed the following information:Total defective units 2,000 Number of units reworked 1,400 Number of customer units returned 650 Profit for a good
How can quality be instilled as part of an organization’s culture?
Why does a company need both a strategically based management accounting system and a financial accounting system?
How is cost of quality measured?
What types of quality costs exist and how are those costs related?
Why is total quality management significant and what conditions are necessary to yield its benefits?
Why do companies engage in benchmarking?
What primary characteristics comprise product quality and service quality?
What is quality and from whose viewpoint should it be evaluated?
Why is the emphasis on quality in business unlikely to decline?
49. The following is an excerpt from the Web site of Zero Defects, an electronics manufacturing service provider:At Zero Defects, we have never believed that perfection is too much for our clients to
48. In accounting for spoilage, consideration should be given to how well the approach chosen to measure spoilage supports management’s efforts to improve quality. Prepare a memo explaining how
47. All world-class models (TQM, JIT, ABM, and theory of constraints) advocate improving throughput as a way to improve quality and minimize defects. Prepare a report for the board of directors of a
46. Use library, Internet, or personal resources to find three companies that instituted workforce education programs and, thereby, reduced the number of lost units. Prepare a five- to seven-minute
45. Every job has certain requirements, and quality is defined by meeting those requirements. In some cases, however, people make decisions to override requirements. In a team of three or four,
44. AudioSpectrum produces complex printed circuits for stereo amplifiers. The circuits are sold primarily to major component manufacturers, and any production overruns are sold to small
39. (Comprehensive; FIFO) Use the information for Harper Company from Problem 38 to prepare a FIFO cost of production report for each department for October 2001.
37. (Cost assignment) Patio Products employs a weighted average process costing system for its products. One product passes through three departments (Molding, Assembly, and Finishing) during
35. (Normal and abnormal discrete spoilage; WA) Use the Reagan Company data as given in Problem 34. Prepare a May 2001 cost of production report using the weighted average method.
34. (Normal and abnormal discrete spoilage; FIFO) Reagan Company produces hinges. Completed hinges are inspected at the end of production. Any spoilage in excess of 2 percent of the completed units
33. (Normal and abnormal discrete spoilage; FIFO) Use the Big Stone Furniture information from Problem 32. Determine the proper disposition of the April costs of the Lamination Department using the
30. (Discrete spoilage; WA) Angelique Inc. makes stuffed angels in a mass-production process. Cloth and stuffing are added at the beginning of the production process;the angels are packaged in
29. (Shrinkage; WA) Department 1 of Super Patties cooks ground beef for hamburger patties. The patties are then transferred to Department 2 where they are placed on buns, boxed, and frozen. The
28. (Controlling losses) For each of the following types of production losses or poor service, indicate whether prevention (P) or appraisal (A) techniques would provide the most effective control
27. (Rework) Auto Luster Inc. manufactures two-gallon tubs of car polish for body shops. The company uses an actual cost, process costing system. All material is added at the beginning of production;
26. (Normal discrete spoilage; WA) The Potato Division of Global Foods Company processes potatoes. In the process, raw potatoes are sequentially cleaned, skinned, cooked, and canned. Spoilage

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