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cost accounting

Cost Accounting Traditions And Innovations 3rd Edition Jesse T. Barfield, Cecily A. Raiborn, Michael R. Kinney - Solutions

(Asset-replacement decision) Grist Energy Company provides electrical services to several rural Alabama counties. The company’s efficiency has been greatly af¬ fected by changes in technology. Most recently, the company is considering replacement of its main steam turbine. The existing turbine
(Make-or-buy decision) The Closet Organizer Company manufactures vinyl-clad wire baskets that are used as components in modular storage systems. Each basket requires two to six standard fasteners to attach it to other modular com¬ ponents or structural members of closets. Historically, the company
(Make-or-buy decision) Larson Building Systems manufactures steel buildings for agricultural and commercial applications. Currently, the company is trying to decide between two alternatives regarding a major overhead door assembly for the company’s buildings. The alternatives are#1: Purchase new
(Sales mix with scarce resources) Old Time Furniture makes three unique wood products: desks, chairs, and footstools. These products are made wholly by hand; there is no electric machinery or hydraulic machinery used in production. All products are made by skilled craftspeople who have been trained
(Sales mix decisions) Arizona Fashions produces silk scarves and handkerchiefs, which sell for $40 and $10, respectively. The company currently sells 100,000 units of each type with the following operating results:Corporate management has expressed its disappointment with the income being generated
(Product line decision) Paulson Fresh Meats sells two major lines of products, fish and chicken, to grocery chains and food wholesalers. Income statements showing revenues and costs of 1997 for each product line follow.Management is concerned about the profitability of chicken sales and is
(Prochict line changes) You have been engaged to assist the management of Circle X Farm Products in arriving at certain decisions. Circle X has its home office in Arkansas and leases production facilities in Arkansas, Louisiana, and Missis¬ sippi, which produce a fertilizer spreader designed for
(Comprehensive) GreenX Glass Recyclers has processing plants in Delaware and Florida. Both plants use recycled glass to produce jars that are used in food canning by a variety of food processors. The jars sell for $20 per hundred units. Budgeted revenues and costs for the year ending December 31,
(Sales and profit improvement) Bold and Brassy is a retail organization that sells upscale clothing to professional women in the Northeast. Each year, store man- CASES agers, in consultation with their supervisors, establish financial goals, and then actual performance is captured by a monthly
(Plant closing decision) Elephant Industries is a multiproduct company with several manufacturing plants. The Dole Plant manufactures and distributes two house¬ hold cleaning and polishing compounds, regular and heavy duty, under the HouseSafe label. The forecasted operating results for the first
(Special order decision) Adrian Pipe Company, located in southern Kentucky, man¬ ufactures a variety of industrial valves and pipe fittings that are sold to customers in nearby states. Currently, the company is operating at 70 percent of capacity and is earning a satisfactory return on
In Japan, the decision to stop production of a product or to close down a plant has different cost consequences than in the United States. One principal differ¬ ence is that Japanese managers are much less likely to fire workers who are displaced by an event such as a plant closing. Japanese
Carter’s Computers manufactures computers and all components. The purchas¬ ing agent informed the company owner, Abraham Carter, that another company has offered to supply keyboards for Carter’s computers at prices below the var¬ iable costs at which Carter can make them. Incredulous, Mr.
In 1982, Ford Motor Company officials went to the test track to evaluate a prototype of their new Bronco II, a sports utility vehicle. One of the officials was the head of automotive safety, another was his superior. These two officials, along with Ford’s top lawyer, witnessed something that
In 1981 EEOCS [Equal Employment Opportunity Commission] local field office wrote me a letter saying they had reason to believe / didn't have enough women “food servers" and “busers.” No woman had complained against me. So the EEOC advertised in the local paper to tell women whose job
Search the Internet for technology aids (software programs) to group decision making. After reviewing the features of some available decision making aids, discuss how such aids might help or hinder the making of decisions based on only relevant information.LO1
Search the Internet for discussions and promotions regarding outsourcing ser¬ vices. Write a summary describing the variety of services that are now available to firms that wish to outsource functions.LO1
Assume that you work for a firm that is about to launch a new product line of digital cameras and that you are responsible for devising a strategy to promote and sell the product line through the Internet. Describe how you would use the Internet to promote and market the new product line.LO1
Why is budgeting important?LO1
How are strategic and tactical planning related to budgeting?LO1
How are the various schedules in a master budget prepared?LO1
How do the schedules of the master budget relate to one another?LO1
(Appendix) What are the advantages and disadvantages of imposed budgets? Participatory budgets?LO1
The manager of the Production Department has just received a responsibility report that shows a substantial unfavorable variance for overtime premium.The manager objects to the inclusion of this variance because the overtime was due to the acceptance of a large rush order by the Sales Department.
Refer to the real world application for this chapter. What were the benefits of worker involvement in setting standards at NUMMI?
What nonfinancial performance measures could be used to encourage better product quality? Better customer service?
What nonfinancial performance measures would encourage reduced inventories?
The standard direct labor cost per reservation for the Elegance Inns Reservation System is $1.30 ($13 per hour divided by 10 reservations per hour). Actual direct labor costs during the period totaled $89,000; 6,800 labor-hours were worked during the period; and 72,000 reservations were
The standard direct labor cost per unit for a company was $20 ($10 per hour times two hours per unit). Actual direct labor costs during the period amounted to $37,600, 3,900 labor-hours were worked during the period, and 1,900 units were produced.Compute the direct labor price and efficiency
Refer to the data in exercise 19.22. Prepare graphs like those shown in Illustration 19.13.
Garza Corporation applies overhead at the rate of $4.40 per unit. Budgeted fixed overhead was $67,860. 16,000 units were produced this month, and actual overhead was $65,110.What are the fixed overhead price and production volume variances for Garza?
Using the data in exercise 19-29, compute the following (assume full-absorption costing is used to apply overhead to units produced).a. Total over/underapplied overhead.b. Two-way analysis of overhed variances.c. Three-way analysis of overhead variances.
Moffett Company incurred total overhead costs of $178,360 during the month when 4,100 hours were worked. The normal workload for the company is 4,000 hours. The flexible budget for the output attained this period indicates that 4,300 hours were allowed.Standard costs per hour are as
Moffett Company incurred total overhead costs of $178,360 during the month when 4,100 hours were worked. The normal workload for the company is 4,000 hours. The flexible budget for the output attained this period indicates that 4,300 hours were allowed.Standard costs per hour are as
Refer to the labor and variable overhead data given in problem 19.36. Compute the labor and overhead variances using the method set forth in Appendix B.
Navajo Company reported a $50 unfavorable price variance for variable overhead and a $500 unfavorable price variance for fixed overhead. The flexible budget had$32,1(X) variable overhead based on 10,700 direct labor-hours; only 10,600 hours were worked. Total actual overhead was $54,350. Estimated
Brock Toy Company has been experiencing declining profit margins and has been looking for ways to increase operating income. It cannot raise selling prices for fear of losing business to its competitors. It must either cut costs or improve productivity.Brock uses a standard cost system to evaluate
Windsor Healthcare, Inc., a manufacturer of custom-designed home health-care equipment, has been in business for 15 years. Last year, in an effort to better control the costs of their products, the controller implemented a standard cost system.Reports are issued monthly for tracking performance and
Ullrich Company purchased 26,000 units of material A at a price of $1.30 per pound.The standard price of material A is $1.40 per pound. During the month. 14,000 units of material A were used, which was 1,500 pounds more than the standard allowed.Prepare journal entries to record these transactions.
Refer to the data in exercise 20.11 . Prepare T-accounts to show the flow of costs for these transactions.
Monroe Products has a standard labor cost of $60 per unit of output. During the past month, 3,000 output units were manufactured. The total labor-hours allowed for this output were 22,500 hours. The actual labor costs were $176,240. Actual labor-hours were 22,600.Prepare journal entries to record
Refer to the data in exercise 20.14. Prepare T-accounts to show the flow of costs through accounts.
Prepare journal entries to record these transactions and set up overhead variances.Refer to the data in exercise 20.16. Show the flow of costs through T-accounts.
Refer to the variance calculations for exercise 20.16. Assume 75 percent of the units produced were sold. Prorate the variances to ending Finished Goods Inventory (25%)and Cost of Goods Sold (75%).
Use the data in exercise 20.19 to show the flow of these overhead costs through T-accounts.
Use the data in exercise 20.21 to show the flow of costs through T-accounts.
Use the variance calculations in exercise 20.21. Prorate the variations to ending Finished Goods Inventory (20%) and Cost of Goods Sold (80%).Armadillo Corporation acquired 50,000 units of direct materials for $70,000 last year.The standard price paid for the materials was $1 .30 per unit. During
Refer to the variances calculated for exercise 20.24. Prorate the materials price variance to the Materials Efficiency Variance, ending inventories, and Cost of Goods Sold; and prorate the efficiency variance to ending inventories and the Cost of Goods Sold.
During the current period. Otter Co. paid $38,000 for 30.000 units of material. All of these materials were immediately put into process. During the period, 14,800 units of output were produced, and 14,500 units were sold. Three hundred units remain in Finished Goods Inventory. Each unit of output
Refer to the data for the Armadillo Corporation, exercise 20.24, above. If Armadillo Corp. were operating in a just-in-time environment and charging its standard costs directly to Standard Cost of Goods Sold, show the flow of costs through T-accounts that would be required to adjust the Standard
Refer to the data for the Juneau Company in problem 20.30. Prorate variances for the Juneau Company. Show the proration with journal entries and T-accounts.
Refer to the data for the Ashwood Company (problem 20.32). Use T-accounts to show how the variances would be prorated at the end of the period. Assume 100 percent of the production had been transferred to Finished Goods Inventory, and 90 percent of the completed production had been sold.
Refer to the data for the Ashwood Company (problems 20.32 and 20.33 above). For this problem, assume that Ashwood charges all standard costs directly to Cost of Goods Sold and maintains a separate account for variances. At the end of the period, adjustments are made to reflect inventories and to
Refer to the data presented in Chapter 19, problem 19.51, on Racketeer. Using traditional standard, full-absorption costing for Racketeer, present the flow of costs through accounts, using journal entries and T-accounts.
Phil Brooks, president of Woodside Products, Inc., called Marilyn Mynar into his office one morning in early July. Ms. Mynar was a business major in college and was employed by Woodside during her college summer vacation."Marilyn," Brooks began, "I've just received the preliminary financial
What is the essential difference between real and personal property?
Why are all buildings unique?
What similarity exists between subcontractors and designer’s consultants, and what are the reasons for their presence and importance in the design and construction industry?
What are the five ingredients of a valid construction contract?
What information does a bidder need to be able to submit a satisfactory bid for work to be done in a stipulated sum contract, and why?
How can competitive bids be made for work to be done in a cost-plus-fee contract?
Explain how a target figure contract can contain major features and advantages of both a stipulated sum contract and a cost-plus-fee contract.
Explain the meaning of the term wait price.
Explain the meaning of the term item of work.
Name all the persons who have contracts with the owner in the arrangement commonly called a construction Management contract.
What kind of estimate is needed to be made by a construction manager?
How can owners in package deals know that they will get value for their money?
What are the three primary uses of a standard cost system? In a business that routinely manufactures the same products or performs the same services, why would standards be helpful?LO1
The standards development team should be composed of what experts? Why are these people included?LO1
Discuss the development of standards for a material. How is the quality standard established for a material?LO1
What is a standard cost card? What information is contained on it? How does it relate to a bill of materials and an operations flow document?LO1
Why are the quantities shown in the bill of materials not always the same quan¬ tities that are shown in the standard cost card?LO1
A total variance may be calculated for each cost component of a product. Into what variances can this total be separated and to what does each relate? (Discuss separately for material and labor.)LO1
What is meant by the term standard hours allowed? Does the term refer to inputs or outputs?LO1
“Unfavorable variances will always have debit balances, whereas favorable vari¬ ances will always have credit balances.” Is this statement true or false? Why?LO1
What is meant by the process of “management by exception?” How is a standard cost system helpful in such a process?LO1
Discuss the three types of standards with regard to the level of rigor of attain¬ ment. Why are some companies currently adopting the most rigorous standard?LO1
Why may traditional methods of setting standards lead to less than desirable material resource management and employee behavior?LO1
How are variances used by managers in their efforts to control costs?LO1
Fixed overhead costs are generally incurred in lump-sum amounts. What impli¬ cations does this have for control of fixed overhead?LO1
Can combined overhead rates be used for control purposes? Are such rates more or less appropriate than separate overhead rates? Why or why not?LO1
Which overhead variance approach (two-variance, three-variance, or four- variance) provides the most information for cost control purposes?LO1
Why are some companies replacing the two traditional cost categories of direct labor and manufacturing overhead with a “conversion cost” category?LO1
How has automation affected standard costing? How has automation affected the computation of variances?LO1
(Direct material variances) Leisure Furniture makes wrought iron table and chair sets. During April 1996, the purchasing agent bought 17,600 pounds of scrap iron at $.89 per pound. Each set requires a standard quantity of 70 pounds at a standard cost of $.85 per pound. During April, the company
(Direct material variances) In August 1996, Westwego Company’s costs and amounts of paper consumed in manufacturing its 1997 Executive Planner and Calendar were as follow:a. Calculate the total cost of purchases for August.b. Compute the material price variance (based on quantity purchased).c.
(Direct labor variances) Prefab Construction Inc. builds standard prefabricated wooden frames for apartment walls. The standard quantity of direct labor is 3.5 hours for each frame at an average standard hourly wage of $14.50. During May 1996, the company produced 520 frames. The payroll records
(Direct labor variances) In auditing the inventory account of a client, the account¬ ing firm of Porter & Co., CPAs, set the following standard: 200 hours at an hourly rate of $24.50. The firm actually worked 190 hours auditing inventory. The total labor variance for the inventory audit was $40
(Direct material and direct labor variances) Lisa Scamponi Ltd. produces evening bags. In December 1996, Ms. Scamponi, president of the company, received the following information from Antonio Buffa, the new controller, in regard to No¬ vember production:Ms. Scamponi asked Mr. Buffa to provide her
(Missing information for materials and labor) For each of the independent cases, fill in the missing figures.LO1 CASE A CASE B CASE C CASE D Units produced Standard hours per unit 800 ? 240 1,500 3 .8 ? P Standard hours allowed ? 600 480 ? Standard rate per hour $7 ? $9.50 $6 Actual hours worked
(Four-variance approach; journal entries) For 1996, Phelps Manufacturing has set 120,000 direct labor hours as the annual capacity measure for computing its predetermined variable overhead rate. At that level, budgeted variable overhead costs are $540,000. The company has decided to apply fixed
(Computation of all variances) The manager of the Automobile Registration Di¬ vision of the State of Louisiana has determined that it typically takes 30 minutes for the department’s employees to register a new car. The following predeter¬ mined overhead costs are applicable to Orleans Parish.
(Missing data, three-variance approach) The flexible budget formula for total overhead for the Compass Division of Maritime Products Company is $360,000 + $8 per direct labor hour. The combined overhead rate is $20 per direct labor hour. The following data have been recorded for the year:Use a
(Variances and cost control) Windfall Company applies overhead on a direct labor hour basis. Each unit of product requires 5 direct labor hours. Overhead is applied on a 30 percent variable and 70 percent fixed basis; the overhead appli¬ cation rate is $16 per hour. Standards are based on a normal
(Journal entries) Thurston Custom Floors had the following balances in its trial balance at year-end 1996:Assume that the variances, taken together, are believed to be significant. Prepare the journal entries to dispose of the variances.LO1 Direct Material Inventory Work in Process Inventory
(Variances and conversion cost category) Kansas Brass makes small brass statues. Until recently, the company used a standard cost system and applied overhead to production based on direct labor hours. The company automated its facilities in March 1996 and revamped its accounting system so that
(Appendix) Salem Corporation produces 12-ounce cans of mixed pecans and cashews. Standard and actual information is shown below.LO1 Standard quantities and costs (12-oz. can): Pecans: 6 ounces at $3.00 per pound Cashews: 6 ounces at $4.00 per pound $1.125 1.500 Actual quantities and costs for
(Appendix) Apex Mechanical Systems is a mechanical engineering firm. The firm employs both engineers and draftspeople. The average hourly rates are $40 for engineers and $20 for draftspeople. For one project, the standard was set at 750 hours of engineer time and 1,250 hours of draftsperson time.
(Developing standard cost card and discussion) The Frozen Fruitcup Company is a small producer of fruit-flavored frozen desserts. For many years, Frozen Fruitcup products have had strong regional sales on the basis of brand recognition; how¬ ever, other companies have begun marketing similar
(Behavioral implications of standard costing) Contact a local company that uses a standard cost system. Make an appointment with a manager at that company to interview him or her on the following issues.■ The characteristics that should be present in a standard cost system to en¬ courage

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