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cost accounting

Principles Of Cost Accounting 15th Edition Edward J. Vanderbeck - Solutions

A company may select an inventory costing method from a number of commonly used procedures. Briefly, how would you describe each of the following methods?a. First-in, first-outb. Last-in, first-outc. Moving average
Why do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on both the income statement and balance sheet.
Which of the forms shown in the chapter is the source for the following entries to subsidiary ledger accounts?a. Debits in materials ledger to record materials purchasedb. Credits in materials ledger to record materials requisitionedc. Debits in job cost ledger to record materials placed in process
How does the just-in-time approach to production differ from the traditional approach?
Explain the meaning of the terms push manufacturing and pull manufacturing.
List three disadvantages of the ‘‘push’’ manufacturing approach to production.What are the arguments for and against ‘‘backflush’’ costing?
What is the difference between throughput time and velocity?
List three advantages to producing all units of a specific product in a single manufacturing cell?
What are the arguments for and against ‘‘backflush’’ costing?
A manufacturing process may produce a considerable quantity of scrap material because of the nature of the product. What methods can be used to account for the sales value of scrap material?
After a product is inspected, some units may be classified as spoiled and others as defective. What distinguishes a product as being spoiled or defective?
Aztec Company expects daily usage of 500 pounds of material Inca, an anticipated lead time of seven days, and a desired safety stock of 2,500 pounds.a. Determine the order point.b. Determine the number of pounds to be issued from safety stock if the new order is four days late.
Patriot Company predicts that it will use 360,000 gallons of material during the year. The material is expected to cost $5 per gallon. Patriot anticipates that it will cost $72 to place each order. The annual carrying cost is $4 per gallon.a. Determine the most economical order quantity by using
Match the materials control form in the left column with the person responsible for its preparation in the right column.(A selection may be used more than once.)a. Purchase requisition 1. Production department supervisorb. Purchase order 2. Storeroom keeperc. Receiving report 3. Purchasing
Catskill Manufacturing, Inc., records the following use of materials during the month of June:Prepare a summary journal entry for the materialsrequisitions.
Prepare a journal entry to record each of the following materials transactions:a. Total materials purchased on account during the month amounted to $200,000.b. Direct materials requisitioned for the month totaled $175,000.c. Indirect materials requisitioned during the month totaled $12,000.d.
Using first-in, first-out; perpetual inventory costing; and the following information, determine the cost of materials used and the cost of the July 31 inventory:July 1 Balance on hand, 1,000 yd of linen@$4.00 each.3 Issued 250 yd.5 Received 500 yd@ $4.50 each.6 Issued 150 yd.10 Issued 110 yd.11
Using last-in, first-out; perpetual inventory costing; and the information presented in E2-6, compute the cost of materials used and the cost of the July 31 inventory.
Using the moving average method of perpetual inventory costing and the information presented in E2-6, compute the cost of materials used and the cost of the July 31 inventory. (Round unit prices to four decimal places and totals to the nearest whole dollar.)
In tabular form, compare the total materials cost transferred to Work in Process and the cost of the ending inventory for each method used in E2-6, E2-7, and E2-8. Discuss the effect that each method will have on profits, depending on whether it is a period of rising prices or a period of falling
Benson Company was franchised on January 1, 2011. At the end of its third year of operations, December 31, 2013, management requested a study to determine what effect different materials inventory costing methods would have had on its reported net income over the three-year period. The materials
Mystic Manufacturing Company maintains the following accounts in the general ledger: Materials, Work in Process, Factory Overhead, and Accounts Payable. On June 1, the materials account had a debit balance of $5,000. Following is a summary of materials transactions for the month of June:1.
Iwamura Industries produces 10,000 units each day, and the average number of units in work in process is 40,000.1. Determine the throughput time.2. If the same daily output can be achieved while reducing the work in process by 75%, determine the new throughput time.
RDI Company uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following:a. Purchased raw materials, on account, $80,000.b. Requisitioned raw
In E2-13, prepare any journal entries that would have been different if the only trigger points had been the purchase of materials and the sale of finished goods.
A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered that the material used was inferior to the specifications required by the engineering department;
Venus, Inc., manufactures tennis clothing. During the month, the company cut and assembled 8,000 skirts. One hundred of the skirts did not meet specifications and were considered ‘‘seconds.’’ Seconds are sold for $9.95 per skirt, whereas first-quality skirts sell for $39.95. During the
David Mfg. Company manufactures an integrated transistor circuit board for repeat customers but also accepts special orders for the same product. Job No. MS1 incurred the following unit costs for 1,000 circuit boards manufactured:Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marino Company predicts that it will use 25,000 units of material during the year. The expected daily usage is 200 units, and there is an expected lead time of five days and a desired safety stock of 500 units. The material is expected to cost $5 per unit. Marino anticipates that it will cost $50
Cortez Chemical, Inc., requires 20,000 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5.Required:Determine the EOQ from potential order sizes of 300, 400, 500, 600, 700, and 800 gallons by constructing a table similar to the one
In P2-2, assume that the company desires a safety stock of 500 gallons.Required:1. Compute the average number of gallons in inventory.2. Compute the total carrying cost.3. Compute the total order cost. Did it differ from your answer in P2-2 above?
The purchases and issues of rubber gaskets (Materials Ledger #11216) as shown in the records of HD Corporation for the month of November follow:Required:1. Complete a materials ledger account similar to Figure 2-10 (the â€˜â€˜On Order'' columns should be omitted) for each of the following
The following transactions affecting materials occurred in February:Feb. 1 Balance on hand, 1,200 ft @ $2.76, $3,312.00 (plastic tubing, materials ledger account #906).5 Issued 60 ft to production on Materials Requisition No. 108.11 Issued 200 ft on Materials Requisition No. 210.14 Received 800 ft
Milano’s Specialty Clothing, Inc., uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows:Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scarlatta€™s Manufacturing Company uses a job order cost system. The following accounts have been taken from the books of the company:Required:1. Analyze the accounts and describe in narrative form what transactions took place. (Use the reference letters a. through f. in your explanations
The following actions occurred at Sanibel Sheet Metal Company relative to accounting for materials costs for April.Mar. 31 The factory manager informs the storeroom keeper that for the month of April, 2,000 sheets of aluminum are the forecasted usage. A check of the stock shows 500 aluminum sheets,
Yusane Bolts, Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in process is $1,000,000.Required:1. Determine the throughput time.2. Compute the annual carrying
T. Hilliary, Inc., uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products.Required:1. Prepare journal entries, if needed, to account for the
An examination of Frosty Corporation’s records reveals the following transactions:a. On December 31, the physical inventory of raw material was 9,950 gallons. The book quantity, using the moving average method, was 10,000 gal@ $0.52 per gal.b. Production returned to the storeroom materials that
One of the tennis racquets that Set Point manufactures is a titanium model (Ace) that sells for $149. The cost of each Ace consists of:Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35Labor . . . . . . . . . . . . . . . . . . . . . . . .
Torre, Inc., manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The following costs were determined for each motor:Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Review Problem for Chapters 1 and 2 Lift It, Inc., manufactures chain hoists. The raw materials inventories on hand on October 1 were as follows:Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 pounds, $24,000Pulleys . . . . . . . . . . . . . . . . . .
Katy, Inc., manufactures ‘‘smart phones.’’ It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to $200,000 annually. Estimated benefits from the change to JIT are as follows:The quality advantages of JIT should reduce current rework
In the scenario on page 91, Boston Company was trying to decide whether or not to change from a traditional inventory system to a just-in-time (JIT) system. The president, Teresa Francona, wanted to know whether this change would merely affect how goods were ordered and produced, or if it would
Go to the text Website at www.cengage.com/accounting/vanderbeck and click on the link to the following article: Benefits From Lean and Cellular Manufacturing, by Strategos, Inc.-Consultants, Engineers, StrategistsRequired:Read the article and answer the following questions:1. Name some general
What is the difference between direct and indirect labor?
Briefly stated, what are the advantages and disadvantages of (a) The hourly rate wage plan and (b) The piece-rate wage plan?
What is a modified wage plan?
What is the concept of production work teams as it relates to incentive wage plans?
What is the function of the payroll department?
In a payroll system, what purpose is served by a labor time record? How is the information that is recorded on labor time records used?
What purpose do digital records and remote computer terminals serve in a payroll system?
Although payroll records may vary in design, what types of employee data would be found in the payroll records of most manufacturing companies?
What are the sources for posting direct labor cost to (a) Individual jobs in the job cost ledger and (b) The work in process account in the general ledger?
What are the sources for posting indirect labor cost to the indirect labor account in the factory overhead ledger?
In accounting for labor costs, what is the distinction between the accounting treatment for regular pay and overtime premium pay?
Maintaining internal control over labor cost is necessary for a cost accounting system to function effectively. What are the internal control procedures regarding the charge to the work in process account and the credit to the payroll account in the general ledger?
What accounts are used to record employees’ withholding taxes and the employer’s payroll taxes?
What are the procedures involved in accounting for labor cost, and what supporting forms are used for each procedure?
What is the source of data used to:a. record the distribution of the payroll.b. record the employer’s payroll taxes.
In what circumstance should an accrual for payroll earnings and payroll tax expense be made?
What is a shift premium, and how is it usually accounted for?
What is a basic requirement of all pension plans?
a. Distinguish between defined benefit pension plans and defined contribution pension plans.b. Distinguish between contributory and noncontributory pension plans.
In 2009, what was the maximum amount that an employee could contribute to a 401(k) plan?
What accounting treatments do factory bonuses, vacation pay, and holiday pay for factory employees have in common?
What are the two alternatives for accounting for the fringe benefits of direct laborers?
A. Jolly of Pittsburgh Manufacturing Company is paid at the rate of $20 an hour for an 8-hour day, with time-and-a-half for overtime and double-time for Sundays and holidays. Regular employment is on the basis of 40 hours a week, five days a week. At the end of a week, the labor time record shows
Using the earnings data developed in E3-1 and assuming that this was the first week of employment for A. Jolly with Pittsburgh Manufacturing Company, prepare the journal entries for the following:a. The week’s payroll.b. Payment of the payroll.
Marcia Young earns $25 per hour for up to 400 units of production per day. If she produces more than 400 units per day, she will receive an additional piece rate of $0.50 per unit. Assume that her hours worked and pieces finished for the week just ended were as follows:a. Determine Young's earnings
Albert Machine Tool Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred:Other factory costs for the month totaled $16,800. Factory overhead costs are allocated one-third to Job 401 and two-thirds to Job 402.a. Describe two
A partial summary of the payroll data for Burrington Manufacturing Company for each week of June is as follows:a. Compute the missing amounts in the summary, assuming that no employees have reached the $100,000 FICA maximum.b. For each payroll period, prepare journal entries to (1) Record the
Fontana Fabricating Company paid wages to its employees during the year as follows:Burris . . . . . . . . . . . . . . . . . . . . . . . . $ 15,400Combs . . . . . . . . . . . . . . . . . . . . . . . 16,700Detrick . . . . . . . . . . . . . . . . . . . . . . . 13,000Edwards . . . . . . . .
Using the earnings data developed in E3-1, and assuming that this was the eighth week of employment for Jolly and the previous earnings to date were $7,900, prepare the journal entries for the following:a. The week’s payroll.b. Payment of the payroll.c. The employer’s payroll taxes.
Using the earnings data developed in E3-1, and assuming that this was the fiftieth week of employment for Jolly and the previous earnings to date were $99,800, prepare the journal entries for the following:a. The week’s payroll.b. Payment of the payroll.c. The employer’s payroll taxes.
The total wages and salaries earned by all employees of Cutler Manufacturing Company during the month of March, as shown in the labor cost summary and the schedule of fixed administrative and sales salaries, are classified as follows:Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . .
A weekly payroll summary made from labor time records shows the following data for Musketeer Manufacturing Company:Overtime is payable at one-and-a-half times the regular rate of pay for an employee and is distributed to all jobs worked on during the period.a. Determine the net pay of each
The payroll records of Torero Machining Company show the following information for the week ended April 17:Hourly workers are paid time-and-a-half for overtime.a. Determine the net earnings of each employee.b. Prepare the journal entries for the following:1. Recording the payroll.2. Paying the
Beth Elkins, a factory worker, earns $1,000 each week. In addition, she will receive a $4,000 bonus at year-end and a four-week paid vacation. Prepare the entry to record the weekly payroll and the costs and liabilities related to the bonus and the vacation pay, assuming that Elkins is the only
Clark Kent earns $800 per week for a five-day week, and he is entitled to 12 paid holidays and four weeks of paid vacation.a. Over how many weeks should the holiday pay and vacation pay be expensed?b. What is the amount of the total holiday pay, and how much of it should be expensed per week?c. How
Fifteen workers are assigned to a group project. The production standard calls for 500 units to be completed each hour to meet a customer's set deadline for the products. If the required units can be delivered before the target date on the order, the customer will pay a substantial premium for
Terri Whelan, SS# 036-47-2189, is a Grade 1 Machinist who earns $20 per hour. On Monday June 12 through Wednesday June 14, she worked four hours per day on each of Jobs 007 and 2525. On Thursday and Friday of the week, she worked six hours per day on Job 2525 and two hours per day on maintenance.
A rush order was accepted by San Diego Machine Conversions for five van conversions. The labor time records for the week ended January 27 show the following:All employees are paid $10.00 per hour, except Peavy, who receives $20 per hour. All overtime premium pay, except Peavy€™s, is
The following form is used by MoJo Manufacturing Company to compute payroll taxes incurred during the month of April:Required:1. Using the above form, calculate the employer's payroll taxes for April. Assume that none of the employees has achieved the maximums for FICA and unemployment taxes.2.
WTA Manufacturing Company operates on a modified wage plan. During one week's operation, the following direct labor costs were incurred:The employees are machine operators. Piece rates vary with the kind of product being produced. A minimum of $70 per day is guaranteed each employee by union
The general ledger of Smokey Mountain Mfg., Inc., showed the following credit balances on January 15:FICA Tax Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100.00Employees Income Tax Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The payroll records of XU Corporation for the week ending October 7, the fortieth week in the year, show the following:Required:1. Complete a work sheet with the following column headings: Employee3 columns for Earnings for Week:Use one for Regular Pay.Use one for Overtime Premium Pay. (The company
Pan-Am Manufacturing Company prepares cost estimates for projects on which it will bid. In order to anticipate the labor cost to be included in a request to bid on a contract for 1,200,000 units that will be delivered to the customer at the rate of 100,000 units per month, the company has compiled
An analysis of the payroll for the month of November for Hollywood, Inc., reveals the information shown:Crowe, Eastwood, and Carey are production workers, and Penn is the plant manager. Giamatti is in charge of the office. Cumulative earnings paid (before deductions) in this calendar year prior to
Giovanni Construction Company uses the job order cost system. In recording payroll transactions, the following accounts are used:Cash Administrative SalariesWages Payable Miscellaneous Administrative ExpenseFICA Tax Payable Sales SalariesFederal Unemployment Tax Payable Miscellaneous
The factory payroll for the week is $200,000, consisting of $140,000 earned by 100 direct laborers and $60,000 earned by 30 indirect laborers. The total of factory bonuses to be received at year-end is estimated at $400,000. All factory workers receive a two-week paid vacation and five paid
In P3-11 above, prepare the entries to distribute the weekly payroll and the costs and liabilities related to the bonus, vacation, and holiday pay, assuming that the fringe benefits of the direct laborers are charged to the individual jobs worked on during the period.
Stacey Womack is considering the implementation of an incentive wage plan to increase productivity in her small manufacturing plant. The plant is nonunion, and employees have been compensated with only an hourly rate plan. Jane Moore, Vice President—Manufacturing, is concerned that the move to an
Elite Manufacturing Company uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and double-time for Saturday and Sunday. Also, a bonus of 1% of the employees' earnings for the year is to
Go to the Vanguard Investments’ Web site https://retirementplans.vanguard.com/VGApp/pe/PubHome for retirement information that is linked to the text Web site at www.cengage.com/accounting/vanderbeck. Enter ‘‘401(k) plans’’ in the search area and find the answers to the following
How does the cost accounting function assist in the management of a business?
What is ISO 9000, and why is it an important designation for competing globally?
How do the activities of manufacturers, merchandisers, and service businesses differ?
In what ways does a typical manufacturing business differ from a merchandising concern? In what ways are they similar?
How is cost accounting information used by management?

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