Cost Accounting Analysis And Control 1st Edition W Armand Layne - Solutions

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What are the advantages of an electronic data processing system?LO6
In addition to being measured in nonmonetary terms, what are the other attributes of nonfinan¬ cial performance measures that distinguish them from financial measures?LO6
Identify four examples of nonfinancial peifonnance measures and explain what four different aspects of performance they might be used to monitor.LO6
What challenge to cost accountants and cost sys¬ tems is posed by the increased interest in nonfi¬ nancial performance measures?LO6
Enumerate the most commonly used classifica¬ tions of costs.LO6
Describe indirect materials and give an appropri¬ ate example.LO6
Describe indirect labor and give an appropriate example.LO6
Manufacturing Costs. For each bicycle produced, Matheson Company incurs direct material cost of $6, direct labor of $3, and variable factory overhead of $1. Matheson’s fixed factory overhead totals $1,000 per month.Required:(1) Identify the prime cost per unit.(2) Identify the variable conversion
Manufacturing Costs. The estimated unit costs for CNR Inc., when it is operating at a production and sales level of 12,000 units, are as follows:Cost Item Unit Cost Direct materials.:. $32 Directlabor. 10 Variable factoryoverhead. 15 Fixed factoryoverhead. 6 Variablemarketing. 3 Fixedmarketing. 4
Fixed and Variable Costs. In the year 19A, the Titanic Company had sales of $19,950,000, with $11,571,000 variable and $7,623,000 fixed costs. 19B sales are expected to decrease 15%, and the cost relationship is expected to remain constant (the fixed costs will not change).Required: Determine
Nonfinancial Performance Measures.Required: Match each of the nonfinancial performance measures in the first column with the most closely related goal, objective, or other aspect of performance in the second column.(1) Absenteeism(2) Number of warranty repairs(3) Rejects, as a percentage of units
Manufacturing Costs. Randall Company manufactures mainframe computers. The prime cost of producing a computer is $300,000 and the conversion cost is $400,000, but the total manufacturing cost is only $600,000.Required: Determine the cost of direct labor per computer.
Manufacturing Costs. Sunshine Company manufactures diamond-tipped cutting blades. The total manufac¬ turing cost of one blade is $1,000, of which $400 is the conversion cost. The direct labor cost of a blade is one- sixth as large as the direct material cost.Required: Determine the amount of
Manufacturing Costs. Chianti Company manufactures airbrake systems for long-haul trucks. The prime cost to produce one system is $800, the conversion cost is $400, and the total manufacturing cost is $1,000.Required: Determine the cost of direct labor per system.
Manufacturing Costs. Smithson Inc. manufactures wave soldering machines. The total manufacturing cost of one machine is $3,000, of which $2,000 is the conversion cost. The direct labor cost of a machine is half as large as the direct material cost.Required: Determine the amount of factory overhead
Cost Objects, Traceability, and Pricing. Some retail stores that accept bank credit cards will give the cus¬ tomer a discount if a purchase is paid for in cash. The logic behind this practice is that the banks that process credit-card transactions charge the merchant a service fee, usually between
Cost Objects, Traceability, and Pricing. When Johnson Tractor Repair Shop (JTRS) repairs a lawn tractor or small garden tractor for a customer, the tractor is picked up and delivered at no extra charge. When JTRS started business, about half of its customers transported their own tractors, rather
Manufacturing Costs. When Bahalia Bookcase Company operates at a production and sales level of 2,000 units, the estimated unit costs are as follows:Estimated Cost Item Unit Cost Lumber. $12 Directlabor. 2 Variable factory overhead. 5 Fixed factoryoverhead. 4 Variablemarketing. 1 Fixedmarketing. 3
Manufacturing Costs. Ingerson Manufacturing produces self-propelled rock-drilling machines for use in mining, road building, and excavation. The direct materials cost of one machine is $12,000, and the total man¬ ufacturing cost is $20,000. The overhead cost of one machine is one-third as large as
Cost Objects, Traceability, and Pricing. The food- service manager of Too-Simple Hotel is planning a new price structure for room service. It has been determined that the hotel’s cost of a glass of orange juice is 20 cents. To provide the normal 75% profit margin on sales, 80 cents would need to
Classify an expenditure as fixed, variable, or semivariable.
List reasons for separating fixed and variable costs.
Compute the fixed and variable components of costs by three methods.
Define, compute, and explain the use of the coefficient of determination.
Define, compute, and explain the use of the standard error of the estimate.
Compute an estimate of cost using the equation developed by the method of least squares and then compute a confidence interval for that estimate.
(Appendix) Develop the regression and correlation equations.
Explain the difference between fixed, variable, and semivariable costs.What is meant by the term relevant range ?
Explain the meaning of the $200 and the $4 in the regression equation, y. = $200 + $4x., where y. denotes the total monthly cost of indirect sup¬ plies and xt is machine hours per month.
High and Low Points Method. Edd Company wants to segregate the fixed and variable portions of mainte¬ nance cost, believed to be a semivariable cost, as measured against machine hours. The following information has been provided for the first six months of the current year:Machine Maintenance
Statistical Scattergraph. Keefer Company production management is interested in determining the fixed and variable components of supplies cost, a semivariable cost, as measured against direct labor hours. Data for the first ten months of the current year follow:Labor Supplies Month Hours Cost
Method of Least Squares. Tiptop Company management is interested in predicting travel and entertainment expense based on the number of expected sales calls on customers. Over the past 50 weeks, the company’s Sales Department reported that its sales force made 6,250 calls on customers, an average
Method Of Least Squares. The following data were collected for the most recent twelve-month period by the cost accountant in one of Axelrod Company’s manufacturing plants.Electricity Machine Month Cost Hours January. $1,600 2,790 February. 1,510 2,680 March. 1,500 2,600 April. 1,450 2,500 May.
Correlation Analysis. The controller of Berry Electronics Company would like to know how closely the incur¬ rence of factory overhead in the company’s Semiconductor Manufacturing Department correlates with machine hours. Total factory overhead over the past 12 months is $108,000, and 5,760
Correlation Analysis. The management of Hidalgo Inc. collected the following data over the most recent 12 months:Shipping Sales Month Expense Revenue January. $560 $26,500 February. 600 30,000 Month Expense Revenue March. $600 $29,000 April. 580 28,000 May. 570 27,000 June. 550 25,500 July. 590
Cost Behavior and Correlation Analysis. Cyclops Company’s total maintenance cost for the past 10 months is $50,000. Some of the maintenance activity appears related to the operation of machinery, and the accountant wants to detennine whether machine hours should be used as a basis upon which to
Choosing Appropriate Activity Measure and Separating Fixed and Variable Costs. Total electricity cost for the past 20 months is $42,000. An activity measure on which to base estimates of electricity cost is needed. The two activity measures being considered are direct labor hours and machine hours.
Standard Error Of the Estimate. The controller of Fratiani Company used the method of least squares to com¬ pute the fixed and variable components of utility cost from the following data:Utility Labor Month Cost Hours January.. $3,600 2,650 February.. 4,000 3,000 March.. 4,000 2,900 April.. 3,800
Standard Error of the Estimate and Confidence Interval Estimation. The production supervisor of Pylex inc. would like to know the range of maintenance cost that should be expected about 90% of the time at the 1,500- machine-hour level of activity. The least squares estimate of maintenance cost at
Correlation Analysis. The Cost Department of Quick Supply Company attempts to establish a budget to assist in the control of marketing expenses. An examination of individual expenses shows:Fixed Variable Item Portion Portion Sales staff:Salaries.$1,200 none Retainers.2,000 none Commissions.none 4%
2 Choosing Appropriate Activity Measure; Cost Behavior Analysis. The controller of Pitzky Corporation has asked for help in the selection of the appropriate activity measure to be used in estimating variable supplies cost for the company’s budget. The following information about past expenses and
Choosing Appropriate Activity Measure; Cost Behavior Analysis. The management of the kxr Corporation has asked for help in the selection of the appropriate activity measure to be used in estimating electricity cost in one of its manufacturing plants. The following information about past expenses
Cost Behavior Analysis; Correlation Analysis; Standard Error of the Estimate. The following data have been collected by the controller of Lynpax Corporation over the past 12 months:Maintenance Machine Month Cost Hours January. $ 2,200 2,500 February. 2,130 2,350 March. 2,000 2,000 April. 2,170
Three Methods of Cost Behavior Analysis; Correlation Analysis; Standard Error of the Estimate. The manage¬ ment of the Rest-Time Hotel is interested in an analysis of the fixed and variable costs in the electricity used relative to hotel occupancy. The following data have been gathered from
Three Methods of Cost Behavior Analysis; Correlation Analysis; Standard Error of the Estimate, a company making tubing from aluminum billets uses a process in which the billets are heated by induction to a very high temperature before being put through an extruding machine that shapes the tubing
Cost Behavior Analysis; Correlation Analysis; Standard Error of the Estimate. Randal Company manufactures a wide range of electrical products at several different plant locations. Due to fluctuations, its Franklin plant has been experiencing difficulties in estimating the level of monthly
Choosing Appropriate Activity Measure; Cost Behavior Analysis; Standard Error of the Estimate. Based on observation and knowledge of the production process, the controller of Whirlwind Company believes that the bulk of variable maintenance cost is driven by either labor hours or machine hours. Data
Cost Behavior Analysis Using Method of Least Squares. Elisko Inc. is a major book distributor that ships books throughout the United States. Elisko’s Shipping Department consists of a manager plus 10 other permanent positions—four supervisors and six loaders. The four supervisors and six
Regression and Correlation Analysis-Utility and Implementation. Ned McCarty, controller of Arkansas Distribution Company, is responsible for development and administration of the company’s internal informa¬ tion system as well as the coordination of the com¬ pany’s budget preparation.At a
Cost Behavior Analysis; Correlation Analysis; Standard Error of the Estimate. A company’s Cost Department has compiled weekly records of production volume (in units), electric power used, and direct labor hours employed. The range of output for which the fol¬ lowing statistics were computed is
Cost Behavior Analysis; Alternative Models.Motorco Corporation plans to acquire several retail automotive parts stores as part of its expansion pro¬ gram. Motorco carries out extensive review of possi¬ ble acquisitions prior to making any decision to approach a specific company. Projections of
Multiple Regression Analysis. Multiple regres¬ sion is a procedure used to measure the relationship of one variable with two or more other variables. Regression provides a relational statement rather than a causal statement with regard to the relation¬ ship. The basic formula for a multiple
Multiple Regression and Correlation Analysis. John Wood, a financial analyst for a major automobile cor¬ poration, has been monitoring the funds used in adver¬ tising campaigns and the funds used for automobile factory rebates. Financial data have been accumulated for the last 24 months along
The following data were collected from the Industrial Products Manufacturing Co. Ltd.Month Total overhead Direct labour Plant Hr Jan Feb Mar Apr May Jun y15000 14500 15750 15250 16250 15000 I:y = 91750¥ = 15291.7x = 886.7 REQUIRED Hr (DLH) (PH)X 736 184 800 160 1008 168 880 176 1056 176 840 168
A sample of eight employees is taken from the production department of a light engineering factory. The data below relate to the number of weeks' experience in the wiring of components, and the number of components which were rejected as unsatisfactory last week.Employee A 8 C D E F G H Weeks'
A sample of 11 observations on the variables X and Y yielded the following sample calculations:Y = 22 l:x;Y; = 569 ~Y1= 176 x =52 I:x1= 1695 Here V = n- 1 ~Y;, X= n-1 I:.X;, X;= X;-X. Y; = Y;- Y, and all sums are over the n sample observations.REQUIRED(a) Estimate a and b in Y =a+ bX, assuming that
A company has the following demand and cost function for a particular item:Demand function: p = 600- 2q2 Cost function: c = 1 00 + 216q Where p = Price of the item ($)q = Quantity produced and sold c =Total cost of producing the item ($)REQUIRED Determine:(i) price and quantity for maximum sales
A manufacturer has fixed costs of $5000 per week and variable cost of~X2 + 1 OX, where X is the number of tons produced; research has shown that, within the range of practicable prices, the relationship between price, P, and auantity X, is approximately P= 160-~X All production can be sold.REQUIRED
(a) Next year's forecasted trading results for Caribee Ltd, a small company manufacturing three different types of product, are shown below:Product A$Selling price (per unit) 10$000 Sales 100 Variable cost of sales Prime cost 40 Variable overhead 20 Share of general fixed overhead 30 Profit (loss)
A company manufactures plastic-covered steel fencing in two qualities: standard and heavy gauge. Both products pass through the same processes involving steel-forming and plastic-bonding.The standard gauge sells at $15 a roll, the heavy gauge at $20 a roll. There is an unlimited market for the
As the first management accountant employed by a manufacturer of power tools, you have been asked to supply financial results by product line to help in marketing decisionmaking.The following account was produced for the year ended 30 September 1981$000 $000 Sales 1200 Cost of goods sold:Materials
The accountant of XYZ Ltd has produced the following statement of cost and profit for his company's product, the annual production;sales level of which is 50000 units:Direct material Direct labour Variable overhead Fixed overhead Profit Selling Price$25 32 515 50 REQUIRED(i)(a) Prepare a chart from
A company has decided that its profit on turnover is insufficient and after investigation, has concluded that it must attempt to change its mix of sales.REQUIRED(a) Present on graph paper a profit-volume (PjV) graph to show:(i) results of the budgeted sales mix for the year(ii) expected results if
The Norman Co. produces a product which sells at $20. Sales amounting to $5 million represent 75 per cent of capacity of the factory, and that percentage is regarded as the normal level of activity which cost as follows:Including variable cost $75000 63000 40000 167 The commission payable for the
A company selling an air conditioner has estimated the market capacity as 50000 units a year.The directors have set the company a sales objective of between 50 per cent and 80 per cent of this potential. The sales force is divided into five equal areas, and the objective is expected to be achieved
MNO Ltd. produces and sells for $25 an office machine for which there is a heavy demand which the company is prevented from meeting because of a shortage of skilled labour. The direct material and labour cost of the machine is $1 0 and $5 respectively. The labour force is paid $1.25 per hour. All
Following a fire at the factory of Elgar Ltd, the management team met to review the proposed operations for the next quarter. The fire had destroyed all the finished good stock, some of the raw materials, and about half of the machines in the forming shop.At the meeting of the management team, the
Ayeco Ltd, with a central organisation in Ayetown, has three manufacturing units, one is Beetown, the second in Ceetown and the third in Deetown. The company manufactures and sells an air conditioner under the brandname of Ayecool at a price of $200. It is unable to utilise fully its manufacturing
The original budget for the K department of Hilton Ltd for the forthcoming year was as follows:Budget for forthcoming year- K dept Budgeted sales and production- 30000 units Sales revenue Manufacturing cost:Material per unit Material A-1 I Material B-1 kg Production labour Variable overhead Fixed
MC Ltd operates four departments, in which three products are manufactured. The company is currently experiencing a critical shortage of labour in department 3, and there are no immediate prospects of an improvement in this situation.REQUIRED(a) Show the contribution which each product can make
A company is asked to quote for a special order to be delivered ex works.Direct material costs per unit of output are:For total $ %of each discount 100 18 200 18 400 18 less 10 less 20 The work would be done in two departments:Dept F Employs highly skilled operators paid at $2.50 per hour zUnits 37
The budget of S Ltd provides for the manufacture and sale of 10000 spodgets per month, the unit standard cost being $6, made up:$Direct material 3.5 Direct labour 0.5 Fixed overhead 2.0 The selling price of the spodget being $8.0 Production and sales quantities for period 1 and 2 were:Production
(a) From the information given below, prepare profit statements for the year based on:(i) marginal costing(ii) absorption costing Comment on the difference in the profit figures you report for (i) and (ii) above JB ltd produces a single product, which is bottled and sold in cases. The normal annual
Rumbles Ltd manufactures a single product, with a variable manufacturing cost of $12 per unit and a selling price of $20 per unit. Fixed production overhead is $90000 per period. The company operates a full absorption costing system, and the fixed overhead is absorbed into the cost of production on
Kerry-Blue Ltd is a company manufacturing two products using one type of material and one grade of labour. Shown below is an extract from the company's working papers for the next period's budget:Product R 8 Budgeted sales (units) 3000 4500 Budgeted material consumption per product (Wg) 6 2
ABC ltd manufactures three products from three basic raw materials in three departments. The company operates a budgetary control system, and values its stocks of finished goods on a marginal cost basis. From the data given below, you are required to produce for the month of June 19X9:(a)
At the Purcell Co. Ltd a proposed expansion, which would entail the setting up of a separate department to produce a new product, had previously been rejected on various (non-financial)grounds. However, the project was being re-examined. Details of the proposed expansion are as follows:(i) A new
REQUIRED For a company making one product. produce:(a) budgeted production requirement (in units) for each of the months March, April and May(b) budgeted purchase requirements of raw material (in units) for each of the months March and April(c) budgeted profit and loss statement for April(d) cash
Dyer Ltd manufactures a variety of products using a standardised process which takes 1 month to complete. Each production batch is started at the beginning of a month and is transferred to finished goods at the beginning of the next month. The cost structure, based on current selling prices, is
ABC pic is experiencing cash flow problems. The managing director asks you to devise a system to improve the company's ability to budget its cash position for one month ahead.An examination of past data products the following information:Cash expenditure(i) The company maintains a strict policy of
You have taken up at 1 November 19X7 an appointment as the managing accountant with a company manufacturing mainly for export. You arrive to find there is a cash crisis. The company had promised to repay a 1 October bank overdraft of $50000 by the year end. This had been agreed on the basis of
At the end of April19-8, CD Ltd, which supplies a component to leading manufacturers in a segment of the engineering industry, fears that its largest customer EF ltd is likely to be subject to a strike. This strike is expected to last from 1 May-31 July 19X8, during which time EF Ltd will be unable
What do you understand by the term 'cost accounting'?
What are the reasons for the existence of the firm?
What is an organisational chart? How is it useful to the firm?
Explain the purposes of (i) planning, (ii) decision accounting, and (iii) control accounting in the firm.
Is profit maximisation the only theory of the firm?
Explain: (a) variable and fixed costs, (b) cost unit and cost centres, (c) direct and indirect cost.
List the cost elements which go into the making and selling of a product.
Briefly explain what is meant by 'historical cost' and 'standard cost', 'absorption costing' and'marginal costing'.
Why is a measurement process of importance to cost accounting?
What do you understand by centralised and decentralised production planning decisions?
Describe the routine stages in a purchasing operation.
Describe the factors which influence the level of stockholding.
What are the advantages and disadvantages of the inventory methods used for valuing stock described in this chapter?
From the information shown below which relates to component ABC, prepare statements using each of the following methods of stock accounting:(i) weighted average cost(ii) standard cost to show the following(a) the amount to be charged to cost of production(b) the value of the closing stock(c) the
S. Poynter PLC, an engineering company constructing special purpose equipment to customer specification, employs a system of job costing to determine the actual cost of products manufactured.Shown below is the incomplete stores account, for Month 11, of one component used in the construction of the
The Trix Manufacturing Co. Ltd. produces four products-A, B, C and D. Each product is made from three raw materials- P, Q and R:PRODUCT MATERIAL A 8 c D p Q R Production data R 2 4 To (per unit) E 5 3 Q 5 3 u 4 2 4 2 RE s$ $ $ $ $ $ $Raw material cost (per unit) 2 3 6 Direct production cost(per
Every day a shop purchases for $2 per unit a product which it sells for $4 per unit. For every unit of product sold, a wrapping cost of $0.20 is incurred. Since the product is perishable, units remaining unsold at the end of the day are returned, without wrapping, to the supplier, who refunds$1 for
REQUIRED Prepare the matrix formulation to solve the following problems:(a)40x+70y+ 7z-300=0 22x+35y+12z-525 = 0 y+ z- 30 = 0 in the form: Ax = c Cost Accounting(b) The total cost C of purchases from a supplier of four commodities each with a different price:in the form: q'p = c(c) A matrix which

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Cost Accounting Analysis And Control 1st Edition W Armand Layne - Solutions

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