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cost accounting
Cost Accounting Principles And Applications 6th Edition Horace R. Brock, Linda Herrington - Solutions
What factors are considered in developing a sales budget?LO.1
What factors determine how many units of a product are to be manufactured?LO.1
What is meant by the term control as it is used in cost accounting?LO.1
What is the manufacturing costs budget? Name the detailed budgets that support the manufacturing costs budget.LO.1
How is the monthly production budget used in planning purchases?LO.1
What is the relationship between the materials purchases budget and the materials usage budget?LO.1
How is the overhead flexible budget used in preparing the manufacturing budget?LO.1
Why are work in process inventories sometimes omitted in preparing the manufacturing costs budget?LO.1
In addition to the manufacturing budget, what other budget schedules become part of the master budget?LO.1
How are budgets used as a control device?LO.1
Why is the flexible budget used in controlling costs?LO.1
What is an overhead performance report?LO.1
How are the costs of service departments, such as an electric generating plant, handled in budget reports?LO.1
Explain what the term budget means.LO.1
What are the purposes of budgeting?LO.1
Explain what a master budget is.LO.1
What is the role of the accountant in the budgeting process?LO.1
What is the role of the budget director in the budgeting process?LO.1
Why is the sales budget important in the budgeting manufactvu"-ing costs?LO.1
Is economic forecasting important in the budgeting process?Explain.LO.1
What is the production budget?LO.1
What factors are used in computing the number of units of a product to be manufactured during the period?LO.1
What is a flexible budget? LO.1
How are costs in a flexible budget arrived at?LO.1
Explain two ways in which a flexible budget is used.LO.1
What costs are included in the manufacturing costs budget?LO.1
How would a firm go about setting the budget for direct labor?LO.1
What information is included in a performance report?LO.1
How often should a performance report be prepared? Explain.LO.1
List the major budget schedules that become a part of the master budget.LO.1
What types of economic reports or forecasts would be of special interest in preparing budgets for each of the following?a. A manufacturer of automobilesb. A home builderc. A commercial bankd. A community college LO.1
The management of the company for which you are employed has asked you to explain the steps that would be necessary in setting up a master budget. Respond.LO.1
You have an appointment with the president of your company to explain how a budget can help in planning. What will you say to her?LO.1
You are helping to set up a budgeting system in the company for which you work. Should the managers of the factory's operating departments have a role in developing their own budgets? Explain your answer.LO.1
Explain to your supervisor how a formal budgeting system can help the company's planning.LO.1
Why would a flexible budget be more useful than a fixed budget in controlling costs and evaluating performance?LO.1
Why would a manager's performance be different if the manager were allowed to participate in the budgeting process than it would be if top management were to develop the budget without the manager's participation?LO.1
The actual indirect labor costs of a department in September 19X9 were $104,600. The flexible budget for the level of activity worked called for indirect labor costs of $96,400. With which personnel would management want to discuss this type of overrun?LO.1
Prepare a sales budget. (Obj. 1). In 19X8 the sales of Protek, a product of Ohio Manufacturers, were 612,000 units at an average price of $5.92 per unit. It is anticipated that the number of units sold in 19X9 will decrease 4 percent and the average selling price per unit will increase 5 percent.
Prepare a production budget. (Obj. 2). The December 31, 19X8, inventory of Syntho, a product manufactured by Household Products, is 82,000 units. The company wants to have an ending inventory on December 31, 19X9, equal to 8 percent of the budgeted sales in 19X9.What will be the budgeted production
Compute the budgeted materials cost per unit. (Obj. 2). Use the following information about the materials in Alchem, a medicinal product, to prepare a schedule of materials cost per unit of product:Compound X: 8 ounces for each pound of Alchem; cost per pound,$1.54.Filler: 4 ounces for each pound
Prepare a materials purchases budget. (Obj. 2). Low Cost Manufacturing Company has projected its sales of Perfecto smoker grills to be 10,000 units during the year 19X9. At the beginning of 19X9, the company will have 1,200 smoker grills in stock, but the controller and purchasing manager have
Prepare a direct labor budget. (Obj. 2). The production budget for the Southeast Company, Inc., calls for manufacturing 90,200 units of product during 19X9. Each unit is expected to require 2j hours of labor in the Mixing Department at a rate of $10.20 per hour and l|hours of labor in the Cooking
Prepare a flexible overhead budget. (Obj. 3). For 19X9, the overhead budget of the Extrusion Department of the Beasley Company includes the following three elements among the costs:Indirect materials: $.50 per direct labor hour for variable costs plus$33,000 for fixed costs Salaries of factory
Prepare a flexible overhead budget. (Obj. 3). The monthly overhead costs of the Cleaning Department of Bear Creek Corporation have been analyzed as follows:Variable Fixed(per direct labor hour) (per month)Supervision — $4,600 Other indirect labor $ .80 2,400 Utilities .30 800 Depreciation —
Prepare an operating expenses budget. (Obj. 4). Deep South Company has projected its sales for 19X9 to be $1,200,000. Selling expenses are projected as follows:Salaries of sales manager and other sales office personnel Advertising expense Commissions of two salespersons Shipping and delivery costs
Prepare a monthly overhead performance report. (Obj. 6). A portion of the flexible budget for overhead of the Erection Department of Riners Company for 19X9 is shown.Variable Cost Element Item Per Hour Indirect Labor $.80 Power .40 TOTAL BUDGETED COST AT Fixed 90% of 100% of 110% of Cost Element
Prepare a monthly performance report; develop a flexible overhead budget. (Objs. 3, 6). The monthly fixed cost element of indirect labor in the Forming Department of Taylor Company is $12,000, and the variable cost element is $2.20 per direct labor hour. During May 19X9, production was 4,200 direct
Explain the relationship between total costs and costs per unit for variable and fixed costs.LO.1
Estimate the costs that should be incurred when the number of hours worked, the fixed costs, and the variable costs per hour are known.LO.1
Classify costs as variable, fixed, or semivariable.LO.1
Analyze cost behavior using the scattergraph method for estimating variable and fixed components.LO.1
Analyze cost behavior using the high-low points method for estimating variable and fixed components.LO.1
Analyze cost behavior using the least squares method for estimating variable and fixed components.LO.1
Explain the engineering analysis and direct estimate methods of estimating variable and fixed components.LO.1
What happens to variable costs per unit as production volume increases?LO.1
What happens to total variable costs as production volume increases?LO.1
What happens to total fixed costs as production volume decreases?LO.1
What happens to fixed costs per unit as production volume decreases?LO.1
What is a semivariable cost?LO.1
What happens to total semivariable costs as production volume increases?LO.1
What are stair-step costs?LO.1
Name five methods for analyzing cost behavior discussed in this chapter.LO.1
Explain briefly how to estimate fixed and variable cost components using the high-low points method.LO.1
Under what conditions can the scattergraph method be used to estimate the fixed and variable components of a cost?LO.1
In what circumstances is the engineering analysis method of estimating the fixed and variable components of a cost likely to be more useful than other methods?LO.1
Which two methods of estimating the fixed and variable components of a cost may be described as developing a line of best fit? Explain.LO.1
How are the engineering analysis and direct estimate methods similar? How do they differ?LO.1
Identify the basic cost behavior patterns and indicate how total costs change depending on each pattern as the activity level changes.LO.1
Explain how variable costs change as the activity level decreases.LO.1
How do fixed costs change in total and on a per-unit basis as production increases?LO.1
LO.1 What are semivariable costs? Give four examples.LO.1
Are direct materials costs fixed costs or variable costs? Explain.LO.1
Give the steps to be followed if the high-low points method is to be used to analyze cost variability.LO.1
If the high-low points method is to be used to analyze cost behavior, what is the most important criterion that the accountant should keep in mind?LO.1
Explain stair-step costs and give an example.LO.1
What is meant by engineering analysis of costs? What costs are commonly analyzed by this method? Why are these costs particularly adaptable to engineering analysis?LO.1
Describe the scattergraph method of analyzing costs.LO.1
Explain the approach that the least squares method uses in analyzing semivariable costs.LO.1
What has been historically the greatest disadvantage to using the method of least squares? Why is this no longer a great disadvantage?LO.1
What is the direct estimate method of analyzing cost behavior?When is it used?LO.1
Which of the following costs do you think is more likely to be a variable cost? A fixed cost? A semivariable cost?a. Repairs to factory equipmentb. A royalty paid by a manufacturing compEiny to a patent owner for using the patent to make a product.c. Payments made to lease factory equipment used in
For planning and control purposes, how are stair-step costs generally treated? Why are they treated in this manner?LO.1
As cost accountant of Central States Manufacturing Company, you are developing a system for budgeting manufacturing costs.You have analyzed cost and production data for the past year.You have decided to use the high-low points method for determining the variable and fixed components of equipment
Explain why a distinction between fixed costs and variable costs is important to management when a factory is operating at less than full capacity.LO.1
The president of a corporation clcdms that depreciation is a variable cost because the depreciation cost per unit of output decreases as the volume of output increases. Comment on this.LO.1
How would a distinction between fixed and variable costs help management in forecasting cash needs for the business?LO.1
The president of Macro Microelectronics Company has expressed concern to the corporation's controller over the fact that the controller has been using the scattergraph method for estimating fixed and variable costs. The president believes that the method is not reliable enough. What is your
Explain why an understanding of past cost behavior is important in the budgeting process.LO.1
For several years the Elliott Company's cost accountant has analyzed the company's semivariable manufacturing costs by breaking them into fixed and variable components. During the past year, the company's production declined by more than 25 percent but the variable portions of some costs decreased
Yesterday, the president of the company in which you are cost accountant held a meeting of managers. She expressed some concern that variable costs were increasing because volume was going down. She gave as an example the fact that depreciation costs per unit of product had increased from $4.34 per
Explain unit cost and total cost relationships. (Obj. 1). At the Shelby Company, indirect materials are purely variable costs, varying in proportion to direct labor hours worked at the rate of $.80 per direct labor hour.a. Compute the total indirect materials cost for each of the following four
Explain unit cost and total cost relationships. (Obj. 1). At the Open Door Company, factory supervision is a fixed cost of $10,000 per month.a. Compute the supervision cost per direct labor hour at each of the following monthly activity levels:(1) 10,000 hours(2) 11,000 hours(3) 12,500 hours(4)
Explain unit cost and total cost relationships. (Obj. 1). The depreciation cost for the Dunn Company is $20,000 per month.a. What should the depreciation cost per direct labor hour be if 4,000 hours are worked?b. What should the depreciation cost per direct labor hour be if 4,500 hours are
Estimate costs. (Obj. 2). Fixed electric power costs in San Saba Production Company are estimated to be $1,360 per month and variable electric power costs are estimated to be $.40 per direct labor hour. What would be the total expected electric power for each of the following levels of direct labor
Estimate costs. (Obj. 2). The cost accountant of San Diego Manufacturers has estimated the fixed costs for factory indirect labor to be $14,200 per month and the variable indirect labor cost to be $10 per direct labor hour. What would be the total expected indirect labor costs for each of the
Classify costs. {Obj. 3). Indicate whether each of the following costs is likely to be fixed, variable, or semivariable, based on physical units of output:a. Direct materialsb. Direct laborc. Payroll taxesd. Salaries of factory departmental managerse. Insurance on factory buildingf. Depreciation g.
Use the high-low points method. (Obj. 5). The monthly managerial costs of the London Company's factory for each month of 19X9 have been analyzed. The month in which the greatest number of direct labor hours were worked was March, with 10,000 hours. The managerial costs for that month totaled
Classify costs as variable, fixed, or semivariable. (Obj. 3). The Offshore Company's accountant has accumulated cost figures at various activity levels. The following data show the activity levels and the direct management costs for six months:Direct Labor Direct Management Hours 13,360 15,960
Use the high-low points method. (Obj. 5). Compute the fixed and variable components of the indirect labor cost for Gaines Company, using the high-low points method.LO.1
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