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Accounting Principles 10th Edition Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso - Solutions

Bryant Corporation operates on a calendar-year basis. It begins the annual bud getting process in late August when the president establishes targets for the total dollar sales and net income before taxes for the next year.The sales target is given first to the marketing department. The marketing
Blog & Twitter Inc. manufactures ergonomic devices for computer users. Some of their more popular products include glare screens (for computer monitors), keyboard stands with wrist rests, and carousels that allow easy access to magnetic disks. Over the past 5 years, it experienced rapid growth,
The All About You feature (available on the book's companion website) emphasizes that in order to get your personal finances under control, you need to prepare a personal budget. Assume that you have compiled the following information regarding your expected cash flows for a typical
Ken Holder is confused about how a flexible budget is prepared. Identify the steps for Ken.
Moises Company has prepared a graph of flexible budget data. At zero direct labor hours, the total budgeted cost line intersects the vertical axis at $25,000. At 10,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $85,000. How may the fixed
Anna Hsung is studying for an accounting examination. Describe for Anna what conditions are necessary for responsibility accounting to be used effectively.
Distinguish between controllable and noncontrollable costs.
Data for Meine Company are given in BE24-1. In the second quarter, budgeted sales were $380,000, and actual sales were $383,000. Prepare a static budget report for the second quarter and for the year to date.
In Giletto Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2012, direct labor totaling $203,000 is incurred in working 10,400 hours. Prepare (a) A static budget report and (b) A flexible budget report. Evaluate the usefulness
Myles Company expects to produce 1,200,000 units of Product XX in 2012. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for
Data for Myles Company are given in BE24-4. In March 2012, the company incurs the following costs in producing 100,000 units: direct materials $425,000, direct labor $590,000, and variable overhead $805,000. Prepare a flexible budget report for March. Were costs controlled?
In the Assembly Department of Mantle Company, budgeted and actual manufacturing overhead costs for the month of April 2012 were as follows.. All costs are controllable by the department manager. Prepare a responsibility report for April for the cost center
Maris Manufacturing Company accumulates the following summary data for the year ending December 31, 2012, for its Water Division which it operates as a profit center: sales— $2,000,000 budget, $2,080,000 actual; variable costs—$1,000,000 budget, $1,050,000 actual; and controllable fixed
For the year ending December 31, 2012, Ruth Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin— $700,000 budget, $715,000 actual; controllable fixed costs—$300,000 budget, $309,000 actual. Average operating assets for
For its three investment centers, Jackson Company accumulates the following data: Compute the return on investment (ROI) for eachcenter.
In Brown Company’s flexible budget graph, the fixed cost line and the total budgeted cost line intersect the vertical axis at $90,000. The total budgeted cost line is $330,000 at an activity level of 60,000 direct labor hours. Compute total budgeted costs at 70,000 direct labor hours.
The Far West Division operates as a profit center. It reports the following for the year. Prepare a responsibility report for the Far West Division at December 31,2012.
Bruce Willis has prepared the following list of statements about budgetary control.1. Budget reports compare actual results with planned objectives.2. All budget reports are prepared on a weekly basis.3. Management uses budget reports to analyze differences between actual and planned results and
Valenzuela Company budgeted selling expenses of $30,000 in January, $35,000 in February, and $40,000 in March. Actual selling expenses were $31,000 in January, $34,500 in February, and $47,000 in March.Instructions(a) Prepare a selling expense report that compares budgeted and actual amounts by
Rooney Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.Indirect labor ...... $1.00Indirect materials ........ 0.50Utilities ........... 0.40Fixed overhead costs per month are:
Russell Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000. Variable costs and their percentage relationship to sales are: Sales Commissions 5%, Advertising 4%, Traveling 3%, and Delivery 2%. Fixed selling expenses will
Byrd Company??s manufacturing overhead budget for the first quarter of 2012 contained the following data. Actual variable costs were: indirect materials $13,800, indirect labor $9,600, utilities $8,700, and maintenance $4,900. Actual fixed costs equaled budgeted costs except for property taxes and
As sales manager, Magic Johnson was given the following static budget report for selling expenses in the Clothing Department of Lakers Company for the month of October. As a result of this budget report, Magic was called into the president??s office and congratulated on his fine sales performance.
Manning Plumbing Company is a newly formed company specializing in plumbing services for home and business. The owner, Peyton Manning, had divided the company into two segments: Home Plumbing Services and Business Plumbing Services. Each segment is run by its own supervisor, while basic selling and
Brees Company has two production departments, Fabricating and Assembling. At a department managers’ meeting, the controller uses flexible budget graphs to explain total budgeted costs. Separate graphs based on direct labor hours are used for each department. The graphs show the following.1. At
Bush Company’s organization chart includes the president; the vice president of production; three assembly plants—New Orleans, Houston, and Mobile; and two departments within each plant—Machining and Finishing. Budget and actual manufacturing cost data for July 2012 are as follows:Finishing
Maguire Manufacturing Inc. has three divisions which are operated as profit centers.Actual operating data for the divisions listed alphabetically are as follows. Instructions(a) Compute the missing amounts. Show computations.(b) Prepare a responsibility report for the Women??s Shoes Division
The Red Division of Tarkington Company reported the following data for the current year.Sales .......... $3,000,000Variable costs ...... 1,950,000Controllable fixed costs .. 600,000Average operating assets . 5,000,000Top management is unhappy with the investment center’s return on investment
The Nung Dental Clinic provides both preventive and orthodontic dental services. The two owners, Chris Thao and Kim Long, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Chris for Preventive
The Panamerican Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using a system of responsibility reports and return on investment calculations. The allocation of
Chamberlin Company estimates that 360,000 direct labor hours will be worked during the coming year, 2012, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. It is estimated that direct labor hours worked each month will
Taylor Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2012. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an
Namath Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2012, and relevant budget data are as follows. Average
Cobb Company estimates that 240,000 direct labor hours will be worked during 2012 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed. It is estimated that direct labor hours worked each month will range from 18,000 to 24,000 hours.During
Lombardi Manufacturing Company produces one product, Olpe. Because of wide fluctuations in demand for Olpe, the Assembly Department experiences significant variations in monthly production levels. The annual master manufacturing overhead budget is based on 300,000 direct labor hours. In July,
Jordan Company uses budgets in controlling costs. The May 2012 budget report for the company??s Packaging Department is as follows. The monthly budget amounts in the report were based on an expected production of 50,000 units per month or 600,000 units per year.The company president was displeased
Collins Manufacturing Inc. operates the Home Appliance Division as a profit center. Operating data for this division for the year ended December 31, 2012, are shown below. In addition, Collins Manufacturing incurs $150,000 of indirect fixed costs that were budgeted at $155,000. Twenty percent
Ryan Manufacturing Company manufactures a variety of garden and lawn equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Lawnmower Division for the year ended December 31, 2012, and relevant budget data are as follows. Average
Waterways Corporation is continuing its budget preparations. This problem gives you static budget information as well as actual overhead costs and asks you to calculate amounts related to budgetary control and responsibility accounting.
Organic Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has led to a decline in breeding activities, and it has made the boarding business extremely
Rambis Company manufactures expensive watch cases sold as souvenirs. Three of its sales departments are: Retail Sales, Wholesale Sales, and Outlet Sales. The Retail Sales Department is a profit center. The Wholesale Sales Department is a cost center. Its managers merely take orders from customers
There are many useful resources regarding budgeting available on websites. The following activity investigates the results of a comprehensive budgeting study.Address: www.accountingweb.com/whitepapers/centage_ioma.pdf, InstructionsGo the address above and then answer the following questions.(a)
Continental Products Corporation participates in a highly competitive industry. In order to meet this competition and achieve profit goals, the company has chosen the decentralized form of organization.Each manager of a decentralized investment center is measured on the basis of profit
Ron Ely says that the balanced scorecard was created to replace financial measures as the primary mechanism for performance evaluation. He says that it uses only nonfinancial measures. Is this true?
Rosie Perez does not understand why the overhead volume variance indicates that fixed overhead costs are under- or overapplied. Clarify this matter for Rosie.
Rick Schroeder is attempting to outline the important points about overhead variances on a class examination. List four points that Rick should include in his outline.
Tijuana Company uses both standards and budgets. For the year, estimated production of Product X is 500,000 units. Total estimated cost for materials and labor are $1,200,000 and $1,600,000. Compute the estimates for (a) A standard cost and (b) A budgeted cost.
Juneau Company accumulates the following data concerning raw materials in making one gallon of finished product: (1) Price-net purchase price $2.20, freight-in $0.20, and receiving and handling $0.10. (2) Quantity-required materials 2.6 pounds, allowance for waste and spoilage 0.4 pounds. Compute
Brand Company’s standard materials cost per unit of output is $10 (2 pounds 3 $5). During July, the company purchases and uses 3,200 pounds of materials costing $16,160 in making 1,500 units of finished product. Compute the total, price, and quantity materials variances.
Mersaw Company’s standard labor cost per unit of output is $20 (2 hours 3 $10 per hour). During August, the company incurs 2,100 hours of direct labor at an hourly cost of $10.50 per hour in making 1,000 units of finished product. Compute the total, price, and quantity labor variances.
In October, McEnroe Company reports 21,000 actual direct labor hours, and it incurs $115,000 of manufacturing overhead costs. Standard hours allowed for the work done is 20,000 hours. The predetermined overhead rate is $6 per direct labor hour. Compute the total overhead variance.
Some overhead data for McEnroe Company are given in BE25-6. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $4 variable per direct labor hour and $50,000 fixed. Compute the overhead controllable variance.
Saito Company accumulated the following standard cost data concerning product I-Tal.Materials per unit: 2 pounds at $5 per poundLabor per unit: 0.2 hours at $14 per hourManufacturing overhead: Predetermined rate is 125% of direct labor costCompute the standard cost of one unit of product I-Tal.
Horowitz Company is planning to produce 2,000 units of product in 2012. Each unit requires 3 pounds of materials at $6 per pound and a half-hour of labor at $14 per hour. The overhead rate is 70% of direct labor.Instructions(a) Compute the budgeted amounts for 2012 for direct materials to be used,
Romy Schneider manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch.3,000 ounces of grape concentrate at $0.04 per ounce54 pounds of granulated sugar at $0.35 per pound60 lemons at $0.60 each50 yeast
Sergey Company has gathered the information shown below about its product. Direct materials: Each unit of product contains 4.5 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost $4 per pound, but Sergey always takes the 2%
Rush Repair Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month.Actual time spent on the oil change ..... 1.0 hourHourly wage rate .............. $10Payroll taxes
Cherie Company’s standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.Instructions(a) Compute the total labor variance.(b) Compute the
Injin Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.Direct materials (8 pounds at $2.50 per pound) ... $20Direct labor (3 hours at $12.00 per hour) ....... $36During the month of April, the company manufactures 230 units and incurs
Rathman Company purchased (at a cost of $10,900) and used 2,300 pounds of materials during May. Rathman’s standard cost of materials per unit produced is based on 2 pounds per unit at a cost of $5 per pound. Production in May was 1,070 units.Instructions(a) Compute the total, price, and quantity
Tovi Landscaping plants grass seed as the basic landscaping for business campuses. During a recent month, the company worked on three projects (Bose, Larkin, and Torres). The company is interested in controlling the materials costs, namely the grass seed, for these plantings projects.In order to
Figueroa Corporation prepared the following variance report. InstructionsFill in the appropriate amounts or letters for the question marks in the report.
Phap Company uses a standard cost accounting system. During January, the company reported the following manufacturing variances. In addition, 8,000 units of product were sold at $8.00 per unit. Each unit sold had a standard cost of $6.00. Selling and administrative expenses were $6,000 for the
Leab Company installed a standard cost system on January 1. Selected transactions for the month of January are as follows.1. Purchased 18,000 units of raw materials on account at a cost of $4.50 per unit. Standard cost was $4.30 per unit.2. Issued 18,000 units of raw materials for jobs that
Tsar Company uses a standard cost accounting system. Some of the ledger account have been destroyed in a fire. The controller asks your help in reconstructing some missing entries and balances.InstructionsAnswer the following questions.(a) Materials Price Variance shows a $2,000 favorable balance.
Data for Injin Inc. are given in E25-7.InstructionsJournalize the entries to record the materials and labor variances.
The information shown on page 1181 was taken from the annual manufacturing overhead cost budget of Jamaica CompanyVariable manufacturing overhead costs ..... $33,000Fixed manufacturing overhead costs ...... $19,800Normal production level in labor hours ..... 16,500Normal production level in units
Liam Company’s annual overhead rate was based on estimates of $200,000 for overhead costs and 20,000 direct labor hours. Liam’s standards allow 2 hours of direct labor per unit produced.Production in May was 900 units, and actual overhead incurred in May was $18,800. The overhead budgeted for
Mifflin Corporation manufactures a single product. The standard cost per unit of product is shown below.Direct materials—1 pound plastic at $7.00 per pound .... $ 7.00Direct labor—1.5 hours at $12.00 per hour ....... 18.00Variable manufacturing overhead ............. 11.25Fixed manufacturing
Simon Manufacturing Corporation accumulates the following data relative to jobs started and finished during the month of June 2012. Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct labor hour. The jobs were sold for $400,000.
Panache Clothiers is a small company that manufactures tall-men??s suits. The company has used a standard cost accounting system. In May 2012, 11,200 suits were produced. The following standard and actual cost data applied to the month of May when normal capacity was 14,000 direct labor hours. All
Fuentes Manufacturing Company uses a standard cost accounting system. In 2012, the company produced 28,000 units. Each unit took several pounds of direct materials and 1½ standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,000 direct labor hours. During the
Agri Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company’s customers are governmental agencies, prices are strictly regulated. Therefore, Agri Labs must constantly monitor and control its testing costs. Shown below are the
Papillion Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,900 units of Product B was received. The standard cost of one unit of Product B is as follows. Normal capacity for the month was 4,200 machine hours. During January, the
Lopez Corporation manufactures a single product. The standard cost per unit of product is as follows.Direct materials—2 pounds of plastic at $5 per pound ....... $10Direct labor—2 hours at $12 per hour .............. 24Variable manufacturing overhead ................ 8Fixed manufacturing
Lopes Manufacturing Company uses a standard cost accounting system to account for the manufacture of exhaust fans. In July 2012, it accumulates the following data relative to 1,800 units started and finished. Manufacturing overhead was applied on the basis of direct labor hours. Normal capacity
Classy Clothiers manufactures women??s business suits. The company uses a standard cost accounting system. In March 2012, 15,700 suits were made. The following standard and actual cost data applied to the month of March when normal capacity was 20,000 direct labor hours. All materials purchased
Quintana Manufacturing Company uses a standard cost accounting system. In 2012, 50,000 units were produced. Each unit took several pounds of direct materials and 2 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 96,000 direct labor hours. During the year,
Private Labs performs steroid testing services to high schools, colleges, and universities. Because the company deals solely with educational institutions, the price of each test is strictly regulated. Therefore, the costs incurred must be carefully monitored and controlled. Shown below are the
Uhren Manufacturing Company uses standard costs with its job order cost accounting system. In January, an order (Job No. 84) was received for 5,500 units of Product D. The standard cost of 1 unit of Product D is as follows.Direct materials—1.4 pounds at $4.00 per pound $ 5.60Direct labor—1 hour
Donel Professionals, a management consulting firm, specializes in strategic planning for financial institutions. Lee Dong and Geri Elton, partners in the firm, are assembling a new strategic planning model for use by clients. The model is designed for use on most personal computers and replaces a
Al Ignatenko and Associates is a medium-sized company located near a large metropolitan area in the Midwest. The company manufactures cabinets of mahogany, oak, and other fine woods for use in expensive homes, restaurants, and hotels. Although some of the work is custom, many of the cabinets are a
The setting of standards is critical to the effective use of standards in evaluating performance.InstructionsExplain the following in a memo to your instructor.(a) The comparative advantages and disadvantages of ideal versus normal standards.(b) The factors that should be included in setting the
At Milton Manufacturing Company, production workers in the Painting Department are paid on the basis of productivity. The labor time standard for a unit of production is established through periodic time studies conducted by the Mobley Management Department. In a time study, the actual time
Your roommate, Dave Klein, contends that accounting contributes to most of the steps in management’s decision-making process. Is your roommate correct? Explain.
Dean Martin asks your help concerning the relevance of variable and fixed costs in incremental analysis. Help Dean with his problem.
Frido Ortiz is trying to understand the term “cost of capital.” Define the term, and indicate its relevance to the decision rule under the annual rate of return technique.
Calliope Company uses the internal rate of return method. What is the decision rule for this method?
Vinh Company is considering two alternatives. Alternative A will have sales of $150,000 and costs of $100,000. Alternative B will have sales of $180,000 and costs of $120,000. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income. Which alternative should you
In Kastle Company, it costs $30 per unit ($20 variable and $10 fixed) to make a product that normally sells for $45. A foreign wholesaler offers to buy 4,000 units at $23 each. Kastle will incur special shipping costs of $1 per unit. Assuming that Kastle has excess operating capacity, prepare an
Beamer Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 10,000 of the part at $5.30 per unit. If the offer is accepted, Beamer will save all variable costs but no fixed costs. Prepare an analysis
Keaton Inc. makes unfinished bookcases that it sells for $60. Production costs are $30 variable and $10 fixed. Because it has unused capacity, Keaton is considering finishing the bookcases and selling them for $72. Variable finishing costs are expected to be $8 per unit with no increase in fixed
Stanley Company has a factory machine with a book value of $90,000 and a remaining useful life of 4 years. A new machine is available at a cost of $200,000. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from
O’Toole, Inc. manufactures golf clubs in three models. For the year, the Eagle line has a net loss of $20,000 from sales $200,000, variable expenses $180,000, and fixed expenses $40,000. If the Eagle line is eliminated, $34,000 of fixed costs will remain. Prepare an analysis showing whether the
In Cheval Company, data concerning two products are: Contribution margin per unit-Product A $11, Product B $12; machine hours required for one unit—Product A 2, Product B 2.5. Compute the Contribution margin per unit of limited resource for each product.
Laura Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $130,000 and will increase annual expenses by $80,000 including depreciation. The oil well will cost $490,000 and will have a $10,000 salvage value at the end of its
Wales Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $395,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,000. Project B will cost $270,000, has an expected
Jacques Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $170,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual cash flows by $33,740. What is its approximate
Travolta Company accumulates the following data concerning a proposed capital investment: cash cost $225,000, net annual cash flow $34,000, present value factor of cash inflows for 10 years 6.71 (rounded). Determine the net present value, and indicate whether the investment should be made.
Maize Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that normally sells for $58. A foreign wholesaler offers to buy 6,000 units at $31 each. Maize will incur additional costs of $2 per unit to imprint a logo and to pay for shipping. Compute the increase or

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