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Principles Of Cost Accounting 15th Edition Edward J. Vanderbeck - Solutions
Assuming that all materials are added at the beginning of the process and the labor and factory overhead are applied evenly during the process, compute the figures to be inserted in the blank spaces of the following data, using the average costmethod.
Foamy, Inc., manufactures shaving cream and uses an average cost system. In November, production is 14,800 equivalent units for materials and 13,300 units for labor and overhead. During the month, materials, labor, and overhead costs were as follows:Materials . . . . . . . . . . . . . . . . . . . .
Seymour Brothers Products, Inc., manufactures a liquid product in one department. Due to the nature of the product and the process, units are regularly lost at the beginning of production. Materials and conversion costs are added evenly throughout the process. The following summaries were prepared
A company manufactures a liquid product called Glitter. The basic ingredients are put into process in Department 1. In Department 2, other materials are added that increase the number of units being processed by 50%. The factory has only two departments.Calculate the following for each
Using the data given for Cases 1–3 and the FIFO cost method, compute the separate equivalent units of production, one for materials and one for labor and overhead, under each of the following assumptions (labor and factory overhead are applied evenly during the process in each assumption):a.
Assume each of the following conditions concerning the data given:1. All materials are added at the beginning of the process.2. All materials are added at the end of the process.3. Half of the materials are added at the beginning of the process, and the balance of the materials is added when the
Lexington Lumber Co. processes rough timber to obtain three grades of finished lumber, A, B, and C. The company allocates costs to the joint products on the basis of market value. During the month of May, Lexington incurred total production costs of $300,000 in producing the following:Make the
Cooper Company’s joint cost of producing 1,000 units of Product A, 500 units of Product B, and 500 units of Product C is $200,000. The unit sales values of the three products at the split-off point are Product A—$20, Product B—$200, and Product C—$160. Ending inventories include 100 units
Orlando Metals manufactures tin. During the process, a byproduct-scrap metal-is obtained and placed in stock. The estimated sales value of the scrap metal produced during the month of April is $2,000. Assume that the value of the by-product is treated as a reduction in production cost.Make the
Alphabet Manufacturing Co. makes one main product, X, and a by-product, Z, which splits off from the main product when the work is three-fourths completed. Product Z is sold without further processing and without being placed in stock. During June, $1,200 is realized from the sale of the
Manufacturing data for the months of January and February in the Mixing Department of Cappy Cleaning Products follow:All materials are added at the start of the process. Labor and factory overhead are added evenly throughout the process. No units were in process at the beginning of January. Goods
On December 1, Lake George Production Company had a work in process inventory of 1,200 units that were complete as to materials and 50% complete as to labor and overhead. December 1 costs follow:Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,000Labor . . . . . . . . . . . .
Akron Manufacturing Company manufactures a cement sealing compound called Ultra-Seal. The process requires that the product pass through three departments. In Dept. 1, all materials are put into production at the beginning of the process; in Dept. 2, materials are put into production evenly
Gold Giant Products, Inc., cans peas and uses an average cost system. For the month of November, the company showed the following:Peas completed and canned . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,000 poundsPeas in process at the end of November: 100% complete as to peas, 50%
Sinaloa Products Co. uses the process cost system. A record of the factory operations for the month of October follows:Production Summary UnitsStarted in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500Finished and transferred to stockroom . . . . . . . . . . . . . .
Cancun Chemicals, Inc., which uses the process cost system, has two departments: A and B. In both departments, all of the materials are put into production at the beginning of the process. The materials added in Dept. B increase the number of units being processed by 25%. Labor and factory overhead
Boise Beverages, Inc., uses the FIFO cost method and adds all materials, labor, and factory overhead evenly to production. A record of the factory operations for the month of October follows:Production Summary UnitsWork in process, beginning of month,one-fourth completed . . . . . . . . . . . . . .
Columbus Candy Company had a cost per equivalent pound for the month of $4.56 for materials, $1.75 for labor, and $1.00 for overhead. During the month, 10,250 pounds were completed and transferred to finished goods. The 3,200 pounds in ending work in process were 100% complete as to materials and
Mt. Repose Manufacturing Company uses a process cost system. Its manufacturing operation is carried on in two departments:Machining and Finishing. The Machining Department uses the average cost method, and the Finishing Department uses the FIFO cost method. Materials are added in both departments
Chikin, Inc., specializes in chicken farming. Chickens are raised, packaged, and sold mostly to grocery chains. Chickens are accounted for in batches of 50,000. At the end of each growing period, the chickens are separated and sold by grades. Grades AA and A are sold to large grocery chains, and B
Boone Oil Company transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off point for $500,000 of annual revenue, and the joint processing costs to get the crude oil to split-off
Clark Kent, Inc., buys crypton for $0.80 a gallon. At the end of processing in Dept. 1, crypton splits off into products A, B, and C. Product A is sold at the split-off point with no further processing. Products B and C require further processing before they can be sold. Product B is processed in
The Coca-Cola Company’s manufacturing operations are ideal for process costing because it and its bottlers produce long runs of identical beverages in a continuous flow production process. Go to the companion Web site at www.cengage.com/accounting/vanderbeck and visit the link for Coca-Cola to
What is the difference between the standard cost and the actual cost of production?
What is a ‘‘standard’’? Give some examples such as those appearing in the chapter introduction.
What are the specific procedures on which a standard cost accounting system is based?
How are standards for materials and labor costs determined?
What is a variance?
How do price and quantity variances relate to materials costs?
How do rate and efficiency variances relate to labor costs?
Is a favorable variance ‘‘good’’ and an unfavorable variance ‘‘bad’’? Explain.
How does a materials purchase price variance differ from a materials price variance.
When are variances usually recorded in the journals?
Are actual costs or standard costs charged to Work in Process?
When a company uses a standard cost system, are the inventory accounts—Finished Goods, Work in Process, and Materials— valued at actual cost or standard cost?
What two factors must be considered when breaking down a variance into its components?Explain.
What might cause the following materials variances?a. An un-favorable materials price variance.b. A favorable materials price variance.c. An unfavorable materials quantity variance.d. A favorable materials quantity variance.
What might cause the following labor variances?a. An unfavorable labor rate variance.b. A favorable labor rate variance.c. An unfavorable labor efficiency variance.d. A favorable labor efficiency variance.
Is it possible that a variance of one type might be partially or fully offset by another variance? Explain.
If, in a given period, the total actual cost of all materials used is exactly the same as the standard cost so that no net variance results, should the data be further analyzed?Explain.
At what amount is the entry made to transfer the cost of finished goods from the first department to a subsequent department in a standard cost system?
What is a controllable variance?
Why is it important to determine controllable variances?
What is a volume variance?
What is the significance of a volume variance?
If production is more or less than the standard volume, is it possible that no controllable or volume variances would exist? Explain.
At the end of the current fiscal year, the trial balance of Flatbush Corporation revealed the following debit (unfavorable) balances:Controllable Variance—$2,000Volume Variance—$75,000What conclusions can be drawn from these two variances?
What variances from the four-variance method are included in the controllable variance from the two-variance method? (appendix)
What is the primary difference between the two-variance and three-variance methods of calculation? (appendix)
The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:1. Two pounds of materials are needed to produce one unit.2. Standard unit cost of materials is $8
The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:1. Two pounds of materials are needed to produce one unit.2. Standard unit cost of materials is $8
The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:1. Two pounds of materials are needed to produce one unit.2. Standard unit cost of materials is $8
The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:1. Two pounds of materials are needed to produce one unit.2. Standard unit cost of materials is $8
The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:1. Two pounds of materials are needed to produce one unit.2. Standard unit cost of materials is $8
D-List Calendar Company specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct materials costs and the quantities of paper used showed the following:Actual purchase price . . . .
Overhead Doors, Inc., manufactures garage doors for homes. The standard quantity of direct labor to manufacture a door is 4.5 hours. The standard hourly wage in this department is $12.50 per hour. During August, 6,100 doors were produced. The payroll records indicate that 31,110 hours were worked
AACSB Processors, Inc., produces an average of 10,000 units each month. The factory standards are 20,000 hours of direct labor and 10,000 pounds of materials for this volume. The standard cost of direct labor is $9.00 per hour, and the standard cost of materials is $4.00 per pound. The standard
Fill in the missing figures for each of the following independent cases:(Round all rates to the nearest cent and all totals to the nearestdollar.)
The normal capacity of Austin Adhesives, Inc., is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10.00 per hour. The plant estimates that overhead for a month will be
Assume that during the month of April the production report of Austin Adhesives, Inc., in E8-10 revealed the following information:Units produced during the month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,000Direct labor hours for the month . . . . . . . . . . . . . . . . . . . .
Last year, Tri-Rivers Corporation adopted a standard cost system. Labor standards were set on the basis of time studies and prevailing wage rates. Materials standards were determined from materials specifications and the prices then in effect. On June 30, the end of the current fiscal year, a
Marblehead Manufacturing, Inc., has two departments, Mixing and Blending. When goods are completed in Mixing, they are transferred to Blending and then to the finished goods storeroom. There was no beginning or ending work in process in either department. Listed below is information to be used in
The standard capacity of a factory is 8,000 units per month. Cost and production data follow:Standard application rate for fixed overhead . . . . . . $0.50 per unitStandard application rate for variable overhead . . . . $1.50 per unitProduction—Month 1 . . . . . . . . . . . . . . . . . . . . . .
Missoula Manufacturing Company normally produces 10,000 units of product X each month. Each unit requires 2 hours of direct labor, and factory overhead is applied on a direct labor hour basis. Fixed costs and variable costs in factory overhead at the normal capacity are $5 and $3 per unit,
The normal capacity of a manufacturing plant is 30,000 direct labor hours or 20,000 units per month. Standard fixed costs are $6,000, and variable costs are $12,000. Data for two months follow:For each month, make a single journal entry to charge overhead to Work in Process, to close Factory
The overhead application rate for a company is $2.50 per unit, made up of $1.00 for fixed overhead and $1.50 for variable overhead. Normal capacity is 10,000 units. In one month, there was an unfavorable controllable variance of $200. Actual overhead for the month was $27,000. What was the amount
Georgia Gasket Company budgets 8,000 direct labor hours for the year. The total overhead budget is expected to amount to $20,000. The standard cost for a unit of the company’s product estimates the variable overhead as follows:Variable factory overhead (3 hours@$2 per direct labor hour) $6 per
Using the data shown in E8-15, calculate the following overhead variances:a. Budget variance.b. Capacity variance.c. Efficiency variance.d. Was the factory overhead under- or overapplied? By what amount?
Ichiro Inspections, Inc., specializes in determining whether a building or house’s drain pipes are properly tied into the city’s sewer system. The company pours colored chemical through the pipes and collects an inspection sample from each outlet, which is then analyzed. Each job should take 15
Folsom Fabricators, Inc., uses a standard cost system to account for its single product. The standards established for the product include the following:Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 lb @$0.50 per lbLabor . . . . . . . . . .
Accelerator, Inc., manufactures a fuel additive, Surge, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Accelerator's financial statements for the year ended September 30, management has
Prado Corporation manufactures and sells a single product. The company uses a standard cost system. The standard cost per unit of product follows:Materials—1 lb plastic@$3.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.00Direct labor—1.6 hr@$10.00 . . . . . . . . .
Stylized Products, Inc., uses a standard cost system in accounting for the cost of production of its only product, Suave. The standards for the production of one unit of Suave follow:Direct materials: 10 feet of Class at $0.75 per foot and 3 feet of Chic at $1.00 per foot.Direct labor: 4 hours at
TBA Products Company manufactures a variety of products made of plastic and aluminum components. During the winter months, substantially all of the production capacity is devoted to the production of lawn sprinklers for the following spring and summer seasons.Other products are manufactured during
The standard cost summary for the most popular product of Phase-Five Products Company is shown as follows, together with production and cost data for the period.Production and Cost SummaryUnits completed during the month . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000Ending units in
Suzy-Q Corporation has established the following standard cost per unit:Materials—5.5 lb@$2.20 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.10Labor—1.8 hr@$6.25 per hr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.25Although
Newport Beach Manufacturing Corporation uses a standard cost system that records raw materials at actual cost, records materials price variances at the time that raw materials are issued to work in process, and prorates all variances at year-end. Variances associated with direct materials are
On May 1, Maximus Company began the manufacture of a new mechanical device known as Caesar. The company installed a standard cost system in accounting for manufacturing costs. The standard costs for a unit of Caesar follow:Raw materials (5 lb@$1 per lb) . . . . . . . . . . . . . . . . . . . . . . .
The standard specifications for an electric motor manufactured by B&B Electric Corporation follow:Standard cost per unit:Materials (2 lb × $5 per lb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.00Labor (4 hr × $6 per hr) . . . . . . . . . . . . . . . . . . . .
Cost and production data for Gigante Products Company follow: Standard Cost Sheet (Normal capacity'1,000 units)During the month, 850 units were sold at $60 each.Note: Materials, labor, and overhead are added evenly throughout the process.Required:1. Make general journal entries to record all
Poway Shirts, Inc., manufactures men's sport shirts for large stores. Folsom produces a single quality shirt in lots of a dozen according to each customer's order and attaches the store's label. The standard costs for a dozen shirts include the following:During October, Poway worked on three orders
Fargo Company manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60,000 per period. The standard costs per batch follow:Material (80 gallons) . . . . . . . . . . . .
Metropolis Manufacturing Company manufactures a small electric motor that is a replacement part for the more popular gas furnaces. The standard cost card shows the product requirements as follows:Direct materials'2 lb @$4 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
K-Rod Corporation uses a standard cost system and manufactures one product. The variable costs per product follow:Materials (4 parts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2Labor (2 hours) . . . . . . . . . . . . . . . . . . . . . . . .
Tech-Elec Manufacturing Company estimates the following labor and overhead costs for the period:Variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,200Fixed overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Using the data provided in P8-12, calculate the overhead cost variances under the three-variance method.
Wausau Furniture Company uses a standard cost system in accounting for its production costs. The standard cost of a unit of furniture follows:The following flexible monthly overhead budget applies:Direct Labor Hours Estimated
Madden Manufacturing, Inc., manufactures a single product and uses a standard cost system. The factory overhead is applied on the basis of direct labor hours. A condensed version of the company's flexible budget follows:The product requires 3 pounds of materials at a standard cost of $5 per pound
Cost and production data for Biloxi Beverages, Inc., are presented as follows.Required:1. Calculate net variances for materials, labor, and factory overhead.2. a. Calculate specific materials and labor variances by department, using the diagram format in Figure.b. Comment on the possible causes for
This includes standards for such items as food, labor, and paper products. Given the level of sales volume achieved, the actual costs incurred are compared to the standard costs that should have been achieved for each cost item. Go to the text Web site at www.cengage.com/accounting/ vanderbeck and
What is a budget? Discuss.
What are the advantages of using budgets in a business setting?
What are six principles of good budgeting?
What is a continuous budget, and why is it useful?
Give three examples each of operating budgets and financial budgets.
Which budget must be prepared before the others? Why?
What is ‘‘demand software,’’ and where in the budgeting process is it useful?
Why is it important to have front-line managers participate in the budgeting process?
If the sales forecast estimates that 50,000 units of product will be sold during the following year, should the factory plan on manufacturing 50,000 units in the coming year? Explain.
What are the advantages and disadvantages of each of the following for a company that has greatly fluctuating sales during the year?a. A stable production policyb. A stable inventory policy
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