Questions and Answers of Financial And Management Accounting

NewsCorp prints and sells a variety of news magazines and newspapers on presses that run on the company’s presses 24 hours a day, seven days a week. This has always been the cheapest way to produce
Stuart’s Oil Refinery runs on a 24/7 clock. For the month of January, it had 20,000 gallons in process at the beginning of the month, added 400,000 gallons to the process, and had 30,000 gallons in
Identify and define the three main components of a product cost.
Time Tells makes children’s storybooks in a continuous run. It changes plates while the large machines are running, losing roughly 100 copies in the changeover process. This has long ago been
Using the information in Exercise 9, charge out the general overhead using machine hours.REQUIRED:a. How much total cost is there in the cell including this overhead?b. How much does it cost per good
What is the defining feature of an assembly line? How does cellular manufacturing incorporate the strengths of an assembly line at the same time as it allows for different features in output units?
Best Brew Coffee, Inc., makes single-serve coffee pots that use coffee pods. It has become very popular. Even though the cost per cup is greater than for brewed coffee, the freshness and variety
Best Made Electronics makes a variety of cellular telephone units. It uses cellular manufacturing. All of the costs incurred in the cell get charged to good units produced. It also pays its share of
Describe a situation that would be best served by using job order costing. Why did you choose this setting?
New Dawn Cleaning Supplies makes a variety of cleaning products, including powder cleansers, window-washing fluid, and dishwashing soap. The company currently has $10,000,000 in overhead, which it
Using the information in Exercise 6, charge general overhead on direct labor hours first; then re-total your overhead by department. Next, charge out the total overhead in a department using the
What are the five ways work can be organized in manufacturing or service firms?
Zippy Bags manufactures plastic bags with zippers for the consumer market. It makes the product in three sizes: one pint, one quart, and one gallon. It produces the product in large batches using the
Using the information in Exercise 6, recalculate your plant-wide overhead rate using machine hours as the driver. How much overhead gets charged to each department now?Data from Exercise 6 Wholesome
What is the difference between a committed and an incurred cost? Which is more actionable before a product is designed? After a product is designed?
Made-Rite Foods makes several lines of sauces, including barbecue sauce and hot sauces, on a large batch basis. The products use different departments at the company, including Batch Preparation,
Wholesome Oats makes several lines of breakfast cereals using large batch manufacturing. It takes three departments—Prepping, Blending, and Boxing—to make the products. It also has a general
Describe the attainment phase of target costing. What are its primary objectives?
Brewer’s Magic makes the basic yeast and flavoring packets for the home beer-brewing industry. It makes these products in large batches on a repetitive basis, so it has gotten to know quite a bit
Using the information in Exercise 3, recalculate the cost of Job 123 using machine hours for the overhead on the black and white printer and the color printer, and direct labor hours for the binding
What is a firm’s target cost? How is it used during the new product development stage?
Jenny’s Painting Company paints and power-washes for industrial and residential customers. The company currently charges all overhead out on direct labor hours but is considering making changes
Using the information in Exercise 3, recalculate the cost of Job 123 using machine hours for both the machine costs and the overhead costs. How much does Job 123 cost now?Data from Exercise 3 Josie's
How is a target price established in a competitive market with similar offerings? If it is a new market, how is price established?
Dan’s Custom Cabinets makes stereo cabinets for new homes and remodeling jobs. Dan crafts each cabinet to fit special places and uses solid wood throughout, making his cabinets of much higher
Josie’s Copy Shop performs a variety of copy jobs for its customers. Job 123 takes 500 sheets of paper at $0.01 per sheet and 10 bindings at $0.25 per binding. It takes 10 minutes of labor and 15
During the establishment phase of target costing, what main activities take place?
Drip-No-More, Inc., makes various faucets for home use. It has a patented design feature that practically ensures there will be no dripping from the faucet in the first 10 years of use. This patented
Green Hills makes coffee pods for one-cup coffee machines. It was recently approached by Tracy ’s Coffees, a high-end coffee shop, to see if it can make pods for its special blends of coffees.
What does the term target costing mean?
Better Yet Dishware produces dishes and drinking mugs for a large domestic market. It uses both traditional retail outlets and its own company stores where slightly flawed product is sold. Decorating
The emphasis in this exercise is on first assigning overhead to departments with different drivers, and then looking at the impact of using direct labor hours at the departmental level as the
Sparrows Specialty Products makes a wide variety of specialty home products. Joey Sparrow, the owner, has recently decided to add a special type of wine opener—one with a granite base that can be
Sam’s Sports makes several lines of tennis racquets. Recently, Sam decided to carry an entire line of graphite racquets. He has done his competitive analysis and found that his competitors’
What is the product domain and why is it so important to companies?
Easy Sweep makes vacuum cleaners for both residential and commercial customers. It has been making vacuum cleaners for more than 50 years, starting with one small model that was sold door-to-door. It
To get started, you’ll need the workbook DB 6-1. Using the overhead driver “Material Dollars,” you are to develop an overhead rate using this driver, and then apply it to the individual units
What is incremental analysis and when do we use it?
There are two labor departments in the following business. Their results for September are in the following table. Please develop a price v s. efficiency variance for each of these two departments.
Samson, Inc., is trying to understand the causes behind some ongoing problems it is having in making good kitchen cabinets for its customers. It decides to do a cause-and-effect diagram using four
The worksheet in workbook DB 5.2 named Summary Easy Air provides all of the raw data you will need for this exercise.REQUIRED:a. Do a three-year trend analysis of the four basic problems plaguing
Using the data in Exercise 5, perform a percentage change, or trend analysis, of Angie’s sales. Do you spot any patterns in sales?Data From Exercise 5 November December Type of Job October Units
Using the data in Exercise 3, perform a percentage change, or trend analysis, of Ernesto’s sales.Data From Exercise 3 Type of Sub Sandwich Planned Sales (a) Actual Sales (b) Italian meats 100 125
Now that Bill has gotten another class under his belt, he wants to understand the relative impact, in percentage terms, of the changes in his business. So using the data from Problem 1
Define a firm’s competitive cost. How is it related to market price?
Tony ’s Pizza makes a variety of pizzas and grinders for local customers. He needs to set the price of a regular pizza, which has two ingredients. Tony’s costs for making a pizza are as
What is the difference between tracing and assigning a cost? Between assigning and allocating a cost? Why is this important?
Speedy Print is a small copy shop that has both black and white and color printers. It also offers a range of binding choices. The cost for running the shop are:REQUIRED:a. Speedy Print takes a job
List the steps needed to develop an activity-based cost.
What are the key differences between capacity- and activity-based costing? When should each be used?
Define the term cost object and give at least one example of a cost object.
Define cost-plus pricing. When is it the preferred way to price a job? When is it not a good way to price a job?
What are the five basic problems the planning activity attempts to resolve?
Westerly Cable offers a series of products such as cable television, telephone service, internet service, and an entire range of business products. Recently the company has been receiving a lot of
Troy hill Manufacturing makes a variety of lawn products. It keeps track of problems that occur during the manufacturing process. The results of the tracking of number of occurrences for the company
Easy Air has decided to look at a couple of options for dealing with its late flight problem. While the number of solutions could be endless, it has narrowed it down to two: increase the turn time
Bright Views is a window manufacturer. It produces high-quality windows in a variety of sizes, shapes, and colors. One of the leaders in its industry, Bright Views offers a lifetime warranty on its
William Blake runs a local taxi service. Lately his phone has been flooded with customer complaints. He gives you the following list of complaints.REQUIRED:a. Draw a Pareto chart of these problems.b.
Magic, Inc., makes a number of magic tricks. Recently it has been experiencing problems in its manufacturing process, as the table below suggests:REQUIRED:a. Perform a Pareto analysis for each of the
Big Top Toys makes a variety of badminton and volleyball sets for people’s home use. The company sells 100,000 badminton sets and 75,000 volleyball sets per year. The company just hired a new
What does the term benchmarking mean and why is it used?
Susie Grace runs Grace Deli. She has set monthly sales goals for this year and is now trying to understand how well she is doing. The following table lists the goals by month and actual
List the four different types of benchmarking and explain their differences.
Robert Treadwell runs a medium- sized machine shop. He sets monthly sales goals for his salespeople, who get bonuses for exceeding their sales goals. Robert uses these goals to help him manage his
Hard Earth does plant maintenance for large industrial companies. It recently has faced a significant increase in customer complaints regarding the quality of its work. The company decides to pull
Define a performance standard. What are the ways it can be established?
Using the numbers in the following table for materials used in manufacturing, develop a variance analysis of price v s. efficiency (usage) variances for the two main materials in the product.
Blue Spruce Small Appliance Repair has well-defined time and material specifications for every type of job that comes into the shop. During April, while there was a lot of business, profitability was
What is the continuous improvement philosophy?
Using the numbers in the following table for materials used in manufacturing soap, develop a variance analysis of price vs. efficiency (usage) variances for the two main materials in the product.
Hang Ten is a small manufacturer of fasteners used in the manufacturing of hang gliders. It is a competitive business, with only a few major customers and a lot of machine shops like Hang Ten
Identify six tools that can be used to compare actual results to plan. What are the strengths and weaknesses of each?
There are two labor departments in the following business. Their results for January are in the following table. Please develop a price v s. efficiency variance for each of these two departments.
Bangor Industries makes staplers. It currently buys the parts that make up the casing of the stapler, only producing the internal mechanicals. It makes and sells 5,000,000 staplers per year.
In performing a variance analysis, what are the common dimensions used to isolate the causes for performance shortfalls?
Gypsum Powders makes four compounds for dogs o of one raw material, Just Gyp—tick powder, flea powder, itch powder, and talcum powder. The company makes 200,000 pounds of Just Gyp per year. It has
What are the primary differences between a Pareto and a gap analysis?
Tudor Associates currently makes its own parts for the microwaves it sells. It has recently been approached by a local machine shop that has offered to make the outer casing of the microwaves. The
Hard Rock Company currently offers several lines of decorative stone. It takes the larger rocks and splits them down into smaller pieces that it then sells by the pound in both bags and in bulk
What is the key difference between a favorable and unfavorable cost variance? Revenue variance?
Excell Corporation makes thumb drives for use by consumers and businesses. Right now, Excell performs all of the operations for making the thumb drives. It has recently been approached by a memory
Cedar Shakes, Inc., makes a variety of cedar siding materials for houses. It is facing a major problem with one of its key machines. Specifically, it will either have to overhaul the machine, at a
Yellowtail Manufacturing makes a product that is currently sold to health food stores. It recently has discovered it could sell its product, Real Yellow, at an earlier stage in its production to
What are the primary steps in doing an incremental analysis?
What role does subjective, or nonquantitative, information play in incremental analysis?
What is sensitivity analysis, and why is it used?
What are the primary features of a sound business case?
The Coffee Palace just had its third business anniversary. A lice Cornwell, the company ’s owner, has recently become concerned. Early in the year, she increased her prices to bring in more
You decide to take the analysis a bit further. Using the results you obtained in Problem 3 and the lessons you have learned about percentage change, do the following:REQUIRED:a. Calculate the
Reorganize the activities in the following sequences so that they match the four stages of the management process. Put “plan” activities first, followed by “do” activities, then “check”
Darby Computer Associates provides computer services to both small businesses and individuals. It has faced changing conditions in the marketplace, one characterized by constant changes in both
For the following list of activities, identify whether it is a “P” or “plan” activity, “D” or “do” activity, “C” or “check” activity, or an A or “adjust” activity. Only
Rontell, Inc., is a medium- sized producer of latex balloons that are filled by helium and given on special occasions. It distributes it s balloons in many styles and colors to the tri- state region
For each of the following activities, identify what aspect of the IMA Statement is being violated. Use “C” for competence, “N” for confidentiality, “O” for objectivity, and “I” for
For each of the following activities, identify what aspect of the IMA Statement is being violated. Use “C” for competence, “N” for confidentiality, “O” for objectivity, and “I” for
You recently enrolled in an advanced class in accounting, where you are expected to work on your own for many of the assignments. The professor relies on the honor code and makes you submit a signed
Go back to the table of proposed measures for McDonald’s in Table 2.3. What type of control measures are these? Please list them by type in your answer. TABLE 2.3 A SET OF HYPOTHETICAL MEASURES
Using the data in the following table, do a simple variance analysis for Don’s pizza shop for March. Make sure to mark your variances as favorable or unfavorable.REQUIRED:a. What appears to be the
Returning to Sam’s Golf Pro Shop in the chapter, Sam really wants to hone in on what part of his sales package is working and what is not. In talking about it, Sam notes, “The easiest solution
In Chapters 1 and 2, we have only had Easy Air’s profits in terms of revenue miles flown. Now we would like to expand this analysis to look at profitability both in terms of number of passengers

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