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cornerstones cost management
Cost Management Accounting And Control 3rd Edition Don R. Hansen, Maryanne M. Mowen - Solutions
Refer to the data in 4-2.Required:1. At the end of the year, how much overhead has been applied to production?2. Is overhead over- or underapplied and by how much?3. Assuming that any overhead variance is closed to cost of goods sold, will the cost of goods sold increase or decrease?
Randi Garner, owner of Garner Office Designs of 4-2, noticed that many of her clients had similar computers, and the desks for this part of the installation were virtually the same from one installation to another. She decided to start a separate company. Garner Office Furniture, to make and sell
Shevaneh Company uses a normal job-order cost system. Budgeted overhead for the com¬ing year is $950,000. Expected actual activity is 250,000 direct labor hours. During the year, Shevaneh worked a total of 243,000 direct labor hours and actual overhead totaled$920,000.Required:1. Compute the
Zander, Inc. costs products using a normal costing system. The following data are availablefor last year;Overhead is applied on the basis of direct labor hours.Required:1. What is the predetermined overhead rate?2. What is the applied overhead for last year?3. Was overhead over- or underapplied,
Using the information from 4-6, suppose Zander, Inc. applied overhead to production on the basis of machine hours instead of direct labor hours.Required:1. What is the predetermined overhead rate?2. What is the applied overhead for last year?3. Is overhead over- or underapplied, and by how much?4.
Karol Company and Jason Company both use predetermined overhead rates to apply fac¬tory overhead to production. Karol's is based on machine hours and Jason's is based on ma¬terials cost. Budgeted production and cost data for Karol and Jason are as follows:At the end of the year, Karol Company had
Kaycee, Inc., manufactures brown paper grocery bags. During the month of May, the fol¬lowing occurred;a. Materials were purchased on account for $23,175.b. Materials totaling $19,000 were requisitioned for use in production.c. Direct labor payroll for the month was $17,850 with an average wage of
Cimino Company uses a predetermined overhead rate to assign overhead to jobs. Because Cimino's production is machine-dominated, overhead is applied on the basis of machine hours. The expected overhead for the year was $3.6 million, and the practical level of ac¬tivity is 200,000 machine
Porter Company uses job-order costing. During January, the following data were reported:a. Materials purchased: direct materials, $82,000; indirect materials, $10,500.b. Materials issued: direct materials, $72,500; indirect materials, $7,000.c. Labor cost incurred: direct labor, $52,000; indirect
Hamblin Products, Inc. provided the following data for the year:The company uses a predetermined overhead rate based on direct labor hours. The rate for the year was $5.20 per direct labor hour.Required:1. Compute the applied overhead for the year. Is the overhead over- or underapplied? By how
Bryan Company uses a normal job-order cost system. Currently, a plantwide overhead rate is used, based on machine hours. Sam Perkins, the plant manager, has heard that depart¬mental overhead rates can offer significantly better cost assignments than can a plantwide rate. Bryan has the following
During October, Tyson Company worked on two jobs. Data relating to these two jobs follow:Overhead is assigned on the basis of direct labor hours at a rate of $3.75. During October, Job 68 was completed and transferred to finished goods. Job 69 was the only unfinished job at the end of the
Golding Company applies overhead based on direct labor cost. During the first quarter, the following activity took place in each of the accounts listed below.Job 32 was the only job in process at the end of the first quarter. A total of 1,000 direct la¬bor hours at $10 per hour were charged to Job
Sanderson Company uses a predetermined overhead rate to apply overhead. Overhead is applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in Department 2. At the beginning of the year, the following estimates are provided:Required:1. Compute the predetermined
On March 1, Mangan Company had the following balances in its inventory accounts:Work in process is made up of three jobs with the following costs:During March, Mangan experienced the transactions listed below:a. Materials purchased on account, $27,000.b. Materials requisitioned: Job 33, $12,500;
During February, the following transactions were completed and reported by Bixby Prod¬ucts, Inc.:a. Raw materials purchased on account, $43,500.b. Materials issued to production to fill job-order requisitions, $35,000; supplies, $12,200.c. Payroll for the month: direct labor, $60,000; indirect
At the beginning of the year. Poison Manufacturing Company had the following balances in its inventory accounts:Poison applies overhead on the basis of 150 percent of direct labor cost. During the year.Poison experienced transactions as described below.L03, L04, LOSa. Direct materials purchased,
Chesbro Inc., manufactures customized pressure washers. The washers pass through two departments: fabrication and painting. Chesbro uses a normal costing system. Estimated overhead and direct labor hours for the year are as follows:Job 416 required $57 of direct materials and $45 direct labor (3
Jurgens Tailoring is a costume company located in Manhattan. Jurgens designs and creates costumes for theatrical presentations. Additionally, Jurgens alters and repairs costumes.Jurgens has three departments: design, machine sewing, and beading. The design department overhead consists of computers
Refer to the data in 4-22. Is Jurgens a manufacturing firm or a service firm? Explain.
Dr. Sherry Bird is employed by Dental Associates. Dental Associates recently installed a computerized job costing system to help monitor the cost of its services. Each patient is treated as a job and assigned a job number when he or she checks in with the receptionist.The receptionist-bookkeeper
Palace Lighting Fixtures Inc. uses a predetermined overhead rate to apply overhead. Over¬head is applied on the basis of direct labor hours in Department 1 and on the basis of machine hours in Department 2. At the beginning of the year, the following estimates are provided:Required:1. Compute the
Jackson's Sporting Goods Store sells a variety of sporting goods and clothing. In a back room, Jackson's has set up heat-transfer equipment to personalize T-shirts for Little League teams. Typically, each team has the name of the individual player put on the back of the Tshirt. Last week, Taffy
Describe the basic characteristics of process costing, including cost flows, journal entries, and the cost of production report.
Describe process costing for settings without work in process inventories.
Define equivalent units, and explain their role in process costing.
Prepare a departmental production report using the FIFO method.
Prepare a departmental production report using the weighted average method.
Prepare a departmental production report with transferred-in goods and changes in output measures.
Describe the basic features of operation costing.
What are the similarities and differences in the manu¬facturing cost flows for job-order firms and process firms?
What are transferred-in costs?
Can process costing be used for a service organization?Explain.
Explain how process costing can be used for JIT man¬ufacturing firms.
What are equivalent units? Why are they needed in a process cost system?
What are the disadvantages of the weighted average method? Advantages?
What is the role of work orders in operation costing?
Explain the similarities and differences between financial accounting and cost management.
Describe the evolution of accounting.
Identify and discuss the current focus of cost management.
Discuss the importance of the accounting system for internal and external reporting.
Explain the need for cross¬functional expertise in today's cost accountant.
Describe the role of cost and management accountants in an organization.
Explain the importance of ethical behavior for managers and accountants.
Identify the three forms of certification available to internal accountants.
What is cost management, and how does it differ from management and cost accounting?
How has expanded global competition affected busi¬nesses' need for accounting information?
PCs significantly increase a manager's capabilities to process and use accounting information. Do you agree? Explain.
What is the role of the controller in an organization?
Describe some of the activities over which he or she has control.
What is ethical behavior? Is it possible to teach ethical behavior in a management accounting course?
In the 1400s Europeans valued the gold, gems, drugs, and spices that came from the Orient.However, these goods were very costly, since they could only be transported to Europe via long overland caravans. Portuguese sailors tried to reach the Orient by sea—around Africa.Christopher Columbus felt
A number of mail-order computer and software companies have set up customer service telephone lines. Some are toll-free, some are not. A customer can wait on hold anywhere from three seconds to twenty minutes.Required:Evaluate all of the costs that these companies might consider when setting up the
Consider the following scenario:MANAGER: "If I can increase my fourth quarter profit by $120,000, my division will show a profit 10 percent above the planned level, and I will receive a $30,000 bonus. However, my controller indicates that such an increase is unlikely. With only one month remaining,
Each of the following scenarios requires the use of accounting information to carry out one or more of the following managerial activities: planning, controlling (including performance evaluation), or decision making. Identify the managerial activity or activities applicable for each scenario, and
Management accountants are actively involved in the process of managing the entity. This process includes making strategic, tactical, and operating decisions while helping to coor¬dinate the efforts of the entire organization. To fulfill these objectives, the management ac¬countant accepts
The job responsibilities of three employees of Barney Manufacturing are described next.Tyranna Davis, cost accounting manager, is responsible for measuring and collecting costs associated with the manufacture of the purple stuffed dinosaur product line. She is also responsible for preparing
Assess and comment on each of the following statements that have appeared in newspaper editorials:1. Business students come from all segments of society. If they have not been taught ethics by their families and by their elementary and secondary schools, there is little effect a business school can
The Alert Company is a closely held investment service group that has been very success¬ful over the past five years, consistently providing most members of the top management group with 50 percent bonuses. In addition, both the chief financial officer and the chief ex¬ecutive officer have
Webson Manufacturing Company produces component parts for the airline industry and has recently undergone a major computersystem conversion. Michael Darwin, the controller, has established a trouble-shooting team to alleviate accounting problems that have occurred since the conversion. Michael has
JLA Electronics is a U.S.-based, high-tech company that manufactures and distributes com¬puter and telecommunications equipment. JLA has developed a handheld, lightweight fax system, Porto-Fax, that will allow the user total freedom in receiving and transmitting in¬formation. Marketing research
The external auditors for Heart Health Procedures'(HHP) are currently performing the an¬nual audit of HHP's financial statements. As part of the audit, the external auditors have prepared a representation letter to be signed by HHP's chief executive officer (CEO) and chief financial officer (CFO).
Using Internet resources, describe the CMA, CPA, and CIA. In describing the certifications, answer the following questions: What are the relative advantages of each certification for the internal accountant? What are the stated purposes for certification? Are these the only certifi¬cations
The Body Shop has been considered an ethical model for business. For example, it does not test products on animals and is known for paying first-world wages in third-world coun¬tries. Yet recently. The Body Shop has been criticized for engaging in unethical practices(e.g., making false advertising
Describe a cost nnanagement information system, its objectives and major subsystems, and indicate how it relates to other operating and information systems.
Explain the cost assignment process.
Define tangible and intangible products, and explain why there are different product cost definitions.
Prepare income statements for manufacturing and service organizations.
Explain the differences between traditional and contemporary cost management systems.
What is a system?
Why should the cost management system be inte¬grated with the operational systems of the value chain?
Explain the difference between direct tracing and dri¬ver tracing.
What is allocation?
What are drivers? Resource drivers? Activity drivers?Give an example of a resource driver and an example of an activity driver.
What is a service?
Explain how services differ from tangible products.
Describe some of the major differences between a functional-based and an activity-based cost manage¬ment system.
When would a’ company choose an activity-based cost system over a functional-based system? What forces are moving more firms to implement activity-based management cost systems?
The following items are associated with a cost accounting information systema. Usage of direct materialsb. Cost Accountingb. Assignment of direct materials cost to each productc. Information Systemc. Direct labor cost incurrenced. Depreciation on production equipmente. Cost accounting personnelf.
Lehman Company produces parts for the automotive industry including: doors, manifolds, and fuel tanks. Recently, Lehman switched from a traditional departmental assembly line system to a manufacturing cell in order to produce fuel tanks for sport utility vehicles. Sup¬pose that the fuel tank
Shumard Company manufactures sundials. The following information was obtained for last yearDuring the year, materials purchases amounted to $199,200, direct labor cost was $170,000, and overhead cost was $133,000. There were 20,000 units produced.Required:1. Calculate the total cost of direct
For each of the following independent situations, calculate the missing values.1. The Indianola plant purchased $143,000 of materials during May. Beginning inventory was $17,500 and direct materials used in production were $130,000. What is ending materials inventory?2. Semmel Company produced
Morey Company manufactures desk lamps. At the beginning of March, the following information was supplied by its accountant:During March, direct labor cost was $17,000, raw materials purchases were $75,000, and the total overhead cost was $216,850. The inventories at the end of March
Wachman Inc. manufactures mugs decorated with the likenesses of famous cartoon char¬ acters. Last year 200,000 mugs were made and 207,000 were sold for $5 each. The actual unit cost for a mug is as follows.The selling expenses consisted of a commission of $0.25 per unit sold and advertising
Ghajar Company, a manufacturing firm, has supplied the following information from its ac¬counting records for last year:Required:1. Prepare a cost of goods manufactured statement.2. Prepare a cost of goods sold statement. Factory insurance Direct labor cost Purchases of raw materials Supplies used
Bill Johnson owns and operates three Frazer Speedo outlets in Wichita, Kansas. Frazer Speedo is an oil and lubrication service outlet—one of many franchise outlets popular throughout the Midwest. The Frazer Speedo outlets also change transmission and power steering fluids. In May, purchases of
The following items are associated with a functional-based cost accounting infonnation system, an activity-based cost accounting information system, or both (that is, some elements are com¬mon to the two systems).a. Usage of direct materialsb. Direct materials cost assigned to products using
The actions listed next are associated with either an activity-based operational control system or a functional-based operational control system.a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. !b. The maintenance department mani^er
lolanni Company produced 2,4(^teakwood screens during the past year. These screens sell for $^350 each. lolanni had 112 screens in finished goods inventory at the beginning of the year. At the end of the year, there were 150 screens in finished goods inventory. lolanni's accounting records provide
Whizbang Company creates, produces, and markets video games. Most of the games in¬volve some sort of brain teaser. Leonard Poison, the owner of Whizbang, is convinced that his employees must have strong analytical and problem-solving skills. Before any employee is hired, he or she must
Kreative Company is a tax services firm. The firm is located in Chicago and employs ten professionals and five staff. The firm does tax work for small businesses and well-to-do in¬dividuals. The following data are provided for the year ended July 31, 2001:Required:1. Prepare a statement of cost of
Lamson Company produces circuit boards that are used by manufacturers of microcom¬puters. For 2001, Lamson reported the following:Lamson produced 50,000 units during 2001 and sold 62,000 units at $12 per unit.Required:1. Prepare a statement of cost of goods manufactured.2. Prepare an
Gateway Construction Company is a family-operated business founded in 1970 by Samuel Gateway. In the beginning, the company consisted of Gateway and three employees laying gas, water, and sewage pipelines as subcontractors. Currently, the company employs twentyfive to thirty people and is directed
Define and describe fixed, variable, and mixed costs.
Explain the use of resources and activities and their relationship to cost behavior.
Separate mixed costs into their fixed and variable components using the highlow method, the scatterplot method, and the method of least squares.
Evaluate the reliability of the cost formula.
Explain how multiple regression can be used to assess cost behavior.
Discuss the use of managerial judgment in determining cost behavior
Explain the difference between committed and discre¬tionary fixed expenses. Give examples of each.
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