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managerial accounting

Accounting concepts and applications 11th Edition Albrecht Stice, Stice Swain - Solutions

How does a firm dispose of over- or under-applied overhead costs?
Cost of goods manufactured represents the costs being transferred out of the work-in-process account into the finished goods inventory account. Does the cost of goods manufactured calculation include actual manufacturing overhead costs or applied manufacturing overhead costs?
What is the difference between a manufacturing company and a merchandising company? Between a merchandising company and a service company?
What is a service organization and what are some examples?
Name three ways in which the service industry differs from the manufacturing industry.
What is the principal “product cost” for a service company?
Which three costs go into the work-in-process services account for a service company? How does this account differ between service and manufacturing firms?
What similarities and differences exist among the costs of merchandising, manufacturing, and service firms?
Should managers concentrate only on the costs of production (e.g., the cost of goods sold), or should they also consider other costs and factors?
Which one of the following statements is false?a. A company wishing to enter a new market may decide not to because the prices charged by potential competitors are too low to allow the company to cover its costs.b. Because gathering accurate cost data is so difficult, the benefits rarely outweigh
Which one of the following is not an example of manufacturing overhead?a. Tires used in the assembly of carsb. Production supervisor’s salaryc. Utilities for production plantd. Staples used in assembling furnituree. Insurance on assembly equipment
Which one of the following sequences correctly illustrates the flow of costs through a production process?a. Raw materials inventory, work-in-process inventory, cost of goods sold, finished goods inventory b. Raw materials inventory, cost of goods sold, work-in-process inventory, finished goods
Gharavi Company purchased plastic costing $23,000 and sheet metal costing $92,000 with cash.Both of these materials are used in the production process. Make the necessary journal entry or entries to record these transactions.
Gharavi Company transferred plastic costing $4,000 and sheet metal costing $22,000 to the factory floor to be used as direct materials in production. Make the necessary journal entry or entries to record these transactions.
Gharavi Company transferred plastic costing $3,400 and sheet metal costing $6,700 to the factory floor to be used in general maintenance projects. Because these materials will not be used in the production process itself, they are classified as indirect materials. Make the necessary journal entry
Two workers worked six hours each to build a custom entertainment center. Each worker earns $12 per hour. Make the necessary journal entry to record this transaction
Furka Company paid $6,500 in April to its production supervisor for her monthly salary. Make the necessary journal entry to record this transaction.
The cost of certain overhead items for the month was as follows:Rent for production facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,600Insurance premium for the month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hill Company used 130 direct labor hours to complete a certain job. The company applies manufacturing overhead based on direct labor hours at a rate of $6.80 per hour. Make the necessary journal entry to record the application of manufacturing overhead to this job.
The total cost of materials, labor, and overhead assigned to a job was $603. Busch Company transferred this job to its finished goods warehouse. Make the necessary journal entry to record this transaction.
Refer to the data in PE 16-11. Busch Company sold the inventory produced in this job for $987.Make the journal entry to record this transaction. The sale was on account. The company uses a perpetual inventory system.
Aurora Company spent a total of $102,340 in the current period in one of its production centers. In addition, when the production period began, there was work-in-process inventory in the production center that had a total value of $3,820. If the costs of the inventory at the end of the period are
FLSR Company spent a total of $407,888 in the current period in one of its production centers. In addition, when the production period began, there was work-in-process inventory in the production center that had a total value of $26,554. If the total costs of the inventory transferred out of the
Newman Company reports the following information from the budget for the coming year:Estimated total amount of manufacturing overhead . . . . . . . . . . . . . . . . . . . . . $1,600,000Average wage for production employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heink Company incurred $32,056 in manufacturing overhead and applied $32,537. The company uses the most common and simple method of handling differences between actual and applied overhead. Make the necessary journal entry to dispose of the difference.
Using the following information, compute cost of goods manufactured, which is the cost of inventory transferred to Finished Goods Inventory.Work-in-process inventory, beginning balance . . . . . . . . . . . . . . . . . . . . . . $125,000Work-in-process inventory, ending balance . . . . . . . . . .
Using the following information, prepare a Cost of Goods Manufactured schedule.Work-in-process inventory, beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . $160,000Work-in-process inventory, ending balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000Raw
Using the following information, compute cost of goods sold. Make sure to consider all necessary adjustments. Any over-or under-applied manufacturing overhead is closed and adjusted to cost of goods sold.Finished goods inventory, beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . .
Which one of the following statements is false?a. Service companies use predetermined overhead rates.b. Regarding the accounting for cost of “goods” sold, service companies are more similar to merchants than to manufacturers.c. Service companies use work-in-process inventory accounts to
Steven James, a recently hired internal auditor, is currently auditing the work-in-process inventory account. Steven has forgotten some basic cost accounting concepts and asks for your assistance. Identify the four types of transactions or events that affect the work-in-process inventory account in
Post the following cost data to the appropriate T-accounts to trace the flow of costs from the time they are incurred until the product is completed and sold. (Assume that purchases and expenses are credited to Cash or Accounts Payable.)a. Direct materials purchased . . . . . . . . . . . . . . . .
Farrer Manufacturing Company uses a job order costing system. All relevant information for Jobs #203 and #204, which were completed during May, is provided here. No other jobs were in process during the month of May.A predetermined overhead rate of $12 per direct labor hour is used to apply
The following T-accounts represent inventory costs as of December 31, 2012:1. Determine the direct labor costs for 2012.2. Determine the cost of goods manufactured for 2012.3. Determine the cost of goods sold for 2012.4. Compute over- or under-applied manufacturing overhead for 2012.5. Determine
The Boise Manufacturing Company uses a job order costing system. For Job #221, the production manager requisitioned $1,500 of direct materials and used 35 hours of direct labor at $30 per hour. Manufacturing overhead is applied on the basis of direct labor hours, using a predetermined overhead
The Lewandowski Company manufactures special wheelchairs for handicapped athletes. The company uses a job order costing system. Partial data for a particular job include:Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $575Direct
Chicago Corporation uses a job order costing system. Thus, management must establish a predetermined overhead rate for applying manufacturing overhead. Over a period of three years, the following data are accumulated:1. What would the predetermined overhead rate be for each of the three years, if
East Lake Corporation uses a job order costing system and applies manufacturing overhead using a predetermined overhead rate. The following data are available.1. Compute the predetermined overhead rate for each of the two years, based on(a) Direct labor hours,(b) Direct materials costs, and(c)
Chris Company has four manufacturing subsidiaries (listed below). Each subsidiary keeps a separate set of accounting records. Manufacturing cost forecasts for 2012 for each subsidiary are:The predetermined overhead rates for each subsidiary are based on the following:Tulare Subsidiary: Machine
Valtec Company has three manufacturing divisions (listed below). Each division has its own job order costing system and forecasts the following manufacturing costs for the upcoming year:The predetermined overhead rates for each division are based on the following:Wayne Division: Machine hoursMonroe
Cedar Company uses predetermined overhead rates in assigning manufacturing overhead costs to jobs. The rates are based on machine hours in the machining department and on direct labor hours in the assembly department. Estimated costs, machine hours, and direct labor hours for the year in each
The following information is for Kiev Derrald Company:Manufacturing overhead (actual) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $175,000Ending raw materials inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The following information is for MTC Harry Company:Beginning raw materials inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000Raw materials used in production as direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000Ending
Xavier & Associates Law Firm estimated its total overhead costs for 2011 to be $1.8 million. It allocates overhead based on direct labor hours. Xavier employs 11 attorneys, each working an average of 2,000 hours per year. The average annual salary for Xavier attorneys is $140,000, or
Johnson Engineers incurred (but has not yet paid) the following costs in 2012:Use of supplies for clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,000Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The following data are available for Haul-It-Away Truckers:1. Compute the predetermined overhead rate for each of the two years, if based on (a) Direct labor hours, (b) Number of moving jobs, and (c) Total miles driven.2. Interpretive Question: Which allocation basis would you recommend for
The following information was forecasted for 2012:Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $280,000Property tax on equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The following information is available for a particular consulting contract performed by Newland Business Consultants in 2012:Consulting labor costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000Supplies . . . . . . . . . . . . . . . .
Following are transactions for Itabuna Manufacturing Company. Assume that the company has no beginning work-in-process inventory or finished goods inventory.a. Itabuna purchased $575,000 of raw materials, paying 12% down, with the remainder to be paid in 10 days.b. The production manager
Payson Company uses a job order costing system. The following is a partial list of the company's accounts.CashManufacturing OverheadSalesCost of Goods SoldSales Commissions ExpenseAdministrative ExpensesAccounts ReceivableCommissions PayableRequired:1. Prepare journal entries for each of the
Ogden Corporation uses a job order costing system in its manufacturing operation. For the year 2011, Ogden’s predetermined overhead rate was 75% of direct labor costs. For September 2012, the company incurred the following costs:Purchased raw materials on account . . . . . . . . . . . . . . . . .
Al Ordan Furniture Company manufactures only custom furniture and uses a job order costing system to accumulate costs. Actual direct materials and direct labor costs are accumulated for each job, but a predetermined overhead rate is used to apply manufacturing overhead costs to individual
Swenson Corporation has four independent manufacturing divisions. The following data apply to the divisions for the year just endedRequired:1. For each of the four divisions, calculate:a. Applied manufacturing overheadb. Over- or under-applied manufacturing overheadc. Cost of goods manufactured,
Openshaw Manufacturing Company made the following estimates at the beginning of the year:Manufacturing overhead is applied on the basis of machine hours in the machining department and on the basis of direct labor hours in the painting department. During the year, the following two jobs were
Dunn Manufacturing Company applies manufacturing overhead on the basis of direct materials costs. The estimates for 2012 were:Direct materials costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,000Manufacturing overhead . . . . . . . . . . . . .
Jones Custom Furniture Manufacturing, Inc., made the following estimates at the beginning of the year, 2012:Budgeted direct labor costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000Budgeted direct labor hours . . . . . . . . . . . . . . . . . . . .
The following data apply to Newton Company and Alexander Company (two independent companies):Required:Fill in the unknowns for the twocases.
Dunn Manufacturing Company’s journal entries and T-accounts for Manufacturing Overhead and Work-in-Process Inventory were completed in P 16-45. Assume that Dunn had the following beginning inventory amounts:Direct materials inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delta Manufacturing Company applies manufacturing overhead to jobs on the basis of machine hours. The 2012 estimates of manufacturing overhead and machine hours were:Manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,825,000Machine
The following T-accounts represent manufacturing cost flows for Lincoln Manufacturing Company for the year 2012.Required:1. Identify the following amounts for 2012 from Lincoln's T-accounts:a. Direct labor costb. Cost of goods manufacturedc. Cost of goods soldd. Actual manufacturing overhead
Sutherland Estimating Company employs three professional estimators, each having a different specialty. John Spencer specializes in structural estimating; Steve Ray, electrical estimating; and Dave Eugene, mechanical estimating. The firm expects to incur the following operating costs upcoming
Following are transactions for Michael Custodial, Inc. Assume the company’s beginning work-in-process services account balance is zero.a. Purchased supplies costing $5,000 for cash.b. Received and immediately paid a utility bill, $600.c. Used supplies costing $4,000 in doing work for a
Blake Accounting Services has the following transactions. Its beginning work-in-process services account balance is zero.a. Purchased supplies costing $11,000 on account.b. Paid property tax, $20,000.c. Paid rent, $2,000; and utilities, $700.d. Paid support staff salaries, $35,000.e. Used supplies
Allee Company had the following balances at the beginning of the year:Allee estimates that its total overhead for the year will amount to $400,000. It allocates overhead based on direct labor hours. Allee estimates that its total 2010 direct labor hours for the year will be 100,000 hours. Because
Packard, Inc., produces and sells mousetraps. The cost of a mousetrap can be broken down as follows:Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.23Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . .
You work for US MacDonald Inc., which makes airplanes for commercial airlines, like United, American, and Delta, and for the U.S. Air Force. Many parts are common to all planes made by MacDonald. The market for commercial planes is extremely competitive with General Dynamics, Lockheed, and European
With advancements in the Internet and e-commerce, will retailers be important to the future success of businesses, or will their services be eliminated in order to decrease costs?Companies like Amazon.com and eBay have no physical store locations. Customers order their products over the Internet
Should the costs associated with an uncompleted consulting project be classified as a work-in-process asset on the balance sheet, or should the cost be expensed on the income statement as a part of doing business?Your marketing company has been working on a consulting project for a client. Your
Despite being the largest retailer in the world, Wal-Mart operates in a highly competitive environment. This is especially true considering the recent financial crisis. Hence, it is important for Wal-Mart’s management to track the success of the company. In the Management’s Discussion and
The cost data below are for a medium-size, family-owned pump manufacturing business located in the Midwest, which we will refer to as Pump, Inc., for confidentiality reasons.Pump, Inc., reorganized much of its production into manufacturing €œcells€: self-supervising work
The cost accounting for manufacturers we have studied in this chapter has a very clear connection to the way financial accounting is reported. Exhibit 16.1 demonstrates the difference between the production process and the administration process in a manufacturing organization. U.S. cost accounting
You have recently been hired as an accountant for the largest residential construction company in the state. Your primary responsibility is to track costs for each home being constructed. Tracking the costs for direct materials and direct labor is relatively straightforward. Materials requisitioned
What is the major difference between job order costing and process costing?
What two conditions generally exist for process costing to be appropriate?
What is meant by the term equivalent units of production?
At the beginning of the month, the company had 105 units that were 20% complete in inventory. At the end of the month, the company had 50 units that were 30% complete in inventory. During the month, the company completed and transferred 1,250 units out of inventory. Compute the number of units
Given the following information, compute the equivalent units of production.
Using the following information, compute the total product costs per unit for both beginning work-in-process inventory and for current periodproduction.
Assume that you are the owner and sole employee of a lube, oil, and filter service business that you run out of your home. Currently, you are running a spring special on a "super maintenance service" on cars. The maintenance service you offer is quite comprehensive and includes changing the oil,
A large wooden furniture factory has several assembly lines, one of which is dedicated to assembly of wooden kitchen tables. All raw materials necessary to complete each table are requisitioned from the raw materials warehouse at the time each table starts production on the assembly line. The
Heidi Corporation began producing quick-drying paper cement in June (i.e., there was no beginning work-in-process inventory on June 1). The manufacturing process involves only one step. In June, the costs were $15,360 for direct materials and $33,512 for conversion costs. During the month, 3,200
The cleaning division of Clark Corn Company had the following data for January:Required:1. Using the FIFO cost flow method, compute the per-ton cost of corn processed by the cleaning division in this period (all materials are in place at the beginning of the process).2. Compute the cost of the
C&H Square Company provides a tax return processing service. C&H essentially has two processing centers'staff and managers. The data that follow show the production and cost results for the staff center for the month of March:Required:Costs of direct materials (paper, staples, etc.) are immaterial
The assembly department of Charles Manufacturing Company reported the following data for the month of August:Required:Prepare the production cost report for the assembly department. (Note: The prior department's manufacturing costs should be included in this department's production costreport.)
Wheelie Electric, Inc., performs tune-ups on automobiles. It has five service bays. During September, Wheelie Electric had the following operating data:Required:Direct materials include spark plugs, wires, ignition parts, etc. Materials are added to each car as needed during the tune-up process (in
How are overhead costs assigned to products or divisions when an activity-based costing (ABC) system is used?
What is the most serious drawback of an ABC system?
What are the five steps involved in implementing and using an ABC system?
What are the four general categories of ABC activities?
Give two examples of unit-level activities.
Give two examples of batch-level activities.
Give two examples of product-line activities.
Give two examples of facility support activities.
What must a company do in order to be able to assign overhead costs to specific overhead activities?
What can a company do to determine what percentage of time employees spend on particular overhead cost activities?
What is a cost pool?
What is a cost driver?
How are facility support overhead costs treated in an ABC system?
Why is the amount of overhead cost allocated to a product or division in an ABC system not necessarily proportional to a single measure of activity such as direct labor hours?
Compare Exhibits 17.6 and 17.7. Why does the total €œflavor gross profit€differ?

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