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cost accounting
Cost Accounting 11th Edition Lawrence H. Hammer, William K. Carter, Milton F. Usry - Solutions
(Appendix) Payroll Taxes, Vacation Pay, and Payroll. The normal workweek at walfe City Publishing Inc. is Monday through Friday, with payday on the following Tuesday. On April 1, after the reversing entry was posted, the payroll account showed a $2,230 credit balance, representing labor purchased
Setting Productivity Standards. Anvil Inc. intends to expand its Punch Press Department with the purchase of three new presses from Presco Inc. Mechanical stud¬ ies indicate that for Anvil’s intended use, the output rate for one press should be 1,000 pieces per hour. The com¬ pany has similar
Incentive Wage Plan. Morac industries is a rapidly growing 10-year-old company specializing in plumbing supplies. The company employs 100 persons. There are 25 salaried employees in office and manage¬ ment positions. The remaining 75 employees perform various production line functions and are
Learning Curve. Kelly Company plans to manu¬ facture a product called Electrocal, which requires a substantial amount of direct labor on each unit. Based on the company’s experience with other products that required similar skills, management believes that there is a learning factor in the
Payroll Procedures. A team of internal auditors was assigned to review the Galena Plant’s Payroll Department, including the procedures used for payroll processing. Their findings are as follows: LO3(a) The payroll clerk receives the clock cards from the various department supervisors at the end
Ethical Considerations. Bert Osborne is currently assigned as an accountant in the Payroll Department of the Bay Bridge Company. One of his duties is the pro¬ cessing of engineering time reports, which are used to charge engineering time related overhead costs to maintenance jobs performed within
Distinguish by-products from joint products. LO5
Define joint cost. LO5
Assign cost to by-products by different methods. LO5
Allocate joint production cost to joint products by different methods. LO5
Evaluate the relationship of joint costs to decision making and profitability analysis. LO5
Distinguish between joint products and by-products. LO5
How can the revenue from the sale of by-prod¬ ucts be shown on the income statement? LO5
Does the inclusion of revenue from by-products on the income statement influence the unit cost of the main product? LO5
By what method can production cost be relieved of the value of a by-product that can be further utilized in production processes? Explain. LO5
By-products that require no additional processing after the point of separation are often accounted for by assigning to them a cost of zero at the point of separation and crediting the cost of pro¬ duction of the main product as sales are made.(a) Justify this method of treating by-products.(b)
Are by-products ever charged with any cost? Explain. LO5
Describe methods for allocating the total joint production cost to joint products. LO5
Discuss the advantages and disadvantages of the market value and average unit cost methods of joint cost allocation. LO5
When is it necessary to allocate joint costs to joint products? LO5
Does the Internal Revenue Service prescribe any definite joint product or by-product cost alloca¬ tion methods for tax purposes? Explain. LO5
In a decision about the further processing of joint products, what costs are relevant? LO5
By-Product Costing—Net Revenue and Market Value (Reversal Cost) Methods, in the manufacture of its main product, the Welsh Company produces a by-product. Joint production cost incurred to the point of separation totals $200,000. After separation, cost of $150,000 is incurred to complete the main
By-Product Costing—Market Value (Reversal Cost) Method. Logan Company manufactures one main prod¬ uct and two by-products, A and B. For April, the following data are available: LO5 Main By-Product Product AB Total Sales.$75,000$6,000$3,500$84,500 Manufacturing cost after separation.Marketing and
Joint Product Cost Allocation—Market Value Method. Navarre Corporation manufactures products W, X, Y, and Z from a joint process. Additional information follows: LO5 Market If Processed Further Units Value at Additional Market Product Produced Split-Off Cost Value W.. 6,000$ 80,000'$ 7,500$
Joint Product Cost Allocation—Market Value Method; By-Product Cost Allocation—Market Value (Reversal Cost) Method. Alba Company manufactures joint products X and Y as well as by-product Z. Cumulative joint cost data’ for the period show $204,000, representing 20,000 completed units processed
Joint Product Cost Allocation—Market Value Method. The Escambia Company produces three products, E, S, and C, as the result of joint processing, which costs $150,000. LO5 E S C Unitsproduced. 30,000 15,000 13,000 Separable processingcosts. $30,000 $24,000 $27,000 Unit salesprice. $ 4.30 $ 6.60 $
Joint Product Cost Allocation—Market Value Method. Boyd Company manufactures three products—A, B, and C—as a result of a joint process. During October, joint processing costs totaled $288,000. Details regarding each of the three products show: LO5 Product A B C Unitsproduced. 1,000 3,000
Joint Product Allocation—Average Unit Cost and Market Value Methods. Scott Company manufactures three products, A, B, and C, from a joint process. The joint costs for January total $100,000. Additional January infor¬ mation follows: LO5 Processing Cost Ultimate Product Quantity after Split-Off
Joint Product Cost Allocation. Jackson Inc. produces four joint products having a manufacturing cost of $70,000 at the split-off point. Data pertinent to these products follow: LO5 Product Units Produced Ultimate Market Value per Unit Processing Cost after Split-Off Weight Factors K5,000$5.50$1,500
Joint Product Cost Allocation—Weighted-Average Method, a department s production schedule shows 10,000 units of X and 8,000 units of Y. Both articles are made from the same raw materials, but units of X and Y require estimated quantities of materials in the ratio of 3:2, respectively. Both
Joint Product Cost Allocation—Average Unit Cost and Market Value Methods. Sage Products Company pro¬ duces three products from a joint source. A single raw material is introduced into Process I from which prod¬ ucts A, B, and C emerge. Product A is considered to be a by-product and is sold
Joint Product Cost Allocation—Market Value Method. Hamilton Company produces three products jointly.During May, joint costs totaled $200,000. The following individual product information is available: LO5 Product C Product L Product T Production. 15,000 10,000 20,000 Salesunits. 13,000 9,000
Cost Allocation—Joint Products and By-Product. Brooks Corporation produces three products, Alpha, Beta, and Gamma. Alpha and Gamma are joint products; Beta is a by-product of Alpha. No joint cost is to be allo¬ cated to the by-product. The production processes for a given year are as follows:
Joint Product Cost Allocation—Same Gross Profit Percentage for Each Joint Product. Lond Company produces joint products Jana and Reta, together with by-product Bynd. Jana is sold at split-off, but Reta and Bynd undergo additional processing. Production data pertaining to these products for the
Cost Allocation—Joint Products and By-Product. 'Alderon Industries is a manufacturer of chemicals for vari¬ ous purposes. One of the processes used by Alderon produces SPL-3, a chemical used in swimming pools; PST- 4, a chemical used in pesticides; and RJ-5, a by-product that is sold to
Cost of Production Report—Average and Fifo Process Costing Methods; Joint Products and By-Product. The following data appear in the records of Rodomontade Company for February: LO5 Process 1 2 3 Unit data:Beginning work in process inventory('A complete in Processes 2 and3). — 3,000 3,000
Joint Cost Allocation—Market Value Method.Minimax Corporation is a chemical manufacturer that produces two main products, Pepco-1 and Repke-3, and a by-product, SE-5, from a joint process. If Minimax had the proper facilities, it could process SE-5 further into a main product. The ratio of output
Costing Joint Products. Hayes Products Company produces three products, X, Y, and Z, from a single joint process. The company uses the average unit cost method for allocating the joint production cost. Some spoilage normally occurs in the joint process, but the company also has been experiencing
Ethics. An internal auditor, George Vickery, has been assigned to test the pricing of the finished goods inventory for a subsidiary that manufactures a variety of digital watches in a common facility. Total manufactur¬ ing costs are allocated to the various finished goods stock items using the
Describe a system of materials procurement and use. LO2
Identify the components of the cost of acquiring materials. LO2
Define and calculate economic order quantity. LO2
Define and calculate the order point. LO2
Define and calculate safety stock. LO2
Describe the ABC plan for inventory control. LO2
List the documents most frequently used in the procurement and use of materials. LO2
How is an invoice approved for payment? LO2
For a retailer and wholesaler that purchases its inventories from various suppliers, what criteria should be used to determine which costs are inventoriable? LO2
Refer to question Q9-3. Are a retailer’s adminis¬ trative costs inventoriable? Explain. LO2
When an inventory control system is designed, what are three key questions that must be answered? LO2
How can a firm benefit from economic order quantity and order point techniques? LO2
What is the purpose of the economic order quan¬ tity model? LO2
What types of costs should be considered in deriving the economic order quantity? LO2
What are the consequences of maintaining inad¬ equate inventory levels? What are the difficulties of measuring precisely the costs associated with understocking? LO2
In the computation of optimum production run size, what alterations to the EOQ formula’s com¬ ponents are required? LO2
Explain each of the following terms: (a) order point, (b) lead time, and (c) safety stock. LO2
Define materials requirements planning (MRP). LO2
Is general management concerned primarily with unit control or financial control of inventory? LO2
The control of materials must meet two opposing needs. What are they? LO2
In what situation are selective control and auto¬ matic control of materials effective? LO2
(Appendix) Describe the fundamental cost flow assumptions of the average cost, fifo, and lifo inventory costing methods. LO2
(Appendix) Discuss the reasons for using lifo in an inflationary economy. LO2
(Appendix) During a period of oil price decline, oil companies were accused of making excess profits when the prices at the pump did not fall as quickly as the prices at the well head. In order to report a lower profit to offset the criticism, would lifo or fifo be used? Explain. LO2
(Appendix) Proponents of lifo and fifo proce¬ dures ascribe certain merits to each. Identify the inventory procedure, lifo or fifo, to which the fol¬ lowing features are attributed: LO2(a) Matches actual physical flow of goods in most cases.(b) Matches old costs with new prices.(c) Costs
Cost Of Acquiring Materials—Freight-In. An invoice for Part A, Part B, and Part C is received from the Noble Company. Invoice totals are: Part A, $8,600; Part B, $5,060; and Part C, $3,840. The shipment weighs 1 400 kilograms and freight charges are $280. Weights for the respective materials are
Quantity to Order. On September 1, a company wants to determine the number of units of Material X it should order for November delivery. The production schedule calls for 4,200 units of Material X for September operations, 4,400 units for October, and 4,700 units for November. On September 1, the
Usage Forecast and Inventory Balances. On January 1, a materials analyst is asked to determine the number of units of Item AZ to be ordered for March delivery. The production schedule calls for 4,800 units of AZ for January operations, 5,000 units for Febaiary, and 5,600 units for March. On January
EOQ. (Round all answers to the nearest whole number.)(1)Franklin Inc. has an annual usage of 100 units of Item M, having a purchase price of $55 per unit. The fol¬ lowing data are applicable to Item M: LO2 Orderingcost. $5 per order Carrying costpercentage. 15%Required: Compute the economic order
EOQ and Quantity Discount, a particular material is purchased for $3 per unit. Monthly usage is 1,500 units, the ordering cost is $50 per order, and the annual carrying cost is 40%. LO2 Required:(1) Compute the economic order quantity.(2) Determine the proper order size if the material can be
Ordering and Carrying Costs; Economic Order Quantity; Quantity Discount. George Company buys 500 boxes of Item X-100 every two months. Order costs are $380 per order; carrying costs are $1 per unit and vary directly with inventory investment. Currently the company purchases the item for $5 each.
Safety Stock; Order Point. Eagle Company’s usage of Material A is 9,600 units during 240 working days per year. Normal lead time and maximum lead time are 20 working days and 30 working days, respectively.Required: Assuming Material A will be required evenly throughout the year, what is the
Order Point. Rider Company has obtained the following costs and other data pertaining to one of its materials: LO2 Orderquantity. 1,500 units Normal use perday. 500 units Maximum use perday. 600 units Minimum use perday. 100 units Leadtime. 5 days Required: Compute the following:(1) Safety stock
Order Point Computations. The Pen Company is setting up an inventory control system. For one type of material, the following data have been assembled: LO2 Orderquantity. 3,000 units Minimum use perday. 80 units Normal use perday. 120 units Maximum use perday. 200 units Leadtime. 12 days Required:
Safety Stock. Jackson & Sons Inc. would like to determine the safety stock it needs to maintain for a prod¬ uct, to incur the lowest combination of stockout cost and carrying cost. Each stockout costs $75; the carrying cost for each safety stock unit is $1; the product is ordered five times a
(Appendix) Materials Costing Methods. Kenney Company made the following materials purchases and issues during January: LO2 Units Price Inventory: Jan.1.. 500$1.20 Receipts: Jan.6.. 200 1.25 10.. 400 1.30 25.. 500 1.40 Issues: Jan.15.. 560 27.. 400 Required: Compute the cost of materials consumed
Applied Acquisition Costs. Benjamin Company Inc. records incoming materials at invoice price less cash dis¬ counts plus applied receiving and handling cost. For product Gamma, the following data are available: LO2 Budgeted for Actual Cost the Month for the Month Freight-in and cartage-in.$ 2,500$
EOQ; Safety Stock. Maple Company sells a number of products to many restaurants in the area. One product is a special meat cutter with a disposable blade. Blades are sold in a package of 12 at $20 per package. It has been detennined that the demand for the replacement blades is at a constant rate
Order Point; Inventory Levels. Cummings Company has developed the following figures to assist in control¬ ling one of its inventory items: LO2 Minimum dailyuse. 150 units Normal dailyuse. 200 units Maximum dailyuse. 230 units Working days peryear. 250 Lead time in workingdays. 10 Safetystock. 300
Safety Stock. For Product 6E, ordered five times per year, stockout cost per occurrence is $80 and safety stock canying cost is $3 per unit. Available options are: LO2 Units of Probability of Running Safety Stock out of Safety Stock 10 50%20 40 30 30 40 20 50 10 55 3Required: Compute the safety
(Appendix) Inventory Costing Methods. Ewing Corporation had the following purchases and issues during March: LO2 March 1 Beginning balance: 750 units @ $20 per unit 3Purchased 400 units @ $19.50 per unit 5Issued 600 units 12 Purchased 350 units @ $21.50 per unit 15 Issued 500 units 18 Purchased 500
(Appendix) Inventory Costing Methods. The records of the Blue Mercantile Company show the following data for Item A: LO2 Balance, January 1 200 units @ $10 per unit Purchases Price Sales Units per Unit Units January12.. 100$11 February1.April16.. 200 12 200 May1.100 July15.November10.. 100 14 100
(Appendix) Inventory Costing. Token Company uses perpetual inventory costing for inventory Item 407, which it purchases for resale. The company began its operations on January 1 and is in the process of prepar¬ ing its first financial statements. LO2 The inventory ledger and other accounting
EOQ; Safety Stock Related to Production Runs.Thomas Peterson, general manager for Topp Desk Company, is exasperated because the company exhausted its finished goods inventory of Style 103— Modern Desk twice during the previous month. This led to customer complaints and disrupted the normal flow
Setup Cost. Pointer Furniture Company manufac¬ tures and sells office desks. For efficiency and quality control reasons, the desks are manufactured in batches. For example, 10 high quality desks might be manufac¬ tured during the first two weeks in October and 50 units of a lower quality desk
Cost of Carrying Inventory. Lacy Products is a regional firm that operates a manufacturing plant. The plant’s operations are typical, involving raw materials, work in process, and finished goods inventories. Raw materials are purchased and stored until their introduc¬ tion into the manufacturing
Cite examples of businesses in which process costing is used. LO3
Explain three common patterns of manufacturing production flow. LO3
Determine if a process cost system can be used, based on an examination of the manufacturing environment. LO3
Calculate equivalent production and departmental unit costs. LO3
Prepare a departmental cost of production report based on average costing. LO3
Prepare general journal entries to record manufacturing costs in a process cost system. LO3
(Appendix) Prepare a departmental cost of production report based on fifo costing. LO3
What is the basic objective of process costing? LO3
Discuss three physical product flow formats. LO3
Compare the cost accumulation and summariza¬ tion of job order costing and process costing. LO3
Can predetermined overhead rates be used in process costing? Explain. LO3
What is the purpose of a cost of production report? LO3
What are the various sections commonly found in a cost of production report? LO3
Separate cost of production reports are prepared for each producing department. Why is this method used in preference to one report for the entire company? LO3
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