Questions and Answers of Horngrens Cost Accounting A Managerial Emphasis

InStep Company prints custom training material for corporations.The business was started January 1, 2017.The company uses a normal-costing system. It has two direct cost pools, materials and labor,
Conroe Company is reviewing the data provided by its management accounting system. Which of the following statements is/are correct?I. A cost driver is a causal factor that increases the total cost
Nobis Company uses an ABC system. Which of the following statements is/are correct with respect to ABC?I. Departmental costing systems are a refinement of ABC systems.II. ABC systems are useful in
CKM is an architectural firm that designs and builds buildings.It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $$4,011,780.$ CKM’s simple costing system allocates overhead
Vital Dimension’s Radiology Center (VDRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI).VDRC has developed a reputation as a top radiology
Roletter Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Bob Anderson, the controller, is responsible for preparing Roletter’s master budget
Tom’s Apparels (Ghana) manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following:Budgeted sales and selling price per unit are as follows:Tom’s Apparels has the
The Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2016, Sabat’s budget department gathered the following data to prepare budgets for 2017:The following
Christa Schuller owns an outlet of a popular chain of restaurants in the southern part of Germany. One of the chain’s popular lunch items is the cheeseburger. It is a hamburger topped with cheese.
ABC manufacturing, two products. Hazlett, Inc., operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the
“Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree?Explain.
Give three examples of opportunity costs that typically are not recorded in accounting systems, although they are relevant when using the EOQ model in the presence of demand uncertainty.
Backflush costing is comparable to cost accounting in a service firm. Discuss.
What is cost-plus pricing?
What is life-cycle budgeting?
Soda-King prepared the budget for 2017 assuming a 12.5% market share based on total sales in the western region of the Australia. The total soft drinks market was estimated to reach sales of 10
Define strategy.
What are the five types of conditions to consider when evaluating a strategy map?
What is a partial-productivity measure?
Define opportunity cost.
Which of the following is not a qualitative factor that Atlas Manufacturing should consider when deciding whether to buy or make a part used in manufacturing their product?a. Quality of the outside
What are the main uses of variance analysis in an organization?
When using standard costing, what are the two main components of variances for materials in a flexible budget?
Why should the performance of variance analyses be based on flexible budgets rather than static budgets?
What is the main component of sales variance if a flexible-sales budget is used?
What is the main advantage of standard costs versus past costs?
Differentiate between breakeven analysis and CVP analysis.
With regard to making decisions, what do you think are the main limitations of CVP analysis?Explain.
Give an example each of how a manager can decrease variable costs while increasing fixed costs and increase variable costs while decreasing fixed costs.
Inaccurate costing can result in two deviations. Name the two deviations and explain how they can impact a business.
Differentiate between simple costing systems and ABC systems.
How can ABC help with cost reduction and process improvement decisions?
Describe the main barriers for adopting an ABC system.
What are the main behavioral issues in implementing ABC systems?
List the five key questions that must be considered by managers for developing successful strategies.
“Budgets provide a framework for evaluating performance and improving learning.” Do you agree? Explain.
“Budgets motivate managers and other employees to the company’s goals.” Do you agree?Explain.
Which of the following statements is correct regarding the components of the master budget?a. The cash budget is used to create the capital budget.b. Operating budgets are used to create cash
Which of the following statements is correct regarding the drivers of operating and financial budgets?a. The sales budget will drive the cost of goods sold budget.b. The cost of goods sold budget
Superior Industries sales budget shows quarterly sales for the next year as follows: Quarter 1–10,000; Quarter 2–8,000; Quarter 3–12,000; Quarter 4–14,000. Company policy is to have a target
In 2017, Rouse & Sons, a small environmental-testing firm, performed 12,200 radon tests for $$290$ each and 16,400 lead tests for $$240$ each. Because newer homes are being built with lead-free
The Albright Company manufactures ball pens and expects sales of 452,000 units in 2018. Albright estimates that its ending inventory for 2018 will be 65,400 pens. The beginning inventory is 46,500
Polyhidron Corporation produces 5-gallon plastic buckets. The company expects to produce 430,000 buckets in 2018. Polyhidron purchases high-quality plastic granules for the production of buckets.
The Ceremicon Company produces teapots from stoneware clay.The company has prepared a sales budget of 150,000 units of teapots for a 3-month period. It has an inventory of 34,000 units of teapots on
The Deluxe Motorcar in northern California manufactures motor cars of all categories. Its budgeted sales for the most popular sedan model XE8 in 2018 is 4,000 units. Deluxe Motorcar has a beginning
Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2018. Each successive month, the budgeted cost-driver rate decreases by 0.4% relative
Sumitomo Cable manufactures various types of aluminum and copper cables which it sells directly to retail outlets through its distribution channels. The manufacturing process for producing cables
The Cooper Furniture Company of Potomac, Maryland, assembles two types of chairs (Recliners and Rockers). Separate assembly lines are used for each type of chair.Classify each cost item (A–I) as
The following data are for Marvin Department Store. The account balances (in thousands) are for 2017.1. Compute(a) the cost of goods purchased and(b) the cost of goods sold.2. Prepare the income
The following data are for Huang Wong Ping Retail Outlet Stores. The account balances (in thousands) are for 2017.1. Compute(a) the cost of goods purchased and(b) the cost of goods sold.2. Prepare
Renka’s Heaters selected data for October 2017 are presented here(in millions):Calculate the following costs:1. Direct materials inventory 10/31/2017 2. Fixed manufacturing overhead costs for
The Howell Corporation has the following account balances (in millions):Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2017. (For
Real’s Bees makes products for personal care and sells through retail outlets and grocery stores. Its product line includes products for facial and body skin care, lip care, baby care, and outdoor
PostNews.com offers its subscribers several services, such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main revenue sources are fees for
Consider the following series of independent situations in which a firm is about to make a strategic decision.Decisionsa. Stila Cosmetics is considering introducing an anti-aging facial cream with
Consider the following series of independent situations in which a firm is about to make a strategic decision.Decisionsa. Lactalis Foods is planning to come out with a special tetrazzini made with
For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different
Europa Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows:The percentage of time spent by professional staff on
Define the term “value chain” and state its six primary business functions.
Describe the five-step decision-making process.
What is the role of ethics in a well-functioning economy? List a few groups of stakeholders who may suffer in an economic system governed by weak ethics.
Provide one example of an ethical issue in relation to suppliers and its possible impact on customers and the market when ethics is weak.
Which of the following is not a primary function of the management accountant?a. Communicates financial results and position to external parties.b. Uses information to develop and implement business
Why are overtime premium and idle time considered as indirect costs?
Appolo Healthcare Solutions provides preventive health check-up packages for men and women over 40 years of age and charges $$12$,000 per package on an average. The average variable costs per
Modern Beauty Parlour provides beauty treatment for women. Its average monthly variable costs per woman are as follows:Modern Beauty charges $$250$ per woman on an average.1. Calculate the
United Project Consultants (UPC) provides project consultancy services to new business projects. For 2017, it has a total budgeted revenue of $$480$,000, based on an average price of $$240$ per
What is the main difference between job costing and process costing? Provide one example for each costing method.
Explain how you can determine the cost of a cost object/job under job-costing system.
Job order costing, process costing. In each of the following situations, determine whether job costing or process costing would be more appropriate.a. A hospitalb. A car manufacturerc. A computer
Role of controller, role of chief financial officer. George Jimenez is the controller at Balkin Electronics, a manufacturer of devices for the computer industry. The company may promote him to chief
Rector Corporation is examining its quality control program. Which of the following statements is/are correct?I. Rework costs should be regarded as a cost of quality when the rework is caused by
Describe EVA.
Describe moral hazard.
Assuming an increase in price levels over time, which of the following asset valuations will produce the highest return on assets?a. Net book valueb. Gross book valuec. Replacement costd. Depreciated
Online Learning, Inc. has two divisions: Test Preparation and Language Arts. Results (in millions) for the past 3 years are partially displayed here:Required1. Complete the table by filling in the
Carter Corporation recently announced a bonus plan to be awarded to the manager of its most profitable division. The three division managers are to choose whether ROI or RI will be used to measure
If ROI is used to evaluate a manager’s performance for a relatively new division, which of the followingmeasures for assets (or investment) will increase ROI?a. Gross book value used instead of net
The Quality Athletics Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product— AccuDriver, a golf club that uses global
The Long Haul Trucking Company is developing metrics for its drivers. The company computes variable costs of each load based upon miles driven and allocates fixed costs based upon time consumed. Load
ABC Inc. wants to maintain a capital structure of 80% equity and 20% debt. They currently have an effective tax rate of 30%. The company’s cost of equity capital is 12%. To obtain their debt
Mary Jane is an upscale retailer for women’s clothing with stores in many high-end shopping centers across the United States. In recent years, sales in most of the stores, especially the
Return on investment (ROI) is often expressed as follows:
Accelerate Auto Company operates a new car division (that sells high performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some
The Mountainside Corporation manufactures similar products in the United States and Norway. The U.S. and Norwegian operations are organized as decentralized divisions. The following information is
Natural Bounty Corporation operates three divisions that process and bottle natural fruit juices. The historical-cost accounting system reports the following information for 2020:Natural Bounty
Isla Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has two divisions, clothing and cosmetics. Isla has $2,500,000 invested in assets
Kroger 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
Estancia, Inc. is a large company that owns restaurants and has a wine division and a frozen food division. Management of the company gives its division managers autonomy in running their divisions
News Report Group has two major divisions: print and Internet. Summary financial data (in millions) for 2019 and 2020 are as follows:The two division managers’ annual bonuses are based on division
Doorharmony Company makes doorbells. It has a weighted-average cost of capital of 7% and total assets of $5,630,000. Doorharmony has current liabilities of $750,000. Its operating income for the year
Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1994. The Phoenix spa opened in
Precision Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately 2 years ago, Pedro Mendez, president of Precision, decided to
Channels is a manufacturer of flatware that is grade-rolled rather than stamped. The flatware is sold in upscale stores as a high-quality item. The company sells the goods that arewithin
The variable manufacturing costs per unit of EntertainMe Corporation are as follows:Required1. Prepare income statements for EntertainMe in January, February, and March 2020 under throughput
Ebbelly Transport Services is a trucking business in the United States. The company has two divisions (Loading and Off-loading) and uses the dual-rate method for allocating trucking costs to each
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
Calculus Company makes calculators for students. The company has been working on improving its quality over the last year and it wants to confirm a reduction in their costs-of quality (COQ). Here are
Cloths of Heaven purchases old tires and recycles them to produce rubber floor mats and car mats. The company washes, shreds, and molds the recycled tires into sheets. The floor and car mats are cut
iProtect produces covers for all makes and models of iPads. iProtect sells 1,500,000 units each year at a price of $30 per unit and a contribution margin of 35%. A survey of iProtect’s customers

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