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cost accounting

Cornerstones Of Cost Management 3rd Edition Don R. Hansen, Maryanne M. Mowen - Solutions

The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): .... $64,900 per year Variable costs (supplies): ..... $1.35 per maintenance hour Estimated usage by: Assembly Department ....... 4,500 Fabricating
A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:Required:1. Allocate the joint cost to
Refer to Cornerstone Exercise 7.10. (Round percentages to four significant digits and cost allocations to the nearest dollar.)Required:1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.2. Allocate the joint cost to
Classify each of the following departments in a factory that produces crème-filled snack cakes as a producing department or a support department.a. Janitorialb. Bakingc. Inspectiond. Mixinge. Engineeringf. Groundsg. Purchasingh. Packagingi. Icing (frosts top of snack cakes and adds decorative
Classify each of the following departments in a large metropolitan law firm as a producing department or a support department. a. Copying b. WESTLAW computer research c. Tax planning d. Environmental law e. Oil and gas law f. Custodians g. Word processing h. Corporate law i. Small business law j.
Identify some possible causal factors for the following support departments: a. Cafeteria b. Custodial services c. Laundry d. Receiving, shipping, and stores e. Maintenance f. Personnel g. Accounting h. Power i. Building and grounds
Dr. Fred Poston, “Dermatologist to the Stars,” has a practice in southern California. The practice includes three dermatologists, three medical assistants, an office manager, and a receptionist.The office space, which is rented for $5,000 per month, is large enough to accommodate four
Samantha and Rashida are planning a trip to Padre Island, Texas, during spring break. Members of the varsity volleyball team, they are looking forward to four days of beach volleyball and parasailing. They will drive Samantha’s car and estimate that they will pay the following costs during the
Jeff McMillan owns a small neighborhood shopping mall. Of the 10 store spaces in the building, seven are rented by boutique owners and three are vacant. Jeff has decided that offering more services to stores in the mall would enable him to increase occupancy. He has decided to use one of the vacant
Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Human Resources (HR) Department.The total costs
Refer to the data in Exercise 7.18. When the capacity of the HR Department was originally established, the normal usage expected for each department was 20,000 direct labor hours. This usage is also the amount of activity planned for the two departments in Year 1 and Year 2.In exercise Kumar,
The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:Fixed costs (salaries, tools): ...... $64,900 per yearVariable costs (supplies): ........$1.35 per maintenance hourThe Assembly and Packaging departments expect to use maintenance hours
Jasmine Company manufactures both pesticide and liquid fertilizer, with each product manufactured in separate departments. Three support departments support the production departments:Power, General Factory, and Purchasing. Budgeted data on the five departments are as follows:The company does not
Refer to the data in Exercise 7.20. The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost.In exercise Jasmine Company manufactures both pesticide and liquid fertilizer, with each
Eilers Company has two producing departments and two support departments. 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. 2. Using direct labor hours, compute
Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating support service costs by switching to the direct method.In exercise Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four
Refer to the data in Exercise 7.22. The support departments are ranked in order of highest cost to lowest cost.In exercise Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:Required:1. Allocate the costs of the
Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows:Direct materials.... $67,900Direct labor ...... 34,000Overhead ...... 25,500At the split-off point, a batch yields 1,400 barlon, 2,600
Refer to Exercise 7.25 and allocate the joint costs using the sales-value-at-split-off method.In exercise Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows:Direct materials.... $67,900Direct
Further Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 14,000 units of overs and 36,000 units of unders were produced. Separable processing costs beyond the split-off point were as follows: overs, $18,000; unders,
Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of $168,000 for next year. Service Department 2 has total budgeted costs of $280,000 for next year. Minor allocates service department costs solely to the producing
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: Budgeted variable costs ..... $238,000 Budgeted fixed costs ..... $ 35,000 Budgeted labor hours ..... 14,000 If
Chester Company provided information on overhead for its three producing departments as follows:Overhead is applied on the basis of machine hours in Fabricating and direct labor hours in Assembly and in Finishing.Job #13-198 had total prime cost of $6,700. The job took 40 machine hours in
Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square
Farleigh Petroleum, 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. Farleigh Petroleum does not have the
Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost.In exercise Valron Company has two support departments, Human Resources and General Factory,
Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the reciprocal method to allocate support department costs.In exercise Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly.The costs of the
Refer to Cornerstone Exercise 7.3 and solve for the allocated costs to Fabricating and Assembly using the direct method of support department cost allocation. The Fabricating Department overhead rate is based on normal activity of 82,000 machine hours. The Assembly Department overhead rate is based
Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce
Refer to Cornerstone Exercise. Assume that Orchard Fresh, Inc., uses the weighted average method of joint cost allocation and has assigned the following weights to the four grades of apples:Required:1. Allocate the joint cost to the four grades of apples using the weighted average method.2. What if
Refer to Cornerstone Exercise. Assume that Orchard Fresh, Inc., uses the sales-value-at-split-off method of joint cost allocation and has provided the following information about the four grades of apples:Total joint cost is $18,000.Required:1. Allocate the joint cost to the four grades of apples
Discuss the shortcomings of the traditional master budget. In what situations would the master budget perform well?
What is an accounts receivable aging schedule? Why is it important?
FlashKick Company manufactures and sells soccer balls for teams of children in elementary and high school. FlashKick€™s best-selling lines are the practice ball line (durable soccer balls for training and practice) and the match ball line (high-performance soccer balls used in games). In the
Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of $15.9 million and cost of goods sold of $8.75 million. Advertising is a key part of Coral Seas’ business strategy, and total marketing expense for the year is budgeted at $2.8 million.
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales:Quarter 1 ......$4,600,000Quarter 2 ...... 5,100,000Quarter 3 ...... 5,000,000Quarter 4 ...... 7,600,000In Shalimar’s experience, 10 percent of sales are paid in cash. Of the
Khloe Company imports gift items from overseas and sells them to gift shops and department stores throughout the United States. Khloe Company provided the following information: a. The October 31 balance in the cash account is $53,817.b. All sales are on account. Sales in September were $950,000
Nashler Company has the following budgeted variable costs per unit produced:Direct materials .......$7.20Direct labor ....... 1.54 Variable overhead:Supplies ....... 0.23Maintenance ....... 0.19Power ........... 0.18Budgeted fixed overhead costs per month include supervision of $98,000,
Refer to Cornerstone Exercise 8.13. In March, Nashler Company produced 163,200 units and had the following actual costs:Direct materials..... $1,170,000Direct labor ........ 258,000Supplies ........ 38,100Maintenance ........ 30,960Power ........... 29,300Supervision
Palmgren Company produces consumer products. The sales budget for four months of the year is presented below.Company policy requires that ending inventories for each month be 25 percent of next month€™s sales. At the beginning of July, the beginning inventory of consumer products met that
Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.The president of the company believes that the projected sales are realistic and can be
Crescent Company produces stuffed toy animals; one of these is “Arabeau the Cow.” Each Arabeau takes 0.20 yard of fabric (white with irregular black splotches) and eight ounces ofPolyfiber fill. Fabric costs $3.50 per yard and polyfiberfill is $0.05 per ounce. Crescent has budgeted production
Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-in hard drive; they can be put into fanny packs for use while working out. It is now early January,
Tiger Drug Store carries a variety of health and beauty aids, including 500-count bottles of vitamins. The sales budget for vitamins for the first six months of the year is presented below.The owner of Tiger Drug believes that ending inventories should be sufficient to cover 10 percent of the next
Refer to Cornerstone Exercise 8.1, through Requirement 1. FlashKick requires ending inventory of product to equal 20 percent of the next month€™s unit sales. Beginning inventory in January was 3,100 practice soccer balls and 400 match soccer balls.In exercise FlashKick Company manufactures and
Rosita Flores owns Rosita’s Mexican Restaurant in Tempe, Arizona. Rosita’s is an affordable restaurant near campus and several hotels. Rosita accepts cash and checks. Checks are deposited immediately. The bank charges $0.50 per check; the amount per check averages $75. “Bad” checks that
Refer to Exercise 8.20. Rosita thinks that it may be time to refuse to accept checks and to start accepting credit cards. She is negotiating with VISA/MasterCard and American Express, and she would start the new policy on April 1. Rosita estimates that with the drop in sales from the “no
Janet Wooster owns a retail store that sells new and used sporting equipment. Janet has requested a cash budget for October. After examining the records of the company, you find the following:a. Cash balance on October 1 is $1,118.b. Actual sales for August and September are as follows:c. Credit
Historically, Ragman Company has had no significant bad debt experience with its customers. Cash sales have accounted for 20 percent of total sales, and payments for credit sales have been received as follows:40 percent of credit sales in the month of the sale35 percent of credit sales in the first
Del Spencer is the owner and founder of Del Spencer’s Men’s Clothing Store. Del Spencer’s has its own house charge accounts and has found from past experience that 10 percent of its sales are for cash. The remaining 90 percent are on credit. An aging schedule for accounts receivable reveals
Del Spencer’s purchases clothing evenly throughout the month. All purchases are on account. On the first of every month, Jana Spencer, Del’s wife, pays for all of the previous month’s purchases. Terms are 2/10, n/30 (i.e., a 2 percent discount can be taken if the bill is paid within 10 days;
Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased
In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the
Refer to Exercise. At the end of the year, Meliore, Inc., actually produced 310,000 units of the standard model and 115,000 of the deluxe model. The actual overhead costs incurred were:Maintenance.......$ 64,100Power ......... 12,420Indirect labor ...... 129,400Rent .........
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:a. Salaries
Refer to Cornerstone Exercise 8.2 for the production budgets for practice balls and match balls. Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 3 ounces of glue. FlashKick€™s policy is that 20 percent of the following
Suppose Gene determines that next year€™s Sales Division activities include the following:Research€”researching current and future conditions in the industryShipping€”arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and
Trumbull Co. plans to produce 100,000 toy cars during September. Planned production for October is 125,000 cars. Sales are forecasted at 90,000 toy cars for September and 120,000 toy cars for October. Each toy car requires four wheels. Trumbull’s policy is to maintain 10 percent of the next
A company’s controller is adjusting next year’s budget to reflect the impact of an expected 3 percent inflation rate. Listed below are selected items from next year’s budget before the adjustment.Total salaries expense $360,000Materials costs 400,000Depreciation expense 48,000Interest expense
A company’s sales for the coming months are as follows: April ....... $150,000 May ....... 155,000 June ....... 149,000 July ....... 156,000 August ....... 160,000 About 20 percent of sales are cash sales, and the remainder is credit sales. The company finds that typically 10 percent of
Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world.Projected sales in units for the coming five months are given below.January..........10,000February
The School of Accounting (SOA) at State University is planning its annual fundraising campaign for accounting alumni. This year, the SOA is planning a call-a-thon and will ask Beta Alpha Psi members to volunteer to make phone calls to a list of 5,000 alumni. The Dean’s office has agreed to let
The controller for Muir Company€™s Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided to concentrate on the past 12 months since that time period was one in which there was little important change in technology, product lines,
Refer to Problem 8.40 for data.In exerciseRequired:1. Run a multiple regression equation using machine hours, number of setups, and number of purchase orders as independent variables. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the
Overhead Budget Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year.Supplies ...............$216,000Gas ................ 50,000Indirect labor .............
Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs:Direct materials .......$1.67Direct labor........ 0.56Variable overhead ....... 0.72Fixed overhead ....... 1.80Total unit cost ..........$4.75For the coming year, Play-Disc
Refer to Cornerstone Exercise 8.6. In Exercise Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs: Direct materials ....... $1.67 Direct labor ........ 0.56 Variable overhead ....... 0.72 Fixed overhead ....... 1.80 Total
Timothy Donaghy has developed a unique formula for growing hair. His proprietary lotion, used regularly for 45 days, will grow hair in bald spots (with varying degrees of success). Timothy calls his lotion Hair-Again and is selling it via the telephone and Internet. His major form of marketing is
Green Earth Landscaping Company provides monthly and weekly landscaping and maintenance services to residential customers in the tri-city area. Green Earth has no variable administrative expense. Fixed administrative expenses for June, July, and August include:Salaries ...........$9,600Insurance
1. Describe a strategic-based responsibility accounting system. How does it differ from activity based responsibility accounting?
Norton Company has the following data for one of its production departments: Theoretical velocity: 300 units per hour Productive minutes available per year: 10,000,000 Annual conversion costs: $60,000,000 Actual velocity: 160 units per hour Required: 1. Calculate the actual conversion cost per unit
Refer to Exercise 13.9. 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 laptop.2. Assume that you set an MCE target of 75
Bannister Company, an electronics ﬁrm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Bannister sells its products to original equipment manufacturers. Proﬁts for the last two years have been less than expected. Mandy Confer, owner of
Refer to Exercise 13.13. Suppose that Mandy communicates the following weights to her CEO: Perspective: Financial, 40%; Customer, 20%; Process, 20%; Learning & growth, 20% Financial objectives: Proﬁts, 50%; Revenues, 25%; Costs, 25% Customer objectives: Customer satisfaction, 60%; Market share,
In a balanced scorecard, a key strategic if-then statement is provided: if the number of defective units decreases, then market share will increase. Assume that the targeted reduction level of defective units was achieved but that the targeted market share increase was not achieved. Which statement
Craig, Inc., has provided the following information for one of its products for each hour of production: Actual velocity: 100 units (per hour) Move time: 20 minutes Inspection time: 18 minutes Rework time: 12 minutes Required: 1. Calculate MCE. Comment on its signiﬁcance. 2. What is the
At the end of 2014, Mejorar 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, Mejorar undertook a number of
Refer to the data in Problem 13.21.1. Express Mejorar’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
Lander Parts, Inc., produces various automobile parts. In one plant, Lander has a manufacturing cell with the theoretical capability to produce 450,000 fuel pumps per quarter. The conversion cost per quarter is $9,000,000. There are 150,000 production hours available within the cell per
Auï¬‚egger, Inc., manufactures a product that experiences the following activities (and times):Required:1. Compute the MCE for this product.2. A study lists the following root causes of the inefï¬ciencies: poor quality components from suppliers, lack of skilled workers, and plant layout.
Mulhall, Inc., 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 mopeds, has four operations: machining, ﬁnishing, assembly, and qualifying (testing). The machining process is
At the beginning of the last quarter of 2013, 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
Harmon Community Hospital developed the following series of if-then statements for itsBalanced Scorecard strategy:• If employee turnover rate decreases and employee satisfaction increases, then the quality of health care service will improve.• If the quality of health care service improves,
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
“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 that may be measured subjectively or objectively.” Required: 1.Using the above statement about scorecard
Consider the following list of scorecard measures: a. Product proﬁtability b. Ratings from customer surveys c. Number of patents pending d. Strategic job coverage ratio e. Revenue per employee f. Quality costs g. Percentage of market h. Employee turnover percentages i. First-pass
Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $12,960,000 per year. The total labor minutes available are 1,440,000. During the
Computador has a manufacturing plant in Des Moines that has the theoretical capability to pro-duce 243,000 laptops per quarter but currently produces 91,125 units. The conversion cost per quarter is $ 7,290,000. There are 60,750 production hours available within the plant per quarter. In addition
What are the four objectives associated with ecoefﬁciency?
Describe the four opportunities for improving ecoefﬁciency.
What information is communicated by the unit environmental cost of a product?
What is the difference between the zero-defects philosophy and the robust quality philosophy?
Describe the Taguchi quality loss function, and relate it to robust quality.
Evans Company had total sales of $3,000,000 for fiscal 2015. The costs of quality-related activities are given below.Returns/allowances ......$150,000Design changes ...... 180,000Prototype inspection ...... 39,000Downtime ........ 120,000Quality circles ........ 6,000Packaging inspection
Classify the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs: 1. Inspection of reworked units 2. Inspecting and testing a newly developed product (not yet being sold) 3. Retesting a reworked product 4. Repairing a computer still under
Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products:Required:1. Calculate the quality cost per unit for each product, and break this unit cost into quality
Kang Company reported sales of $3,240,000 in 2015. At the end of the calendar year, the following quality costs were reported:Design review .......$162,000Recalls ........... 54,000Reinspection ....... 27,000Materials inspection ... 21,600Quality training ... 54,000Process acceptance
Gagnon Company reported the following sales and quality costs for the past four years. Assume that all quality costs are variable and that all changes in the quality cost ratios are due to a quality improvement program.Required: 1. Compute the quality costs for all four years. By how much did net

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