Questions and Answers of Horngrens Cost Accounting A Managerial Emphasis

Performance Auto Company operates a new car division (that sells highperformance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some
Acme Company recently introduced a new bonus plan for its corporate executives. The company believes that current profitability and customer satisfaction levels are equally important to the
America Cola is considering the purchase of a special-purpose bottling machine for $$65,000.$ It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager
Ella’s Bakery plans to purchase a new oven for its store.The oven has an estimated useful life of 4 years. The estimated pretax cash flows for the oven are as shown in the table that follows, with
LaCroix Company produces handbags from leather of moderate quality. It distributes the product through outlet stores and department store chains. At LaCroix’s facility in northeast Ohio, direct
Roku Electronics manufactures universal power adapters at its Desert Sands plant. The company provides you with the following information regarding operations for April 2017:Assume the spoiled units
Textual Deviance is a manufacturer of writing products for aspiring indie authors.Winston Smith, the plant manager of Textual Deviance, obtains the following information for Job #10 in August 2017. A
Assume that the 6 spoiled units of Textual Deviance Machine Shop’s Job #10 can be reworked for a total cost of $$1,800.$ A total cost of $$6,600$ associated with these units has already been
Assume that Job #10 of Textual Deviance generates normal scrap with a total sales value of $$700$ (it is assumed that the scrap returned to the storeroom is sold quickly).Prepare the journal
Superb Furniture manufactures plastic lawn furniture in a continuous process. The company pours molten plastic into molds and then cools the plastic. Materials are added at the beginning of the
Toy-For-Fun (TFF) makes customized toys for kids. TTF’s managers are currently in a fix: although their vending machine is under-utilized according to their calculations, there is often a queue in
Global Cell Phones (GCP) has developed a cell phone that can be used anywhere in the world (even countries like Japan that have a relatively unique cell phone system). GCP has been receiving
Prescott Manufacturing evaluates the performance of its production managers based on a variety of factors, including cost, quality, and cycle time. The following are nonfinancial measures for quality
Fresh Foodie operates two restaurant services, one in City X and one in City Y. The semiannual bonus plan for each restaurant’s president has three components:a. Profitability performance. Add 1%
QwakSoda Corporation makes soda in three departments: blending, bottling, and labeling. Currently, the output from the blending department first moves through the bottling department and then through
RightTime (RT) Corporation operates a retail store featurin wristwatches. It maintains an EOQ decision model to make inventory decisions. Currently, it is considering inventory decisions for its
The TieNeck Company manufactures men’s neckwear at its A1 plant. TieNeck is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production:a.
Pilar Chemicals has a mixing department and a refining department. Its process-costing system in the mixing department has two direct materials cost categories (chemical P and chemical Q) and one
The assembly division of Fenton Watches, Inc., uses the weighted-average method of process costing. Consider the following data for the month of May 2017:Compute equivalent units for direct materials
Heavy Duty, Delhi manufactures motorbike augmentations for use by seasoned riders across the world. A critical requirement for seasoned riders is that each augmentation that they apply have a unique
Larsen Company manufactures car seats in its San Antonio plant.Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The
Larsen Company, as youknow,is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct
Refer to the information in Problem 17-39.Suppose that Larsen Company uses the FIFO method instead of the weighted-average method in all of its departments.The only changes to Problem17-39 under the
Publishers, Inc., has two departments: printing and binding. Each department has one direct-cost category (direct materials) and one indirect-cost category(conversion costs). This problem focuses on
Tasty, Inc., is a producer of potato chips. A single production process at Tasty, Inc., yields potato chips as the main product and a byproduct that can also be sold as a snack. Both products are
Iridium Technologies manufactures a variety of flash memory chips at its main foundry in Anam, Korea. Some chips are sold by Iridium to makers of electronic equipment while others are embedded into
The Magill Repair Shop repairs and services machine tools.A summary of its costs (by activity) for 2017 is as follows:1. Classify each cost as value-added, non-value-added, or in the gray area
Sun Systems provides energy audits in residential areas of southern Ohio. The energy audits provide information to homeowners on the benefits of solar energy. A consultant from Sun Systems educates
TinRoof, Inc., manufactures and sells a do-it-yourself storage shed kit. In 2016, it reported the following:1. What was TinRoof’s operating income in 2016? What was the full cost per unit? What was
Enviro-Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands):Enviro-Tech’s annual distribution-channel costs are $$33$
Speedy Service repairs printers and photocopiers for five multisite companies in a tristate area. Speedy’s costs consist of the cost of technicians and equipment that are directly traceable to the
Holbrook Corporation has three divisions: pulp, paper, and fibers.Holbrook’s new controller, Paul Weber, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is
The Adelaide Hares play in the Australian Cricket League. The Hares play in the Bogga Arena, which is owned and managed by the City of Adelaide. The arena has a capacity of 17,500 seats (6,500
Soda-King manufactures and sells two soft drinks: Kola and Limor. Budgeted and actual results for 2017 are as follows:1. Compute the total sales-volume variance, the total sales-mix variance, and the
Space Infonautics, Inc., produces handheld Windows CE™-compatible organizers. Space Infonautics markets three different handheld models: MobilePro is a souped-up version for the executive on the
Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services (AS) and information systems (IS)—and two
Hall Auto Sales uses all types of media to advertise its products (television, radio, newspaper, and so on). At the end of 2016, the company president, Tina Hall, decided that all advertising costs
Fixed-cost allocation. Baker University completed construction of its newest administrative building at the end of 2017. The University’s first employees moved into the building on January 1, 2018.
Stenback Company is one of the world’s leading corn refiners. It produces two joint products—corn syrup and corn starch—using a common production process. In July 2017, Stenback reported the
Fancy Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results
Dhyanchand & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers.Dhyanchand wants to be known for its trendsetting
Refer to Exercise 12-22. Suppose that the market for silk-screened T-shirts grew by 10% during 2017. All increases in sales greater than 10% are the result of Dhyanchand’s strategic
Refer to Exercise 12-21. 1. Calculate the amount and cost of unused administrative capacity at the beginning of 2017, based on the actual number of customers Dhyanchand served in 2017. 2. Suppose
CocoMint Chocolates makes custom-labeled, high-quality, specialty candy bars for special events and advertising purposes. The company employs several chocolatiers who were trained in Germany. The
Highland State Company provides cable and Internet services in Barcelona. There are many competitors that provide similar services. Highland State believes that the key to financial success is to
SmoothAir is a no-frills airline that services the Midwest. Its mission is to be the only short-haul, low-fare, high-frequency, point-to-point carrier in the Midwest. However, there are several large
The Bengal Corporation operates car rental agencies at more than 20 airports across India. Customers can choose from one of three contracts for car rentals of one day or less:■ Contract 1: $$50$
Goldstein Corporation manufactures a children’s bicycle, model CT8. Goldstein currently manufactures the bicycle frame. During 2017, Goldstein made 32,000 frames at a total cost of $$1,056,000.$
Inbee is concerned that she still does not understand the relationship between output and labor consumption. She consults with Jim Park, the head of engineering, and shares the results of her
Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $$9$ per unit, and the contribution margin of the next best alternative of the
Mechum River Anglers, a division of Old Dominion Travel, offers two types of guided fly fishing tours, Basic and Deluxe. Operating income for each tour type in 2017 is as follows:The equipment has a
Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,000 tires at a variable cost of $$74$ per tire and total fixed
Beta Company’s budgeted prices for direct materials, direct manufacturing labor,and direct marketing (distribution) labor per luxury wallet are $$41,$ $$5,$ and $$11,$ respectively. The
XYZ Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the customer’s bank. The
The Alpha Company manufactures designer jewelry for jewelry stores. A new accountant intern at Alpha Company has accidentally deleted the calculations on the company’s variance analysis
Luster, Inc., produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge.Luster uses standard costing and carries
Modern Tiles Ltd. manufactures ceramic tiles. For January 2017,it budgeted to purchase and use 10,000 pounds of clay at $$0.70$ a pound. Actual purchases and usage for January 2017 were 11,000
SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. SallyMay’s May 2016 static budget and actual results for direct inputs
Milan Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static
Marcus McQueen has run In-A-Flash Car Detailing for the past 10 years. His static budget and actual results for June 2017 are provided next. Marcus has one employee who has been with him for all 10
Omega Animal Health, Inc. produces a generic medication used to treat cats with feline diabetes. The liquid medication is sold in 100 ml vials. Omega employs a team of sales representatives who are
Gamma’s Snacks produces snack mixes for the gourmet and natural foods market. Its most popular product is Tempting Trail Mix, a mixture of peanuts, dried cranberries, and chocolate pieces. For each
On May 1,2017, Lowell Company began the manufacture of a new paging machine known as Dandy. The company installed a standard costing system to account for manufacturing costs. The standard costs for
Each of the following statements is correct regarding overhead variances except:a. Actual overhead greater than applied overhead is unfavorable.b. The efficiency overhead variance ignores the
Steed Co. budgets production of 150,000 units in the next year. Steed’s CFO expects that each unit will take 8 hours to produce at an hourly wage rate of $$10$ per hour. If factory overhead is
Omega Arts is a manufacturer of designer vases. The cost of each vase is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead costs)
Omega Arts allocates fixed manufacturing overhead to each vase using budgeted direct manufacturing labor-hours per vase.Data pertaining to fixed manufacturing overhead costs for June 2017, are
The French Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable
The French Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2017, fixed manufacturing overhead was budgeted at
The Principles Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is 2
Healthy Limited is a pharmaceutical and biotechnology company.It has the following data for manufacturing overhead costs during August 2018:Fill in the blanks. Use F for favorable and U for
Hot Meals Now (HMN) operates a meal home-delivery service.It has agreements with 20 restaurants to pick up and deliver meals to customers who phone or fax orders to HMN. HMN allocates variable and
XYZ automobiles, Inc. makes accessories primarily for cars.For 2017, budgeted variable overhead is $$90,000$ for 12,000 direct labor-hours. Budgeted total overhead is $$110,000$ at 8,000 direct
Alpha Capital Company provides financial services to their clients. Recently, Alpha has experienced rapid growth rate due to expansion and is becoming concerned as to their rising costs, particularly
Alma, Inc., manufactures high-pressure cleaners for large transportation companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each
Michael Roberts is a cost accountant and business analyst for Darby Design Company (DDC), which manufactures expensive brass doorknobs.DDC uses two direct-cost categories: direct materials and direct
Omega’s Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping department
The Delta Company started business on January 1, 2017. The company adopted a standard absorption costing system for the production of ergonomic backpacks. Delta chose direct labor as the application
Crystal Clear Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows:The selling price per unit
The Zeta Company manufactures trendy, good-looking, moderately priced umbrellas. As Zeta’s senior financial analyst, you are asked to recommend a method of inventory costing. The CFO will use your
Regina Company manufacturers a professional-grade vacuum cleaner and began operations in 2017. For 2017, Regina budgeted to produce and sell 20,000 units. The company had no price, spending, or
Artesa, a leading firm in the semiconductor industry, produces digital integrated circuits (ICs) for the communications and defense markets. For the year ended December 31, 2017, Artesa sold 242,400
(R. Marple, adapted) It is the end of 2017. The All-Fixed Company began operations in January 2016. The company is so named because it has no variable costs. All its costs are fixed; they do not vary
Horizon Press produces textbooks for college courses. The company recently hired a new editor, Billie White, to handle production and sales of books for an introduction to accounting course.
Donaldson Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2017:There are no price, spending, or efficiency
Gostkowski Company is about to enter the highly competitive personal electronics market with a new optical reader. In anticipation of future growth, the company has leased a large manufacturing
The Beta Company started business on January 1, 2017. Beta manufactures a specialty honey soda, which it sells directly to state-owned distributors in Abu Dhabi. Honey soda is produced and sold in
Top Catering operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, TopStuff, prepares and delivers meals to the hospitals.It has the capacity to deliver up to
In 2018, only 740,000 TopStuff meals were produced and sold to the hospitals. Smith suspects that hospital controllers had systematically inflated their 2018 meal estimates.1. Recall that TopStuff
Akua works in the manufacturing department of Impala Iron Works (IIW) as a machine operator. Akua, a long-time employee of IIW, is paid on an hourly basis at a rate of $$25$ per hour. She works
Roughstyle Shirts Co. sells shirts wholesale to major retailers across Australia. Each shirt has a selling price of $$40$ with $$26$ in variable costs of goods sold. The company has fixed
Recreational Music Society is a not-for-profit organization that brings guest artists to the community’s greater metropolitan area. The society just bought a small concert hall in the center of
Brandon Harris has a small bakery business called Super Bakery. Revenues and cost data of Super Bakery for the year 2016 are as follows:An analysis of other operating costs reveals that 80% of it
Roma Skincare manufactures and sells a face cream to small specialty stores in Victoria, Australia. It presents the monthly operating income statement shown here to Jacob Scott, a potential investor
AgroPharm Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. AgroPharm is considering
Carolin Chemicals produces a range of chemical products for industries on getting bulk orders. It uses a job-costing system to calculate the cost of a particular job. Materials and labors used in the
Caldwell Toys produces toys mainly for the domestic market. The company uses a job-costing system under which materials and labors used in the manufacturing process are directly allocated to
Gammaro Companyuses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour.The following data are available for 2017:1. Calculate the budgeted manufacturing
Global Enterprize, a management consulting firm, has the following condensed budget for 2017:Global Enterprize has a single direct-cost category (professional labor) and a single indirect-cost pool
Holland Woodworking uses normal costing and allocates manufacturing overhead to jobs based on a budgeted labor-hour rate and actual direct labor-hours. Under- or overallocated overhead, if

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