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Cost Management Accounting And Control 6th Edition Don R. Hansen, Maryanne M. Mowen, Liming Guan - Solutions
Delille Company manufactures both traditional toothpaste and gel toothpaste, with each type of toothpaste produced in separate departments. Three support departments support the production departments: power, general factory, and personnel. Budgeted data on the five departments are as follows:The
Refer to the data in Exercise 7-5. The company has decided to use the sequential method of allocation instead of the direct method.Required:1. Allocate the overhead costs to the producing departments using the sequential method.2. Using machine hours, compute departmental overhead rates. (Round the
Kumar Company has two producing departments and two support centers. The following budgeted data pertain to these four departments:Required:1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal method. Bases for allocation are:
Refer to the data in Exercise 7-7. The company has decided to simplify its method of allocating support service costs by switching to the direct method.Required:1. Allocate the costs of the support departments to the producing departments using the direct method.2. Using direct labor hours, compute
Refer to the data in Exercise 7-7.Required:1. Allocate the costs of the support departments using the sequential method.2. Using direct labor hours, compute departmental overhead rates for the two producing departments.
Pagilla Company manufactures four products—andol, incol, ordol, and exsol—from a joint production process. The joint costs for one batch are as follows:Direct materials .......$56,300Direct labor ........ 28,000Overhead ......... 15,700At the split-off point, a batch yields 1,000 andol, 1,500
Refer to Exercise 7-10 and allocate the joint costs using the sales-value-at-split-off method.
Presley, Inc., produces two products, ups and downs, in a single process. The joint costs of this process were $42,000, and 39,000 units of ups and 21,000 units of downs were produced. Separable processing costs beyond the split-off point were as follows: ups, $18,000; downs, $5,780. Ups sell for
Biotechtron, Inc., has two research laboratories in the Midwest, one in Tulsa, Oklahoma, and one in Ames, Iowa. The owner of Biotechtron centralized the legal services function in the Tulsa office, where both laboratories send any legal questions or issues. The legal services support center has
AirBorne is a small airline operating out of Boise, Idaho. Its three flights travel to Salt Lake City, Reno, and Portland. The owner of the airline wants to assess the full cost of operating each flight. As part of this assessment, the costs of two support departments (maintenance and baggage) must
Homestead Pottery, Inc., is divided into two operating divisions: pottery and retail. The company allocates power and human resources department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and human resources costs on the basis of the
Maricopa Corporation is developing departmental overhead rates based on direct labor hours for its two production departments€”molding and assembly. The molding department employs 20 people, and the assembly department employs 80 people. Each person in these two departments works 2,000
Petro-Chem, Inc., is a small company that acquires high-grade crude oil from low volume production wells owned by individuals and small partnerships. The crude oil is processed in a single refinery into Two Oil, Six Oil, and impure distillates. Petro-Chem does not have the technology or capacity to
Welcome Inns is a chain of motels serving business travelers in Arizona and southern Nevada. The chain has grown from one motel in 2007 to five motels. In 2010, the owner of the company decided to set up an internal accounting department to centralize control of financial information. (Previously,
Sonimad Sawmill, Inc., purchases logs from independent timber contractors and processes them into the following three types of lumber products.1. Studs for residential construction (e.g., walls and ceilings)2. Decorative pieces (e.g., fireplace mantels and beams for cathedral ceilings)3. Posts used
House Corporation Board (HCB) of Tri-Gamma Sorority is responsible for the operation of a two-story sorority house on the State University campus. HCB has set a normal capacity of 60 women. At any given point in time, the chapter has 100 members: 60 living in the house and 40 living elsewhere
Divide the class into groups of six. Within each group, form pairs. One pair works Requirement 1(a); another pair works Requirement 1(b); and the remaining pair works Requirement 1(c). When the pairs have completed their work, they reform their group, and each pair teaches the other how to complete
What is a Balanced Scorecard? Explain it briefly?
What is meant by balanced measures?
What is a lag measure? A lead measure?
What is the difference between an objective measure and a subjective measure?
What are stretch targets? What is their strategic purpose?
How does the reward system for a strategic-based system differ from the traditional approach?
What are the three strategic themes of the financial perspective?
Identify the five core objectives of the customer perspective.
Explain what is meant by the long-wave and the short-wave of value creation.
Define the three processes of the process value chain.
Identify three objectives of the learning and growth perspective.
What is a testable strategy?
What is meant by double-loop feedback?
Identify and explain three methods for achieving strategic alignment.
The following comment was made by the CEO of a company that recently implemented the Balanced Scorecard: “Responsibility in a strategic-based performance management system differs on the three D’s: Direction, Dimension, and Diffusion.”Required:Explain how this comment describes differences in
“A Balanced Scorecard expresses the complete story of a company’s strategy through an integrated set of financial and nonfinancial measures that are both predictive and historical and which may be measured subjectively or objectively.”Required:1. Using the above statement about scorecard
The Balanced Scorecard is an approach that has the objective of driving change. Performance evaluation is an integral part of this effort. Performance evaluation within the Balanced Scorecard framework is also concerned with the effectiveness and viability of the organization’s
Consider the following list of scorecard measures:a. Ratings from customer surveysb. Cycle time to resolve customer complaintsc. Unit customer costd. Return on investmente. Employee satisfaction ratingsf. Percentage of defective unitsg. Post purchase costsh. Time to market (from start to finish)i.
The theoretical cycle time for a product is 48 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $4,320,000 per year. The total labor minutes available are 960,000. During the year, the cell was able to produce 0.60 unit of the product per hour.
A manufacturing plant has the theoretical capability to produce 54,000 printers per quarter but currently produces 20,250 units. The conversion cost per quarter is $2,430,000.There are 13,500 production hours available within the plant per quarter. In addition to the processing minutes per unit
Refer to Exercise 13-6. Assume that the company identifies poor plant layout as the root cause of wait time and move time. Required:1. Express an improvement strategy as a series of if-then statements that will reduce the conversion cost per printer.2. Assume that you set an MCE target of 60
The following if-then statements were taken from a Balanced Scorecard:a. If employee productivity increases, then process efficiency will increase.b. If process efficiency increases, then product price can be decreased.Required:1. Identify the lead and lag variables, and explain your reasoning.2.
Consider the following quality improvement strategy as expressed by a series of if-then statements:• If design engineers receive quality training, then they can redesign products to reduce the number of defective units.• If the number of defective units is reduced, then customer satisfaction
Crescent Company, an electronics firm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Crescent sells its products to original equipment manufacturers. Profits for the last two years have been less than expected. Mandy Confer, owner of Crescent,
Refer to Exercise 13-10. Suppose that Mandy communicates the following weights to her CEO:• Perspective: Financial, 40%; Customer, 20%; Process, 20%; Learning and Growth, 20%• Financial objectives: Profits, 50%; Revenues, 25%; Costs, 25%• Customer objectives: Customer satisfaction, 60%;
Carson Wellington, president of Mallory Plastics, was considering a report sent to him by Emily Sorensen, vice president of operations. The report was a summary of the progress made by an activity-based management system that was implemented three years ago. Significant progress had indeed been
At the end of 2008, Activo Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost producer in its industry. A Balanced Scorecard was developed to guide the company toward this objective. To lower costs, Activo undertook a number of
Refer to the data in Problem 13-13.Required:1. Express Activo’s strategy as a series of if-then statements. What does this tell you about Balanced Scorecard measures?2. Prepare a strategy map that illustrates the relationships among the likely strategic objectives.
The following strategic objectives have been derived from a strategy that seeks to improve asset utilization by more careful development and use of its human assets and internal processes:a. Increase revenue from new products.b. Increase implementation of employee suggestions.c. Decrease operating
A manufacturing cell has the theoretical capability to produce 150,000 subassemblies per quarter. The conversion cost per quarter is $1,500,000. There are 50,000 production hours available within the cell per quarter.Required:1. Compute the theoretical velocity (per hour) and the theoretical cycle
Molson, Inc., manufactures a product that experiences the following activities (and times):HoursProcessing (two departments) .... 42.0Inspecting ............ 2.8Rework ............. 7.0Moving (three moves) ....... 11.2Waiting (for the second process) .... 33.6Storage (before delivery to customer) .
Garvey Company has a JIT system in place. Each manufacturing cell is dedicated to the production of a single product or major subassembly. One cell, dedicated to the production of snowmobiles, has four operations: machining, finishing, assembly, and qualifying (testing). The machining process is
At the beginning of the last quarter of 2008, Youngston, Inc., a consumer products firm, hired Maria Carrillo to take over one of its divisions. The division manufactured small home appliances and was struggling to survive in a very competitive market. Maria immediately requested a projected income
Form groups of three to five. Divide the groups into four sets: A, B, C, and D.Required:Use Chapters 12 and 13 to do the following:1. Group A will compare responsibility under a traditional financial responsibility structure with responsibility under a strategic performance management system.2.
Define total productive efficiency.
What is lean manufacturing?
What are the five principles of lean thinking?
Identify two types of value streams and explain how they differ.
How are value streams identified and created?
Explain how lean manufacturing is able to produce small batches (low volume products) of differing products (high variety).
What role does a demand-pull system have in lean manufacturing?
Identify eight sources of waste.
What is a focused value stream?
What is the purpose of assigning facility costs to value streams, using a fixed price?
Why are units shipped used to calculate the value stream product cost?
When is the average unit cost useful for value streams?
Explain why changes in value stream profitability may be better information than individual product cost for certain decisions.
Explain how operational control works in a lean manufacturing firm.
Explain why the implementation of lean manufacturing could show a temporary decline in profits.
Describe the features and characteristics costing approach.
Aono, Inc., formed the following matrix for its five products.Required:Using the information in the matrix, identify the valuestreams.
Pollard Pharm, Inc., has the following departmental structure for producing a popular pain medication:A consultant designed the following cellular manufacturing structure for the same product:The times above and below the processes represent the time required to process one unit of
Pollard Pharm, Inc., implemented cellular manufacturing as recommended by a consultant. The production flow improved dramatically. However, the company was still faced with the need to improve its cycle time to one bottle every six minutes, as required by customer demand. The cell structure is
Azari, Inc. has just created five order fulfillment value streams, two focused and three that produce multiple products. The size of the plant in which the values streams are located is 150,000 square feet. The facility costs total $900,000 per year. One of the focused value streams produces a
Wilson Manufacturing, Inc., has implemented lean manufacturing in its Bloomington plant as a pilot program. One of its value streams produces a family of small electric tools. The value stream team managers were quite excited about the results, as some of their efforts to eliminate waste were
The following Box Scorecard was prepared for a value stream of Furumo Company.Required:1. How many nonfinancial measures are used to evaluate performance?2. Classify the operational measures as time-based, quality-based, or efficiency-based. Discuss the significance of each category for lean
Elmer Company is a lean manufacturer and is considering whether to buy a part that is needed for production of a value stream. The part is currently made within the value stream (the part is considered a materials cost). The revenue for the value stream is $2,000,000. Currently, the cost of
Forty agents of a local real estate brokerage firm eat lunch at least twice weekly at a very popular pizza restaurant. The pizza restaurant recently began offering discounts for groups of 10 or more. Groups would be seated in a separate room, served individual bowls of salad costing $2 each,
Refer to Problem 16-8. After eating at the pizzeria for a week, the 40 agents realize they have not two kinds of eaters but four: two types of light eaters and two types of heavy eaters. The consumption patterns for each group are given (slices of pizza, glasses of root beer, and bowls of salad):
Shapiro Company, a manufacturer of small tools, implemented lean manufacturing at the end of 2009. The company€™s goal for the year was to increase the return on sales to 40 percent of sales. A value stream team was established and began to work on lean improvements.During the year, the
Vishal Company has implemented lean manufacturing systems. One of the value streams of the company manufactures three products: A, B, and C. Each product goes through three cells, each of which has a team of people and machines. The operational sequence of the three cells is as follows:Total
Explain the difference between technical and allocative efficiency.
What is productivity measurement?
Explain the difference between partial and total measures of productivity.
What is an operational productivity measure? A financial measure?
Discuss the advantages and disadvantages of partial measures of productivity.
What is the purpose of a base period?
What is profile measurement and analysis? What are the limitations of this approach?
What is profit-linked productivity measurement and analysis?
Explain why profit-linked productivity measurement is important.
What is the price-recovery component?
What is activity productivity analysis, and what are its limitations?
What is process productivity analysis?
Listed below are four possible input combinations for producing 2,000 units of a men€™s watch. Two of the input combinations are technically efficient.Required:1. Identify the technically efficient input combinations. Explain your choices.2. Which of the two technically efficient input
Cuzco Sweaters Company produces alpaca sweaters that use two inputs, materials and labor. During the past quarter, 4,000 sweaters were produced, requiring 16,000 pounds of material and 8,000 hours of labor. An engineering efficiency study commissioned by the local university revealed that Cuzco can
Drumwright Company needs to increase its profits and so has embarked on a program to increase its overall productivity. After one year of operation, Kent Olson, manager of the Columbus plant, reported the following results for the base period and its most recent year of operations:Required:Compute
Refer to Exercise 15-3. Suppose the following input prices are provided for each year:Required:1. Compute the profit-linked productivity measure. By how much did profits increase due to productivity?2. Calculate the price-recovery component for 2010. Explain itsmeaning.
Wilton Company has recently installed a computer-aided manufacturing system. The decision to automate was made so that material waste could be reduced. Better quality and a reduction of labor inputs were also expected. After one year of operation, management wants to see if the expected
The manager of Blakely Company was reviewing two competing projects for the molding department. The projects represented different methods of preparing the molds for one of the company's more popular product lines. One project changed the way molds were poured and promised a savings in material
Diamante Company gathered the following data for the past two years:Required:1. Prepare a productivity profile for each year.2. Prepare partial income statements for each year. Calculate the total change in income.3. Calculate the change in profits attributable to productivity changes.4. Calculate
In an effort to become more competitive, Hardy Company has embarked on a program to reduce and eliminate its non-value-added activities and to improve the efficiency of its value-added activities. The activity of paying bills has been classified as value-added and in need of improvement. The major
In 2009, Maravilla Auto's Motor Division hired a consulting firm to help identify and define the processes used within the division. Megan Dorr, the divisional manager, also asked the consulting firm to make recommendations concerning the reengineering of the processes to improve overall
Berry Company is considering the acquisition of a computerized manufacturing system. The new system has a built-in quality function that increases the control over product specifications. An alarm sounds whenever the product falls outside the programmed specifications. An operator can then make
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