Cost Management Accounting And Control 2nd Edition Don R. Hansen, Maryanne Mowen - Solutions

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Refer to the data in Exercise 2.48. Compute absorption cost of goods sold, gross margin, and operating Absorption Costing income. Why is operating income different from one month to the next?(LO 7) Cee ae eee re Seer Exercise 2.51 Portland Security Company sells a security system key pad for
Information taken from Laramie Lumber Company’s records for the most recent year is as follows:celina Hraee ay SRISSTOVOMUICS Ao RK 9h wale Geen Pan ne ee! $ 1,500,000 (LO 6,7,8) BirectimatenaluSec ess ere, -fay Seer esas 290,000 Direc tlaO res at mawer, Wer Reemscans ees 100,000 Variable
Pittsburgh Pillow Company’s planned production for the year just ended was 10,000 units. This produc-Absorption, Variable, and tion level was achieved, but it sold only 9,000 units. Other data follow:Throughput Costing (LO 6,7,8) SASS TOVEMUCL ai srara stuc nee Raeweet ieee erenarera $ 135,000
Each of the following columns is independent and for a different company. Use the data given, which Problem 2.55 refer to one year for each company, to find the unknown account balances. Unknown Account Balances company (LO 1, 2,3)Account I 2 3 SALCSICVCHUC MID Ret eee «fusca qn. ak a a en a
You have been appointed manager of an operating division of Tallahassee Technology, Inc.,a manu- Problem 2.56 facturer of products using the latest developments in microprocessor technology. Your division _!mpact of a Decision on manufactures the chip assembly, CH-1. On January 1 of this year, you
On November 15 of this year, a sales representative for Hasegawa Machine Company approaches you. Hasegawa wants to rent to your division a new assembly machine that would be installed on December 31 for an annual rental charge of $230,000. The new equipment will enable your division to produce a
The following data refer to Fresno Fashions Company for the year 20x2:SpAIeSSeHEsVE NUCS amma See Cant a oom ttO eee eee $945,000 Work-in-process inventory, December 31........... 30,000 Work-in-process inventory, January 1.............. 40,000 Sw a Selling and administrative
Sacramento Electronics Corporation incurred the following costs during 20x1. The company sold all of Problem 2.58 its products manufactured during the year. Fixed and Variable ; ‘ Costs; Forecasting WikectiMatenalcarswr iensetae ce a uth A $ 2,900,000 (LO 4)DifSehlawO nn me anes aap Leek Sn ty
The following terms are used to describe various characteristics of costs. Problem 2.59 1. Opportunity cost 4. Prime cost Characteristics of Costs 2. — Out-of-pocket cost 5. Conversion cost sa 5)3. Sunk cost 6. Average cost Required Choose one of the terms to characterize each of the following
Alberta Alloys, Inc., incurs a variable cost of $40 per pound for direct material to produce a special alloy Problem 2.60 used in manufacturing aircraft. Variable Costs;Graphical and Tabular Required Analysesa. Draw a graph of the firm’s direct material cost, showing the total cost at the
The following data appeared in Ticonderoga Tile Company’s records on December 31 of last year:Leake re SaleSievVemUee kis. a gue ake Pee alae oO ee ee
The following data pertain to the photon gismo manufactured by Gizmos R Us, Inc.: Problem 2.64 SEUSNOIOS FONE ae ee ee a eee an
Items(a) through(e) are based on the following data pertaining to Pacifico’s manufacturing operations: Problem 2.65 Cost Concepts Inventories November | November 30 (LO 1,3)Rawinatcitalee ss asc. sea. 9,0009,000 8,500 WONKsIMOTOCESS a nam us le ay 4,500 3,000 FnISMECGOOCS pres: hbsseea te:
Florida Fruits, Inc., agreed to sell 40,000 cases of Fang, a dehydrated fruit drink, to NASA for use on the international space station at “cost plus 10 percent.” The company operates a manufacturing plant that can produce 120,000 cases per year, but it normally produces 80,000. The costs to
You have been given the following information concerning Orion Corporation, which manufactures the ever-popular cosmic gismo.Sales: 10,000 units per year at a price
Lake Michigan Fabricating Company (LMFC) employs an absorption-costing system for external reporting and internal management purposes. The latest annual income statement follows:SHIOSICVeT Wow emtaat fate doe iinet crvmelwen’ ca awitncend
On December 31 of last year, a fire destroyed the bulk of the accounting records of Hudson Company, a small, one-product manufacturing firm. In addition, the chief accountant mysteriously disappeared. You have the task to reconstruct last year’s records. The general manager has said that the
Tennessee Tool Corporation (TTC) manufactures small electric hand tools in Memphis, Tennessee. The firm uses a standard absorption-costing system for internal reporting purposes; however, the company is considering using variable costing. Data regarding TTC’s planned and actual operations for
Cleveland Toner Company (CTC) manufactures toner used in photocopy machines. The company’s Problem 2.71 product is sold by the jug
Tampa Enterprises released the following figures from its records for the past two years: Problem 2.72 Comparison of Variable Year | Year 2 and Absorption Costing:SalesiUmiiSeeeucee = re ee ee ee res. 250,000 250,000 Profit Performance BrOGUCTIOMIMUMIS tame enn ae etl. eee w sal 250,000 344,000
The following questions are based on Laramie Leather Corporation, which produces belts that sell
Makin & Byrd, Inc., which uses throughput costing, just completed its first year of operations. Planned and actual production equaled 10,000 units, and sales totaled 9,600 units
Campus Bookstore is a profit-making organization that reports to the Student Council. Martha Wailua, a part-time student employee, noticed that the managers at the bookstore seemed unconcerned about the costs of carrying large inventories. For example, several times a year the manager of the
The new president promptly stepped up production to an annual rate of 30 million units. Sales for year 2 remained at 10 million units. The resulting Brassinni Company absorption-costing income statement for year 2 follows:BRASSINNI COMPANY Income Statement For the Year Ending December 31, Year 2
Potierre imports designer clothing manufactured by subcontractors in Mexico. Clothing is a seasonal Absorption and Variable product. The goods must be ready for sale prior to the start of the season. Any goods left over at the end Costing; Import Decisions of the season usually must be sold at
What are the significant inputs to a production process, and how do cost managers track the flow of costs through the process?
The day after the statement was verified, the president took his check for $1,400,000 and resignedto take a job with another corporation. He remarked, “I enjoy challenges. Now that Brassinni Companyis in the black, I’d prefer tackling another challenging situation.” (His contract with his new
Howcan alternative methods to calculate product costs create different incentives?
How should cost-management analysts measure costs for internal decision making?
What is the difference between the meanings of the terms 2.12 Define and give an example of each of the following costs:“cost” and “expense”?a. Opportunity costd. Period cost g. Controllable cost •• What is the difference between product costs and periodb. Outlay coste. Direct cost hh.
Determine the number of units that must be sold to break even or to earn a targeted profit. LO1
Determine the amount of revenue required to break even or to earn a tar¬ geted profit. LO2
Apply cost-volume-profit analysis in a multiple product setting. LO3
Prepare a profit-volume graph and a cost-volume-profit graph, and explain the meaning of each. LO4
Explain the impact of risk, uncertainty, and changing variables on cost- volume-profit analysis. LO5
Discuss the impact of activity-based costing on cost-volume-profit analysis. LO6
Explain how CVP analysis can be used for mana¬ gerial planning. LO1
Describe the difference between the units-sold ap¬ proach to CVP analysis and the sales-revenue approach. LO1
Define the term break-even point. LO1
Explain why contribution margin per unit becomes profit per unit above the break-even point. LO1
If the contribution margin per unit is $7 and the break-even point is 10,000 units, how much profit will a firm make if 15,000 units are sold? LO1
What is the variable cost ratio? The contribution margin ratio? How are the two ratios related? LO1
Suppose a firm has fixed costs of $20,000 and a con¬ tribution margin ratio equal to 0.4. How much sales revenue must the firm have in order to break even? LO1
Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by $10,000 and found that sales increased by $30,000. Was it a good decision to increase advertising expenses? LO1
Define the term sales mix, and give an example to support your definition. LO1
Explain how CVP analysis developed for single products can be used in a multiple-product setting. LO1
Assume that a firm has two products—Product A and Product B. Last year 2,000 units of A and 1,000 units of B were sold. The same sales mix is expected for the coming year. Total fixed expenses are $30,000, and the unit contribution margins are $10 for A and $5 for B. How many units of A and how
Wilson Company has a contribution margin ratio of 0.6. The break-even point is $100,000. During the year, Wilson earned total revenues of $200,000. What was Wilson's profit? LO1
Explain how a change in sales mix can change a company's break-even point. LO1
Define the term margin of safety. Explain how it can be used as a crude measure of operating risk. LO1
Explain what is meant by the term operating leverage. What impact does increased leverage have on risk? LO1
Why does the activity-based costing approach to CVP analysis offer more insight than the conven¬ tional approach does? LO1
How does JIT affect the firm's cost equation? Affect CVP analysis? LO1
How can sensitivity analysis be used in conjunction with CVP analysis? LO1
Describe and explain the tactical decision-making model. LO1
Define and explain the concept of relevant costs and revenues. LO2
Explain how the activity resource usage model is used in assessing relevancy. LO3
Apply the factical decision-making concepts in a variety of business situations. LO4
What is tactical decision making? LO3
"Tactical decisions are often small-scale decisions that serve a larger purpose." Explain what this means. LO3
What is tactical cost analysis? LO3
What steps in the tactical decision model correspond to tactical cost analysis? LO3
What is a relevant cost? A relevant revenue? LO3
Explain why depreciation on an existing asset is al¬ ways irrelevant. LO3
Give an example of a future cost that is not relevant. LO3
Relevant costs always determine which alternative should be chosen. Do you agree? Explain. LO3
Can direct materials ever be irrelevant in a make-or- buy decision? Explain. LO3
Give an example of a fixed cost that is relevant. LO3
When, if ever, is depreciation a relevant cost? LO3
What role do past costs play in tactical cost analysis? LO3
When will resources acquired as used and needed be relevant to a decision? LO3
When will the cost of resources acquired in advance (through implicit contracting) be relevant to a decision? LO3
Explain why resources acquired in advance with a multiperiod commitment are usually not relevant to a tactical decision. LO3
What are the main differences between a traditional and contemporary make-or-buy analysis? LO3
Explain why activity-based segmented reporting provides more insight concerning keep-or-drop decisions. LO3
Suppose that a product can be sold at split-off for $5,000 or processed further at a cost of $1,000 and then sold for $6,400. Should the product be processed further? LO3
Should joint costs be considered in a sell-or-process- further decision? Explain. LO3
Why would a firm ever offer a price on a product that is below its full cost? LO3
Explain what a capital investment decision is and distinguish between independent and mutually exclusive capital investment decisions. LO1
Compute the payback period and accounting rate of return for a proposed investment and explain their roles in capital investment decisions. LO2
Use net present value analysis for capital investment decisions involving independent projects. LO3
Use the internal rate of return to assess the acceptability of an independer project. LO4
Explain why NPV is better than IRR for capital investment decisions involving mutually exclusive projects. LO5
Convert gross cash flows to after-tax cash flows. LO6
Describe capital investment in the contemporary manufacturing environment. LO7
What are ordering costs? Provide examples. LO5
What are setup costs? Illustrate with examples. LO5
What are carrying costs? Illustrate with examples. LO5
Explain why, in the traditional view of inventory carrying costs increase as ordering costs decrease. LO5
Discuss the traditional reasons for carrying inventory. LO5
What are stock-out costs? LO5
Explain how safety stock is used to deal with de¬ mand uncertainty. LO5
Suppose that a raw material has a lead time of three days and that the average usage of the material is twelve units per day. What is the reorder point? If the maximum usage is fifteen units per day, what is the safety stock? LO5
What is the economic order quantity? LO5
What approach does JIT take to minimize total in¬ ventory costs? LO5
One reason for inventory is to prevent shutdowns. How does the JIT approach to inventory manage¬ ment deal with this potential problem? LO5
Explain how the Kanban system helps reduce inventories. LO5
Explain how long-term contractual relationships with suppliers can reduce the acquisition cost of raw materials. LO5
What is EDI and what relationship does it have to continuous replenishment? LO5
What is a constraint? An internal constraint? An ex¬ ternal constraint? LO5

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Cost Management Accounting And Control 2nd Edition Don R. Hansen, Maryanne Mowen - Solutions

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