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cost accounting

Cost Accounting Foundations and Evolutions 8th Edition Michael R. Kinney, Cecily A. Raiborn - Solutions

Jacobs manufactures two products: A and B. The firm predicts a sales volume of 10,000 units for Product A and ending finished goods inventory of 2,000 units. These numbers for Product B are 12,000 and 3,000, respectively. Jacobs currently has 7,000 units of A in inventory and 9,000 units of B.The
The board of directors of Ogle Construction Company is meeting to choose between the completed-contract method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Ogle's controller in the preparation of
Pluto, Inc. has a beginning cash balance of $430 on February 1st. The firm has projected sales of $600 in January, $800 in February and $900 in March. The cost of goods sold is equal to 70% of sales. Goods are purchased one month prior to the month of sale. The accounts payable period is 30 days
Lando Company reported the following amounts for 2008:Raw materials purchased ...........$ 98000Beginning raw materials inventory ....... $ 5200Ending raw materials inventory ....... $ 4500Ending work in process inventory ...... $ 6300Manufacturing overhead costs applied ....$ 36000Beginning work
Finney Company's condensed income statement is presented below:The following data is compiled relative to Finney's operating segments:Included in the amounts allocated to each segment on the above percentages are the following expenses which relate to general corporate activities:Instructionsa.
Company X Marketing Department has forecasted the following for next quarter: Product XX is expected to sell 14,600 units, Product XY is expected to sell 21,300 units, and Product XZ is expected to sell 34,400 units.Beginning inventories are as
Music City, Inc. has an average collection period of 56 days. Its average daily investment in receivables is $50,000. What are the annual credit sales?
Gold Co. sold merchandise to Bronze Co. on account, $25,000, terms 2/15, net 45. The cost of the merchandise sold is $18,500. Gold Co. issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900. Bronze Co. paid the invoice within the discount period. What is amount
It is expected that this problem will be complete using an Excel spreadsheet using formulas. Please see the Excel Tutorial that is available under the course home tab. The Hale Company finished their sales projections for the coming year. The company produces one product. Part of next year's sales
A customer paid for merchandise with a check that has been erroneously entered into Mutare’s cash account for $48 (it actually has been issued and paid for $84).Required:Record the appropriate journal entry to correct the error.
Assume that a trial balance is prepared with an account balance of $21,360 listed as $21,630 and an account balance of $1,500 listed as $15,000. Identify the transposition and the slide.
Toby Andres owns a tree nursery. She analyzes her business’s results by comparing actual operating results with figures budgeted at the beginning of the year. When the business generates large profits, she often overlooks the differences between actual and budgeted data. But when profits are low,
Quester Company expects to sell 50,000 units of its product in the coming year. Each unit sells for $45. Sales brochures and supplies for the year are expected to cost $7,000. Three sales representatives cover the southeast region. Each representative’s base salary is $20,000, and each earns a
Operating budgets for the DiPaolo Company reveal the following information: net sales, $450,000; beginning materials inventory, $23,000; materials purchased, $185,000; beginning work in process inventory, $64,700; beginning finished goods inventory, $21,600; direct labor costs, $34,000; overhead
KD Insurance Company specializes in term life insurance contracts. Cash collection experience shows that 20 percent of billed premiums are collected in the month before they are due, 60 percent are paid in the month in which they are due, and 16 percent are paid in the month following their due
Berthaâ€™s Bathworks began manufacturing hair and bath products in 20x1. Its biggest customer is a national retail chain that specializes in such products. Bertha Jackson, the owner of Berthaâ€™s Bathworks, would like to have an estimate of the companyâ€™s net income in
Whatever Video Company, Inc., produces and markets two popular video games, “High Range” and “Star Boundary.” The closing account balances on the company’s balance sheet for last year are as follows: Cash, $18,735; Accounts Receivable, $19,900; Materials Inventory, $18,510; Work in
The products of Minnesota Mining and Manufacturing Company (3M) range from office supplies, duct tape, and road reflectors to laser imagers for CAT scanners. One of the company’s goals is to accelerate sales and product development. Toward that end, it spends over $1 billion a year on research
Some corporate websites include areas specifically designed for student needs. Search the student area of Johnson & Johnson’s website (www.jnj.com/ student_resources/index.htm). What kinds of information does it provide? How does the information apply to the material discussed in this chapter?
Many people believe that the budgeting process is wasteful and ineffective. They maintain that managers spend too much time focusing on the mechanics of budgeting and not enough time on strategic issues. They believe that this emphasis on the budgeting process causes managers to neglect more
Suppose you have just signed a partnership agreement with your cousin Eddie to open a bookstore near your college. You believe that the store will be able to provide excellent service and undersell the local competition. To fund operations, you and Eddie have applied for a loan from the Small
Using the following information from Hakim Company, prepare an income statement through operating income for the year:Sales ............................................................$900,000Finished goods inventory, beginning ......... 45,000Cost of goods manufactured ....................
Mazzola Clothiers Company relies on the information from its activity-based costing system when setting prices for its products. Compute ABC rates from the following estimated data for each of the activity centers:
Lisette Company manufactures music boxes. Seventy percent of its products are standard items produced in long production runs. The other 30 percent are special orders with specific requests for tunes. The latter cost from three to six times as much as the standard product because they require
H & R Block is a service company that prepares tax returns; Borders is a retail company that sells books and CDs; Indian Motorcycle Corporation is a manufacturing company that makes motorcycles. Show that you understand how these companies differ by giving for each one an example of a direct
Both Matos Company and Stubee Corporation use predetermined overhead rates for product costing, inventory valuation, and sales quotations. The two businesses are about the same size, and they compete in the corrugated box industry. Because the overhead rate is an estimated measure, Matos
Gateway, Inc., and Dell Computer Corporation assemble computers and sell them over the telephone or the Internet. Access the website of either of these companies. Become familiar with the products of the company you have chosen. For one of these products, such as a desktop or laptop computer, give
At the end of 20x9, Compumatics had compiled a total of 89,920 labor hours worked. The actual overhead incurred was $1,143,400.1. Using the overhead rate computed in E14, determine the total amount of overhead applied to operations during 20x9.2. Compute the amount of overapplied overhead for the
Carola Industries, Inc., manufactures discs for several of the leading recording studios in the United States and Europe. Department 60 is responsible for the electronic circuitry within each disc. Department 61 applies the plastic-like surface to the discs and packages them for shipment. Carola
Natural Cosmetics Company applies overhead costs on the basis of machine hours. The overhead rate is computed by analyzing data from the previous year to determine the percentage change in costs. Thus, the 20x9 overhead rate will be based on the percentage change multiplied by the 20x8 costs. The
Byte Computer Company, a manufacturing organization, has just completed an order that Grater, Ltd., placed for 80 computers. Byte recently shifted from a traditional system of allocating costs to an activity-based costing system. Simone Faure, Byteâ€™s controller, wants to know the impact that
Lund Products, Inc., uses a predetermined overhead rate in its production, assembly, and testing departments. One rate is used for the entire company; it is based on machine hours. The rate is determined by analyzing data from the previous year to determine the percentage change in costs. Thus the
Fraser Products, Inc., which produces copy machines for wholesale distributors in the Pacific Northwest, has just completed packaging an order from Kent Company for 150 Model 14 machines. Fraser recently switched from a traditional system of allocating costs to an activity-based costing system.
Sea Scout, Inc., manufactures two types of underwater vehicles. Oil companies use the vehicle called Rigger II to examine offshore oil rigs, and marine biology research foundations use the BioScout to study coastlines. The companyâ€™s San Diego factory is not fully automated and requires some
H & R Block is a service company that prepares tax returns; Borders is a retail company that sells books and CDs; Indian Motorcycle Corporation is a manufacturing company that makes motorcycles. Show that you understand how these companies differ by giving for each one an example of a direct
Both Matos Company and Stubee Corporation use predetermined overhead rates for product costing, inventory valuation, and sales quotations. The two businesses are about the same size, and they compete in the corrugated box industry. Because the overhead rate is an estimated measure, Matos
Refer to P 8 in this chapter. Assume that Oz Parson, the controller of Sea Scout, Inc., has received some additional information from the production manager, Parvin Hrinda. Hrinda reported that robotic equipment has been installed on the factory floor to increase productivity. As a result, direct
Gateway, Inc., and Dell Computer Corporation assemble computers and sell them over the telephone or the Internet. Access the website of either of these companies. Become familiar with the products of the company you have chosen. For one of these products, such as a desktop or laptop computer, give
Ankara Company uses as imprest petty cash system. The fund was established on March 1 with a balance of TL100. During March the following petty cash receipts were found in the petty cash box.The fund was replenished on March 15 when the fund contained TL3 in cash. On March 20, the amount in the
Basel Company is unable to reconcile the bank balance a January 31. Basel’s reconciliation is as follows.Cash balance per bank ............ CHF3.560.20Add: NSF check ............... 690.00Less: Bank service charge .......... 25.00Adjusted balance per bank .......... CHF4.225.20Cash balance
The following information pertains to Teresina Video Company.1. Cash balance per bank, July 31, R$7,263.2. July bank service charge not recorded by the depositor R$28.3. Cash balance per books, July 31, R$7,284.4. Deposits in transit, July 31, R$1,500.5. Bank collected R$900 note for Teresina in
On March 20, Yang Company’s (a Chinese firm) petty cash fund of Y1,000 is replenish when the fund contains Y70 in cash and receipts for postage Y520, freight-out-Y260, and trade expense Y100. Prepare the journal entry to record the replenishment of the petty cash fund.
Peacock Company requires that all documents supporting a check be cancelled by punching a hole through the packet. Why is this practice required? What might happen if it were not?
The Cash account of Rampart Corp. reported a balance of $2,540 at October 31. Included were outstanding checks totaling $900 and an October 31 deposit of $400 that did not appear on the bank statement. The bank statement, which came from Tri Bank, listed an October 31 balance of $3,675. Included in
After preparing Rampart Corp.’s bank reconciliation in Short Exercise 4-8 , make the company’s journal entries for transactions that arise from the bank reconciliation. Date each transaction October 31, and include an explanation with each entry.
Brenda Small manages Harris Manufacturing. Small fears that a trusted employee has been stealing from the company. This employee receives cash from clients and also prepares the monthly bank reconciliation. To check up on the employee, Small prepares her own bank reconciliation, as follows:Does it
Cooper Apple Growers (CAG) is a major food cooperative. Suppose CAG begins 2011 with cash of $8 million. CAG estimates cash receipts during 2011 will total $103 million. Planned payments will total $86 million. To meet daily cash needs next year, CAG must maintain a cash balance of at least $20
Grace Rocker, an accountant for Dill Limited, discovers that her supervisor, Bob Doon, made several errors last year. Overall, the errors overstated the company’s net income by 20%. It is not clear whether the errors were deliberate or accidental. What should Rocker do?
Identify the internal control weakness in the following situations. State how the person can hurt the company.a. John Munson works as a security guard at VALID parking in Denver. Munson has a master key to the cash box where customers pay for parking. Each night Munson prepares the cash report that
Billy Flack served as executive director of Downtown Columbia, an organization created to revitalize Columbia, South Carolina. Over the course of 11 years, Flack embezzled $444,000. How did Flack do it? By depositing subscriber cash receipts in his own bank account, writing Downtown Columbia checks
D. J. Harris€™ checkbook lists the following:The January bank statement showsRequirementPrepare Harris€™ bank reconciliation at January31.
Frank White operates a roller skating center. He has just received the monthly bank statement at November 30 from Citizen National Bank, and the statement shows an ending balance of $570. Listed on the statement are an EFT rent collection of $335, a service charge of $8, two NSF checks totaling
Use the data from Exercise 4-21A to make the journal entries that White should record on November 30 to update his Cash account. Include an explanation for each entry
McIntosh stores use point-of-sale terminals as cash registers. The register shows the amount of each sale, the cash received from the customer, and any change returned to the customer. The machine also produces a customer receipt but keeps no record of transactions. At the end of the day, the clerk
Flat Flyers Company manufactures a popular line of remote airplanes. Flat Flyers employs 125 workers and keeps their employment records on time sheets that show how many hours the employee works each week. On Friday the shop foreman collects the time sheets, checks them for accuracy, and delivers
Gale Communications, Inc., is preparing its cash budget for 2012. Gale ended 2011 with cash of $85 million, and managers need to keep a cash balance of at least $78 million for operations.Collections from customers are expected to total $11,335 million during 2012, and payments for the cost of
Assume Victor’s Vans borrowed $15 million from Jay’s Bank and agreed to (a) pay an interest rate of 7.2% and (b) maintain a compensating balance amount equal to 5.3% of the loan. Determine Victor’s Vans’ actual effective interest rate on this loan.
Scott Smart served as executive director of Downtown Huntsville, an organization created to revitalize Huntsville, Alabama. Over the course of 14 years, Smart embezzled $236,000. How did Smart do it? He did it by depositing subscriber cash receipts in his own bank account, writing Downtown
D. J. Hardy€™s checkbook and August bank statement show the following:RequirementPrepare Hardy€™s bank reconciliation at August31.
Evan Neal operates a roller skating center. He has just received the monthly bank statement at January 31 from Citizen National Bank, and the statement shows an ending balance of $575. Listed on the statement are an EFT rent collection of $330, a service charge of $9, two NSF checks totaling $115,
Use the data from Exercise 4-32B to make the journal entries that Neal should record on January 31 to update his Cash account. Include an explanation for each entry.
Roper stores use point-of-sale terminals as cash registers. The register shows the amount of each sale, the cash received from the customer, and any change returned to the customer. The machine also produces a customer receipt but keeps no record of transactions. At the end of the day, the clerk
Fast Pass Company manufactures a popular brand of footballs. Fast Pass employs 142 workers and keeps its employment records on time sheets that show how many hours the employee works each week. On Friday the shop foreman collects the time sheets, checks them for accuracy, and delivers them to the
Donn Communications, Inc., is preparing its cash budget for 2012. Donn ended 2011 with cash of $88 million, and managers need to keep a cash balance of at least $79 million for operations.Collections from customers are expected to total $11,323 million during 2012, and payments for the cost of
Assume Slippy Slides borrowed $17 million from West Side Bank and agreed to (a) pay an interest rate of 7.0% and (b) maintain a compensating balance amount equal to 5.1% of the loan. Determine Slippy Slides’ actual effective interest rate on this loan.
(Multiple Choice)1. All of the following are objectives of internal control excepta. To safeguard assetsb. To maximize net incomec. To ensure accurate and reliable accounting recordsd. To comply with legal requirements2. All of the following are internal control procedures excepta. Electronic
(Multiple Choice)1. In a bank reconciliation, an EFT cash payment isa. added to the bank balance.b. deducted from the book balance.c. added to the book balance.d. deducted from the bank balance.2. If a bookkeeper mistakenly recorded a $72 deposit as $27, the error would be shown on the bank
Irish Imports is an importer of silver, brass, and furniture items from Ireland. Kathleen O’Shea is the general manager of Irish Imports. O’Shea employs two other people in the business. Molly Fitzpatrick serves as the buyer for Irish Imports. In her work, Fitzpatrick travels throughout Ireland
The cash data of Durkin Automotive for April 2012 follow:Durkin received the following bank statement on April 30, 2012:Additional data for the bank reconciliation include the following:a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance payment.b. The
The November 30 bank statement of Donald Engineering Associates has just arrived from Kansas First Bank. To prepare the Donald bank reconciliation, you gather the following data:a. Donald’s Cash account shows a balance of $7,684.83 on November 30.b. The November 30 bank balance is $8,457.95.c.
Healthy Hair Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days of the sale. Kathy Mulberry opens envelopes and separates the checks from the accompanying remittance advices. Mulberry forwards the checks to another employee, who makes the daily bank deposit but has
Nathan Farmer, chief financial officer of Bosworth Wireless, is responsible for the company€™s budgeting process. Farmer€™s staff is preparing the Bosworth cash budget for 2013. A key input to the budgeting process is last year€™s statement of cash flows, which
European Imports is an importer of silver, brass, and furniture items from Spain. Eloise Stiles is the general manager of European Imports. Stiles employs two other people in the business. Michelle Woods serves as the buyer for European Imports. In her work, Woods travels throughout Spain to find
The cash data of Duff y Automotive for October 2012 follow:Duff y received the following bank statement on October 31, 2012:Additional data for the bank reconciliation include the following:a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance expense.b. The
The April 30 bank statement of Durkin Engineering Associates has just arrived from Maine First Bank. To prepare the Durkin bank reconciliation, you gather the following data:a. Durkin’s Cash account shows a balance of $7,795.12 on April 30.b. The April 30 bank balance is $8,501.15.c. The bank
Radiant Hair Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days of the sale. Ella Neil opens envelopes and separates the checks from the accompanying remittance advices. Neil forwards the checks to another employee, who makes the daily bank deposit but has no
David Doyle, chief financial officer of Madison Wireless, is responsible for the companyâ€™s budgeting process. Doyleâ€™s staff is preparing the Madison cash budget for 2013. A key input to the budgeting process is last yearâ€™s statement of cash flows, which follows (amount in
Sharon Hall, the owner of Sharon’s Party Picks, has delegated management of the business to Lola Oster, a friend. Hall drops by to meet customers and check up on cash receipts, but Oster buys the merchandise and handles cash payments. Business has been very good lately, and cash receipts have
Dave Dern, the chief financial officer, is responsible for Th e Grand Design€™s cash budget for 2013. The budget will help Dem determine the amount of long-term borrowing needed to end the year with a cash balance of $135,000.Dern€™s assistants have assembled budget data for
The president of The Pembrook Company has recently become concerned that the bookkeeper has embezzled cash from the company. He asks you, confidentially, to look over the bank reconciliation that the bookkeeper has prepared to see if you discover any discrepancies between the books and the bank
Refer to the Amazon.com, Inc., consolidated financial statements in Appendix A at the end of this book. The cash and cash equivalents section of the Consolidated Balance Sheet shows a balance of $3,777 as of December 31, 2010, and is made up of many different bank accounts, as well as time
After graduating from Eastern University in Campus Town, USA with a degree in business, Michael Woods realized that he wanted to remain in Campus Town. After a number of unsuccessful attempts at getting a job in his discipline, Michael decided to go into business for himself. In thinking about his
Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the bank’s evaluation process, you have been asked to take an examination that covers several financial analysis techniques. The first section of the test addresses discounted cash flow
The U.S. Census Bureau publishes data on factory orders for all manufacturing, durable goods, and nondurable goods industries. Shown here are factory orders in the United States from 1987 through 1999 ($ billion).a. Use these data to develop forecasts for the years 1992 through 2000 using a 4-year
Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on
RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.Each unit of raw material A costs $8; RPR pays for all purchases in the month of
An abbreviated cash budget for Big Chuck Enterprises follows.Big Chuck wishes to maintain a $10,000 minimum cash balance at all times. Additional financing is available (and retired) in $1,000 multiples at a 12% interest rate. Assume that borrowings take place at the beginning of the month;
The balance sheet of Watson Company as of December 31, 20X1, follows.The following information has been extracted from the firm's accounting records:All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the
Centron, Inc., has the following budgeted production costs:Direct materials ..... $0.40 per unitDirect labor ........ 1.80 per unitVariable factory overhead .. 2.20 Per unitFixed factory overheadSupervision ........... $24,000Maintenance ........... 18,000Other .............. 12,000The company
Fill in the missing amounts in the following schedule.Half of each month's sales are on account. March sales amounted to $60,000. 60% of credit sales are collected in the month of sale: 40% is collected in the following is the Japanese nationalcurrency.
Sound Investments, Inc. is a large retailer of stores equipment. The controller is about to prepare the budget for the first quarter of 20x2. Past experience has indicated that 75 percent of the store's sales are cash sales. The collection experience for the sales on account is as follows:80
Harry's House of Hamburgers (HHH) wants to prepare a cash budget for months of June through November. Using the following information, prepare the cash budget schedule and interpret the results. Will Harry need additional financing?Bonus:If Harry's House of Hamburgers (HHH) received a 2% 10 day
What are the basic benefits and purposes of developing pro forma statements and a cash budget?
Explain what risk-taking has to do with the use of operating and financial leverage?
Could you please write a short essay (1,000 words) regarding the most important characteristics required of a small business owner and the most important factors for SME’s failure? You need to support your answers with references to relevant data.
Could you please write an essay of 1,000 words, discussing the major benefits of budgeting?
Dailey Company at December 31 has cash $40,000, noncash assets $200,000, liabilities $110,000, and the following capital balances: Dickinson $90,000 and Meierhoff $40,000. The firm is liquidated, and $220,000 in cash is received for the noncash assets. Dickinson and Meierhoff income ratios are 60%
Calculating the Cash Budgets: Here are some important figures from the budget of Cornell, Inc., for the second quarter of 2007:This company predicts that a percent of its credit sales will never be collected. 35 percent of its sales will be collected in the month of the sales, and the remaining 60
Here are some important figures from the budget of Cornell Inc for the second quarter 2007The company predicts that 5 percent of its credit sales will never be collected 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the
The management of Horton Company estimates that credit sales for August, September, October, and November will be $270,000, $375,000, $420,000, and $240,000, respectively. Experience has shown that collections are made as follows:In month of sales ...........................25%In first month after

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