Questions and Answers of Horngrens Cost Accounting A Managerial Emphasis

Marshall’s Devices uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding. Direct material and
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
Plush Decor, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Italy, Spain, and Singapore. All area rugs are to be sold to retail outlets in
Consider the following details of the income statement of Fountain Pen Ltd, a Swedish company that produces special pens, for the last year:An analysis of Fountain Pen Ltd’s costs reveals that its
Northampton plc, a British-based company, makes superbikes for the U.S. and British markets. For the current year, it estimates fixed costs of £10 million. Its variable costs are £3,000 per
Ariba Corporation reaches its breakeven point at $3,200,000 of revenues. At present, it is selling 105,000 units and its variable costs are $30. Fixed manufacturing costs, administrative costs, and
Futuremart is an international retail store. They are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs
Wellington Vents Ltd operates and services snack vending machines located in restaurants, metro stations, canteens, etc. The machines are rented from the manufacturer. In addition, the company must
Yahama Medical Centre operates a medical surgery in Japan that specializes in the diagnosis and treatment of hay fever allergies. The firm’s budget for next year is as follows:Required1. Calculate
Mundial Nails produces a famous nail polish with a unique glossy feature and sells it for $25 per unit. The operating income for 2017 is as follows:Required1. Replacing a portion of its variable
The LadyStyle sells women’s shoes across the country through its chain of shoe stores. It sells 20 different styles of shoes with identical unit costs and selling prices. A unit is defined as a
Refer to requirement 3 of Problem 3-43. In this problem, assume the role of the owner of LadyStyle.Data From Problem 3-43The LadyStyle sells women’s shoes across the country through its chain of
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
Sunshine Printing Company currently leases its only copy machine for $1,500 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based.
TopHats operates a kiosk at a local mall, selling hats for $30 each. TopHats currently pays $900 a month to rent the space and pays three full-time employees to each work 160 hours a month at $12 per
The Matrix Company has three product lines of belts—A, B, and C—with contribution margins of $7, $5, and $4, respectively. The president foresees sales of 400,000 units in the coming period,
Romi Filters produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet; the other is a pitcher-cum-filter that only purifies water meant for
The Garden Club is preparing for its annual meeting in which a magic show will be shown to its contributing members only. Last year, out of 1,500 members, only 600 contributed for the magic show.
Blackthorns Ltd produces a single product, which has a selling price of £10 per unit and a variable cost of production of £4 per unit. The fixed costs of production are £55,000. In addition, the
Central térmica, Inc., produces the same power generator in two Spanish plants, a new plant in Los Barrios and an older plant in Ascó. The following data are available for the two plants.All fixed
Define cost pool, cost tracing, cost allocation, and cost-allocation base.
How does a job-costing system differ from a process-costing system?
Explain how the cost of a cost object/job is determined under a job-costing system.
Describe a key feature of job costing and process costing.
Explain the role of information technology in job costing.
Seasonal patterns and fluctuating levels of monthly outputs are the two main factors for most organizations to use an annual period rather than a weekly or a monthly period to compute budgeted
Describe normal costing and actual costing systems.
Explain how job-costing information may be used for decision making.
Comment on the following statement: There is no difference between “actual costing” and “normal costing” systems because both systems use the product’s actual direct-cost rates and actual
Alga Computers Ltd. manufactures computer chips for a major computer company. The following are the cost data for Job #0064:What are the total manufacturing costs for Job #0064 using normal
Describe the flow of costs in a normal job-costing system.
Indicate which of the following jobs will involve job costing and process costing:a. Job process: 1, 3, 5, 8, 9; process costing: 2, 4, 6, 7b. Job process: 1, 4, 5; process costing: 2, 3, 6, 7, 8,
Oracle Enterprises manufactures tennis balls for the Royal Tennis Club in Buckinghamshire. The following relates to the cost incurred for Job #506:Oracle Enterprises uses a direct labor hours basis
Why do managers have to make adjustments for under- or over-allocated indirect costs?
Empire Ltd. is a paper production company based in Northamptonshire, UK. The company’s actual and budgeted figures for Job #419 include the following:If the company absorbs overheads based on
Which of the following statements does not accurately describe the flow of costs in a job costing system?a. Direct materials used and direct manufacturing labor can be easily traced to jobs.b. Direct
Global Enterprize, a management consulting firm, has the following condensed budget for 2021:RequiredGlobal Enterprize has a single direct-cost category (professional labor) and a single
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
Holland Builders 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 immaterial,
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
Olga Ltd produces stapling machines for most businesses operating in New Orleans. The production process involves three stages: cutting department, assembly department and painting and finishing
Docks Transport assembles prestige manufactured homes. Its jobcosting system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing
Global Pipes produces longitudinal submerged arc welded (LSAW) pipes for the oil, gas, and petrochemical industries. Each job is unique. In April 2020, it completed all outstanding orders, and then,
Virtual Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2020:Virtual Co. uses a normal-costing system and allocates overhead to work
Chico & Partners, a Quebec-based public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) and a single
Clayton Solutions designs Web pages for clients in the education sector. The company’s job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool
Kidman has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about what factors
The Row-On-Watershed Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following
Daewoong Medicals, a healthcare company based in South Korea, uses a job-costing system at Hyangnam plant. The plant has a technology department and a finishing department. Daewoong uses normal
Premier Golf Carts makes custom golf carts that it sells to dealers across the Southeast. The carts are produced in two departments, fabrication (a mostly automated department) and custom finishing
Kidman & Associates is a law firm specializing in labor relations and employee-related work. It employs 30 professionals (5 partners and 25 associates) who work directly with its clients. The
What are the strategic consequences of product undercosting and overcosting?
How can a cost hierarchy lead to a more accurate costing system?
Explain why ABC is equally important for both manufacturing and service companies.
Triumph Trophies makes trophies and plaques and operates at capacity. Triumph does large custom orders, such as the participant trophies for the Minnetonka Little League. The controller has asked you
What are the main factors determining the number of indirect-cost pools in a costing system, to increase the accuracy of product or service costs? Explain.
The total annual production cost of a manufacturing company that produces three different USB devices is $10,000,000. The manager of the company states that the contribution margins of all three
John Bradshaw & Bros Ltd. manufactures different plastic toys for kindergartens in Lagos, Nigeria. Details of the toy production budget for the next accounting year are as follows. Note all costs
The job-costing system at Sheri’s Custom Framing has five indirect-cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process
Legion Bank (LB) is examining the profitability of its Star Account, a combined savings and checking account. Depositors receive a 6% annual interest rate on their average deposit. LB earns an
Caleb Enterprises Ltd. manufactures electrical cables for households and industries. The company has identified the following overheads activities, costs, and activity drivers for the coming year.The
Ramirez Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Ramirez commented, “We apply ABC to determine product-line profitability. The
Bradley Associates is a recently formed law partnership. Emmit Harrington, the managing partner of Bradley Associates, has just finished a tense phone call with Martin Omar, president of Campa Coal.
LawnCare USA provides lawn care and landscaping services to commercial clients. LawnCare USA uses activity-based costing to bid on jobs and to evaluate their profitability. LawnCare USA reports the
Yahama Ltd makes several spare parts for motorbikes including Suzuka and Yahama parts. The company has recently switched from the traditional absorption costing to the activity-based costing
Whitewater Adventures manufactures two models of kayaks, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect
Pharmassist, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments:a. General supermarket chainsb. Drugstore chainsc. Mom-and-pop
Shades & Hues (S&H) is a designer of high-quality curtains and bedsheets. Each design is made in small batches. Each spring, S&H comes out with new designs for the curtains and for the
Phoenix Medical Associates operates a walk-in medical clinic in Tempe, Arizona. The clinic includes two different departments, Urgent Care, which serves patients with minor to moderate acute
What are the advantages of a budget?
What are the four elements of the budgeting cycle?
Define a master budget and explain its purpose. Describe its components.
List the key questions that a manager must consider when developing a successful strategy.
“Budgets can promote coordination and communication among subunits within the company.” Do you agree? Explain.
“Budgets meet the cost–benefit test by pushing managers to act differently.” Do you agree? Explain.
What is the usual starting point for an operating budget?
How can sensitivity analysis be used to increase the benefits of budgeting?
What would be the purchases budget for the raw material for Olaska Jaysung Bros Ltd?a. 362,000 kgs b. 282,000 kgsc. 392,000 kgs d. 342,000 kgsOlaska Jaysung Bros Ltd produces hockey sticks
What is the key emphasis in Kaizen budgeting?
What would be the production budget for Olaska Jaysung Bros Ltd?a. 94,000 units b. 100,000 unitsc. 96,000 units d. 88,000 unitsOlaska Jaysung Bros Ltd produces hockey sticks and the
Explain how the choice of the type of responsibility center (cost, revenue, profit, or investment) affects behavior.
Explain why cash budgets are important.
Which of the following statements is true about a master budget?I. It is a summary of all other budgets. It is expressed as a budgeted income and is mentioned in the balance sheet.II. The master
Augustine Company sells a product for £50. Budgeted sales for the first quarter of 2020 are as follows:The company collects 60% in the month of sale, 20% in the following month, and 10% two months
Sandra Martins, a confectionery based in Austria, decides to produce peanut packs for supermarkets in Salzburg. The projected sales units and selling price per pack for 2021 for its three brands of
Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system.i. In a cost center,
Mary Jacobs, the controller of the Jenks Company is working on Jenks’ cash budget for year 2. She has information on each of the following items:i. Wages due to workers accrued as of December 31,
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
Nova Plastics produces 10-liter plastic buckets. The company expects to produce 825,000 buckets in 2020. Nova Plastics purchases high-density polyethylene (HDPE) to produce the buckets. Each pound of
The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity-based budget for January 2021. Jiffy Mart has three product categories: soft drinks (35% of
Amira Ltd is a trading company that sells mobile phones. The opening cash balance on January 1 was expected to be £30,000. The sales budgeted were as follows:Analysis of records shows that trade
Woodechuck’s manufactures, among other things, jerseys for the girls’ football teams in two high schools in Australia. The company uses fabric to create the jerseys and sews on a logo patch
The Deluxe Motorcar in northern California manufactures motor cars of all categories. Its budgeted sales volume for the most popular sedan model XE8 in 2020 is 4,000 units. Deluxe Motorcar has a
Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2021. Each successive month, the budgeted cost-driver rate decreases by 0.4% relative
John Dawling Brothers is a company that produces two well-known domestic appliance models, the Tablefrig and Tablefrez. The following details have been estimated for 2021 for the sales and production
EverGreen Store, Singapore, manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following:Budgeted sales and selling price per unit are as follows:EverGreen has the
Spin Cycle Company is a manufacturer of commercial grade exercise bikes that are sold to hotels and health clubs. Maintaining the bikes is an important area of customer satisfaction. Because of
Akanson Crafts Ltd. is an arts gallery that produces three different arts products namely: Akra, Omra, and Okore. The budgeted sales of the products for 2020 were as follow:Materials used in the
Refer to the information in Problem 6-40. Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are
Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2020, Skulas’s management accountant gathered the following data to prepare budgets for

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