Questions and Answers of Horngrens Cost Accounting A Managerial Emphasis

Krater Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm’s services is very competitive. To compete
Refer to Exercise 13-29.Data From Exercise 13.29Krater Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm’s
Suppose that during 2020, the market for architectural jobs increases by 10%. Assume that any increase in market share more than 10% and any decrease in selling price are the result of strategic
Refer to Exercise 13-29.Data From Exercise 13-29Krater Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm’s
The R and J Company manufactures a robotic vacuum called the Baxter. The company sells the vacuum to discount stores throughout the country. The Baxter is a basic robotic vacuum with a remote and is
XBlast manufactures an entry-level hoverboard, HOV-X. Pursuing a cost-leadership strategy, the company has tried to improve quality and reduce costs. As a result of the actions taken over the last
Suppose that during 2020, the market for hoverboards increased by 25%. All increases in market share (that is, sales increases greater than 25%) and decreases in the selling price of HOV-X are the
Refer to the information for XBlast in Problem 13-34.Data From Problem 13-34XBlast manufactures an entry-level hoverboard, HOV-X. Pursuing a cost-leadership strategy, the company has tried to improve
Unearth, Inc., refines petrol and sells it through its own Unearth gas stations. On the basis of market research, Unearth determines that 60% of the overall petrol market consists of
Vic Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers
Monza Pharma (Monza) is a developer and manufacturer of medical drugs, based in Beeland but selling its products all over the world. As a listed company, the overall objective of the company is to
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
While many reports do recognize the advantage of an outcomes focus in government, often public bodies concentrate on individual outputs. Many agencies are still working on short-term or annual
Goldstein Company manufactures wallets from fabric. In 2019, Goldstein made 2,700,000 wallets using 1,875,000 yards of fabric. In 2019, Goldstein has capacity to make 3,600,000 wallets and incurs a
Refer to the data for Problem 13-43. Assume the fabric costs $4.40 per yard in 2020 and $4.55 per yard in 2019.Data From Problem 13-43Goldstein Company manufactures wallets from fabric. In 2019,
The following items appear as cost of a manufacturing company:A. Depreciation on plant and equipmentB. Depreciation on delivery vansC. Insurance on plant and buildingD. Marketing manager’s salaryE.
What is a cost object?
Distinguish between direct and indirect costs. Explain with an example.
Explain whether a business department can be a cost object.
Differentiate between variable costs and fixed costs. Give some examples.
Give an example for each of the following: A cost that is variable and direct, a cost that is variable and indirect, a cost that is fixed and direct, and a cost that is fixed and indirect.
What is a cost driver? Give one example.
Why and when is it essential to calculate a unit cost?
Describe how manufacturing-, merchandising-, and service-sector companies differ from one another.
Inventoriable costs are usually associated with the manufacturing firms whilst period costs are mainly for trading firms. Discuss.
Goldings Limited produces sports wears for school children. The company incurred the following costs in the production of its inter-school sports wears:Required1. Classify each of the costs listed
Timi Company manufactures pens for schools. Summary data (in thousands) for the year ended December 31, 2019, are as follows:Required1. For each cost item (A–I) from the records, identify the
Bridget Ashton is getting ready to open a small restaurant.She is on a tight budget and must choose between the following long-distance phone plans:Required1. Draw a graph of the total monthly costs
Explain how overtime premium and idle time affect labor costs.
Explain three common features of cost accounting and cost management and their applications.
Essential College Supplies (ECS) is a store on the campus on a large Midwestern university. The store has both an apparel section (t-shirts with the school logo) and a convenience section. ECS
Which of the following is not correct regarding variable costs and fixed costs.a. Variable costs change in proportion to changes in the related level of activity while fixed costs remain unchanged
The following data has been collected from Decent Waters Company for the year ended December 31, 2019.Required1. Prepare a schedule for the cost of goods manufactured for the year 2019.2. If the
Comprehensive Care Nursing Home is required by statute and regulation to maintain a minimum 3:1 ratio of direct service staff to residents to maintain the licensure associated with nursing home beds.
Compute the missing amounts. If 10,000 units are produced If 20,000 units are produced If 50,000 units are produced Variable Costs Total Per Unit $5 ? ? ? ? ? Fixed Costs Total ? Per
Which of these is correct about overtime premium and idle time?a. Both overtime premium and idle time can be classified as overhead costs.b. Overtime premium can be classified as labor cost if such
APAPA Limited is analyzing its inventoriable costs and period costs. Which of the following statements is/are correct?I. Inventoriable cost and period costs flow through the income statement at a
The representative cost drivers in the right column of this table are randomized so they do not match the list of functions in the left column.Required1. Match each function with its representative
The following data are for Mama Retail Outlet Stores. The account balances (in thousands) are for 2020.Required1. Compute (a) The cost of goods purchased and (b) The cost of goods sold.2.
Stewart Tables’ selected data for March 2020 are presented here (in millions):RequiredCalculate the following costs:1. Direct materials inventory, March 31, 20202. Fixed manufacturing overhead
The following data are for Huang Wong Ping Retail Outlet Stores. The account balances (in thousands) are for 2021.Required1. Compute (a) The cost of goods purchased and (b) The cost of
Chan’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturing labor, and manufacturing overhead costs. The following items (in millions) pertain to
Gummy Land Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 5,000 jawbreakers per month. The machine cost
Consider the following account balances (in thousands) for the Peterson Company:Required1. Prepare a schedule for the cost of goods manufactured for 2020.2. Revenues for 2020 were $310 million.
The following information is available for the McCain Manufacturing Company for 2020.RequiredAssume that all raw materials are purchased on credit and all sales are credit sales. Compute the missing
There are at least three different purposes for which we measure product costs. They are (1) Product mix decisions, (2) Determining the appropriate charge for a government contract,
Each of the following cost items pertains to one of these companies: Home Depot (a merchandising-sector company), Apple (a manufacturing-sector company), and Rent a Nanny (a service-sector
A UK-based company Office Essentials manufactures and sells metal shelving. It began operations on January 1, 2020. Costs incurred for 2020 are as follows (V stands for variable; F stands for
Sam Wright recently took over as the controller of Osborn Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray.
Granolla Mike works as an auditor in the audit firm of Alison Wonderland & Partners and charges £60 per hour for normal working hours. The firm pays him £90 per hour for unsociable hours, which
An auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers.RequiredFor each case in the accompanying list, find the unknown elements
Adalard Müller, the new plant manager of New Times Manufacturing Plant Number 12, has just reviewed a draft of his year-end financial statements. Müller receives a year-end bonus of 8% of the
Crestwood Ltd makes 200 wooden kitchen chairs every month and sells them for €50 each. Fixed monthly overheads are €3,000 and the standard cost of one chair is as follows:Required1. Calculate the
Explain the concept of cost–volume–profit (CVP) analysis.
Differentiate between contribution margin and contribution margin ratio.
Plum Electronics, a division of Berry Corporation, manufactures two large-screen television models: the Mammoth, which has been produced since 2016 and sells for $990, and the Maximum, a newer model
Broadpull Rugs is holding a 4-week carpet sale at Tryst’s Club, a local warehouse store. Broadpull Rugs plans to sell carpets for $1,500 each. The company will purchase the carpets from a local
NWI is a service provider that offers computing resources measured in RAM (random-access memory)-hours to handle enterprise-wide applications. Information about variable overhead costs for March 2020
Megaphone Corporation produces a molded plastic casing, M&M101, for many cell phones currently on the market. Summary data from its 2020 income statement are as follows:Joshua Kirby,
For each of the following, state whether job costing or process costing would be most appropriate. Building a space satellite Egg production A play in a theatre Making a film Manufacturing
Gammaro Manufacturer uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2020:Required1. Calculate the budgeted
Daytona Wheels is a Japanese tire manufacturer. For August 2021, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs of $54,000. The budgeted
Describe three methods that managers can use to express CVP relationships.
What is breakeven point (BEP)?
Explain what are the main limitations of CVP analysis for decision making? Explain.
Is CVP analysis more focused on the short or the long term? Explain.
Is it possible to calculate the breakeven point for a company that produces and sells more than one type of product? Explain.
Sales volume next year is anticipated to be 50,000 plates of fried rice. By what percentage would the selling price have to be changed to generate a net income of £75,000, assume corporate tax is
CVP analysis assumes that costs can be accurately divided into fixed and variable categories. Do you agree? Explain.
What is the contribution margin percentage per plate of fried rice?a. £2 b. 50%c. 33.33% d. 66.67%You are given the following details regarding the operations of Cheng Hi Fried Rice
What are some of the assumptions underlying breakeven analysis in a multiple products environment?
Calculate the breakeven point in both units and sales valuea. 30,000 plates of fried rice and £60,000b. 180,000 plates of fried rice and £80,000c. 10,000 plates of fried rice and £180,000d. 30,000
Fill in the blanks for each of the following independent cases. Variable Case Revenues Costs $4,250 a. b. C. d. $6,600 $3,500 $2,400 Fixed Costs Total Costs $2,975 $6,000 $1,800 Operating
What is the main difference between gross margin and contribution margin? Which one is the focus of CVP analysis? Explain briefly.
Which of the following statement about contribution margin and gross margin is correct.a. Contribution margin indicates why the operating income changes as the number of units sold changes.b.
The Patisserie Hartog owns and operates 10 puff pastry outlets in and around Amsterdam. You are given the following corporate budget data for next year:Variable costs change based on the number of
Simplex Inc. sells its product at $80 per unit with a contribution margin of 40%. During 2016, Simplex sold 540,000 units of its product; its total fixed costs are $2,100,000.Required1. Calculate
The Unique Toys Company manufactures and sells toys. Currently, 300,000 units are sold per year at $12.50 per unit. Fixed costs are $880,000 per year. Variable costs are $7.00 per unit. (Consider
Sonix Electronics is a dealer of industrial refrigerator. Its average selling price of an industrial refrigerator is $5,000, which it purchases from the manufacturer for $4,200. Each month, Sonix
The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2020:Machine-hours data
Gordon Bros Ltd manufactures plastic products. The following details relates to Job #369:April 1, 2020: Direct materials of $420,000 and indirect materials of $17,000 were purchased. However, the
Oregon Outfitters, a manufacturer of fly fishing flies, uses a normal-costing system with a single overhead cost pool and direct labor cost as the cost-allocation base. The following data are for
Brandon Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers. The beginning balances (December 1) and ending balances (as of December 30) in their
Kitchen Works Ltd is a carpentry business that specializes in the production of kitchen cabinets. The company budgeted to produce 44,000 kitchen chairs for the month of January, but actually produced
Beth Bledsoe joined Baker Brothers, Inc. as controller in October 2019. Baker Brothers manufactures and installs custom kitchen countertops. The company uses a normal-costing system with two
What is broad averaging, and what consequences can it have on costs?
What are the fundamental cost objects in activity-based costing? How does activity-based costing work?
Which levels of cost hierarchy (under activity-based costing) are not used in simple costing systems and why are they important?
Outline the steps involved in a simple costing system using a single indirect-cost pool.
What are some behavioral issues that managers must be sensitive to when implementing ABC systems?
“The cost of cost objects under simple costing systems and under activity-based costing are never the same.” Do you agree? Explain.
Describe the main limitations of ABC systems.
“Activity-based costing is providing more accurate and detailed information and should replace simple costing.” Do you agree? Explain.
The Walliston Group (WG) provides tax advice to multinational firms. WG charges clients for (a) Direct professional time (at an hourly rate) and(b) Support services (at 30% of the direct
Which of the following statements regarding department costing and ABC is/are correct?I. Department costing systems always properly recognize the drivers of costs within departments.II. Emphasizing
ABC is most likely to yield benefits for a company with which of the following options?I. Many products that consume different amounts of resourcesII. Operations that are varied and complexIII. A
Automotive Products (AP) designs and produces automotive parts. In 2020, actual variable manufacturing overhead is $308,600. AP’s simple costing system allocates variable manufacturing overhead to
SharpPitch, Inc., manufactures karaoke machines for several well-known companies.The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were
CKM is an architectural firm that designs and builds buildings. It prices each job on a cost plus 20% basis. Overhead costs in 2020 are $4,011,780. CKM’s simple costing system allocates overhead
Aniline Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Aniline classifies its various printing jobs as standard jobs or special jobs. Aniline’s

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