Cost Management Measuring Monitoring And Motivating Performance 1st Edition Leslie G. Eldenburg, Susan Wolcott - Solutions

6.4 In a continuous processing situation (such as an oil refinery), the beginning and ending WIP inventories are frequently the same. How does this simplify de- termination of equivalent units completed?
6.3 "We treat spoiled units as fully completed regardless of when the spoiled units are detected. This method makes unit costing much simpler." What is wrong with this approach?
6.2 Under what conditions could a process complete more units during the period than it started?
6.1 Under what conditions will weighted average and FIFO process costing consistently produce similar equivalent unit costs?
5.22 Allocating overhead, over- and underapplied overhead, spoilage The Futons for You Company sells batches of custom-made futons to customers and uses predetermined rates for fixed overhead, based on machine hours. The following data are available for last year. Budgeted and actual fixed factory
5.21 Job costing journal entries Yem's Van Service customizes light trucks according to customers' Q1, Q2, Q3 orders. This month the company worked on five jobs, numbered 207 through 211. Materials req- uisitions for the month were as follows:" Ticket Carpet Paint Electronics Other Total 207 $40
5.20 Cost of goods sold schedule The Rebecca Corporation is a manufacturer of machines made to Q1, Q2 customer specifications. All production costs are accumulated by means of a job order costing sys- tem. The following information is available at the beginning of the month of October 20XX. Raw
5.19 Journal entries Langley Ltd. uses a job costing system. At the beginning of the month of June, two orders were in process as follows: Q1, Q2, Q3 Direct materials Direct labor Overhead allocated Order 88 $1000 1,200 1,800 Order 105 $900 200 300 There was no inventory in finished goods on June
5.18 Analysis of WIP T-account Jeeter Company uses a job costing system. Overhead is allocated Q1, Q2 based on 120% of direct labor cost. Last month's transactions in the work in process account are shown here: Work in Process Beginning balance 48,000 Direct materials 160,000 To finished goods
5.17 Direct costs and overhead Job 87M had direct material costs of $400 and a total cost of $2,100. Overhead is allocated at the rate of 75% of prime cost (direct material and direct labor). A. How much direct labor was used? B. How much overhead was allocated?
5.16 Q5 REQUIRED: Normal and abnormal spoilage Franklin Fabrication produces custom-made security doors and gates. Currently two jobs are in process, 359 and 360. During production of Job 359, the supervisor was on vacation and the employees made several errors in cutting the metal pieces for the
5.15 Job costing, over- and underapplied overhead, journal entries Shane's Shovels produces small, Q1, Q2, Q3 custom earth-moving equipment for landscaping companies. Manufacturing overhead is allocated to work in process using an estimated overhead rate. During April, transactions for Shane's
5.14 Job costing for a hospital Mercy Hospital uses a job costing system for all patients who have sur- Q1, Q2 gery. The hospital uses a budgeted overhead rate for allocating overhead to patient stays. In March, the operating room had a budgeted allocation base of 1,000 operating hours. The
5.13 Job costing in the service sector Consider the following budgeted data for a client case of Bob Q1, Q2, Q4 Crachit's accounting firm. The client wants a fixed price quotation. Direct professional labor Direct support labor Fringe benefits for direct labor Photocopying Telephone calls Computer
5.12 Custom versus mass production The following chart lists several different products. Custom Mass Product Jewelry REQUIRED: Rolls Royce automobiles Honda automobiles Tax services in an accounting firm Haircuts Personal shopping services Breakfast cereal production Check the appropriate boxes to
5.11 List several different sources of information used in job costing, and explain why this information is required.
5.10 List the most common allocation bases used in job costing and explain under what circumstances cach base would be most appropriate.
5.9 Describe the procedures used in job costing.
5.8 Explain how manufacturing overhead cost pools and cost allocation are related.
5.7 Exquisite Furniture designs and manufactures custom furniture from exotic materials. Explain why spoilage is sometimes recorded as a cost for a specific job and other times as overhead for this company.
5.6 Compare actual and normal cost systems. Discuss the ways in which they are similar and the ways they differ.
5.5 Part of a contract between a union and a company guarantees that all manufacturing employees earn 5 hours of overtime each week. In the company's job costing system, should overtime be treated as a direct or indirect cost?
5.4 How does the point of inspection (and therefore com- pletion) affect the cost of spoilage?
5.3 Within the area where you live, work, or attend school, name three businesses that would likely use job costing and three that would likely use process costing.
5.2 Will underapplied and overapplied overhead arise under both actual and normal costing? Explain your answer.
5.1 List three examples of job cost records you recently received for services provided to you. (Hint: Itemized bills made out to you are usually job cost records.)
4.20 Special order The Cone Head House sells ice cream cones in a variety of flavors. Data for a re- cent week appear here: Q2 REQUIRED: Revenue (1,000 cones @ $1.50 each) Cost of ingredients Rent Store attendant Income $1,500 530 300 600 $ 70 The Cone Head's manager received a call from a
4.19 Multiple products and resource constraints, sensitivity analysis Wildlife Foods prepares wild Q5 birdseed mixes and sells them to local pet stores, grocery stores, and wild bird stores. Two types REQUIRED: of mixes have been most successful: Flight Fancy and Multigrain. Flight Fancy generates
4.18 Q5 Product emphasis and constrained resource Emily developed an innovative computer game, called Home By Myself (HBM). It was so successful that she quickly followed up with two se- quels: Home By Myself II (HBM2) and Home By Myself III (HBM3). The costs of developing the games were $95,000
4.17 Keep or drop and constrained resource The income statement for King Salmon Sales, which Q3, Q5 produces smoked salmon, follows: Revenue (100,000 lbs.) Expenses $800,000 Fish $200,000 Smoking materials 20,000 Packaging materials 30,000 Labor (wages) 300,000 Administration 150,000 Sales
4.16 Q5 CMA Multiple products, multiple resource constraints, sensitivity Mrs. Meadows sells two popular brands of cookies, Chip Dip and Soft Chunk Chocolate Chip. Both cookies go through the mix- ing and baking departments, but Chip Dip is also dipped in chocolate in the coating department. Frank
4.15 CVP, single constrained resource Snowbird Snowboards converts regular snowboards by adding Q5 outriggers and seats so that people who use wheelchairs can snowboard. The income statement for last year, in which 500 snowboards were produced and sold, appears here. REQUIRED: Revenue Expenses:
4.14 Constrained resource, qualitative factors Johnson and Sons, Inc., produces organic orange juice Q5,Q6 from oranges it raises. Unfortunately, it has been a bad year for oranges because of severe frosts. Johnson only has 10,000 gallons of juice. It usually sells 15,000 gallons at $3 per gallon.
4.13 Q4, Q6 REQUIRED: Make or buy, qualitative factors Yoklic Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $4.00 30.00 15.00 25.00 $74.00 Regina Corp has contacted
4.12 List two qualitative factors that often need to be considered when making a decision about whether to accept a special order.
4.11 List at least three different types of nonroutine op- erating decisions and give an example of each one for a retail clothing factory outlet.
4.10 What kind of constraints would arise in an account- ing firm during tax season? How could any con- straints be relaxed?
4.9 Explain how managers decide which products in a sales mix to emphasize.
4.8 List two qualitative factors that often need to be considered when making a decision about whether to outsource a product or service.
4.7 Grover Nursery is a large nursery in St. Charles, Illi- nois, that has always raised the bedding plants it sells. The managers recently decided to buy bed- ding plants from a wholesale nursery in another state. List several quantitative factors that might en- courage the managers to buy from
4.6 In your own words, distinguish between quantitative and qualitative information.
4.5 Describe several methods that can be used to relax constrained resources.
4.4 Refer to the general decision rule for special orders. Would this same general decision rule apply to a de- cision to sell aftemoon theater tickets at a discounted price? Explain. Identify two other business pricing situations that are similar to the afternoon theater tickets.
4.3 An organization is currently operating at capacity. Should it accept a request for a special order based on variable cost plus 40%? Explain.
4.2 Business publications frequently provide subscrip- tions to students at a substantial discount. Why do you suppose such offers are made?
4.1 When making a nonroutine operating decision, are all future costs relevant? Explain.
3.20 Q1, Q2, Q4 Breakeven, target profit, cost changes, selling price Laraby Company produces a single prod- uct. It sold 25,000 units last year with the following results. Sales (] $625,000 Variable costs 375,000 150,000 Income before taxes 100,000 45,000 After-tax profit $ 55,000 REQUIRED: Fixed
3.19 Q2, Q4 Breakeven, target profit, ROI target profit Madden Company projected its income before taxes for next year as shown here. Madden is subject to a 40% income tax rate.Sales (160,000 units) $8,000,000 Cost of sales Variable costs 2,000,000 Fixed costs 3,000,000 Pretax profit $3,000,000
3.18 Cost function, breakeven Data for the most recent three months of operations for the RainBeau Q4 Salon appear here: March April Mav Number of appointments 1,600 1,500 1,900 Hair dresser salaries $14,000 $14,000 $18,000 Manicurist salaries 12,000 12,000 16,000 Supplies Utilitic 900 750 950 GOO
3.17 Q2 REQUIRED: Profit, price for target profit The Martell Company has recently established operations in a com- petitive market. Management has been aggressive in its attempt to establish a market share. The price of the product was set at $5 per unit, well below that of the company's major
3.16 Cost function, breakeven Q2, Q4 A. The average cost per unit was $234 at a volume of 1,200 units and $205 at a volume of 1,400 units. The profit was $24,000 at the lower volume. Estimate the variable cost per unit. B. Sparkle Car Wash Supplier sells a hose washer for $0.25 that it buys from
3.15 CVP graph A. Create a CVP graph using the information in Exercise 3.14, part (A). Explain the infor- mation in the graph. B. Create a CVP graph using the information in Exercise 3.14, part (B). Explain the infor- mation in the graph.
3.14 Target profit, not-for-profit breakeven A. The variable cost per gift basket is $2. fixed costs are $5,000 per month, and the selling price of a basket is $7. How many baskets must be produced and sold in a month to eam a pretax profit of $1,000? B. The Community Clinic (a not-for-profit
3.13 Under what circumstances will managers want sensi- tivity analysis around results from a CVP analysis?
3.12 Explain how CVP analysis can be used to make deci- sions about increases in advertising costs.
3.11 Describe three uses for CVP analysis.
3.10 Can the margin of safety ever be negative? Explain your answer.
3.9 How are CVP analysis and breakeven analysis related?
3.8 Explain the term sales mix in your own words. How does sales mix affect the contribution margin?
3.7 How do volume discounts from suppliers affect our assumption that the cost function is linear? Explain how we incorporate this type of cost into a CVP analysis.
3.6 Explain the relationship between margin of safety percentage and degree of operating leverage.
3.5 To estimate revenues, costs, and profits across a range of activity, we usually assume that the cost and rev- enue functions are linear. What are the specific under- lying assumptions for linear cost and revenue func- tions, and how reasonable are these assumptions?
3.4 What is the effect on a firm's breakeven point of a lower income tax rate?
3.3 An organization experiences a 20% increase in pretax profits when revenues increase 20%. Assuming linear- ity, what do you know about the organization's cost function?
3.2 Explain how to calculate a weighted average contribu- tion margin per unit.
3.1 If a firm has a mixed cost function, a 10% increase in sales volume should increase income by more than 10%. Explain why.
2.20 Engineered estimate of cost, cost-based price Julie Long, the manager of the Hamburger Haven, Q4 has been told that to earn a reasonable profit she should price her hamburgers at 300% of the cost of ingredients. Ms. Long has gathered the following data on the cost of ingredients used to make a
2.19 Relevant costs; fixed, variable, and mixed costs Consider the following two cost objects: Q1 1. Purchasing a pizza shop 2. Investing in a fishing boat REQUIRED: For each of the following costs, determine whether the cost is relevant to running a pizza shop (PS), investing in a fishing boat
2.18 Cost function, opportunity cost, relevant costs Yummy Yogurt sells yogurt cones in a variety of natural flavors. Data for a recent month follow: Revenue $9,000 Cost of ingredients Rent $4,500 1,000 Store attendant salary 2,300 7,800 Profit $1,200 REQUIRED: A. Categorize each cost as fixed or
2.17 Direct and indirect costs; fixed, variable, and mixed costs Your sister turned her hobby into a small business called Glazed Over. She is a potter and manufactures and sells bowls that can be used for decoration or for birdbaths. She has one employee who works 40 hours a week no mat- ter how
2.16 FCost function and assumptions Bison Sandwiches is a small restaurant that sells a variety of Q4, Q7 sandwiches and beverages. Total fixed costs are $20,000 per month. Last month total variable costs were $8,000 when total sales were $32,000. REQUIRED: Q1 A. Write out the algebraic expression
2.15 Learning curve, graphing The managers of Tax Plus hired three recent accounting graduates. When they started preparing simple tax returns, it took six hours to complete the first return. The supervisor believes an 80% learning rate is typical for this type of work. A. Estimate the cumulative
2.14 Piecewise linear cost function, regression measurement error The following is the description Q4, Q6 of a cost: Total fixed costs are $50,000 per month and the variable cost per unit is $10.00 when production is under 1,000 units. The variable cost drops to $9.00 per unit after the first 1,000
2.13 Linear, stepwise linear, and piecewise linear cost functions Q1, Q4 A. Total fixed costs are $10,000 per week and the variable cost per unit is $8.00. Write the algebraic expression for the cost function and graph it. What are the assumptions of the cost function? B. Total fixed costs are
2.12 Direct and indirect costs Frida's Tax Practice has two departments, tax and audit. The tax de- Qpartment has two product lines, business returns and individual retums. A list of custs and three cost objects from Frida's Tax Practice follow. REQUIRED: For each cost, identify whether it is
2.11 Cost object, cost function estimation, opportunity cost A computer manufacturer is deciding whether to produce a large monitor with a thin flat screen. One of the managers suggested that the incremental costs for this line of manufacturing will be primarily variable because the company
2.10 The trend line developed using regression analysis provides a more accurate representation of a mixed- cost function than the two-point or high-low meth- ods. Explain why.
2.9 The director of Meals on Wheels, a service that deliv- ers meals to the elderly, is setting work schedules for a new crew. The director knows that the team will work more slowly in the beginning, but would like to set a schedule that approximates their learning rate so that the volunteers know
2.8 List two examples of nonlinear cost functions and describe a method of developing a cost function for each one.
2.7 Explain the analysis at the account level approach to developing a cost function.
2.6 Explain how information from a scatter plot helps in categorizing a cost as fixed, variable, or mixed.
2.5 List two opportunities you would forgo when you decide to study on a Friday night. List relevant cash flows for those two opportunities. Is it possible to assign a quantitative value to the benefits you re- ceive from either of these two missed opportuni- ties? Explain.
2.4 At two levels of activity within the relevant range. average costs are $192 and $188, respectively. As- suming the cost function is linear, what can be said about the existence of fixed and variable costs?
2.3 You have been asked to provide the president with an approximate cost function for the firm's activities, and it must be done by this afternoon. Some members of the Board of Directors want to understand why performance varies so much across store locations. They have asked for a quick analysis
2.2 An automobile assembly plant closes every August to retool for the next year's model. How should Au- gust's cost data be used in estimating the overhead cost function?
2.1 "As volume increases, total cost increases and per- unit cost decreases." What type of linear cost func- tion does this describe? Draw a simple graph of this type of cost function.
1.30 Integrating Across the Curriculum: Technology and Information Systems Internal and ex- Q2, Q6 ternal information, internal reports Managers continuously seek ways to improve productivity REQUIRED: and reduce costs. Many manufacturers and retailers incur large costs to track inventory. During
1.29 Integrating Across the Curriculum: Auditing Quality of information, relevant information to auditors Aden, Inc. is a manufacturer of television sets. The company recently revised its pro- duction processes and invested in new equipment to reduce labor costs. 2 22 A. Following are possible
1.28 Focus on Professional Competency: Professional Demeanor Relevance of competency defi- nitions, developing personal and ethical skills Review the following definition and elements for the Professional Demeanor competency,13REQUIRED: 0 A. In Chapter 1, you learned the importance of identifying
1.27 Quality of decisions Maria and Tracey became good friends while working at the same company, Bial Q3, Q4 Two years ago, they both decided to increase their savings so that they could eventually purchase homes. Each began by putting a portion of every paycheck into a savings account. At the end
1.26 Ethical decision making, relevant information, uncertainties, biases You are an entry-level ac- Q3, Q4, Q5, Q6 countant at city hall. You work for the accounting department, but have been loaned out to the de- ETHICS REQUIRED: partment responsible for building and maintaining roads while the
1.25 Ethical decision making, relevant information, uncertainties, biases In two of his classes, Q3, Q4, Q5, Q6 Larry's professors said that he could work homework problems with other students as long as he Etumed in his own answers. In another class, the professor said that students could not work
1.24 Relevant information, recommendation Francisco owns a camper and loves to visit national parks with his family. However, the family only takes two one-week trips in the camper each year. Francisco's wife would rather stay in motels than the camper. She presented him with the follow- ing
1.23 Relevant information, uncertainties, information for decision making Janet Baker is deciding where to live during her second year in college. During her first year, she lived in the residence hall. Recently her friend Rachel asked her to share an off-campus apartment for the upcoming school
1.22 Identifying open-ended problems textbook defined open-ended problems as problems with no single correct solution due to significant uncertainties. Discuss reasons why each of the following problems is open-ended. A. The managers of Flow Systems, an irrigation equipment manufacturer, are
1.21 Decision-maker bias Gene Horita was choosing a major in his sophomore year. He enjoyed accounting classes at his university, but also found the information systems classes to be interest- ing. Gene's father is a public accountant and has been pressuring Gene to choose an accounting major. Gene
1.20 Uncertainties, degree of uncertainty Community Children's Hospital can invest in one of two different projects. The first project is to purchase and operate a hotel that is located two blocks from the hospital. The CEO of the hospital has no experience operating a hotel, but the hospital does
1.19 Relevant information Suppose you are responsible for ordering a replacement for your office photocopy machine. Part of your job is to decide whether to buy it or lease it. A. Describe something that could be considered relevant information this decision and ex- plain why it is relevant. B.
1.18 Uncertainties You have been admitted to the College of Business at your university. You decide to become an accounting major and are now planning the sequence of classes that you would like to take over the next two years. A. List several uncertainties about your class sequence. Include in
1.17 Relevant costs, uncertainties, other relevant factors This semester, you moved to an apartment eight miles from campus and will commute to classes three times a week. This decision will let you achieve significant savings. However, you have not yet decided whether to use your car or ride the

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Cost Management Measuring Monitoring And Motivating Performance 1st Edition Leslie G. Eldenburg, Susan Wolcott - Solutions

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