Questions and Answers of Fundamentals Cost Accounting

Refer to the data in Exercise 8-26.RequiredCompute the cost per equivalent unit for materials using the FIFO method.Data From Exercise 8-26:The following information pertains to the Moline Facility
Refer to the data in Exercise 8-20.Requireda. Compute the equivalent units for materials using FIFO.b. Compute the equivalent units for conversion costs using FIFO.Data From Exercise 8-20:Pierce
Refer to the data in Exercise 8-18. Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs.Requireda. Compute the
The following transactions occurred in January at Apex Manufacturing, a custom parts supplier. Apex uses job costing:1. Purchased $75,180 in materials on account.2. Issued $2,100 in supplies from the
The following T-accounts represent September activity:
Refer to the information in Exercise 7-30. Prepare an entry to allocate over- or underapplied overhead to:a. Work in Process.b. Finished Goods.c. Cost of Goods Sold.Data From Exercise 7-30:Aspen
Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be $500,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2,
Refer to the information in Exercise 7-28. Prepare an entry to allocate the under- or overapplied overhead. Overhead applied in each of the inventory accounts is as follows:
Consider Question 7-18. What are some of the allocation bases you considered? Why did you choose the one you used?Data From Question 7-18:Assume that you have been asked to paint the inside walls of
Refer to the data in Exercise 6-39. The president of Tiger Furnishings is confused about the differences in costs that result from using direct labor costs and machine-hours.Requireda. Explain why
Refer to the data in Exercise 6-39. Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products.Data From Exercise 6-39:Tiger
Refer to the data in Exercise 6-39. Compute the individual product costs per unit assuming that Tiger Furnishings uses direct labor costs to allocate overhead to the products.Data From Exercise
Refer to the data in Exercise 6-39. Draw the cost flow diagram assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs.Data From Exercise 6-39:Tiger Furnishings produces
Refer to the data in Exercise 6-39. Compute the predetermined overhead rate assuming that Tiger Furnishings uses machine-hours to allocate overhead costs.Data From Exercise 6-39:Tiger Furnishings
Refer to the data in Exercise 6-39. Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs.Data From Exercise 6-39:Tiger
What is continuous flow processing? Give at least three examples of products that might use continuous flow processing.
Recall the analysis for Davis Stores in Exercises 5-39, 5-40, and 5-41. During a discussion of those results, one of the managers suggests that number of employees might be better at explaining cost
Using the same data source as in Problem 5-50, collect a total of 20 years of data.Requireda. Using the latest 10 years of data, perform a regression analysis in which the dependent variable is cost
Multiple regression results from the data of Adriana Corporation (Exercise 5-33) are as follows:
Simple regression results from the data of Adriana Corporation (Exercise 5-33) are as follows:
Simple regression results from the data of Adriana Corporation (Exercise 5-33) are as follows: RequiredEstimate overhead if the
Prepare a scattergraph based on the overhead and labor-hour data in Exercise 5-33.Data From Exercise 5-33:Adriana Corporation manufactures football equipment. In planning for next year, the managers
Prepare a scattergraph based on the overhead and machine-hour data in Exercise 5-33.Data From Exercise 5-33:Adriana Corporation manufactures football equipment. In planning for next year, the
Refer to the facts in Exercise 4-46. Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from
Consider the opportunity costs you identified in Question 4-27. Are they relevant to the decision of the airline to upgrade certain people? Which, if any, of these would be likely to be included in
Consider the Business Application item, referred to in Question 4-19. Suppose the company had signed a lease for five years and had two years remaining on the contract. Would the remaining lease
What is a special order?
Anu’s Amusement Center has collected the following data for operations for the year: Requireda.
Consider the Business Application, “Cost-Volume-Profit Analysis and On-Demand Services”. Would you advise Luxe to use the per unit lease cost when deciding which parking space to use for a car?
A January 1, 2009 news report on msn.com included the following sentence: “A report put out by brokerage house CLSA about Jet Airways said that the fall in ATF [fuel] prices has brought down the
Columbia Products produced and sold 900 units of the company’s only product in March. You have collected the following information from the accounting records:
The following information comes from the accounting records for Chelsea, Inc., for May:
Refer to Exercise 2-46.RequiredCompute:a. Product costs per unit.b. Period costs for the period.Data From Exercise 2-46:Madrid Corporation has compiled the following information from the accounting
Madrid Corporation has compiled the following information from the accounting system for the one product it sells:
The following data refer to one year for Monroe Fabricators. Fill in the blanks.
The following data apply to the provision of psychological testing services:
The friend in question 2-18 decides that she does not want to go to Oklahoma after all. How will the costs of your trip change? Was your choice of allocation in question 2-18 incorrect? Why?Data From
The managers of Quince Products (Problem 1-46) decide they will hire a management accountant to help them analyze the decision to expand their product line. They solicit bids from various accountants
Campus Package Delivery (CPD) provides delivery services in and around Paradise. Its profits have been declining, and management is planning to add an express service that is expected to increase
Refer to the information in Exercise 1-29. The dean of the Business School is considering expanding the BBA program by offering an evening program in a nearby city. The new evening program would be
Apple Inc., incurs many types of costs in its operations.RequiredFor each cost in the following table, identify the stage in the value chain where this cost is incurred:
What is accounting?
Interview the manager of a campus print shop or a print shop in the local area about how the company bids on prospective jobs. Does it use cost information from former jobs that are similar to
Consider the example of Mezzo Diner in the text. Suppose that Mezzo qualifies for and decides to take advantage of a tax law that provides “bonus” depreciation on the investment. Assume that this
Cervantes Company is considering an investment in a new machine. Managers at the company are uncertain about the economic life of the machine, because of the speed of innovation in the technology.
In Chapter 14, we discussed performance measurement in investment centers, where the managers have decision authority over asset usage (for example, adding new plants). The financial performance
Write a report to the president of your college or university indicating the factors that you believe should be included in its mission statement. If your college has a mission statement, are the
A manufacturing company has the following average times (in hours).Transporting product ................4.27Manufacturing product .............6.48Inspecting product ....................3.17Storing
Observe the operations of a restaurant and identify an important nonfinancial performance measure for it.Inspecting product ......................0.30Manufacturing product ..............2.10Storing
“My company is unique. We can’t use benchmarking.” How would you respond?
Again, consider a class you are taking (or have taken). Did the instructor use solely objective measures (scores on numerical exams, for example) or did he or she use a mix of objective and
How do companies evaluate their own performance in getting workers involved and committed?
Albury Corporation sold 121,500 units of its only product last period. It had budgeted sales of 120,000 units based on an expected market share of 30 percent. The sales activity variance for the
Olive Tree Products sold 72,000 units during the last period when industry volume totaled 320,000 units. The company original expected to sell 75,000 based on a budgeted market share of 20 percent.
Cook Company processes and packages frozen seafood. The year just ended was Cook’s first year of business and they are preparing financial statements. The immediate issue facing Cook is the
Keewee Company manufactures a single product for the military. Keewee Company had steady work, but it only had a return on investment of 6 percent.The CEO of Keewee Company did a test flight of
The master budget for the year just ended was on a computer that was just hacked. You feel responsible because you didn’t install anti-hacking software on the computer and you didn’t have a
Information about direct materials cost follows for a local company.Standard price per materials gram ......................................$16Actual quantity used
The standard direct labor cost per unit for a company was $21 (= $14 per hour ? 1.5 hours per unit). During the period, actual direct labor costs amounted to $136,500, 9,600 labor-hours were worked,
Refer to the information in Exercises 16-34 and 16-35. During the year, the company purchased 176,000 pounds of material and employed 40,400 hours of direct labor.Requireda. Compute the direct
Refer to the information in Exercise 16-34. The following is the actual income statement (in thousands of dollars) for the year.Sales revenue ................................$7,238Less variable
Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell
Refer to the information in Exercise 15-20. Assume there is no special order pending.Requireda. What transfer price would you recommend for Tops Corporation?b. Using your recommended transfer price,
Refer to the data in Exercise 15-20. Assume the transfer price is unchanged from the current transfer price.Requireda. Does Tops Corporation want to accept this order?b. Will the Marketing Division
Tops Corporation is organized into two divisions, Manufacturing and Marketing. Both divisions are considered to be profit centers and the two division managers are evaluated in large part on
Why is transfer pricing important in segment reporting for financial accounting?
T4 Enterprises develops sophisticated communications equipment for government and commercial use. It is organized into two divisions, which are evaluated as investment centers. The cost of capital
Refer to the information in Exercises 14-34 and 14-35.a. What is the division’s residual income before considering the project?b. What is the division’s residual income if the asset is
Refer to the data in Exercise 14-34. The division manager learns that he has the option to lease the asset on a year-to-year lease for $740,000 per year. All depreciation and other tax benefits would
The Singer Division of Patio Enterprises currently earns $2.34 million and has divisional assets of $19.5 million. The division manager is considering the acquisition of a new asset that will add to
Refer to the data in Exercise 14-31.RequiredEvaluate the performance of the two divisions assuming UEI uses economic value added (EVA).Exercise 14-31 Consumer Commercial Sales revenue $22,000 $37,000
Refer to the data in Exercise 14-31.RequiredEvaluate the performance of the two divisions assuming UEI uses residual income.Exercise 14-31 Consumer Commercial Sales revenue $22,000 $37,000 Divisional
Universal Electronics, Inc. (UEI), which started operations one year ago,has two divisions: Consumer and Commercial. Both divisions invest heavily in R&D, which is assumed to generate benefits
The following data are available for two divisions of Solomons Company. The cost of capital for the company is 8 percent. Ignore taxes. Requireda. If Solomons measures performance using ROI,
A division is considering the acquisition of a new asset that will cost $2,520,000 and have a cash flow of $700,000 per year for each of the four years of its life. Depreciation is computed on a
The Campus Division of All-States Bank has assets of $1,800 million. During the past year, the division had profits of $225 million. All States Bank has a cost of capital of 4 percent. Ignore
How is return on investment (ROI) computed?
Main Street Charities (MSC) is a not-for-profit organization that works in a large city to alleviate poverty. One of its programs is supported solely by private donations. In preparing the budget for
Glacier Creamery makes and sells ice cream. In developing the operating profit projections, the financial analyst is interested in the sensitivity to two parameters: the quantity of ice cream sold,
Flex-Tite manufactures plastic parts. The inventory policy at Flex-Tite is to hold inventory equal to 130 percent of the average monthly sales for its main product. Sales for the following year are
Sunset Motors, Inc., makes small motors for appliances and other uses. The company develops plans using an annual budgeting cycle. For next year, the production budget is 75,000 units. Inventories
Friendly Financial has $160 million in consumer loans with an average interest rate of 12.5 percent. The bank also has $96 million in home equity loans with an average interest rate of 8 percent.
Roller Partners is a nationwide financial advising firm with managers assigned to each region. The partners are developing their sales budget for the following year. The central finance team, using
Cosmic Corporation is a new company that has not yet developed a formal planning and budgeting process. They have asked for your advice on how they should proceed. Specifically, they would like to
What makes creating budgets for marketing and administration more difficult than creating, for example, the production cost budget?
Write out the inventory equation that is used to determine required production in the production budget for a manufacturing firm.
What is participative budgeting? What are some advantages of participative budgeting? What are some disadvantages?
Pacific Hotels operates a centralized call center for the reservation needs of its hotels. Costs associated with use of the center are charged to the hotel group (luxury, resort, standard, and
Using the data for the consulting firm in Exercise 12-38, what is the cost allocation if fixed computer costs of $7 million are allocated on the basis of number of consultants and the remaining costs
A consulting firm has two departments, Corporate and Government. Computer support is common to both departments. The cost of computer support is $9 million. The following information is
Worldwide Electronics is a global manufacturing firm that produces televisions, monitors, and other consumer electronic equipment. It is organized geographically with four divisions (North America,
Consider the Business Application, The Benefits and Costs of Decentralized Decision Making.RequiredWhat best describes the cost(s) Whole Foods likely hoped to reduce by removing some of the authority
Consider the Business Application, The Benefits and Costs of Decentralized Decision Making.RequiredWhat best describes the benefits Whole Foods likely hoped to receive by having local managers source
What is the dual-rate method of corp How does the separation of duties help prevent financial fraud?orate cost allocation?
What is contingent compensation?
What is relative performance evaluation?
What is the controllability concept?
What are the five basic kinds of decentralized units in a responsibility accounting system?
What are the three elements of a management control system?
What does dysfunctional decision making refer to?

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