Questions and Answers of Horngrens Cost Accounting

Achilles Auto makes and sells batteries. In 2017, it made 100,000 batteries and sold 75,000 of them, at an average selling price of $60 per unit. The following additional information relates to
ZB Toys started 2017 with no inventories. During the year, their expected and actual production was 30,000 units, of which they sold 24,000 units at $50 each. Cost data for the year is as
Potter Replica produces a specialty statue for sale to collectors. In 2017, Potter’s expected and actual output was 12,000 statues. Potter sold 10,000 statues at an average selling price of $425.
Swift Feet, Inc. can produce 1,000 pairs of sneakers per hour at maximum efficiency. There are three 8-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units
Assume Stassen Company on January 1, 2017, decides to contract with another company to preassemble a large percentage of the components of its telescopes. The revised manufacturing cost structure
Write a linear cost function equation for each of the following conditions. Use y for estimated costs and X for activity of the cost driver.a. Direct materials cost is $$1.70$ per pound.b. Total
The Mortise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Mortise has heard about a method of measuring cost
Maude Designs manufactures various picture frames. Each new employee takes 6 hours to make the first picture frame and 4.8 hours to make the second. The manufacturing overhead charge per hour is
What is a linear cost function, and what types of cost behavior can it represent?
What is the most important issue in estimating a cost function?
What are the different methods that can be used to estimate a cost function?
What are the steps to estimate a cost function using quantitative analysis?
How should a company evaluate and choose cost drivers?
What is a nonlinear cost function, and in what ways do learning curves give rise to nonlinear costs?
What are the common data problems a company must watch for when estimating costs?
The Rainier Company provides landscaping services to corporations and businesses.All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to
The Rainier Company provides landscaping services to corporations and businesses. All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to
The Rainier Company provides landscaping services to corporations and businesses.All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to
Irving Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2017 is as follows:The equipment has zero disposal value.Required 1. By closing down the
What is the five-step process that managers can use to make decisions?
When is a revenue or cost item relevant for a particular decision and what potential problems should managers avoid in relevant-cost analysis?
What is an opportunity cost and why should managers consider it when making insourcing versus-outsourcing decisions?
When a resource is constrained, how should managers choose which of multiple products to produce and sell?
What steps can managers take to manage bottlenecks?
In deciding to add or drop customers or to add or discontinue branch offices or business divisions, what should managers focus on and how should they take into account allocated overhead costs?
Is book value of existing equipment relevant in equipment-replacement decisions?
How can conflicts arise between the decision model a manager uses and the performanceevaluation model top management uses to evaluate that manager?
Nile is an online, mail-order company, which provides customers with a wide variety of products. The managers of Nile have identified their financial objectives as: grow operating income and increase
Strategic analysis of operating income. Ronaldo Associates is a construction engineering firm that prepares detailed construction drawings for single-family homes. The market for this service is very
Refer to the information on Ronaldo Associates in Try It! 12-2.Data from Try it 12-2Strategic analysis of operating income. Ronaldo Associates is a construction engineering firm that prepares
Following a strategy of product differentiation, Westwood Corporation makes a high-end kitchen range hood, KE8. Westwood’s data for 2016 and 2017 are:In 2017, Westwood reduced direct material usage
What are two generic strategies a company can use?
How can an organization translate its strategy into a set of performance measures?
How can a company analyze changes in operating income to evaluate the success of its strategy?
How can a company identify and manage unused capacity?
Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following
Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following
Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following
Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following
Winchester Manufacturing, Inc., plans to develop a new industrial motor. The product will take 6 months to design and test. The company expects the motor to sell 10,000 units during the first 6
What are the three major factors affecting pricing decisions?
How do companies make long-run pricing decisions?
How do companies determine target cost?
Why is it important for managers to distinguish cost incurrence from locked-in costs?
How do companies price products using the cost-plus approach?
Describe life-cycle budgeting and life-cycle costing and when should companies use these techniques?
What is price discrimination and peak load pricing and why are there price differences across countries?
How do antitrust laws affect pricing?
How can a company’s revenues and costs differ across customers?
How do customer-profitability profiles help managers?
Why do managers prepare cost-hierarchy based operating income statements?
What criteria should managers use to guide cost-allocation decisions?
What are two key decisions managers must make when collecting and allocating costs in indirect-cost pools?
What are the two components of the sales volume variance and the two components of the sales-quantity variance?
When should managers use the dual-rate method over the single-rate method?
What factors should managers consider when deciding between allocation based on budgeted and actual rates and budgeted and actual usage?
What methods can managers use to allocate costs of multiple support departments to operating departments?
What methods can managers use to allocate common costs to two or more users?
How can contract disputes over reimbursement amounts based on costs be reduced?
What is product bundling, and how can managers allocate revenues of a bundled product to individual products in the bundle?
What do the terms joint cost and splitoff point mean, and how do joint products differ from byproducts?
Why are joint costs allocated to individual products?
What methods can be used to allocate joint costs to individual products?
When is the sales value at splitoff method considered preferable for allocating joint costs to individual products and why?
Are joint costs relevant in a sell-or-processfurther decision?
What methods can be used to account for byproducts, and which of them is preferable?
Under what conditions is a process-costing system used?
How are average unit costs computed when no inventories are present?
What are the five steps in a process-costing system, and how are equivalent units calculated?
What are the weighted-average and first-in, first-out (FIFO) methods of process costing?Under what conditions will they yield different levels of operating income?
How are the weighted-average and FIFO process-costing methods applied to transferred-in costs?
What is an operation-costing system, and when is it a better approach to product costing?
What are spoilage, rework, and scrap?
What is the distinction between normal and abnormal spoilage?
How do the weighted-average and FIFO methods of process costing calculate the costs of good units and spoilage?
How does inspecting at various stages of completion affect the amount of normal and abnormal spoilage?
How do job-costing systems account for spoilage?
How do job-costing systems account for rework?
How is scrap accounted for?
What are the four cost categories of a costs-of-quality program?
What nonfinancial measures and methods can managers use to improve quality?
How do managers identify the relevant costs and benefits of quality-improvement programs?
How do managers use financial and nonfinancial measures to evaluate quality?
What is customer-response time and what are the reasons for delays?
What are relevant revenues and costs of delays?
What financial and nonfinancial measures of time can managers use in the balanced scorecard?
What are the six categories of costs associated with goods for sale?
What does the EOQ decision model help managers do, and how do managers decide on the safety-stock levels?
How do errors in predicting the parameters of the EOQ model affect costs? How can companies reduce the conflict between the EOQ decision model and models used for performance evaluation?
Why are companies using just-in-time (JIT) purchasing?
How do materials requirements planning (MRP) systems differ from just-in-time (JIT) production systems?
What are the features and benefits of a just-in-time (JIT) production system?
How does backflush costing simplify traditional inventory costing?
How is lean accounting different from traditional costing systems?
What are the five stages of capital budgeting?
What are the two primary discounted cash flow (DCF) methods for project evaluation?
What are the payback and discounted payback methods? What are their main weaknesses?
What are the strengths and weaknesses of the accrual accounting rate-of-return (AARR) method for evaluating long-term projects?
What are the relevant cash inflows and outflows for capital budgeting decisions?How should accrual accounting concepts be considered?
What conflicts can arise between using DCF methods for capital budgeting decisions and accrual accounting for performance evaluation?How can these conflicts be reduced?

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