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managerial accounting

Cornerstones of Managerial Accounting 3rd Edition Mowen, Hansen, Heitger - Solutions

Packstar Company produces ready-to-cook oatmeal. Each carton of oatmeal requires 24 ounces of rolled oats per carton (the unit quantity standard) and .05 labor hours (the unit labor standard). During the year, 350,000 cartons of oatmeal were produced.Required:1. Calculate the total amount of oats
During the last six weeks, the actual costs of materials were as follows:Week 1 $47,500 Week 4 $50,000Week 2 $52,500 Week 5 $60,000Week 3 $60,000 Week 6 $65,000The standard materials cost for each week was $50,000 with an allowable deviation of ± 5,000.
Lata Inc., produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4 ounces of aluminum per can. During the month of April, 250,000 cans were produced using 1,100,000 ounces of aluminum. The actual cost of aluminum was $0.09 per ounce and the standard price was $0.08 per
Refer to the data provided in Cornerstone Exercise 10-22.Required:Calculate the materials price and usage variances using the columnar and formula approaches.Exercise 10-22Lata Inc., produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4 ounces of aluminum per can.
Lata, Inc. produces aluminum cans. Each can has a standard labor requirement of .03 hours. During the month of April, 250,000 cans were produced using 7,000 labor hours @ $9.00. The standard wage rate is $8.50 per hour.Required:Calculate the total variance for production labor for the month of
Refer to the data provided in Cornerstone Exercise 10-24.Required:Calculate the labor rate and efficiency variances using the columnar and formula approaches. Exercise 10-24Lata, Inc. produces aluminum cans. Each can has a standard labor requirement of .03 hours. During the month of April,
Stillwater Designs rebuilds defective units of its S12L7 Kicker speaker model. During the year, Stillwater rebuilt 5,000 units. Materials and labor standards for performing the repairs are as follows:Direct materials (1 recon kit @ $150.00) $150.00Direct materials (1 cabinet @ $50)
Sommers Company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated anytime the amount exceeds the lesser of $12,000 or 10 percent of the standard cost. Reports for the past five weeks provided the following
Bolsa Corporation produces high-quality leather belts. The company uses a standard cost system and has set the following standards for materials and labor:Leather (3 strips @ $4) $12.00Direct labor (0.75 hr. @ $12) 9.00Total prime cost $21.00During the year, Bolsa produced 40,000 belts.
Refer to the data provided in Exercise 10-28.Required:Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches.Exercise 10-28Leather (3 strips @ $4) $12.00 Direct labor (0.75 hr. @ $12) 9.00 Total prime cost $21.00
Refer to the data provided in Exercise 10-28.Required:Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches.Exercise 10-28Leather (3 strips @ $4) $12.00 Direct labor (0.75 hr. @ $12) 9.00 Total prime cost $21.00
Legumbre Company produces vegetable juices, sold in gallons. Recently, the company adopted the following material standard for one gallon of its tomato juice:Direct materials (128 oz: @ $0.06) = $7.68During the first week of operation, the company experienced the following results:a. Gallon units
Verde Company produces wheels for bicycles. During the year, 330,000 wheels were produced. The actual labor used was 180,000 hours at $9.25 per hour. Verde has the following labor standard: 0.5 hour at $10.Required:1. Compute the labor rate variance.2. Compute the labor efficiency variance.
At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products:Direct materials (5 lbs. @ $4.00) $20.00Direct labor (2 hrs. @ $11.25) 22.50Standard prime cost per unit $42.50The actual results for the year are as follows:a. Units produced:
Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month ago, she had given him a salary increase and a bonus for his performance. She had been especially pleased with his ability to meet or beat the price standards. But now, she found out that it was
Camisa Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been
Refer to the data provided in Exercise 10-35.Required:1. Prepare a journal entry for the purchase of raw materials.2. Prepare a journal entry for the issuance of raw materials.3. Prepare a journal entry for the addition of labor toWork in Process.4. Prepare a journal entry for the closing of
Esteban Products produces instructional aids. Among the company’s products are white boards, which use colored markers instead of chalk. They are particularly popular for conference rooms in educational institutions and executive offices of large corporations. The standard cost of materials for
Escuchar Products, a producer of DVD players, has established a labor standard for its product—direct labor: 2 hrs at $9.65 per hour. During January, Escuchar produced 12,800 boards. The actual direct labor used was 25,040 hours at a total cost of $245,392.Required:1. Compute the labor rate and
Cabanarama Inc. designs andmanufactures easy-to-set-up beach cabanas. The cabanas come in a kit that includes canvas, lacing, and aluminum support poles. Families can easily transport the cabanas to the beach, set them up, and have a protected place to change clothing, store picnic hampers, and so
Guanamo Waste Disposal Company has a long-term contract with several large cities to collect garbage and trash from residential customers. To facilitate the collection, Guanamo places a large plastic container with each household. Because of wear and tear, growth, and other factors, Guanamo places
Tom Belford and Tony Sorrentino own a small business devoted to kitchen and bath granite installations. Recently, building contractors have insisted on up-front bid prices for a house rather than the cost-plus system that Tom and Tony were used to. They worry because natural flaws in the granite
Mantenga Company provides routine maintenance services for heavy moving and transportation vehicles. Although the vehicles vary, the maintenance services provided follow a fairly standard pattern. Recently, a potential customer has approached the company, requesting a new maintenance service for a
The maternity wing of the city hospital has two types of patients: normal and cesarean. The standard quantities of labor and materials per delivery for 2009 are:The standard price paid per pound of direct materials is $10. The standard rate for labor is $16. Overhead is applied on the basis of
Goodsmell Company produces a well-known cologne. The standard manufacturing cost of the cologne is described by the following standard cost sheet:Direct materials:Liquids (4.2 oz. @ $0.25) $1.05Bottles (1 @ $0.05) 0.05Direct labor (0.2 hr. @ $12.50) 2.50Variable overhead (0.2 hr. @
The management of Golding Company has determined that the cost to investigate a variance produced by its standard cost system ranges from $2,000 to $3,000. If a problem is discovered, the average benefit from taking corrective action usually outweighs the cost of investigation. Past experience from
Ogundipe Company manufactures a plastic toy cell phone. The following standards have been established for the toy€™s materials and labor inputs:During the first week of July, the company had the following results:Units produced 40,000Actual labor costs $42,000Actual labor hours
Whitecotton Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The following standards for producing one case of bottles have been established:Direct materials (5 lbs @ $0.80) $ 4Direct labor (1.5 hours @ $16.00) 24Standard prime cost $28During December, 52,000
The Lubbock plant of Morril’s Small Motor Division produces a major subassembly for a 6.0 horsepower motor for lawn mowers. The plant uses a standard costing system for production costing and control. The standard cost sheet for the subassembly follows:Direct materials (6.0 lbs. @ $5.00)
Paul Golding and his wife, Nancy, established Crunchy Chips in 1938. (Nancy sold her piano to help raise capital to start the business.) Paul assumed responsibility for buying potatoes and selling chips to local grocers; Nancy assumed responsibility for production. Since Nancy was already known for
Pat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price, $0.90, compared favorably with the standard price of $1.10. Given the quantity that would be purchased,
Cost System Choices, Budgeting, and Variance Analyses for Sacred Heart HospitalThe purpose of this integrated exercise is to demonstrate how a change in the cost system€™s allocation base can result in significantly different reported costs for control purposes (e.g., the cost of various
Scarlett Company provided the following information:Current assets:Cash ..................... $1,100,000Accounts receivable ............ 2,700,000Inventories .............. 1,600,000Total current assets ........... $5,400,000Current liabilities ........... $2,000,000Required:Round answers to one
Cameron Company has current assets equal to $250,000. Of these, $135,000 is cash, $55,000 is accounts receivable, and the remainder is inventories. Current liabilities total $200,000.Required:Round answers to two decimal places.1. Compute the current ratio for Cameron Company.2. Compute the quick
Alejandra Company had net sales of $850,000. Alejandra had the following balances:Required:Round answers to one decimal place.1. Calculate the average accounts receivable.2. Calculate the accounts receivable turnover ratio.3. Calculate the accounts receivable indays.
M. Kunis Company had net sales of $6,500,300. Kunis had the following balances:Required:Round answers to two decimal places.1. Calculate the average accounts receivable.2. Calculate the accounts receivable turnover ratio.3. Calculate the accounts receivable indays.
Emma Louise Company had net sales of $2,225,500,000 and cost of goods sold of $1,557,850,000. Emma had the following balances:Required:Round answers to two decimal places.1. Calculate the average inventory.2. Calculate the inventory turnover ratio.3. Calculate the inventory turnover indays.
Hutson Doubleday Company had sales of $3,948,340 and a gross margin of $1,859,260. Hutson had beginning inventory of $53,420 and ending inventory of $62,640.Required:Round answers to one decimal place.1. Calculate the average inventory.2. Calculate the inventory turnover ratio.3. Calculate the
Groomer Company provided the following income statement for last year:Sales ...................$1,400,000Cost of goods sold .................550,000Gross margin ................$ 850,000Operating expenses ...............350,000Operating income ...............$ 500,000Interest expense
Marie Companys balance sheet shows total liabilities of $678,000, total equity of $226,000, and total assets of $904,000.Required:Round answers to two decimal places.1. Calculate the debt ratio for Marie Company.2. Calculate the debt-to-equity ratio for Marie Company.
Hoosier Buddy Marina provided the following income statement for last year:Sales .....................$11,300,000Cost of goods sold ................3,000,000Gross margin ..................$ 8,300,000Operating expenses ..................3,800,000Operating income ..................$ 4,500,000Interest
Refer to the information regarding Hoosier Buddy as shown in Exercise 16-36.Required:Calculate the return on sales (round the answer to two decimal places).Exercise 16-36Sales $11,300,000Cost of goods sold 3,000,000Gross margin $ 8,300,000Operating expenses 3,800,000Operating income $
Refer to the information regarding Hoosier Buddy as shown in Exercise 16-36. Also, assume that Hoosier’s total assets at the beginning of last year equaled $17,350,000 and that the tax rate applicable to Hoosier is 40 percent.Required:Round answers to two decimal places.1. Calculate the average
Haidary Inc. showed the following balances for last year:Haidary's net income for last year was $3,182,000.Required:1. Calculate the average common stockholders' equity.2. Calculate the return on stockholders'equity.
Refer to the Haidary Inc. account balances for last year as shown in Exercise 16-39. Also, assume that the market price per share for Haidary Inc. is $51.50.Required:1. Compute the dollar amount of preferred dividends.2. Compute the number of common shares.3. Compute earnings per share. (Round to
Refer to the Haidary Inc. account balances for last year as shown in Exercise 16-39. Also, assume that the dividends paid to common stockholders for last year were $2,600,000 and that the market price per share of common stock is $51.50.Required:1. Compute the dividends per share.2. Compute the
The following selected information is taken from the financial statements of Riflen Company for its most recent year of operations:Beginning balances:Inventory ................. $200,000Accounts receivable .............. 300,000Ending balances:Inventory ................. $250,000Accounts
Timmins Company has just completed its third year of operations. The income statement is as follows:Sales ..................... $ 2,460,000Less: Cost of goods sold .............. (1,410,000)Gross profit .................... $ 1,050,000Less: Selling and administrative expenses ........
The following information has been gathered for Leatroy Manufacturing:Net income ..................$5,000,000Interest expense .................$400,000Average total assets ...............$60,000,000Preferred dividends ..................$400,000Common dividends ...............$1,200,000Average
Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the company's financial statements for the two most recent years.Required:1. Compute the
Refer to the Kepler Company information as shown in Problem 16-45. Round all percentages to one decimal place.Required:1. Express each item in the asset section of the balance sheet as a percentage of total assets for each year.2. Express each item in the liabilities and equity section as a
Refer to the Kepler Company information as shown in Problem 16-45.Required:1. Compute the following ratios for each year:a. Current ratiob. Quick ratioc. Receivables turnover (in days)d. Inventory turnover (in days)2. Has the liquidity of Kepler improved over the past year? Explain why industrial
Refer to the Kepler Company information as shown in Problem 16-45.Required:1. Compute the following for each year:a. The times-interest-earned ratiob. The debt ratio2. Does Kepler have too much debt? What other information would help in answering this question?Problem 16-45
Refer to the Kepler Company information as shown in Problem 16-45. Also, assume that for last year and for the current year, the market price per share of common stock is $2.98. In addition, for last year, assets and equity were the same at the beginning and end of the year.Required:1. Compute the
Albion Inc. provided the following information for its most recent year of operation. The tax rate is 40 percent.Sales ..................... $100,000Cost of goods sold ................. $45,000Net income .................... $10,500Interest expense ..................... $350Assets—beginning
Based on customer feedback, Ted Pendleton, manager of a company that produces photo supplies, decided to grant more liberal credit terms. Ted chose to allow customers to have 60 days before full payment of the account was required. From 2005 through 2007, the company's credit policy for sales on
Suppose that you are considering investing in one of two companies, each in the same industry. The most recent income statements for each company and other relevant information are as follows:Required:1. Compute the following for each company:a. Earnings per shareb. Dividend yield ratioc. Dividend
Pete Donaldson, president and owner of Donaldson Mining Supplies, was concerned about the firm’s liquidity. He had an easy time selling supplies to the local coal mines but had a difficult time collecting the receivables. He had even tried offering discounts for prompt payment. The outcome
Distinguish between sequential processing and parallel processing.
Describe the differences between process costing and job-order costing.
What are equivalent units? Why are they needed in a process-costing system?
Under the weighted average method, how are prior period costs and output treated? How are they treated under the FIFO method?
Under what conditions will the weighted average and FIFO methods give the same results?
How is the equivalent unit calculation affected when materials are added at the beginning or end of the process rather than uniformly throughout the process?
Explain why transferred-in costs are a special type of raw material for the receiving department.
What are the similarities in and differences between the manufacturing cost flows for job-order firms and process firms?
What journal entry would be made as goods are transferred out from one department to another department? From the final department to the warehouse?
Describe the five steps in accounting for the manufacturing activity of a processing department, and explain how they interrelate.
What is a production report? What purpose does this report serve?
In assigning costs to goods transferred out, how do the weighted average and FIFO methods differ?
Describe the effect of automation on the process accounting system.
How does the adoption of a JIT approach to manufacturing affect process costing?
How would process costing for services differ from process costing for manufactured goods?
1. Process costing works well whenevera. heterogeneous products pass through a series of processes and receive similar doses of materials, labor, and overhead.b. homogeneous products pass through a series of processes and receive similar amounts of materials, labor, and overhead.c. homogeneous
1. During June, Kimbrell Manufacturing completed and transferred out 100,000 units. In EWIP, there were 25,000 units, 40 percent complete. Using the weighted average method, the equivalent units are a. 100,000 units.b. 125,000 units.c. 105,000 units.d. 110,000 units.e. 120,000 units.2. For August,
Sabor Company produces 18-ounce boxes of an oat cereal. Sabor uses three departments:Mixing, Cooking, and Packaging. During the month of August, Sabor produced 150,000 boxes with the following costs:Required:1. Calculate the costs transferred out of each department.2. Prepare journal entries that
Thomas Manufacturing produces cylinders used in internal combustion engines. During June, Thomas’ welding department had the following data:Units in BWIP —Units completed 20,000Units in EWIP (40 percent complete) 3,000Required:Calculate June’s output for the welding
During the month of April, the molding department of Patterson Foundry completed and transferred out 28,000 units. At the end of April, there were 10,000 units in process, 60 percent complete. Paterson incurred manufacturing costs totaling $408,000.Required:1. Calculate the unit cost.2. Calculate
Buckner Enterprises produces premier strawberry jam. Output is measured in pints. Bucker uses the weighted average method. During January, the company had the following production data:Units in process, January 1, 60 percent complete 12,000 pintsUnits completed and transferred out 80,000 pintsUnits
Lawson, Inc. just finished its second month of operations. Lawson mass produces integrated circuits. The following production information is provided for the month of November:Units in process, November 1, 80 percent complete 75,000 Units completed and transferred out 450,000Units in process,
Kinnamon Inc. manufactures bicycle frames in two departments: Cutting and Welding. Kinnamon uses the weighted average method. Manufacturing costs are added uniformly throughout the process. The following are cost and production data for the cutting department for October:Production:Units in
Jackson Inc. had the following production and cost information for its fabrication department during the month of March (materials are added at the beginning of the fabrication process):Production:Units in process, March 1, 50 percent complete with respect to conversion 5,000Units completed
Energetics Inc. produces an energy drink. The product is sold by the gallon. The company has two departments: Mixing and Bottling. For July, the bottling department had 40,000 gallons in beginning inventory (with transferred-in costs of $142,000) and completed 175,000 gallons during the month.
Bebida Inc. produces soft drinks. Mixing is the first department and its output is measured in gallons. Bebida uses the FIFO method. All manufacturing costs are added uniformly. For August, the mixing department provided the following information:Production:Units in process, August 1, 80 percent
Refer to the data in Cornerstone Exercise 6-29.Production:Units in process, August 1, 80 percent complete 20,000 gallonsUnits completed and transferred out 138,000 gallonsUnits in process, August 31, 75 percent complete 16,000 gallonsCosts:Work in process, August 1 $ 19,200Costs added during August
Gardner Company produces a common machine component for industrial equipment. The component is produced in three departments: molding, grinding, and finishing. The following data are available for the month of September:During September, 3,000 components were completed. There is no beginning or
In October, Gardner Company had the following cost flows:Required:Prepare the journal entries to transfer costs from (a) Molding to Grinding, (b) Grinding to Finishing, and (c) Finishing to FinishedGoods.
The mixing department had the following data for the month of December:Units in BWIP —Units completed 5,850Units in EWIP (30 percent complete) 500Total manufacturing costs $3,900Required:1. What is the output in equivalent units for December?2. What is the unit manufacturing cost for December?3.
Lawson Company produces a product where all manufacturing inputs are applied uniformly. The company produced the following physical flow schedule for March:Units to account for:Units in BWIP (40 percent complete) 15,000Units started 35,000Total units to account for 50,000Units accounted
Milton Inc. manufactures products that pass through two or more processes. During April, equivalent units were computed using the weighted average method:Units completed 18,000Units in EWIP × Fraction complete (12,000 × 60 percent) 7,200Equivalent units of output25,200April’s costs to account
Walser Inc. produces a product that passes through two processes. During February, equivalent units were calculated using the weighted average method:Units completed 150,000Add: Units in EWIP × Fraction complete (50,000 × 40 percent) 20,000Equivalent units of output (weighted average)
The following information was obtained for the first department of LPZ Company for April:a. BWIP had 30,500 units, 30 percent complete with respect to manufacturing costs.b. EWIP had 8,400 units, 25 percent complete with respect to manufacturing costs.c. LPZ started 33,000 units in
Nelrok Company manufactures fertilizer. Department 1 mixes the chemicals required for the fertilizer. The following data are for the year:BWIP (40 percent complete) 25,000Units started 142,500Units in EWIP (60 percent complete) 35,000Required:Prepare a physical flow schedule.
Mino Inc. manufactures chocolate syrup in three departments: Cooking, Mixing, and Bottling. Mino uses the weighted average method. The following are cost and production data for the cooking department for April (assume that units are measured in gallons):Production:Units in process, April 1, 60
Terry Linens Inc. manufactures bed and bath linens. The bath linens department sews terry cloth into towels of various sizes. Terry uses the weighted average method. All materials are added at the beginning of the process. The following data are for the bath linens department for
Loran Inc. had the following equivalent units schedule and cost for its fabrication department during the month of September:Required:1. Calculate the unit cost for materials, for conversion, and in total for the fabrication department for September.2. Calculate the cost of units transferred out
Drysdale Dairy produces a variety of dairy products. In Department 12, cream (transferred in from Department 6) and other materials (sugar and flavorings) are mixed and churned to make ice cream. The following data are for Department 12 for August:Production:Units in process, August 1, 25 percent
Golding's finishing department had the following data for the month of July:Required:1. Calculate unit costs for the following categories: transferred-in, materials, and conversion.2. Calculate total unitcost.
Lawson Company produces a product where all manufacturing inputs are applied uniformly. The company produced the following physical flow schedule for March:Units to account for:Units in BWIP (40 percent complete)
Loren Inc. manufactures products that pass through two or more processes. During April, equivalent units were computed using the FIFO method:Units started and completed 4,600Units in BWIP × Fraction to complete (60 percent) 840Units in EWIP × Fraction complete (4,000 × 60 percent)

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