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cost accounting

Introduction To Cost Accounting 1st International Edition Don R. Hansen, Maryanne Mowen, Liming Guan, Mowen/Hansen - Solutions

Bernard Creighton is the controller for Creighton Hardware Store. In putting together the cash budget for the fourth quarter of the year, he has assembled the following data.Required:1. Complete the balance sheet given in part (j).2. Bernard wants to see how the company is doing prior to starting
Norton Company, a manufacturer of infant furniture and carriages, is in the initial stages of preparing the annual budget for the coming year. Scott Ford has recently joined Norton’s accounting staff and is interested in learning as much as possible about the company’s budgeting process. During
The controller for Muir Company’s Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible biidow tim cl Cla eee nem past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on
Paters Company produced 50,000 metal components for tractors. There were no beginning or ending work-in-process inventories in any department. Paters incurred the following costs for October:Required:1. Calculate the costs transferred out of each department.2. Prepare the journal entries
Golding Dentistry has a hygienist that performs cleanings for its patients. During May, Golding had the following cost and output information:Required:1. Calculate the cost per cleaning for May.2. Calculate the cost of services sold for May.3. What if Golding found a way to reduce overhead costs by
Fleming, Fleming, and Johnson, a local CPA firm, provided the following data for individual returns processed for March (output is measured in number of returns):Required:1. Prepare a physical flow schedule 2. Prepare an equivalent units schedule. Explain why output is measured in equivalent
During June, Herring Associates incurred total production costs of $40,000 for copy- CORNERSTONE 6-4 editing manuscripts and had the following equivalent units schedule:Required:1. Calculate the cost of copyediting one manuscript for June.2. Assign costs to manuscripts completed and to EWIP and
Edge Company produces power drinks. The Mixing Department, the first process CORNERSTONE 6-5 department, mixes the ingredients required for the drinks. The following data are for April:Direct materials are added at the beginning of the process. Ending inventory is 60 percent complete with respect
Dulce Company produces premium chocolate candy bars. Conversion costs are added uniformly. For March, EWIP is 40 percent complete with respect to conversion costs.The following information is provided for March:Required:1. Calculate the equivalent units for each input category.2. Calculate the unit
Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follows:Required:1. Prepare a physical flow
Gunnison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December shown at the top of the following page.Required:1. Calculate the unit cost for December, using the FIFO method.2. Calculate the cost of goods transferred out, calculate the
Jackson Products produces a barbeque sauce using three departments: Cooking, Mixing, and Bottling. In the Cooking Department, all materials are added at the beginning of the process. Output is measured in ounces. The production data for July are as follows:Required:1. Prepare a physical flow
Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December shown at the top of the following page.Required:1. Calculate the unit cost for December, using the weighted average method.2. Calculate the cost of goods transferred out,
K-Briggs Company has three process departments: Mixing, Encapsulating, and Bottling.At the beginning of the year, there were no work-in-process or finished goods inventories.The following data are available for the month of July:Required:1. Prepare journal entries that show the transfer of costs
Ireland Company uses JIT manufacturing. There are several manufacturing cells set up within one of its factories. One of the cells makes stands for flat-screen televisons. The cost of production for the month of April is given below.During May, 20,000 stands were produced and sold.Required:1.
Arnez, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies are produced in three departments: Plate Cutting, Rod Cutting, and Welding. Overhead is applied using the following drivers and activity rates:Required:1. Prepare a physical flow schedule.2.
Piel Suave Company manufactures sun protection lotion. The Mixing Department, the first process department, mixes the chemicals required for the repellant. The following data are for 2011:Direct materials are added at the beginning of the process. Ending inventory is 95 percent complete with
Alden Company uses the FIFO method to account for the costs of production. For Crushing, the first processing department, the following equivalent units schedule has been prepared:Required:1. Determine the cost of ending work in process and the cost of goods transferred out.2. Prepare a physical
Using the data from Exercise 6-18, compute the equivalent units of production for each of the four departments using the FIFO method.LO1
Using the same data found in Exercise 6-22, assume the company uses the FIFO method.Required:Prepare a schedule of equivalent units, and compute the unit cost for the month of December.LO1
Baxter Company has two processing departments: Assembly and Finishing. A predetermined overhead rate of $10 per DLH is used to assign overhead to production. The company experienced the following operating activity for April:Required:1. Prepare the required journal entries for the preceding
Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data:a. In Cutting, all direct materials are added at the beginning of the
Refer to the data in Problem 6-26. Assume that the FIFO method is used.Required:1. Prepare a physical flow schedule.2. Calculate equivalent units of production for direct materials and conversion costs.3. Compute unit cost. Round to three decimal places.4, Calculate the cost of goods transferred to
Stewart Company produces a product that passes through three processes: fabrication, assembly, and finishing. All manufacturing costs are added uniformly for both processes.The following information was obtained for the assembly department for May 2007:a. Workin process, May 1, had 10,000 units (40
Refer to the data in Problem 6-28.Required:Prepare a cost of production report for the assembly department for May using the FIFO method of costing.LO1
Granger Credit Corporation is a wholly owned subsidiary of a large manufacturer of computers.Granger is in the business of financing computers, software, and other services that the parent corporation sells. Granger has two departments that are involved in financing services: the credit department
Refer to the data in Problem 6-31.Required:Repeat the requirements in Problem 6-31 using the FIFO method.LO1
Healthway uses a process-costing system to compute the unit costs of the minerals that it produces. It has three departments: Mixing, Tableting, and Bottling. In Mixing, the ingredients for the minerals are measured, sifted, and blended together. The mix is transferred out in gallon containers. The
Refer to the data in Problem 6-34.Required:Prepare a production report for each department using the FIFO method.LO1
Describe the two-stage allocation process for assigning support service costs to products in a traditional manufacturing environment.LO1
Why must support service costs be assigned to products for purposes of inventory valuation?LO1
Explain how allocation of support service costs is useful for planning and control and in making pricing decisions.LO1
Explain how allocating support service costs will encourage service departments to operate more efficiently.LO1
Why is it important to identify and use causal factors to allocate support service costs?LO1
Explain why it is better to allocate budgeted support service costs rather than actual support service costs.LO1
Why is it desirable to allocate variable costs and fixed costs separately?LO1
Explain why either normal or peak capacity of the producing (or user) departments should be used to allocate the fixed costs of support departments.LO1
Explain why variable bases should not be used to allocate fixed costs.LO1
Why is the dual-rate charging method better than the single-rate method? In what circumstances would it not matter whether dual or single rates were used?LO1
Explain the difference between the direct method and the sequential method.LO1
The reciprocal method of allocation is more accurate than either the direct or sequential methods. Do you agree or disagree? Explain.LO1
What is a joint cost? How does it relate to by-products?LO1
How do joint costs differ from other common costs?LO1
Oliphant Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $476,000, and budgeted direct labor hours were 13,600. The average wage rate for direct labor is expected to be $25 per hour. During June, Oliphant Company worked on four jobs. Data relating to
Refer to Cornerstone Exercise 5-1 for data.Required:Calculate the balance in Work in Process as of June 30.Calculate the balance in Finished Goods as of June 30.Calculate the cost of goods sold for June.Calculate the price charged for Job 39.What if the customer for Job 40 was able to pay for the
Prentice Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Prentice identified three overhead activities and related drivers. Budgeted information for the year is as follows:LO1Required: Activity Cost Driver Amount of Driver Materials handling $ 36,000
Bastera Company installs granite countertops in customers’ homes. First, the customer chooses the particular granite slab, then Bastera measures the countertop area at the customer’s home, cuts the granite to that shape, and installs it. The Gavin job calls for direct materials of $2,300 and
Refer to the data in Cornerstone Exercise 5-4. Now Assume that the spoilage was due to the inherently fragile nature of the piece of stone picked out by the Gavins. Bastera had warned them that the chosen piece could require much more care and potentially, additional work. As a result, Bastera
Classify the following types of firms as either manufacturing or service. Explain the reasons for your choice in terms of the four features of service firms (heterogeneity, inseparability, intangibility, and perishability).LO1 a. Bicycle production b. Pharmaceuticals C. Income tax preparation d.
Elin Saunders, of Lawn Pro Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. Lawn Pro estimated the following for the year:Required:1.
Refer to the data in Exercise 5-7. Elin Saunders, owner of Lawn Pro, noticed that the watering systems for many houses in a local subdivision had the same layout and required virtually identical amounts of prime cost. Elin met with the subdivision builders and offered to install a basic watering
Shauntay James has just started a new business—building and installing custom garage organization systems. Shauntay builds the cabinets and work benches in his workshop, then installs them in clients’ garages. Shauntay figures his overhead for the coming year will be $9,000. Since his business
Refer to Exercise 5-9.Required:1. What source documents will Shauntay need to account for costs in his new business?2. Suppose Shauntay’s business grows, and he expands his workshop and hires three additional carpenters to help him. What source documents will he need now?LO1
During March, Aragon Company worked on three jobs. Data relating to these three jobs follow:Overhead is assigned on the basis of direct labor hours at a rate of $8.40 per direct labor hour. During March, Jobs 78 and 79 were completed and transferred to Finished Goods Inventory. Job 79 was sold by
On April 1, Sukanya Company had the following balances in its inventory accounts:LO1 Materials Inventory Work-in-Process Inventory Finished Goods Inventory $12,450 22,605 4,600 Work-in-process inventory is made up of three jobs with the following costs: Direct materials Direct labor Applied
Refer to Exercise 5-12.Required:1. Prepare journal entries for the April transactions.2. Calculate the ending balances of each of the inventory accounts as of April 30.LO1
On August 1, Dabo Company’s work-in-process inventory consisted of three jobs with the following costs:LO1 Job 170 Job 171 Job 172 Direct materials $1,600 $2,000 $850 Direct labor 1,900 1,200 900 Applied overhead 1,710 1,080 810 During August, four more jobs were started. Information on costs
Refer to Exercise 5-14. Dabo’s selling and administrative expenses for August was$1,860.Required:Prepare an income statement for Dabo Company for August.LO1
Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred:LO1 a. Materials were purchased on account for $45,670. b. Materials totaling $40,990 were requisitioned for use in producing various jobs. Direct labor payroll for the month was $22,400 with an
During August, Skyler Company worked on three jobs. Data relating to these three jobs _ follow:Overhead is assigned on the basis of direct labor hours at a rate of $2.30 per direct labor hour. During August, Jobs 39 and 40 were completed and transferred to Finished Goods Inventory. Job 40 was sold
Feldspar Company uses an ABC system to apply overhead. There are three activity rates:During September, Feldspar worked on three jobs. Data relating to these jobs follow:During September, Jobs 10-280 and 10-282 were completed and transferred to Finished Goods Inventory. Job 10-280 was sold by the
Kapoor Company uses job-order costing. During January, the following data were reported:LO1 a. Materials purchased on account: direct materials, $98,500; indirect materials, $14,800. b. Materials issued: direct materials, $82,500; indirect materials, $8,800. C. Labor cost incurred: direct labor,
Appleton Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Appleton identified three overhead activities and related drivers. Budgeted information for the year is as follows:By March 31, Jobs 15, 16, and 17 were completed and sold. The remaining jobs
During May, the following transactions were completed and reported by Jerico Company:Required:1. Prepare journal entries to record the transactions occurring in May.2. Prepare T-accounts for Materials Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post all
Karanth Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is as follows:Previously, Sharon Benetton, Karanth Company’s controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 10,000.Sharon has been
Anselmo’s Kwik Print provides a variety of photocopying and printing services. On June 5, Anselmo invested in some computer-aided photography equipment that enables customers to reproduce a picture or illustration, input it digitally into the computer, enter text into the computer, and then print
Cherise Ortega, marketing manager for Romer Company, was puzzled by the outcome of two recent bids. The company’s policy was to bid 150 percent of the full manufacturing cost. One job (labeled Job 97-28) had been turned down by a prospective customer, who had indicated that the proposed price was
Garvey Company is a specialty print shop. Usually, printing jobs are priced at standard cost plus 50 percent. Job 95-301 involved printing 500 wedding invitations with the following standard costs:LO1 Direct materials .$200 Direct labor 20 Overhead 30 Total $250 Normally, the invitations would be
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 T-shirt. Last week,
Sutton Construction Inc. is a privately held, family-founded corporation that builds single-and multiple-unit housing. Most projects Sutton Construction undertakes involve the construction of multiple units. Sutton Construction has adopted a job-order costing system for determining the cost of each
Dr. Sherry Bird is employed by Dental Associates. Dental Associates recently installed a computerized job-order 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
Nutratask, Inc., is a pharmaceutical manufacturer of amino-acid-chelated minerals and vitamin supplements. The company was founded in 1974 and is capable of performing all manufacturing functions, including packaging and laboratory functions. Currently, the company markets its products in the
Interview an accountant who works for a service organization that uses job-order costing. For a small firm, you may need to talk to an owner/manager. Examples are a funeral home, insurance firm, repair shop, medical clinic, and dental clinic. Write a paper that describes the job-order costing
A number of companies are involved in creating Internet solutions to medical recordkeeping. Given that clinics and doctors offices use a job-order costing system, discuss how software may improve productivity and efficiency. What problems remain to be solved? Use the Athena Health
What is a process? Provide an example that illustrates the definition.LO1
Describe the differences between process costing and job-order costing.LO1
What journal entry would be made as goods are transferred out from one depart- ment to another department? From the final department to the warehouse?LO1
What are transferred-in costs?LO1
Explain why transferred-in costs are a special type of material for the receiving department.LO1
What is a production report? What purpose does this report serve?LO1
Can process costing be used for a service organization? Explain. Describe how process costing can be used for JIT manufacturing firms.LO1
What are equivalent units? Why are they needed in a process-costing system?LO1
How is the equivalent unit calculation affected when direct materials are added at the beginning or end of the process rather than uniformly throughout the process?LO1
Describe the five steps in accounting for the manufacturing activity of a processing department, and indicate how they interrelate.LO1
Under the weighted average method, how are prior-period costs and output treated? How are they treated under the FIFO method?LO1
Under what conditions will the weighted average and FIFO methods give essen- tially the same results?LO1
In assigning costs to goods transferred out, how do the weighted average and FIFO methods differ?LO1
How are transferred-in costs treated in the calculation of equivalent units?LO1
What is operation costing? When is it used?LO1
Bo’s Gym is a complete fitness center. Owner Bo Sanderson employs various fitness trainers who are expected to staff the front desk and to teach fitness classes. While on the front desk, trainers answer the phone, handle walk-ins and show them around the gym, answer member questions about the
Metternich Manufacturing Company has a Purchasing Department staffed by four purchasing agents. Each agent is paid $30,000 per year and is able to process 3,000 purchase orders. Last year, 10,000 purchase orders were processed by the four agents.Required:1. Calculate the activity rate per purchase
Lance Leffler, owner of Leffler Manufacturing, Inc., wants to determine the cost behavior of labor and overhead. Lance pays his workers a salary; during busy times, everyone works to get the orders out. Temps (temporary workers hired through an agency) may be hired to pack and prepare completed
Suenos Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.Required:1. Determine the high point and the low point.2. Calculate the variable rate for purchasing cost based on the number of purchase orders.3. Calculate the fixed monthly cost of
Suenos Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.The controller for Suenos Manufacturing ran regression on the above data, and the coefficients shown by the regression program (rounded to the nearest cent) are:Required:1. Construct
Suenos Manufacturing Company, using 12 months of data on purchasing cost and number of purchase orders, ran a regression equation that yielded the following information on the intercept, X variable 1, and standard error. (All regression results have been rounded to the nearest cent.)Suenos
The controller for Suenos Manufacturing Company felt that the number of purchase orders alone did not explain the monthly purchasing cost. He knew that nonstandard orders (for example, one requiring an overseas supplier) took more time and effort. He collected data on the number of nonstandard
Alexander Company makes aircraft engines. Alexander has noticed that, in general, each new engine design is subject to an 85 percent learning rate. Assume that the first unit produced takes 400 hours, and direct labor is paid an average of $30 per hour.Required:1. Set up a table with columns
Classify the following costs of activity inputs as variable, fixed, or mixed. Identify the activity and the associated activity driver that allow you to define the cost behavior. For example, assume that the resource input is ‘‘cloth in a shirt.” The activity would be“sewing shirts,””
BBQ Biff, Inc., manufactures barbeque smokers. Based on past experience, BBQ Biff has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $720,000 + $0.90X, where X equals number of smokers. Last year, BBQ Biff produced 25,000 smokers. Actual
Cashion Company produces chemical mixtures for veterinary pharmaceutical companies.Its factory has four mixing lines that mix various powdered chemicals together according to specified formulas. Each line can produce up to 5,000 barrels per year. Each line has one supervisor who is paid $34,000 per

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