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managerial accounting

Managerial Accounting 13th Edition Ray H. Garrison, Eric W. Noreen, Peter C. Brewer - Solutions

Hudson Company’s trial balance as of January 1, the beginning of its fiscal year, is given below:Hudson Company uses a job-order costing system. During the year, the following transactions took place:a. Raw materials purchased on account, $40,000.b. Raw materials were requisitioned for use in
Hobart, Evans, and Nix is a small law firm that employs 10 partners and 12 support persons. The firm uses a job-order costing system to accumulate costs chargeable to each client, and it is organized into two departments—the Research and Documents Department and the Litigation Department. The
AOZT Volzhskije Motory of St. Petersburg, Russia, makes marine motors for vessels ranging in size from harbor tugs to open-water icebreakers. (The Russian currency is the ruble, which is denoted by RUR. All currency amounts below are in thousands of RUR.)The company uses a job-order costing system.
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). All materials are classified as direct materials. In computing a predetermined overhead rate at the beginning of
High Desert Potteryworks makes a variety of pottery products that it sells to retailers such as Home Depot. The company uses a job-order costing system in which predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding
Plantwide versus Departmental Overhead Rates; Underapplied or Overapplied Overhead “Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $2,000. It seems we’re either too high to get the job or too low to make any money on half the
Selected T-accounts of Moore Company are given below for the just completed year:Required:1. What was the cost of raw materials put into production during the year?2. How much of the materials in (1) above consisted of indirect materials?3. How much of the factory labor cost for the year consisted
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. (The Norwegian currency is the krone, which is denoted by Nkr.) The company uses a sob-order costing system arid applies manufacturing overhead cost to jobs on the
Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead Bieler & Cie of Altdorf Switzerland, makes furniture using the latest automated technology. The cornpamiy uses a job-order costing system and applies manufacturing overhead cost to products on the basis of
Terri Ronsin had recently been transferred to the Home Security Systems Division of National Home Products. Shortly after taking over her new position as divisional controller, she was asked to develop the division’s predetermined overhead rate for the upcoming year. The accuracy of the rate is
Kelvin Aerospace, Inc., manufactures parts such as rudder hinges for the aerospace industry. The company uses a job-order costing system with a predetermined plantwide overhead rate based on direct labor-hours. On December 16, 2008, the company’s controller made a preliminary estimate of the
The questions in this exercise are based on Toll Brothers, Inc., one of the largest home builders in the United States. To answer the questions, you will need to download Toll Brothers’ 2004 annual report (www.tollbrothers.com/homesearch/servlet/HomeSearch?app=IRannual) and its Form 10-K for the
Pension Services helps clients to set up and administer pension plans that are in compliance with tax laws and regulatory requirements. The firm uses a job-order costing system in which overhead is applied to clients’ accounts on the basis of professional staff hours charged to the accounts. Data
Platinum Tracks, Inc., is a small audio recording studio located in Los Angeles. The company handles work for advertising agencies—primarily for radio ads—and has a few singers and bands as clients. Platinum Tracks handles all aspects of recording from editing to making a digital master from
Ethics; Predetermined Overhead Rate and Capacity Pat Miranda, the new controller of Vault Hard Drives, Inc., has just returned from a seminar on the choice of the activity level in the predetermined overhead rate. Even though the subject did not sound exciting at first, she found that there were
Under what conditions would it be appropriate to us a process costing system?
In what ways are job-order and process costing similar?
Why is cost accumulation easier in a process costing system than it is in a job-order costing system?
Assume that a company has two processing departments-Mixing and Firing. Prepare a journal entry to show a transfer of partially completed units from the Mixing Department to the Firing Department?
Assume that a company has two processing departments-mixing followed by Firing. Explain what costs might be added to the Firing Department’s Work in Process account during a period.
What is a meant by the term equivalent units of production when the weighted-average method is used?
Watkins Trophies, Inc., produces thousands of medallions made of bronze, silver, and gold. The medallions are identical except for the materials used in their manufacture. What costing system would your advise the company to use?
Quality Brick Company produces bricks in two processing departments—Molding and Firing. Information relating to the company’s operations in March follows:a. Raw materials were issued for use in production: Molding Department, $23,000; and Firing Department, $8,000.b. Direct labor costs were
Clonex Labs, Inc., uses a process costing system. The following data are available for one department for October: The department started 175,000 units into production during the month and transferred 190.000 completed units to the next department. Required: Compute the equivalent units of
Superior Micro Products uses the weighted-average method in its process costing system. Data for the Assembly Department for May appear below:Required:1. Compute the cost per equivalent unit for materials, for labor, and for overhead.2. Compute the total cost per equivalent whole unit.
Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses process costing, appear below:A total of 20,100 units were completed and transferred to the next processing department during the period.Required:Compute the cost of the units
Maria Am Corporation uses a process costing system. The Baking Department is one of the processing departments in its strudel manufacturing facility. In June in the Baking Department, the cost of beginning work in process inventory was $3,570, the cost of ending work in process inventory was
Chocolaterie de Geneve, SA, is located in a French-speaking canton in Switzerland. The company makes chocolate truffles that are sold in popular embossed tins. The company has two processing departments—Cooking and Molding. In the Cooking Department, the raw ingredients for the truffles are mixed
Hielta Oy, a Finnish company, processes wood pulp for various manufacturers of paper products.Data relating to tons of pulp processed during June are provided below:Required:1. Compute the number of tons of pulp completed and transferred out during June.2. Compute the equivalent units of production
Pureform. Inc., manufactures a product that passes through two departments. Data for a recent month for the first department follow:The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process
Helix Corporation produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department
Scribners Corporation produces fine papers in three production departments—Pulping, Drying, and Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the
Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,000 units and transferred them to the next department. The cost of beginning inventory and the costs added during January amounted to
Alaskan Fisheries, Inc., processes salmon for various distributors. Two departments are involved–Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented below:A total of 380,000 pounds of salmon were started into processing during
Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices arc extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to
Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, cooking, is given below for May:The company uses the weighted-average methodRequired:1. Compute the equivalent units of production.2.
Comprehensive Problem; Second Production Department—Weighted-Average Method Old Country Links Inc. produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat
Cooperative San José of southern Sonora State in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. (The Mexican currency is the peso and is denoted by
Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-account for the Grinding Department for May is given
Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments: Refining and Blending. Raw materials are introduced at various points in the Refining Department. The following incomplete Work in Process account is
I think we goofed when we hired that new assistant controller,? said Ruth Scarpino, president of Provost Industries. ?Just look at this report that he prepared for last month for the Finishing Department. I can?t make heads or tails out of it.? ?He?s struggling to learn our system,? replied Frank
Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo,
Refer to the data for Clonex Labs, Inc., in Exercise 4—2.Required:Compute the equivalent units of production for October assuming that the company uses the F1FO method of accounting for units and costs.
Superior Micro Products uses the FIFO method in its process costing system. Data for the Assembly Department for May appear below: Required: Compute the cost per equivalent unit for materials, labor, overhead, and intotal.
Data concerning a recent period's activity in the Assembly Department, the first processing department in a company that uses process costing, appear below: A total of 26,000 units were completed and transferred to the next processing department during the period. Beginning work in process
Schroeder Baking Corporation uses a process costing system in its large-scale baking operations. The Mixing Department is one of the company’s processing departments. In the Mixing Department in July, the cost of beginning work in process inventory was $1,460, the cost of ending work in process
MediSecure, Inc., produces clear plastic containers for pharmacies in a process that starts in the Molding Department. Data concerning that department's operations in the most recent period appear below: Required: MediSecure uses the FIFO method in its process costing system. Compute the
Refer to the data for Pureform, Inc., in Exercise 4—8.Pureform, Inc., manufactures a product that passes through two departments. Data for a recent month for the first department follow:Required:Assume that the company uses the FIFO method of accounting for units and costs.1. Compute the
Refer to the data for Hielta Oy in Exercise 4—7. Assume that the company uses the FIFO method in its process costing system.Hielta Oy, a Finnish company, processes wood pulp for various manufacturers of paper products.Data relating to tons of pulp processed during June are provided
Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company's processing departments: The cost of beginning inventory according to the company's costing system was $11,040 of which $8,120 was for
Refer to the data for Alaskan Fisheries, Inc., in Exercise 4—12.Alaskan Fisheries, Inc., processes salmon for various distributors. Two departments are involved—Cleaning and Packing. Data relating to pounds of salmon processed in the Cleaning Department during July are presented
Refer to the data for the Blending Department of Sunspots Beverages, Ltd., in Problem 4-13. Assume that the company uses the FIFO method rather than the weighted-average method in its process costing system.Required:1. Determine the equivalent units for June for the Blending Department.2. Compute
Selzik Company makes super-premium cake mixes that go through two processing departments, Blending and Packaging. The following activity was recorded in the Blending Department during July:All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method
Refer to the data for Provost Industries in Case 4—19. Assume that the company uses the FIFO method in its process costing system.Required:1. Prepare a report for the Finishing Department for April showing how much cost should have been assigned to the units completed and transferred to finished
Seattle Western University has provided the following data to be used in its service department cost allocations:Required:Using the direct method, allocate the costs of the service departments to the two operating departments. Allocate the costs of Administration on the basis of student
Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations:Required:Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the
The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow: The company allocates service department costs by the step-down method in the following order: Administration (number of employees),
Refer to the data for the Fare Publishing Company in Exercise 4B—3.Required:Assuming that the company uses the direct method rather than the step-down method to allocate service department costs, how much cost would be assigned to each operating department?
The Sendai Co., Ltd. of Japan has budgeted costs in its various departments as follows for the coming year:The Japanese currency is the yen, denoted by. The company allocates service department costs to other departments in the order listed below.Machining and Assembly are operating departments;
Woodbury Hospital has three service departments and three operating departments. Estimated cost and operating data for all departments in the hospital for the forthcoming quarter arc presented in the table below:The costs of the service departments are allocated by the step-down method using the
This is really an odd situation, said Jim Carter, general manager of Highland Publishing Company. “We get most of the jobs we bid on that require a lot of press time in the Printing Department, yet profits on those jobs are never as high as they ought to be. On the other hand, we lose most of the
Distinguish between(a) A variable cost,(b) A fixed cost, and(c) A mixed cost.
What effect does an increase in volume have on?(a) Unit fixed costs?(b) Unit variable costs?(c) Total fixed costs?(d) Total variable costs?
Define the following terms;(a) Cost behavior and(b) Relevant range
What is meant by an activity base when dealing with variable costs? Give several examples of activity bases.
Distinguish between(a) A variable cost,(b) A mixed cost,(c) A step-variable cost. Plot the three costs on a graph, with activity plotted horizontally and cost plotted vertically.
Distinguish between discretionary fixed costs and committed fixed costs.
Classify the following fixed costs as normally being either committed or discretionary:(a) Depreciation on buildings.(b) Advertising(c) Research(d) Long-term equipment leases.(e) Pension payments to the company’s retirees.(f) Management development and training.
Does the concept of the relevant range apply to fixed costs? Explain.
What is the major disadvantage of the high-low method?
Give the general formula for a mixed cost. Which term represents the variable cost, the fixed cost?
What is meant by the term least-squares regression?
What is the difference between ordinary least-squares regression analysis and multiple regression analysis?
What is the difference between a contribution approach income statement and a traditional approach income statement?
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed .weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22.Required:1. Fill in the following table with your estimates of total costs and cost per cup of coffee at
Oki Products, Ltd., has observed the following processing costs at various levels of activity over the last 15 months:Required:1. Prepare a scattergraph using the above data. Plot cost on the vertical axis and activity on the horizontal axis. Fit a line to your plotted points using a ruler.2. Using
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel’s business is highly seasonal, with peaks occurring during the ski
The Alpine House, Inc., is a large retailer of winter sports equipment. An income statement for the company’s Ski Department for a recent quarter is presented below:Skis sell, on the average, for $750 per pair. Variable selling expenses are $50 per pair of skis sold. The remaining selling
Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below:Required:1. Complete the schedule of the company’s total and unit costs
The following data relating to units shipped and total shipping expense have been assembled by ArcherCompany, a wholesaler of large, custom-built air-conditioning units for commercial buildings;Required: 1. Using the high-low method, estimate a cost formula for shipping expense.2. The
Hoi Chong Transport, Ltd; operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating
The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were;Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days.Required:1. Using the high-low
Refer to the data for Lakeshore Hotel in Exercise 5—8.Required:1. Prepare a scattergraph using the data from Exercise 5—8. Plot cost on the vertical axis and activity on the horizontal axis. Using a ruler fit a straight line to your plotted points.2. Using the quick-and-dirty method, what is
St. Mark’s Hospital contains 450 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital’s beds are occupied by patients. At this level of occupancy, the hospital’s operating costs are $32 per occupied bed per day, assuming a 30-day month. This $32
Marwick's Pianos, Inc., purchases pianos from a large manufacturer and sells them at the retail level. The pianos cost, on the average, $2,450 each from the manufacturer. Marwick's Pianos, Inc., sells the pianos to its customers at an average price of $3,125 each. The selling and administrative
Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months follow:Required:1. Identify each of the company’s expenses
A number of graphs displaying cost behavior patterns are shown below. The vertical axis on each graph represents total cost, and the horizontal axis represents level of activity (volume).Required:1. For each of the following situations, identify the graph below that illustrates the cost behavior
Pleasant View Hospital of British Columbia has just hired a new chief administrator who is anxious to employ sound management and planning techniques in the business affairs of the hospital. Accordingly, she has directed her assistant to summarize the cost structure of the various departments so
Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs (in Japanese yen, denoted V) at high and low
Amfac Company manufactures a single product. The company keeps careful records of manufacturing activities from which the following information has been extracted:The company’s manufacturing overhead cost consists of both variable and fixed cost elements. To have data available for planning,
Nova Company’s total overhead costs at various levels of activity are presented below:Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 60,000 machine-hour level of activity is:Nova Company’s management
Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez’s business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times.One of the major events Chavez’s customers request is a
Angora Wraps of Pendleton, Oregon, makes fine sweaters out of pure angora wool. The business is seasonal, with the largest demand during the fall, the winter, and Christmas holidays. The company must increase production each summer to meet estimated demand. The company has been analyzing its costs
The questions in this problem are based on Blue Nile, Inc. To answer the questions, you will need to download Blue Nile’s 2004 Form 10-K at www.sec.gov/edgar/searchedgar/company search.html. Once at this website, input 01K code 1091171 and hit enter. In the gray box on the right-hand side of your
Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the behavior of the company’s costs. One of those costs is the cost of washing cars. The company operates its own car wash facility in which
George Caloz & Frères, located in Grenchen, Switzerland, makes prestige high-end custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has observed etching costs (expressed in Swiss Francs. SFr) as follows over the last
Refer to the data for Archer Company in Exercise 5—6.Required:1. Using the least-squares regression method, estimate a cost formula for shipping expense.2. If you also completed Exercise 5—6, prepare a simple table comparing the variable and fixed cost elements of shipping expense as computed
Professor John Morton has just been appointed chairperson of the Finance Department at Westland University. In reviewing the department’s cost records, Professor Morton has found the following total cost associated with Finance 101 over the last several terms:Professor Morton knows that there are
Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its
Refer to the data for Pleasant View Hospital in Problem 5—14.Required:1. Using the least-squares regression method, estimate a cost formula for utilities. (Round the variable cost to the nearest cent.)2. Refer to the graph prepared in part (2) of Problem 5—14. Explain why in this case the

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