Cost Accounting Foundations and Evolutions 8th Edition Michael R. Kinney, Cecily A. Raiborn - Solutions

Gulf Coast Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Gulf Coast Chemical is able to sell as much as it can produce of all three. The reaction operation is a bottleneck in the process and is running at 100% of
Which of the following graphs illustrates how total variable costs behave with changes in total units produced?
How would each of the following costs be classified if units produced is the activity base?a. Straight-line depreciation of plant and equipmentb. Salary of factory supervisor ($70,000 per year)c. Property insurance premiums of $4,000 per month on plant and equipment
Which of the following industries would typically use job order costing, and which would typically use process costing?Apparel manufacturing Automobile repairBusiness consulting Plastic manufacturingCD manufacture Steel
What is just-in-time processing?
What are transferred-out materials?
The price-earnings ratio for the common stock of Cotter Company was 10 at December 31, the end of the current fiscal year. What does the ratio indicate about the selling price of the common stock in relation to current earnings?
Select a bond from listings that appear daily in The Wall Street Journal, and summarize the information related to the bond you select. Include the following information in your summary:1. Contract rate of interest2. Year when the bond matures3. Current yield (effective rate of interest)4. Closing
Using the bond from Practice Exercise 15-6B, journalize the first interest payment and the amortization of the related bond premium.Data From Exercise 15-6B:A company issues a $1,000,000, 10%, ten-year bond that pays semiannual interest of $50,000 ($1,000,000 × 10% × 1⁄2), receiving cash of
Using the bond from Practice Exercise 15-6A, journalize the first interest payment and the amortization of the related bond premium.Data From Exercise 15-6A:A company issues a $2,000,000, 12%, five-year bond that pays semiannual interest of $120,000 ($2,000,000 × 12% × 1⁄2), receiving cash of
Using the bond from Practice Exercise 15-4B, journalize the first interest payment and the amortization of the related bond discount.Data From Exercise 15-4B:On the first day of the fiscal year, a company issues a $1,500,000, 8%, five-year bond that pays semiannual interest of $60,000 ($1,500,000
Using the bond from Practice Exercise 15-4A, journalize the first interest payment and the amortization of the related bond discount.Data From Exercise 15-4A:On the first day of the fiscal year, a company issues a $500,0000, 10%, 10-year bond that pays semiannual interest of $25,000 ($500,000 ×
The treasury stock in Eye Opener 12 is resold for $158,000. (a) What is the effect on the corporation’s revenue of the period? (b) What is the effect on stockholders’ equity?
You are planning to acquire a delivery truck for use in your business for three years. In groups of three or four, explore a local dealer’s purchase and leasing options for the truck. Summarize the costs of purchasing versus leasing, and list other factors that might help you decide whether to
A company revised the estimated useful lives of its fixed assets, which resulted in an increase in the remaining lives of several assets. Can the company include, as income of the current period, the cumulative effect of the changes, which reduces the depreciation expense of past periods? Discuss.
Emporium Company purchased a machine that has a manufacturer’s suggested life of 20 years. The company plans to use the machine on a special project that will last 13 years. At the completion of the project, the machine will be sold. Over how many years should the machine be depreciated?
Use the data in Exercises 9-27 and 9-28 to analyze the accounts receivable turnover ratios of H.J. Heinz Company and The Limited, Inc.a. Compute the average accounts receivable turnover ratio for The Limited, Inc., and H.J.Heinz Company for the years shown in Exercises 9-27 and 9-28.b. Does The
Becker Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2008:a. Journalize the write-offs for 2008 under the direct write-off method.b. Journalize the write-offs for 2008 under the allowance method. Also, journalize the
Vandalay Industries has a past history of uncollectible accounts, as shown below. Estimate the allowance for doubtful accounts, based on the aging-of-receivables schedule you completed in Exercise 9-8.Data From Exercise 9-8:The accounts receivable clerk for Vandalay Industries prepared the
Boeing is one of the world's major aerospace firms, with operations involving commercial aircraft, military aircraft, missiles, satellite systems, and information and battle management systems. As of December 31, 2005, Boeing had $2,620 million of receivables involving U.S. government contracts and
The procedures used for over-the-counter receipts are as follows. At the close of each day’s business, the sales clerks count the cash in their respective cash drawers, after which they determine the amount recorded by the cash register and prepare the memorandum cash form, noting any
The following items may appear on a bank statement:1. Bank correction of an error from posting another customer’s check to your account2. Loan proceeds3. NSF check4. EFT depositUsing the format shown below, indicate whether each item would appear as a debit or credit memorandum on the bank
The beginning inventory at Continental Office Supplies and data on purchases and sales for a three-month period are as follows:Instructions1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the
On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 7.Exhibit 7:
The following data were extracted from the accounting records of Meniscus Company for the year ended June 30, 2008:a. Prepare the cost of merchandise sold section of the income statement for the year ended June 30, 2008, using the periodic inventory system.b. Determine the gross profit to be
What is the nature of (a) a credit memorandum issued by the seller of merchandise, (b) a debit memorandum issued by the buyer of merchandise?
Differentiate between the multiple-step and the single-step forms of the income statement.
The two leading software application providers for supply chain management (SCM) and customer relationship management (CRM) software are Manugistics and Salesforce.com, respectively. In groups of two or three, go to the Web site for each company (linked to the text’s Web site at
Most computerized accounting systems use electronic forms to record transaction information, such as the invoice form illustrated at the top of Exhibit 8.a. Identify the key input fields (spaces) in an electronic invoice form.b. What accounts are posted from an electronic invoice form?c. Why
Most computerized accounting systems use electronic forms to record transaction information, such as the invoice form illustrated at the top of Exhibit 8.a. Identify the key input fields (spaces) in an electronic invoice form.b. What accounts are posted from an electronic invoice form?c. Why
What is the role of a database in a computerized accounting system?
Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2008. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated on pages 161–174. During May, Kelly Consulting entered into the following transactions:May 3. Received cash from
The steps performed in completing an end-of-period spreadsheet (work sheet) are listed below in random order.a. Extend the adjusted trial balance amounts to the Income Statement columns and the Balance Sheet columns.b. Enter the adjusting entries into the spreadsheet (work sheet), based upon the
On December 30, 2008, you buy a Ford Expedition. It comes with a three-year, 36,000-mile warranty. On March 5, 2009, you return the Expedition to the dealership for some basic repairs covered under the warranty. The cost of the repairs to the dealership is $1,560. In what year, 2008 or 2009, should
On October 1 of the current year, a business paid the October rent on the building that it occupies. (a) Do the rights acquired at October 1 represent an asset or an expense? (b) What is the justification for debiting Rent Expense at the time of payment?
Employees performed services in 2007, but the wages were not paid until 2008. During which year would the wages expense be reported on the income statement under (a) the cash basis? (b) the accrual basis?
Fees for services provided are billed to a customer during 2007. The customer remits the amount owed in 2008. During which year would the revenues be reported on the income statement under (a) the cash basis? (b) the accrual basis?
In 2007, Cerberus Capital Management hired the former boss of Home Depot, Bob Nardelli, to run Chrysler. Earlier in the year Cerberus Capital Management had purchased a majority stake in Chrysler from DaimlerChrysler. Nardelli, while CEO of Home Depot, implemented the six sigma philosophy. The
Firms’ increasing awareness of their impacts on the environment has led to the establishment of companies that specialize in all aspects of managing the environmental effects of operations. Search the Internet using the term “environmental cost management.” Review the Web pages of the vendors
Firms’ increasing awareness of their impacts on the environment has led to the establishment of companies that specialize in all aspects of managing the environmental effects of operations. Search the Internet using the term “environmental cost management.” Review the Web pages of the vendors
In their annual reports, companies provide brief descriptions of their most important contracts, including strategic alliances. Select a large publicly traded company and obtain a copy of its most recent annual report (in hard copy, on the company’s Web site, or on the EDGAR portion of the
The issue of whether diversity is positive or negative for an organization has been hotly debated for many years. Some people argue that, because of its homogeneous workforce, Japan has an inherent advantage in competing with the United States. The benefits of a homogeneous workforce result from a
Process mapping and value analysis are tools often used in business process reengineering. As discussed in Chapter 4, a process map is a flowchart of the set of activities that compose a process. Value (or activity) analysis examines each of the activities identified in the flowchart and determines
1. Allowing executives to collect large bonuses and other perquisites while firing ordinary workers for the sake of remaining cost-competitive2. Firing highly paid long-term employees while hiring new, lower-paid employees to perform identical or similar work3. Developing data repositories in ERP
Research the topic of value engineering on the Internet, and write a brief report on a company or an organization’s experiences using this technique.
Randomly select annual reports for 10 publicly traded manufacturing companies. On the balance sheet, or in the related footnotes, for each firm, find the amounts for the three inventory accounts: raw material, work in process, and finished goods. Then, calculate the following for each firm, and the
Randomly select annual reports for 10 publicly traded manufacturing companies. On the balance sheet, or in the related footnotes, for each firm, find the amounts for the three inventory accounts: raw material, work in process, and finished goods. Then, calculate the following for each firm, and the
1. Producing inventory that is not needed relative to current sales demand to increase reported operating profits2. Avoiding the adoption of innovative production and inventory management methods because of short-run negative effects on profits3. Blaming suppliers for inventory problems that are,
Go to the EFQM Web site and find the list of most-current award winners. Choose one of the companies listed and prepare a synopsis of the company. Gather additional information about the company and prepare a brief presentation on why you believe the company received an excellence award.
Choose an organization with which you have a solid familiarity (this may even be your fraternity, sorority, or college). You have been placed in charge of initiating a quality culture in that organization. Access at least four Web sites that refer to this subject; these sites may contain general
Assume that you are in the market for a new car. Since your promotion at work, price is no object. You are considering purchasing a Porsche, but your spouse has suggested the purchase of a Kia.a. What do you perceive to be Porsche’s strategy relative to value and grade of its automobiles?b. How
Assume that you are in the market for a new car. Since your promotion at work, price is no object. You are considering purchasing a Porsche, but your spouse has suggested the purchase of a Kia.a. What do you perceive to be Porsche’s strategy relative to value and grade of its automobiles?b. How
Assume that you are in the market for a new car. Since your promotion at work, price is no object. You are considering purchasing a Porsche, but your spouse has suggested the purchase of a Kia.a. What do you perceive to be Porsche’s strategy relative to value and grade of its automobiles?b. How
Many companies’ products have had flaws; some of these companies have been more forthcoming than others in publicly acknowledging such flaws.a. Do you think admitting that a product is defective hurts or helps a company’s reputation? Explain the rationale for your answer.b. Discuss the costs
Many companies’ products have had flaws; some of these companies have been more forthcoming than others in publicly acknowledging such flaws.a. Do you think admitting that a product is defective hurts or helps a company’s reputation? Explain the rationale for your answer.b. Discuss the costs
Go to the Web site for the Malcolm Baldrige National Quality Award and find the answers to the following questions:a. When and why were the health and education categories established?b. How do the criteria for the health, education, and manufacturing categories differ? Why are such differences
In 2002, a green engineering case study about automobile emissions and saving energy was performed. The study generated designs for both gasoline-and diesel-powered automobiles with the following characteristics: a mid-size sedan that would get 52 miles per gallon when equipped with a gasoline
Locate a well-described product on the Internet. Discuss how that product exemplifies the eight overall quality characteristics. Prepare a balanced scorecard for this product assuming that its manufacturer has a total quality management strategy.
1. Ignoring the actual range of acceptable variation on control charts to accept a higher level of defects than allowed and thus creating a higher possibility of external failure costs2. Using lower-grade raw material and components than specified for production activities to reduce costs while
All organizations seek to be aware of and control costs. In a three- or four-person team, choose one of the following industries and do Web research to identify methods that have been used to control costs:• Internet e-tailers• Automobile manufacturers• Hospitals• Software companies•
1. Including price escalation clauses in sales contracts but refusing to grant sales price decreases in the event of substantial downturns in costs2. Artificially reducing the supply of a product or service to force an increase in price (or maintain an artificially high price) to customers3.
Several capital budgeting techniques depend on discounted cash flow concepts, which are applied in business in a variety of settings. Select a business that relies on discounted cash flow analysis, such as a bond investment company, and prepare a brief report on how the firm applies discounting
1. Using only financial criteria to evaluate projects that enhance employee safety or reduce detrimental environmental impact2. Changing assumptions or estimates for projects solely so that they will meet required criteria for investment approval3. Using an inappropriately low discount rate
Many domestic companies have chosen to “offshore” their production operations to countries with lower wage rates. Some of the countries being used have been accused of allowing sweatshops, child labor, and polluting conditions that would not be allowed domestically. Research the benefits of,
As the cost of health care continues to increase, hospital and clinic managers need to be able to evaluate the performance of their organizations. Numerous articles have been written on performance measurements for health-care organizations. Obtain some of these articles and prepare a report on
You have been elected president of your university’s newly chartered accounting honor society. The society is a chapter of a national organization that has the following mission: “To promote the profession of accountancy as a career and to imbue members with high ethical standards.”a.
Research suggests that as people work over a certain number of hours, productivity goes down, stress goes up, and results are not as good. You have taken this observation to heart and want to establish some performance measures in your accounting firm to help indicate that there is a reasonable
Recall the various ways in which your academic performance has been measured and rewarded. Have the ways that your class grades have been determined always provided the best indications of performance? Provide at least two positive and two negative examples. What would you have done to change the
Choose a company that has either gone out of business or is currently in poor financial condition. Use the Web to research that company’s history. Prepare a report on your findings, concentrating on indicators that might have provided a perspective of failure. Describe these indicators either as
1. Creating an unbalanced performance measurement system that places excessive emphasis on short-term performance2. Putting excessive emphasis on accounting earnings such that managers experience extreme pressure to manipulate financial reports3. Reporting fraudulent or manipulated accounting
Search the Internet to identify three highly decentralized companies. Based on the information you find on each, either determine directly or infer the types of responsibility centers used by these companies. Also, determine or speculate about whether the companies use transfer prices or allocation
Go to http://www.deloitte.com/dtt/article/0,1002,cid%253D56155,00.html to find Deloitte’s 2007 Strategy Matrix for Global Transfer Pricing. Choose eight characteristics of the transfer pricing regimes and compare the requirements for those characteristics of four countries with the same
Go to the Ernst & Young Web site to find information on the 2009 Transfer Pricing Global Reference Guide. Choose five countries (other than the United States) and compare and contrast the transfer pricing survey results for those countries, including APAs.
1. Having managers engage in suboptimization acts that benefit themselves to the detriment of the overall firm2. Creating responsibility reports that “bury” important details needed to accurately evaluate managerial performance in summary data3. Allocating support department costs using an
The price of a product or service is a function of the total costs of producing that product or service. In turn, the total cost of producing a product or service is the aggregate of costs incurred throughout the supply chain.Higher education is one industry that has been characterized by rapidly
Write a paper describing the organizational culture at a job you have held or the organizational culture at the college or university you attend. Be sure to include a discussion of the value system and how it was communicated to new employees or new students.
Use Internet resources to find a company (regardless of where it is domiciled) whose managers have chosen to (a) avoid competition through differentiation, (b) avoid competition through cost leadership, and (c) confront competitors head on. Analyze each of these strategies and discuss your
Use Internet resources to gather information on any two fi rms in the same industry. Th e following examples are possible pairs to compare.• Continental Airlines and Southwest Airlines• ChevronTexaco and Shell• Nordstrom’s and Wal-Mart• Oracle and Microsoft• Hewlett-Packard and Dell
1. Using the financial accounting system rather than an integrated cost management system to support management functions of planning, controlling, decision making, and performance evaluation2. Failing to balance long-run and short-run concerns when designing the cost management system and the
Accounting for certain breast cancer walks has been criticized by one author as providing misleading information. Read the article entitled "The Avon and Komen Breast Cancer Walks: Case Studies in Questionable Special Events Reporting" at
Production of ethanol, made from corn, is on the rise. Some states are even requiring that ethanol be blended in small amounts with gasoline to reduce pollution. The problem is that there is not enough corn being produced: the consumption of corn either as a food product (in all of its many forms)
Choose a not-for-profit organization with which you are familiar. Go to that organization’s Web site and find a recent annual report or IRS filing.a. How much did the organization spend on joint costs during the period?b. To what activities were the joint costs allocated?c. What bases might the
Use the Internet to find five examples of businesses that have joint processes.a. For each business, describe the various outputs from the processes; using logic, determine whether each output would be classified as a joint product, a by-product, scrap, or waste.b. Recommend the most appropriate
1. Making product decisions based on the sum of allocated joint cost and separate processing costs2. Classifying a joint product as a by-product or scrap so that no joint cost will be allocated to that product and, thereby, increase that product's appearance of profitability3. Classifying a salable
1. Ignoring important qualitative factors in making relevant decisions, such as the impact on domestic employees in offshoring decisions2. Choosing to move production offshore to a developing country to exploit lax environmental and labor regulations3. Making decisions based on how they will impact
A significant trend in business today is the increasing use of outsourcing. Go to the Internet and search Web sites with the objective of gaining an understanding of the vast array of outsourcing services that are available. Prepare a presentation in which you discuss the extensive use of
1. Ignoring the relevant range when setting assumptions about cost behavior to disregard the implications of cost changes on the calculation of BEP or CVP analysis2. Treating some or all fixed costs as per-unit costs (i.e., using absorption costing) in calculating BEP or performing CVP analysis3.
Find the Web page for a charitable organization that operates internationally as well as domestically.a. Prepare a list of activities in which this organization is currently involved.b. What would be the greatest challenges in budgeting for such an organization?c. Do you think not-for-profit should
1. Using a single budgeting system globally that may conflict with national cultures2. Knowingly introducing, or allowing employees to introduce, budget slack into the process that will misallocate resources or generate inequitable performance rewards3. Treating short-term conditions as long-term
Hotel rooms have become more extravagant over the past decade and the time needed to clean a room has increased. According to a study entitled "Creating Luxury, Enduring Pain" by Unite Here (the primary union representing hotel workers in the United States), housekeepers have the most dangerous
Contact a local company that uses a standard cost system. Make an appointment with a manager at that company to interview her or him on the following issues:• the characteristics that should be present in a standard cost system to encourage positive employee motivation• how a standard cost
As a three-person team, choose an activity that is commonly performed every day, such as taking a shower/bath, preparing a meal, or doing homework. Have each team member time him- or herself performing that activity for two days and then develop a standard time for the team. Now have the team
1. Setting labor time standards extremely high so that variances on which performance is evaluated are consistently favorable2. Evaluating each manager on the variances generated in his or her production area without regard for potential implications on other production areas3. Estimating
In a team of three or four people, choose a company whose mass production process you would like to study. Use the library, the Internet, and (if possible) personal resources to gather information. Prepare a visual representation of that production process. In this illustration, indicate the
1. Estimating too high (or too low) a completion percentage for ending WIP Inventory to decrease (or increase) the cost per EUP and thereby distorting ending WIP and ending FG inventories on the balance sheet and Cost of Goods Sold on the income statement2. Not updating standard costs to reflect
The 6-acre facility of Richmond Yachts has the capacity to simultaneously build four composite yachts from 120 feet to 155 feet in length. Access the company’s Web site (http://www.richmondyachts.com) and locate one of the yachts that is currently available for sale (“Our Yachts”). What
1. Inflating costs of cost-plus contracts so that the price of the contract increases as does the profit for the contract2. Assigning costs from a fixed-fee contract to a cost-plus contract so that both contracts become more profitable3. Substituting materials of a lower quality than specified in
Your boss wants to know whether quality inspections at your company add value. Use the “why” methodology to help your boss make this determination if you work at (a) a clothing manufacturer that sells to a discount chain and (b) a pharmaceutical manufacturer.
Choose an activity related to this class, such as attending lectures or doing homework. Write down the answers to the question “why” five times to determine whether your activity is value-added or non-value-added.
1. Ignoring non-value-added activities and times in the development of a value chart to improve cycle efficiency as a performance metric2. Using an unsubstantiated designation of “non-value-added” for specific activities merely to justify the elimination of the jobs of the individuals

Cost Accounting Foundations and Evolutions 8th Edition Michael R. Kinney, Cecily A. Raiborn - Solutions

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