Questions and Answers of Management And Cost Accounting 11th

Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costs and
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are
Lawn Products produces two products (X and Y) and a by-product (Z) from a joint process using a raw material (Alpha). The company chooses to allocate the costs on the basis of the physical quantities
Lothrop Security Group (LSG) provides consulting and security services to various clients, including government agencies and commercial firms. It has two operating departments, Government and
Hildale Manufacturing is organized with two service departments (Administration and Maintenance) and two production departments (Assembly and Finishing). The company uses the step method to allocate
Troester Manufacturing produces products X, Y, and Z from a joint process. Each product can be processed further and sold as X-Prime, Y-Prime, and Z-Prime. Information on the operations for the most
Wadsworth Processes manufactures three produces—ABC, DEF, and GHI—from a joint production process. Data on the operations at Wadsworth for the most recent period are as follow:RequiredDetermine
Longwood Corporation processes a liquid into three outputs: K-2, K-4, and K-5. The sales value of each of these products for a single batch follows:The joint costs total $850,000. There are no
Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $42,000 per batch. The joint process produces 11,250 units of Chem-A with a market value of $135,000, and 20,000
What is the controllability concept?
Consider the Business Application, “Centralizing as a Cost-Cutting Approach.” RequiredWhat best describes the cost(s) Pernod Ricard SA likely hoped to reduce by removing some of the
What is relative performance evaluation (RPE)?
What is contingent compensation?
What is the dual-rate method of corporate cost allocation?
Evergreen Transportation is a domestic logistics company offering warehousing and transportation services. It is organized along product lines with three sectors: Agricultural, Manufactured Goods,
Westphalia Corporation produces audio equipment for home, office, and vehicles. The production manager (PM) and marketing manager (MM) are both are paid a flat salary and are eligible for a bonus.
Mackenzie Mining has two operating divisions, Northern and Southern, that share the common costs of the company’s human resources (HR) department. The annual costs of the HR department total
Giardin Outdoors is a recreational goods retailer with two divisions: Online and Stores. The two divisions both use the services of the corporate Finance and Accounting (F&A) Department. Annual
Kentfield Advisory Services (KAS) is a large management consulting firm organized into two groups: Governmental Services (GS) and Commercial Support (CS). Corporate information technology (IT)
Dill Shipyards operates a dry dock on the East Coast, where it builds and repairs ships. The company’s Payroll Department supports its two divisions, Naval and Private. The Naval division has
Montgomery Fashions produces and sells clothing through various retailers. Montgomery is highly decentralized and allows its managers discretion in managing with little direct oversight. This
Burt Management Consultants (BMC) is a multinational consulting group organized geographically. In the U.S. Division, the managing partner for sales (MPS) is responsible for client acquisition. The
Manning Systems is a commercial software vendor that sells billing and other financial software to companies around the globe. Manning operates a centralized call center for customer support calls.
Lilac Group is organized into two geographic divisions (Americas and Rest of the World, or ROW) and a corporate headquarters. Late last year, the Lilac CFO prepared financial operating plans
Elba Consulting Associates (ECA) is organized into three divisions (Manufacturing, Retail, and Entertainment). Many support services, such as human resources, legal, and information technology, are
Burchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the “ordinary and necessary” costs of business travel and reimburses business-class
Raynor Testing Services (RTS) is a new company that has not yet developed a formal planning and budgeting process. RTS is unsure how to proceed. It understands that the following five steps need to
What role do “packages” play in zero-based budgeting? How do these roles address critiques of traditional budgeting?
Bramell Park is an amusement park with an entrance fee that allows unlimited rides. Last year, the company sold 88,000 one-day admission tickets with an average price of $125 and 30,000 three-day
Dawes Designs buys T-shirts for clubs, teams, and other organizations. Dawes takes the shirts and adds the organization’s logo. Because of the uncertainty in the timing of the sales and to avoid
Gladys Bank & Trust has $360 million in consumer loans with an average interest rate of 7.25 percent. The bank also has $240 million in home equity loans with an average interest rate of 5
Ethel Company manufactures and sells desk lamps for hotel and motel rooms. Last year, it sold 120,000 units of its model Y lamp for $45 per unit. The company estimates that this volume represents a
Montrose Instrumentation produces measurement equipment. One component, used in a variety of the company’s products, is critical, and the supply chain often breaks. For that reason, Montrose has a
Bortle Manufacturing Group estimates that sales for the coming year will be 576,000 units. Company policy is to maintain a finished goods inventory of one and one-half months’ unit sales. Beginning
Benham Foundries manufactures metal components. The inventory policy at Benham is to hold inventory equal to 150 percent of the average monthly sales for its main product. Sales for the main product
Curtis Party Rentals offers party equipment such as tents, tables, chairs, and so on for outdoor events. The rental fees average $750 per event. Curtis receives a 15 percent deposit two months before
Cornwall Mobile Detailing (CMD) is a service that washes and details a customer’s vehicle at their home or office. It operates on a membership basis. Members pay $200 dues per month, which entitle
Clairpointe Accessories manufactures products for food preparation at several different manufacturing sites. The following costs and other data apply to unit production from the year just ending:The
Norcross Carpet Cleaning (NCC) is a commercial service specializing in maintaining floor coverings in high-traffic areas such as malls and office buildings. The business is highly seasonal, with high
Avery Equipment Rental is a regional firm servicing agricultural and construction clients in the northern plains states. The CFO of Avery is preparing next quarter’s budget and has two forecasts
How is return on investment (ROI) computed?
Owen Audio shows the following information for its two divisions for year 1. RequiredCompute divisional operating income for the two divisions. Ignore taxes. How have these divisions performed?
If a division’s ROI falls from one period to the next, does that mean that the division’s performance is declining? Why?
The following partial financial information (in thousands of dollars) is available for Thole, Inc.: Corporate overhead costs at Thole are allocated to divisions based on relative
Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial information (in thousands of dollars) for the first year of business
The following data are available for two divisions of Ryan Enterprises: The cost of capital for the company is 7 percent. Ignore taxes.Requireda. If Ryan measures performance using ROI, which
If a division’s residual income falls from one period to the next, does that mean that the division’s performance is declining? Why?
Exeter Division of Wetherby Labs acquired an asset with a cost of $800,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows:The
Leidich Corporation manufactures hospital equipment. The Measurement Division (MD) manufactures testing and measurement equipment including a special cardiovascular instrument. MD started the year
The Plastics Division of Minock Manufacturing currently earns $2.87 million and has divisional assets of $35.0 million. The division manager is considering the acquisition of a new asset that will
Technology firms, pharmaceutical firms, oil and gas companies, and other ventures inevitably incur costs on unsuccessful investments in new projects (e.g., new technologies or new drugs). For oil and
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $36 million and having a four-year expected life, after which the assets can be salvaged for
Normandy Instruments invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage
Gable Corporate Services uses EVA to evaluate the performance of division managers. For the Media Division, after-tax divisional income was $3,100,000 in year 3. The company adjusts the
Leland Pharmaceuticals develops both over-the-counter (OTC) and prescription medicines. It is organized into two divisions, which are evaluated as investment centers. The cost of capital used in
Consider a company that leases a fleet of aircraft for passenger service. Because the planes often fly with room in the cargo area, the company adds a new business shipping timesensitive freight.
Philadelphia Supply Corporation (PSC) produces and distributes various products for the hospitality industry. It is organized in two divisions: Assembly and Packaging. The managers of both divisions
Consider a university setting with many colleges, such as the Engineering College, the Business College, Arts & Sciences College, and so on. The central administration is responsible for finance,
Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale.
Lamothe Solutions is a management consulting firm. Its Business Division advises firms on the adoption and use of financial systems. Civic Division consults with state and local governments. Civic
Pilgrim Logistics operates a network of delivery vans. Pilgrim allows its decentralized units (divisions) to “rent” vans to another Pilgrim division. Commercial Division has leased some of its
Whitehill Chemicals has two operating divisions. Its Formulation Division in the United States mixes, processes, and tests basic chemicals, and then ships them to Ireland, where the company’s
Cascade Containers is organized into two divisions—Manufacturing and Distribution. Manufacturing produces a product that can be sold immediately or transferred to Distribution for further
Norfolk, Inc. consists of three divisions—Tidal, Hill, and Wood—that operate as if they were independent companies. Each division has its own sales force and production facilities. Each division
Wager Enterprises has four operating divisions: Tours, Hotels, Concerts, and Ticket Services. Each division is a separate segment for financial reporting purposes. Revenues and costs related to
Washburn Associates has two divisions. Western Division, which has an investment base of $50,000,000, produces and sells 1,400,000 units of a product at a market price of $60 per unit. Its variable
Dakota Security Systems (DSS) is a decentralized organization that evaluates divisional management based on measures of divisional contribution margin. Residential Division and Commercial Division
Milner Technologies is a large, multidivision firm. One division, Testing, is well known inside Milner for its efficient information technology (IT). A smaller division, Energy, has approached
Rogge Corporation makes a specialized sensor that is used in testing equipment. The company is organized in two divisions: Assembly and Shipping. Managers in both divisions are evaluated as profit
What is the standard cost sheet?
How are actual direct labor costs used in a standard cost system? Does this differ from their use in a normal costing system? If so, how? If not, why not?
Fournier Fixtures produces a variety of manufactured items for the home and building industry. The company produces only when it receives orders and, therefore, has no inventories. The following
Reviewing the variance report for one of the manufacturing plants in your company, you see a large unfavorable fixed cost price variance and large favorable production volume variance. You contact
Selected data for March for Irvington, Inc. follow. The variable material sales activity variance is $21,600 U.Requireda. How many units were budgeted for March in the master budget?b. Recreate the
The master budget at Cherrylawn Corporation at the beginning of the year was based on sales of 275,000 units with revenues of $3,300,000. Total variable costs were budgeted at $1,925,000 and fixed
The records of Heritage Home Supplies show the following for July: RequiredCompute the direct labor and variable overhead price and efficiency variances. Standard direct labor-hours allowed per
Records at the Farnsworth Corporation contained the following data for the most recent period of activity: Variable overhead is applied based on standard direct labor-hours
Rankin Fabrication reports the following information with respect to its direct materials: Rankin Fabrication holds no materials inventories. Requireda. Prepare a short report for
Information on Grixdale Partner’s fixed overhead costs follows: RequiredWhat are the fixed overhead price and production volume variances? (Refer to Exhibit 16.17 for the format to use.)
Engleside Components produces testing equipment for medical devices. Recently, one of the company’s usual suppliers was unable to fill an order, so the purchasing manager chose a supplier who had
Information on Chicago Crafters direct materials costs follows: Chicago Crafters carries no materials inventories. Requireda. What were Chicago Crafters’ direct materials price and
The Faraday Plant of Hindle, Inc. shows the following overhead information for the current period:RequiredWhat are the variable overhead price and efficiency variances and the fixed overhead price
Refer to the data in Problem 16-61. Data in Problem 16-61.The results for March for Savery Parts follow:RequiredPrepare a sales activity variance analysis for Savery Parts for March like the one
Nottingham Forest Products reports the following information concerning operations for the most recent month: There are no inventories. RequiredPrepare a flexible budget for Nottingham
Coe Parts applies fixed overhead at the rate of $6.80 per unit. Budgeted fixed overhead was $197,200. This month 28,120 units were produced, and actual fixed overhead was $192,100.Requireda. What are
The results for March for Savery Parts follow:RequiredPrepare a flexible budget for Savery Parts for March. Sales revenues Less Variable costs Direct material.. Direct labor... Variable
Information about direct materials cost follows for Jennings Chemicals: RequiredWhat was the actual purchase price per gallon? Standard price per gallon Actual quantity used.... Standard
Annland Components applies fixed overhead at the rate of $5.10 per unit. For October, budgeted fixed overhead was $513,825. The production volume variance amounted to $3,825 favorable, and the price
The following is a typical monthly report used to evaluate managers at the six manufacturing plants of Missouri Foundries: RequiredIdentify and explain at least three changes to the report that
Monitor Devices shows the following overhead information for the current period. RequiredWhat are the variable overhead price and efficiency variances and fixed overhead price variance? Budgeted
Wisner Fabrication prepares its budgets on the basis of standard costs. Variances are analyzed and reported monthly. There are no materials inventories.The following information relates to the
Harlow Parts produces a single product at its Superior Plant. The master budget for July follows: The following operating income statement shows the actual results for July: RequiredPrepare
Volte Corporation produces small electric appliances. The following information is available for the most recent period of operations:Volte never has any work-in-process inventories and began the
Keewee Company manufactures a single product for the military. Keewee Company had steady work, but it only had a return on investment of 6 percent.The CEO of Keewee Company did a test flight of
“A process control chart will tell managers when to investigate variances.” Do you agree?
Appoline Juices budgeted sales of 87,000 units of Grape, assuming that the company would have 30 percent of 290,000 units sold in a particular market. The actual results were 78,000 units sold by
Olivet Devices sells two models of fitness devices. The budgeted price per unit for the wireless model is $38 and the budgeted price per unit for the wireless and cellular model is $83. The master
Windward Chemicals produces a product using a process that allows for substitution between two materials, Sol-1 and Sol-2. The company has the following direct materials data for its
Refer to the data in Exercise 17-38. Data in Exercise 17-38.Kentford Associates is a small professional services firm. Last month, Kentford billed more hours than expected, and profits reflected
Oakman Accounting Partners is a small tax and accounting services firm. Each billable hour of partner time has a $960 budgeted price and $450 budgeted variable cost. Each billable hour of staff time

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