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business
cost accounting
Cost Accounting Principles And Applications 6th Edition Horace R. Brock, Linda Herrington - Solutions
What are opportunity costs? Give an example.LO.1
Distinguish between differential costs and incremental costs.LO.1
What is meant by differential revenues?LO.1
When management is making a business decision, are sunk costs more important than incremental costs? Explain.LO.1
Why must nonmeasurable factors be considered in decision making?LO.1
Explain this statement: "There are always at least two alternatives."LO.1
What role does the accountant play in the decision-making process?LO.1
In deciding whether a new labor- saving machine should be purchased, what type of cost data is relevant?LO.1
In deciding whether to process a product further or to sell it in its current stage of completion, what are the relevant items of data?LO.1
Suggest some reasons why a company might decide to manufacture a part even though it might be cheaper to buy the part from an outside vendor.LO.1
Is absorption costing or direct costing more useful in making managerial decisions? Why?LO.1
When absorption costing is used, why might it be profitable to continue to manufacture a product line that is shown in the accounting records as being sold at a loss?LO.1
If a manufacturing plant is not operating at full capacity, why might a company decide to manufacture a part that is currently being purchased from an outside suppher?LO.1
Suggest some nonmeasurable factors that management must consider in deciding whether to accept a special order for the company's product at a price less than the normal price.LO.1
Assume that the management of a firm where you are employed as an accountant has asked you to list the steps that should be used in making decisions from a set of alternatives. Prepare a list.LO.1
What type of information does management need in maiking a decision about whether to add or drop a product line?LO.1
BibBoy Toy Company manufactures wagons for distribution through discount outlets, catalog sales companies, and other outlets. One wagon part is purchased from an outside firm for $6 per unit. The company uses 22.000 of these items each year. The production manager states that the company could
The Mohican Company has substantial capacity that is not being used in current manufacturing operations. Management is considering making bids on government supply contracts. What type of information would be useful in setting bid prices for these special jobs or products?LO.1
One of Myfair Company's joint products, ATEX, is sold after being processed in the Doubling Department. The other product.BETATEX, is further processed in the Acidizing Department. ATEX could also be processed in the Acidizing Department and sold to a different class of customers. Explain how you
Certain managers in the company by which you are employed have discussed for several weeks a proposal by the production manager that scrap materials resulting from the manufacturing process be processed further and sold. They have asked you to help them make the decision. What information will you
Better Engines Inc. is in the process of acquiring a new factory building. The building is larger than is needed at the current level of production, but it is anticipated that the excess space will be needed within three or four years to accommodate expected growth in manufacturing. The director of
Understand the different kindsof normal and abnormal productlosses or spoilage that mayoccur in the manufactuhngprocess.LO.1
Compute equivalent units of productionand cost per equivalentunit when spoilage of productsor normal losses have occurred.LO.1
Compute equivalent units of productionand cost per equivalentunit when spoilage of productsor abnormal losses haveoccurred.LO.1
Prepare cost of production reportswhen spoilage of productsor normal losses have occurred.LO.1
Prepare cost of production reportswhen spoilage of productsor abnormal losses haveoccurred.LO.1
Account for the reworking ofdefective units.LO.1
Compute equivalent units ofproduction and cost per equivalentunit when the number ofunits of product has been increasedin the productionprocess.LO.1
Prepare cost of production reportswhen the number of unitshas been increased in the productionprocess.LO.1
What are some common causes of normal lost units?LO.1
How are manufacturing costs related to normal spoilage or normal lost unitsaccounted for?LO.1
How does normal spoilage or lost units affect the calculation of equivalentproduction in a department?LO.1
What is the difference between spoiled units and defective units?LO.1
Why can it be said that equivalent units actually means equivalent good units?LO.1
Explain two ways that the impact of normal lost units on prior departmentcosts can be handled in the cost of production report.LO.1
In determining equivalent production in a department subsequent to thefirst department, what consideration is given to lost units?LO.1
What is meant by the term lost-unit cost?LO.1
Why must there be a recalculation of prior department unit costs whenunits are lost in the current department?LO.1
In preparing a cost of production report, it is often necessary to round unitcosts. As a result, the Total Costs Accounted For, computed by adding theending work in process inventory and the cost of units transferred out ofthe department, may not exactly equal the Total Costs to Be AccountedFor.
How does abnormal spoilage differ from normal spoilage?LO.1
Name two typical causes of abnormal spoilage.LO.1
How is abnormal spoilage shown in the cost of production report?LO.1
What special journal entry is required to account for abnormal spoilage?LO.1
What are some common reasons for an increase in the number of units ofproducts?LO.1
When units are made defective as a part of the normal manufacturingcosts, how are costs to rework the units accounted for?LO.1
How are units lost in production?LO.1
What is meant by shrinkage?LO.1
What are spoiled units?LO.1
Are lost units considered in computing equivalent units? Explain.LO.1
What are defective units?LO.1
Equivalent units ofproduction actually refers to equivalent goodunits. Explain.LO.1
What is the effect of spoiled goods on prior department costs perunit? How does this differ from their effect on the cost per unitin the current department?LO.1
How does abnormal loss of units differ from normal loss ofunits?LO.1
When units are made defective by abnormal conditions or events,how are costs to rework the units usually accounted for?LO.1
How should abnormal lost units be treated in computing equivalentproduction?LO.1
How can units increase in production?LO.1
How can the effects of lost units on prior department unit costsbe reflected in the cost of production report?LO.1
You are the cost accountant of Ashurst Manufactvu-ing Company.All spoiled units are treated as normal lost units. You have noticedthat the percentage of units that are lost has varied considerably,ranging from less than 1 percent of units started in the departmentto more than 5 percent of units
Why should management be acutely interested in units lost inproduction?LO.1
How would you explain to management why some spoilage can beconsidered normal whereas other spoilage is abnormal?LO.1
As the cost accountant of Duluth Production Company, you havebeen asked by your employer to explain why the unit cost of materialsincreases dramatically in the winter. You have discovered thatsome of the materials are affected by extremely cold weather andas a result become unusable during the
You have discussed with the management of your company theimpact of defective units on the cost of each item of product manufactured.One of the company's officers expresses the opinion thatthe company loses money on reworking defective units. His argumentis that the units should bear the normal
In your company, normal spoiled units £ire ignored in computingequivalent production and costs per unit. In other words, goodunits bear all the costs. The company president thinks that thismay lead to a lack of control over spoilage. Do you agree? Why orwhy not?LO.1
Are normal spoilage and abnormal spoilage accounted for in thesame way? If they are haindled differently, explain how their treatmentsdiffer and why they are treated differently.LO.1
Assume that during one month your company had abnormally highspoilage. You have recommended that the applicable costs be removedfrom the current month and allocated over several months.Why?LO.1
Compute equivalent units of material and cost per equivalent unitwhen there are normal losses. (Obj. 2). Kay Company adds materialsat the start of production in the Forming Department. Data relatedto production in September 19X9 are as follows:Units24,00080,00082,0004,00018,000Work in process on
Compute equivalent units of production and cost per equivalentunit for labor when there are normal losses. (Obj. 2). The followingdata pertain to labor used in the Boxing Department of theEmerson Company during July 19X9.Beginning work in process, 400 units, 50% completeStarted in production, 8,000
Compute equivalent production and cost per equivalent unit foroverhead when there are normal losses. (Obj. 2). The followingdata pertains to overhead for the Assembly Department of Austin ElectronicsCompany for September 19X9.Beginning work in process, 1,000 units 75% completeStarted in production.
Compute equivalent production and cost per equivalent unit forprior department costs when there are normal lost units. (Obj.2). On January 1, 19X9, beginning work in process inventory forthe Machining Department of the Allen Company was 6,000 units withprior department costs of $18,000. During the
Compute equivalent production and cost per equivalent productionfor prior department costs when there are normal losses.(Obj. 2). On March 1, 19X9, the beginning work in process inventoryfor the Laminating Department of the Istanbul Company was 1 00units. The prior department costs for these units
Compute equivalent production and cost per equivalent unit forprior department costs when there are normal losses. (Obj. 2).On October 1, 19X9, the beginning work in process inventory for theDrying Department of the Apache Company was 14,000 units withprior department costs of $22,800. During
Compute equivalent units of production, compute cost per equivalentunit, and record abnormal spoilage. (Obj. 3). Denver DecorativeTray Company adds materials at the start of production in theForming Department. Data related to materials used in October 19X9are as
Accounting for reworking of defective units. (Obj. 6). In the FinishingDepartment of Alamo Reclining Chair Corporation, some re dining chairs are routinely improperly finished and are classified as"defective." These units are refinished and transferred to FinishedGoods Inventory. In AprU 19X9, 14
Compute equivalent production and cost per equivalent unit whenthere are increased units. (Obj. 7). On October 1, 19X9. the beginningwork in process inventory for the Absorption Department ofBeauty Plus Personal Care Products, a cosmetics producer, was 1.000units with prior department costs of
Explain and illustrate the FIFO method of accounting for costs of work in process inventories.LO.1
Compute equivalent production under the FIFO method of accounting for costs of work in process inventories.LO.1
Compute cost per equivalent unit under the FIFO method of accounting for work in process.LO.1
Prepare a cost of production report when the FIFO method of accounting for costs of work in process inventories is used.LO.1
Account for goods lost in production under the FIFO method of accounting for work in process inventories.LO.1
Compare results obtained by using the average cost method and the FIFO method, explain the differences between the methods, and identify the advantages and disadvantages of each method.LO.1
Which method, the average cost method or the FIFO method, produces unit costs that more directly relate to specific units of product?LO.1
How does the monthly production report prepared when the FIFO method is used differ from that prepared when the average cost method is used?LO.1
How does the computation of equivalent production when the FIFO method is used differ from the computation when the average cost method is used?LO.1
Is the figure shown as Total Units to Be Accounted For when the FIFO method is used different from that when the average cost method is used? Explain.LO.1
Why is the cost of each segment of the month's production (units from beginning inventory and units started and completed in the current month)not costed out separately in the cost of production report and transferred as a separate amount to the next department?LO.1
In the cost of production report under the FIFO method, how are lost units treated in computing cost per equivalent unit for costs Transferred In From Prior Department?LO.1
Under the FIFO costing method, are costs included for Costs in Prior Department in the beginning work in process inventory added to Costs in Prior Department transferred into the current department during the current period?LO.1
Does the FIFO method require less or more computational effort than the average cost method?LO.1
Under the average cost method, how do lost units affect the cost per equivalent unit for materials, labor, and overhead added in the department during the current month?LO.1
In a cost of production report prepared when the FIFO method is being used, are rounding errors treated as being applicable only to units that were started and completed during the current period?LO.1
Briefly describe the FIFO method of determining unit costs.What are some of the advantages of the FIFO method over the average cost method for handling the cost of the work in process inventories?LO.1
What are some of the disadvantages of the FIFO method?LO.1
How does the computation of equivalent units of production under the FIFO method differ from the computation under the average cost method?LO.1
Why is the cost of the beginning work in process inventory separated from costs of current production under the FIFO method?LO.1
Is the average cost method or the FIFO method of accounting for work in process more difficult? Explain.LO.1
When the FIFO method is used, how would a firm compute the unit cost of goods transferred out to the next department?LO.1
When the FIFO method is used, how does the monthly production report differ from the monthly production report prepared under the average cost method?LO.1
Will the number of equivalent units of production be larger or smaller if the FIFO method is used rather than the average cost method?LO.1
Suppose that management of a company uses cost data in setting the price of the firms products. In a period of rapid inflation, would the unit cost figures resulting from FIFO be preferable to those resulting from average costing? Explain.LO.1
Management is interested in detecting and measuring changes in unit labor and overhead costs as quickly as possible. Would the average cost method or the FIFO method be more suitable for this purpose? Explain.LO.1
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