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Cost Accounting A Managerial Emphasis 13th Edition Charles T. Horngren, Srikant M.Dater, George Foster, Madhav - Solutions
Flexible-budget and sales volume variances. Marron, Inc. produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Marron uses standard costing and carries over no inventory from one month to the next. The
Price and efficiency variances. Peterson Foods manufactures pumpkin scones. For January 2009, it budgeted to purchase and use 15000 pounds of pumpkin at $0.89 a pound. Actual purchases and usage for January 2009 were 16.000 pounds at $0.82 a pound. It budgets for 60.000 pumpkin scones. Actual
Materials and manufacturing labor variances. Consider the following data collected for great Homes, Inc.:Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing labor.
Direct materials and direct manufacturing labor variances. GloriaDee, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. GloriaDee’s May 2009 static budget and actual results for direct inputs are:GloriaDee has a policy of
Price and efficiency variances, journal entries. The Monroe Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor:Direct materials: 10 lbs. at $4.50 per lb.
Continuous improvement the Monroe Corporation sets monthly standard costs using a continuous-improvement approach. In January 2009, the standard direct material cost is $45 par unit and the standard direct manufacturing labor cost is $15 per unit Due to more efficient operations, the standard
Materials and manufacturing labor variances, standard costs. Dunn, Inc. is a privately held furniture manufacturer. For August 2009, Dunn had the following standards for one of its products, a wicker chair:The following data were compiled regarding actual performance: actual output units (chairs)
Journal entries and T-accounts. Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-26, including requirement 2. Summarize how these journal entries differ from the normal-costing entries described in Chapter.
Flexible budget (Refer to data in Exercise 7-26). Suppose the static budget was for 2,500 units of output. Actual output was 2,000 units. The variances are shown in the following report:What are the price, efficiency, and sales-volume variances for direct materials and direct manufacturing labor?
Activity-based costing flexible-budget variances for finance-function activities. FastGrocery.com an online company that delivers groceries to its customers has the following information for its three finance activities in 2008:The output measure is the number of deliveries, which is the same as
Flexible budget direct materials and direct manufacturing labor variances. Tuscany Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2009:Standard
Variance analysis, non manufacturing settingStevie McQueen has run Lightning Car Detailing for the past 10 years. His static budget and actual results ‘or June 2011 are provided below. Stevie has one employee who has been with him for all ten years that he has been in business. He has not been as
Comprehensive variance analysis, responsibility issues (CMA, adapted) Styles, Inc. manufactures a full line of well-known sunglasses frames and lenses. Styles uses a standard costing system to set attainable standards for direct materials, labor, and overhead costs. Styles reviews and revises
Possible causes for price and efficiency variancesYou are a student preparing for a job interview with a Fortune 109 consumer products manufacturer. You are applying for a job in the Finance Department. This company is known for its rigorous case-based interview process. One of the students who
Material cost variances, use of variances for performance evaluation Katharine Stanley is the owner of Better Bikes, a company that produces high quality cross-country bicycles. Better Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle
Direct manufacturing labor and direct materials variances, missing data. (CMA heavily adapted). More Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $100 per board. This includes 20 pounds of direct materials, at the
Direct materials and manufacturing labor variances, solving unknowns (CPA, adapted) On May 1, 2009, Bovar Company began the manufacture of a new paging machine known as Dandy. The company installed a standard costing system to account for manufacturing costs. The standard costs for a unit of Dandy
Direct materials and manufacturing labor variances, journal entries, Shayna’s Smart Shawls Inc. is a small business that Shayna developed while in college. She began hand-knitting shawls for her dorm friends to wear while studying. As demand grew, she hired some workers and began to manage the
Use of materials and manufacturing labor variances for benchmarking, you are a new junior accountant at Clear view Corporation, maker of lenses for eyeglasses. Your company sells generic-quality lenses for a moderate price. Your boss, the Controller, has given you the latest month’s report for
Comprehensive variance analysis review. Sonnet Inc. has the following budgeted standards for the month of March 2010:Sales of 2,000,000 units are budgeted for March. Actual March results are:Unit sales and production totaled 90% of plan.Actual average selling price declined to
Comprehensive variance analysis. Sol Electronics, a fast-growing electronic device producer, uses a standard costing system, with standards set at the beginning of each year. In the second quarter of 2009, Sol faced two challenges: it had to negotiate and sign a new short term labor agreement with
Comprehensive variance analysis (CMA) Iceland, Inc. is a fast-growing ice-cream maker. The company’s new ice-cream flavor, Cherry Star, sells for $8 per pound. The standard monthly production level is 200,000 pounds, and the standard inputs and costs per pound are:Molly Cates, the CDO, is
Variance analysis with activity-based costing and batch-level direct costs, Electric Eels Company produces high quality electric eels for Museums and Aquaria to sell in their gift shops. It accounts for the production of these eels with an ABC system. For 2009, Electric Eels expected to produce and
Price and efficiency variances, problems in standard-setting, benchmarking. New Fashions manufactures shirts for retail chains. Andy Jorgenson, the controller, is becoming inerasably disenchanted with New Fashion’s standard costing system. The budgeted and actual amounts for direct materials and
Variable manufacturing overhead, variance analysis. Esquire Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs) and one fixed-cost category (manufacturing
Fixed-manufacturing overhead, variance analysisEsquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2009 are budgeted, $62,400, and actual, $63,916.1. Compute the
Variable manufacturing overhead variance analysisThe French Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing basis of standard direct manufacturing
Fixed manufacturing overhead variance analysisThe French Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2009, fixed manufacturing overhead was budgeted at $4.00 per direct manufacturing; labor-hour. Actual fixed
Manufacturing overhead, variance analysisThe Solutions Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is two hours per unit. The following table shows the budgeted
4-variance analysis, fill in the blanks. Pandom, Inc. produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 2010:Use F for favorable and U for unfavorable:
The Lopez Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,000 output units per year, included 6 machine-hours of variable manufacturing overhead at $8 per hour and machine-hours of fixed
Straightforward coverage of manufacturing overhead, standard costing systemStraightforward coverage of manufacturing overhead, standard-costing system, the Singapore division of a Canadian telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data
Furniture, Inc. specializes in the production of futons. It uses standard costing and flexible budgets to account for the production of a new line of futons. For 2010, budgeted variable overhead at a level of 3,200 standard monthly direct labor-hours was $25,600; budgeted to: overhead at 4,000
Overhead variances, missing information. Dvent budgets 18,000 machine-hours for the product of computer chips in August 2009. The budgeted variable overhead rate is $6 per machine-hour. At the end of August, there is a $375 favorable spending variance for variable overhead and a $1,575 unfavorable
Identifying companies, favorable and unfavorable variances. Purdue Inc., manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each independent scenario given, indicate whether each of the
Flexible-budget variances, review of Chapters. David James is a cost accountant and business analyst for Doorknob Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct cost categories: direct materials and direct manufacturing labor. James feels that manufacturing
Comprehensive variance analysis Kitchen Whiz manufactures premium food processors. The following is some manufacturing overhead data for Kitchen Whiz for the year ended December 31, 2010:Budgeted number of output units: 888Planned allocation rate: 2 machine-hours per unitActual number of
Journal entries1. Prepare journal entries for variable and fixed manufacturing overhead (you will need to calculate the various variances to accomplish this).2. Overhead variances are written off to the Cost of Goods Sold (COGS) account at the end of the fiscal year. Show how CGS is adjusted
Graphs and overhead variances. Fresh, Inc. is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2009, budgeted fixed manufacturing overhead cost was $18,000,000. Budgeted variable
4-variance analysis find the unknowns. Consider each of the following situations—cases A, B, and C—independently. Data refer to operations for April 2009. For each situation, assume standard costing. Also assume the use of a flexible budget for control of variable and fixed manufacturing
Flexible budgets, 4-variance analysis. (CMA, adapted) Nolton Products uses standard costing allocates manufacturing overhead (both variable and fixed)to products on the basis of standard direct manufacturing labor-hours (DLH). Nolton develops its manufacturing overhead rate from the current annual
Direct Manufacturing Labor and Variable Manufacturing Overhead Variances. Sarah Beth’s Art Supply Company produces various types of paints. Actual direct manufacturing labor hours in the factory that produces paint have been higher than budgeted hours for the last few months and the owner, Sarah
Causes of Indirect Variances. Heather’s Horse Spa (HHS) is an establishment that boards, trains, and pampers horses while their owners are on vacation. Heather sells her service as an “enchanting vacation experience for your horse while you vacation elsewhere.” Horse feed, shampoos, ribbons,
Activity-based costing, batch-level variance analysis. Rica’s Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping department records both variable and fixed overhead costs. The
Activity-based costing, batch-level variance analysis. Jo Nathan Publishing Company specializes in printing specialty textbooks for a small but profitable college market. Due to the high setup costs for ea: batch printed, Jo Nathan holds the book requests until demand for a book is approximately
Production-Volume Variance Analysis and Sales Volume Variance. Dawn Floral Creations, Inc., makes jewelry in the shape off flowers. Each piece is hand-made and takes an average of 1.5 hours to produce because of the intricate design and scrollwork. Dawn uses direct labor hours to allocate the
Comprehensive review of Chapters working backward from given variances. The Mancusco Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct-cost categories (direct materials and
The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor hours (DLH). At the beginning of 2009,
Non-financial variances. Daisy Canine Products produces high quality dog food distributed only through veterinary offices. To ensure that the food is of the highest quality and has taste appeal, Daisy has rigorous inspection process. For quality control purposes, Daisy has a standard based on the
Non-financial performance measures. Rollie Manufacturing makes, among other things, wheels for roller skates. Manufacturing Department B receives plastic wheel casings from Manufacturing: Department A and puts them on axles along with some ball bearings. The wheel casings have bee inspected in
Overhead variances, ethicsZeller Company uses standard costing. The company prepared its static budget for 2008 at 2,500,000 machine-hours for the year. Total budgeted overhead cost is $31,250,000. The variable overhead rate is $10 per machine-hour ($20 per unit). Actual results for 2008 follow:1.
Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2008 are:The selling price per vehicle is $24,000. The budgeted level of production used to calculate the bud; fixed manufacturing cost per unit is 500 units. There are no price
The variable manufacturing costs per unit of Nascar Motors are:1. Prepare income statements for Nascar Motors in April and May of 2008 under throughput costing.2. Contrast the results in requirement 1 with those in requirement 1 of
BigScreen Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March of 2009 are:The selling price per unit is $2,500. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is
The variable manufacturing costs per unit of BigScreen Corporation are:1. Prepare income statements for BigScreen in January, February, and March of 2009 under throughput costing.2. Contrast the results in requirement 1 with those in requirement 1 of Exercise 9-18.3. Give one motivation or
The Zwatch Company manufactures trendy, high-quality moderately priced watches. As Zwatch’s senior financial analyst, you are asked to recommend a method of inventory costing. The CEO will use your recommendation to prepare Zwatch’s 2009 income statement. The following data are for the year
Absorption and variable costing. (CMA) Osawa, Inc., planned and actually manufactured 200,000 units of its single product in 2009, its first year of operation. Variable manufacturing cost was $20 per unit produced. Variable operating (non-manufacturing) cost was $10 per unit sold. Planned and
Electron, Inc. is a semiconductor company based in San Jose. In 2009, it produced a new router system for its corporate clients. The average wholesale selling price of the system is $1,200 each. For 2009, Electron estimates that it will sell 10,000 router systems and so produces 10,000 units.
The Rehe Company sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actual fixed manufacturing costs by the actual production units. The following data are related to its
Variable and absorption costing, sales, and operating-income changes. Headsmart, a three-year- old company, has been producing and selling a single type of bicycle helmet. Headsmart uses standard costing. After reviewing the income statements for the first three years, Stuart Weil, president
Capacity management, denominator-level capacity concepts Capacity management, denominator-level capacity concepts match each of the following items with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item:a. Theoretical capacityb. Practical
Denominator-level problem. Speedy, Inc. is a manufacturer of the very popular G36 motorcycles. The management at Speedy has recently adopted absorption costing and is debating which denominator level concept to use. The G36 motorcycles sell for an average price of $8,500. Budgeted fixed
Variable and absorption costing and breakeven points Tammy Cat Tree Co (TCTC) builds luxury cat trees and sells them through the Internet to cat owners who want to provide their cats with a more natural environment. At the start of 2008, TCTC carried no inventory. During the year, they produced
Variable costing versus absorption costing. The Mavis Company uses an absorption-costing system based on standard costs. Total variable manufacturing cost, including direct material cost, is $3 per unit; the standard production rate is 10 units per machine-hour. Total budgeted and actual fixed
Variable costing and absorption costing the All-Fixed Company. It is the end of 2009. The All-Fixed Company began operations in January 2008. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. The All-Fixed Company is located on the
Comparison of variable costing and absorption costing. Hinkle Company uses standard costing. Tim Bartina, the new president of Hinkle Company, is presented with the following data for 2009:1. At what percentage of denominator level was the plant operating
Effects of differing production levels on absorption costing income. Metrics to minimize inventory buildups. Effects of differing production levels on absorption costing income: Metrics to minimize inventory buildups. University Press produces textbooks for college courses. They recently hired
Alternative denominator-level capacity concepts effect on operating income. Lucky Lager has just purchased the Austin Brewery. The brewery is two years old and uses absorption costing. It will “sell” its product to Lucky Lager at $45 per barrel. Paul Brandon, Lucky Lager’s controller,
Motivational considerations in denominator-level capacity selection1. If the plant manager of the Austin Brewery gets a bonus based on operating income, which denominator- level capacity concept would he prefer to use? Explain.2. What denominator-level capacity concept would Lucky Lager prefer to
Denominator-level choices, changes in inventory levels, effect on operating income. Koshu Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2009:There are no price spending, or efficiency variances.
Effects of denominator-level choice. The Shen Company is a manufacturer of MP3 players. It installed standard costs and a flexible budget on January 1, 2009. The president has been pondering how fixed manufacturing overhead should be allocated to products. Machine-hours have been chosen as the
Downward demand spiral. Network Company is a large manufacturer of optical storage systems based in Arizona. Its practical annual capacity is 7,500 units, and, for the past few years, its budgeted and actual sales and production volume have been 7,500 units per year. Network’s budgeted and actual
Absorption costing and production-volume variance-alternative capacity bases. Earth Light First (ELF), a producer of energy-efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, ELF has decided to evaluate
Operating income effects of denominator-level choice and disposal of production-volume variance1. If ELF sells all 220,000 bulbs produced, what would be the effect on operating income of using each type of capacity as a basis for calculating manufacturing cost per unit?2. Compare the results of
Cost allocation downward demand spiral Deli One operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Deliman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,460,000 meals a year. In 2009, based on estimates from
Cost allocation responsibility accounting ethics In 2019, only 806,840 Deliman meals were produced and sold to the hospitals. Smith suspects that hospital controllers had systematically inflated their 2010 meal estimates.1. Recall that Deliman uses the master-budget capacity utilization to allocate
Absorption, variable, and throughput costing EnRG Inc. produces trail mix packaged for sale in convenience stores in the Northeast section of the United States. At the beginning of April 2008, EnRG has no inventory of trail mix. Demand for the next three months is expected to remain constant
Equivalent units, zero beginning inventory. Nihon, Inc. is a manufacturer of digital cameras. It has two departments: Assembly and Testing. In January 2009, the company incurred $750,000 on direct materials and $798,000 on conversion costs, for a total manufacturing cost of $1,548,000.1. Assume
Journal entries (continuation of 11-16). Refer to requirement 2 of Exercise 17-16. Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out the cost of goods completed. Show the postings to the Work-in Process
Zero beginning inventory, materials introduced in middle of process. Roary Chemicals has a Mixing Department and a Refining Department. Its process-costing system in the Mixing Department has two direct materials cost categories (Chemical P and Chemical Q) and one conversion costs pool. The
Weighted-average method, equivalent units. Consider the following data for the Assembly Division of Fenton Watches, Inc.: The Assembly Division uses the weighted-average method of process costing.
Weighted-average method, assigning costs (continuation of 17-19). For the data in Exercise 17-19, summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed (and transferred out) and to units in
FIFO method, equivalent units. Refer to the information in Exercise 17-19. Suppose the Assembly Division at Fenton Watches, Inc., uses the FIFD method of process costing instead of the weighted-average method. Compute equivalent units for direct materials and conversion costs. Show physical units
FIFO method, assigning costs (continuation of 11-21). For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed (and transferred out) and to
Standard-costing method, assigning costs. Bucky’s Boxes makes boxes for moving. It sells its boxes to Home Depot U-Haul, and major national moving companies. Because of the simple nature of the production process, Bucky uses standard costing. The following information for July 2010 is
Weighted-average method, assigning costs. Bio Doc Corporation is a biotech company based in Milpitas. It makes a cancer-treatment drug in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Bio Doc uses the
FIFO method assigning costs. Do Exercise 17-24 using the FIFO method. Note that you first need to calculate the equivalent units of work done in the current period (for direct materials and conversion costs) to complete beginning work in process, to start and complete new units, and to produce
Standard-costing method, assigning costs. Refer to the information in Exercise 17-24. Suppose Bio Dec determines standard costs of $6.60 per equivalent unit for direct materials and $10.40 per equivalent unit for conversion costs for both beginning work in process and work done in the current
Transferred-in costs, weighted-average method. Asaya Clothing, Inc. is a manufacturer of winter clothes, It has a Knitting Department and a Finishing Department This exercise focuses on the Finishing Department. Direct materials are added at the end of the process. Conversion costs are added evenly
Transferred-in costs, FIFO method. Refer to the information in Exercise 17-27. Suppose that Asaya uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise 17-27 under the FIFO method are that total transferred-in costs of beginning work in
Standard-costing method. Ozumo?s Gardening makes several different kinds of mulch. Its busy period is in the summer months. In August, the controller suddenly quit due to a stress-related disorder He took with him the standard costing results for RoseBark, Ozumo?s highest quality mulch. The
Weighted-average method. Larsen Company manufactures car seats in its San Antonio plant. Each car seat passes through the Assembly Department and the Testing Department This problem focuses on the Assembly Department. The process-costing system at Larsen Company has a single direct-cost category
Journal entries (continuation of 17-30). Prepare a set of summarized journal entries for all October 2009 transactions affecting Work in Process—Assembly. Set up a T-account for Work in Process—Assembly and post your entries to it.
FIFO method (continuation of 17-30). Do Problem 17-30 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the Assembly Department under the weighted-average method and the FIFO method.
Transferred-in costs, weighted average method (related to 17-30 to 17-32). Larsen Company, as you know, is a manufacturer of car seats. Each car seat passes through the Assembly Department and Testing Department This problem focuses on the Testing Department Direct materials are added when the
Transferred-in costs, FIFO method (continuation of 17-33). Refer to the information in Problem 17-33. Suppose that Larsen Company uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17-33 under the FIFO method are that total
Weighted-average method. Porter Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the Assembly Department and the Finishing Department This problem focuses on the Assembly Department. The process-costing system at Porter has a
Journal entries (continuation of 17-35). Prepare a set of summarized journal entries for all April transactions affecting Work in Process—Assembly. Set up a T-account for Work in Process—Assembly and post your entries to it.
FIFO method (continuation of 17-35). Do Problem 17-35 using the FIFO method of process costing. If you did Problem 17-35, explain any difference between the cost of work completed and transferred out and the cost of ending work in process in the Assembly Department under the weighted-average method
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