Managerial Accounting 2nd Edition James Jiambalvo - Solutions

EXERCISE 3-5. Unit Reconciliation During August, Wilson Lubricant completed 40,000 gallons of product. At the start of August there were 10,000 gallons in Work in Process, and at the end of August, there were 12,000 gallons in Work in Process.Required How many gallons of product were started during
EXERCISE 3-4. Unit Reconciliation During July, Classic Car Wax Company completed 40,000 cans of wax. At the beginning of July, the company had 1 ,000 units that were 90 percent complete with respect to material and 45 percent complete with respect to conversion costs. During the month, the company
EXERCISE 3-3. Internet Assignment Go to the Web site for Redhook Brewery(www.redhook.com), click on breweries and then virtual tour to view their production process.Requireda. How many steps are there in the production process?b. What characteristics of the production process suggest that Redhook
EXERCISE 3-2. Writing Assignment Write a paragraph explaining the calculation of the cost per equivalent unit (i.e., explain what goes in the numerator and what goes in the denominator of the calculation). Be sure to explain why the denominator may be different for the cost per equivalent unit of
EXERCISE 3-1. Group Assignment/Ethics ArcTech is a manufacturer of semiconductors(referred to as chips). Their production process is complex and involves more than 100 steps starting with production of small, round silicon wafers, and ending with chips being put into individual packages that
10. What are the four steps involved in the preparation of a production cost report?
9. Do transferred-in costs occur in all departments of a manufacturer using a process costing system?Explain.
8. What is accomplished by preparing a reconciliation of the physical units as a part of the production cost report?
7. What items of production cost make up the "costs to account for" in a production cost report?
6. What items are in the numerator and what items are in the denominator in the calculation of cost per equivalent unit?
5. Why are units often in a different stage of completion with respect to raw materials and conversion costs?
4. What is meant by the term transferred-in cost?
3. What is meant by the term conversion costs?
2. Explain the concept of an "equivalent unit."
1. What are the two primary accounting systems used to record production costs?
10. Transferred-in costs occur in:a. All production departments.b. The first and last production departments.c. All production departments after the first.d. None of the above is correct.
9. The units as shown in the unit reconciliation section of a production cost report are:a. Equivalent units of production.b. Units without regard to stage of completion.c. Units complete as to materials.d. Units complete as to prime costs.
8. The Unit Reconciliation section of a production cost report includes all of the following except:a. Beginning units in process.b. Ending units in process.c. Units in finished goods.d. Units completed and transferred out.e. Units started during the period.
7. A transfer of units from production department one to production department two would be recorded as a:a. Debit to Work in Process, Department 1; credit to Work in Process, Department 2.b. Debit to Work in Process, Department 2; credit to Work in Process, Department 1.c. Debit to Cost of Goods
6. If raw materials are introduced into a production department at the beginning of the process, which statement is correct about the equivalent units in ending Work in Process for materials?a. All of the units in work in process are 100 percent complete with respect to materials.b. All of the
5. Determine the amount of conversion cost in the following list of costs.a. Direct material, $25,000.b. Direct labor, $35,000.c. Manufacturing overhead, $45,000.d. Selling expenses, $10,000.e. Administrative expenses, $50,000.
4. Match the following terms with the definitions shown below.a. Conversion costs.b. Equivalent units.c. Transferred-in costs.d. Cost per equivalent unit.(1) The costs associated with units received from a preceding department for further processing.(2) The unit cost in a process costing system.(3)
3. The costs in a process cost system are traced to:a. Specific jobs.b. Specific customers.c. Specific company administrators.d. Specific production departments.
2. The best example of a business requiring a process costing system would be a(n):a. Custom cabinet shop.b. Antique furniture restorer.c. Soap manufacturer.d. Automobile repair shop.
1. Which one(s) of the following characteristics are associated with a process costing system?a. Heterogeneous products.b. Homogeneous products.c. Continuous production.d. Discontinuous production.e. Costs are traced to jobs.f. Costs are traced to processing departments.
PROBLEM 2-15. Selection of an Overhead Allocation Base Tilden Manufacturing expects the following overhead costs in 2004:Indirect material $ 25,000 Indirect labor 40,000 Depreciation of machinery 100,000 Repair and maintenance on machinery 125,000 Utilities and taxes 35,000 Total $325,000 They
PROBLEM 2-14. Comprehensive Job-Order Costing Problem Lane Confectioners produce special orders of sugar candies and chocolates for airlines and hotels.During March, they purchased, on credit, 1,800 pounds of confectioners sugar@ $.90 per pound, 2,000 pounds of granulated sugar @ $.70 per pound,
PROBLEM 2-13. Multiple Overhead Rates Vulcan Molding has three production departments:A, B, and C. At the start of the year, the company estimated that it would incur$2,000,000 of direct labor cost and $6,000,000 of manufacturing overhead as follows:Dept. A Dept. B Dept. C Total Estimated overhead
PROBLEM 2-12. Recording Inventory Costs Vulcan Molding produces molded rubber components. At the start of the year, the company estimated that it would incur $2,000,000 of direct labor cost and $6,000,000 of manufacturing overhead. Overhead is allocated to production on the basis of direct labor
PROBLEM 2-11. Recording Inventory Related Costs Fill in the missing information.Raw Materials Work in Process Beg. Bal.Purchases End. Bal.20,000 30,000 10,000(a)Beg. Bal. 70,000 Dir. Matl. (a)Dir. Labor 50,000 Overhead 60,000 End. Bal. 90,000(b)Manufacturing Overhead 65,000 60,000(d)Finished Goods
PROBLEM 2-8. Underapplied or Overapplied Overhead Vista Window Company produces custom windows to specifications provided by architects. At the end of their accounting period, their account balances indicated the following:
PROBLEM 2-7. Underapplied or Overapplied Overhead In the past year, Eagle Custom Cabinets had total revenue of $1,200,000, cost of goods sold of $700,000 (before adjustment for over- or underapplied overhead), administrative expenses of$300,000, and selling expenses of $100,000. During the year,
PROBLEM 2-6. Job Costs Using Different Overhead Rates Innovative Parts Company manufactures parts-to-order for antique cars. Innovative makes everything from fenders to engine blocks. Each customer order is treated as a job. They currently have two jobs, No. 9823 and No. 9824, which are complete,
PROBLEM 2-5. Various Overhead Allocation Rates for Job-Order Costing Allen Shoe Company has expected overhead costs of $10,000,000. The majority of the overhead costs are incurred providing production support to the direct labor force. Direct labor rates vary from $10 to $20 per hour, and more
PROBLEM 2-4. Job Cost Sheets and Inventory Accounts Renton Custom Windows produces custom windows for business and residential customers who supply Renton with architectural specifications.At the start of 2004, three jobs were in process:Cost incurred as of 1/1/2004 Job 258 $2,000 Job 259 3,000 Job
PROBLEM 2-3. Job-Order Costing: Inventory Accounts and Cost of Goods Sold Smith Die Company manufactures cutting dies for the shoe industry. Each set of dies is custom designed to a customer's templates. During the first week of May, six orders were received from customers. They were assigned job
PROBLEM 2-2. Cost of Goods Manufactured and Cost of Goods Sold Design Works International manufactures custom tiles. The following information relates to the fiscal year ending December 31, 2006.Beginning balance in Raw Material Inventory $ 200,000 Purchases of raw material 800,000 Ending balance
PROBLEM 2-1. Cost of Goods Manufactured, Cost of Goods Sold, and Income The following information is available for Costa's Custom Glass for the fiscal year ending December 31, 2006.Beginning balance in Work in Process Ending balance in Work in Process Beginning balance in Finished Goods Ending
EXERCISE 2-17. Underapplied and Overapplied Manufacturing Overhead Injection Molding Services uses a job-order costing system. The account balances at the end of the period for the product cost-related accounts are as follows:Raw Materials Inventory $200,000 Work in Process Inventory 400,000
EXERCISE 2-16. Service Company Use of Predetermined Overhead Rate Smith and Baker Legal Services employs five full-time attorneys and nine paraprofessionals.Budgeted salaries are $80,000 for each attorney and $30,000 for each paraprofessional.Budgeted indirect costs (e.g., rent, secretarial
EXERCISE 2-15. Cost of Jobs RonKen Company is a steel fabricator, and job 325 consists of producing 900 steel supports for Wendell Construction Company. Overhead is applied on the basis of direct labor hours, using a predetermined overhead rate of $15 per hour. Direct costs associated with Job 325
EXERCISE 2-14. Closing the Manufacturing Overhead Account Refer to the information in Exercise 13.Requireda. Determine the balance in manufacturing overhead and prepare a journal entry to close the balance to cost of goods sold.b. Why is it important to close the balance in manufacturing
EXERCISE 2-13. Recording Actual Overhead and Overhead Applied to Jobs During the month of August, Binder Electronics applied overhead to jobs using an overhead rate of $2 per dollar of direct labor. Direct labor in August was $65,000. Actual overhead in August was $140,000. Assume that actual
EXERCISE 2-12. Allocating Manufacturing Overhead to Jobs Jiffy Fabricators estimated the following annual values:Expected annual direct labor hours 20,000 Expected annual direct labor cost $250,000 Expected machine hours 15,000 Expected material cost for the year $400,000 Expected manufacturing
EXERCISE 2-11. Service Company Allocation of Overhead Franklin Computer Repair treats each repair order as a job. Overhead is allocated based on the cost of technician time. At the start of the year, annual technician wages were estimated to be$800,000, and company overhead was estimated to be
EXERCISE 2-10. Overhead Allocation Bases Renton Manufacturing Company expects annual manufacturing overhead to be $600,000. The company also expects 60,000 direct labor hours costing $1,200,000 and machine run time of 30,000 hours.Required Calculate overhead allocation rates based on direct labor
EXERCISE 2-9. Recording Labor Cost in Job-Order Costing Wolk Products had the following labor time tickets for the month of February:Ticket # Employee # Pay Rate Hours Worked Job #2101 011 $8.00 120 201 2102 008 15.00 80 201 2103 011 8.00 40 201 2104 008 15.00 30 202 2105 008 15.00 50 203
EXERCISE 2-8. Recording Labor Cost in Job-Order Costing During the month of August, Binder Electronics had $65,000 of labor costs that were traced to specific jobs. The company also had $45,000 of indirect labor related to supervisory pay.Required Prepare journal entries to record labor cost during
EXERCISE 2-7. Recording Material Cost in Job-Order Costing Five material requisitions (MR) forms were received by the materials storeroom of the Saint Louis Foundry during the first week of 2006. MR101 was for $750 of direct materials for job number 1501. MR102 was for $550 of direct materials for
EXERCISE 2-6. Recording Material Cost in Job-Order Costing During the month of August, Binder Electronics had material requisitions for $250,000 of materials related to specific jobs and $20,000 of miscellaneous materials classified as overhead.Required Prepare journal entries to record the
EXERCISE 2-5. Inventory-Related Accounts Place Y (yes) beside the general ledger accounts related to inventory in a job-order cost system and N (no) by those that are not.a. Raw Materialsb. General and Administrative Expensec. Work in Processd. Finished Goodse. Merchandise Inventoryf. Cost of Goods
EXERCISE 2-4. Product Costing Systems For the list of product manufacturers below, indicate whether a job-cost system (J) or a process cost system (P) would be most appropriate.a. Beverage producerb. Pharmaceutical firmc. Print shopd. Producer of molds used by other manufacturing firms to shape
EXERCISE 2-3. Internet Assignment General Electrics quality program is called Six Sigma. Go to the company Web site (http://www.ge.com/commitment/quality/whatis.htm) and read about Six Sigma. Then locate the Six Sigma glossary(http://www.ge.com/commitment/quality/glossary.htm) and answer the
EXERCISE 2-2. Writing Assignment At Binder Electronics, the balance in manufacturing overhead (which represents over- or underapplied overhead) is always closed to Cost of Goods Sold. This is done even when the balance is relatively large. Peter Lee, the controller, explains that this makes sense
EXERCISE 2-1. Group Assignment Consider three very similar companies. Company A allocates manufacturing overhead to jobs using labor hours as the allocation base; Company B allocates manufacturing overhead to jobs using machine hours as the allocation base; and Company C allocates manufacturing
16. As companies move to computer-controlled man- ufacturing systems, what happens to the mix of product costs (direct material, direct labor, and manufacturing overhead)?
15. Would an unexpected increase in sales and pro- duction result in underapplied or overapplied overhead? Explain.
14. When might it be necessary to assign underap. plied overhead to Finished Goods, Work in Process, and Cost of Goods Sold?
13. Some modern, capital-intensive production facilities have significantly reduced the proportion of direct labor cost to total production cost. Discuss the effect this might have on the selection of an allocation base for the application of overhead.
12. Discuss an important characteristic of a good overhead allocation base.
11. Why do companies apply overhead to jobs using a predetermined (budgeted) overhead rate instead of applying actual overhead to jobs?
10. What information do you expect to find on a labor time ticket?
9. What form is used to withdraw materials from the storeroom, and what information is normally on that form?
8. What is a job cost sheet? What information does it contain?
7. What jobs make up the cost of Work in Process Inventory?
6. Differentiate among the following balance sheet inventory accounts: Raw Materials, Work in Process, and Finished Goods.
5. Identify the two most common types of product costing systems and discuss the manufacturing environments associated with each system.
4. What are the three categories of costs included in Work in Process Inventory?
3. What is the difference between product and period costs?
2. What is the difference between manufacturing and nonmanufacturing costs?
1. Why is a product costing system necessary for a manufacturing company?
20. All of the following are true about just-in-time(JIT) production except:a. JIT seeks to minimize inventories of raw materials and work in process.b. JIT is often referred to as "fat" production.c. JIT companies concentrate on improving quality.d. JIT companies need dependable suppliers.
19. Total quality management (TQM) involves all of the following except:a. Satisfying customers' needs.b. Very close supervision of all employees.c. "A get it right the first time" philosophy.d. Encouraging continuous improvement.
17. Service companies:a. Do not use job-order costing.b. Often use job-order costing.c. Do not cost their services.d. Produce durable products.18. Modern manufacturing practices include:a. Just-in-time production.b. Computer-controlled manufacturing.c. Total quality management.d. All of the above.
16. Compared to traditional methods of allocating overhead, activity-based costing (ABC) uses:a. More allocation bases.b. Only allocation bases related to direct labor.c. Machine hours as an allocation base.d. None of the above.
15. Overhead is overapplied if:a. The actual overhead rate is greater than the budgeted overhead rate.b. The Manufacturing Overhead account has a credit balance at the end of the period.c. The actual overhead rate is greater than the rate used in prior periods.d. The overhead rate is material.
14. Underapplied or overapplied overhead, if material in amount, is allocated to (1) ,(2) and (3) .
13. The predetermined overhead rate is determined as:a. Estimated overhead costs divided by estimated allocation base.b. Actual overhead costs divided by estimated allocation base.c. Estimated overhead costs divided by actual allocation base.d. Actual overhead costs divided by actual allocation
12. Direct material is traced to jobs using:a. An overhead allocation base.b. Material requisition forms.c. Predetermined rates.d. All of the above.
11. Three common allocation bases used to allocate manufacturing overhead are: ( 1 ) ,(2) and (3) .
10. The components of a job-order costing system include which of the following?a. Documents and ledgers.b. Accounts receivable.c. Accounts and accounting procedures.d. a and b only.e. a and c only.
9. The costs of all jobs completed but not yet sold is in the account.
8. The costs of all jobs not yet completed is in the account.
7. Which entity below would most likely use a joborder costing system?a. Textile manufacturer.b. Concrete block producer.c. Petroleum refiner.d. Antique automobile restorer.
6. The beginning balance in Finished Goods is$50,000, the ending balance in Finished Goods is$100,000, and Cost of Goods Manufactured is$200,000. What is Cost of Goods Sold?a. $100,000.b. $250,000.c. $150,000.d. None of the above.
5. Cost of Goods Sold is $200,000, the beginning balance in Finished Goods is $50,000, the ending balance in Finished Goods is $100,000, and the ending balance in Work in Process is $10,000.What is Cost of Goods Manufactured?a. $100,000.b. $250,000.c. $50,000.d. None of the above.
4. Two common types of product costing systems are: and .
3. The inventory accounts of a manufacturing firm include:a. Raw materials.b. Finished goods.c. Work in process.d. All of the above.
2. Full costing includes which of the following in determining product cost?a. Only variable costs of production.b. Only fixed costs of production.c. Administrative overhead.d. All fixed and variable costs of production.
1. Which of the following is a period cost?a. Raw materials costs.b. Manufacturing plant maintenance.c. Wages for production line workers.d. Salary for the vice president of finance.
PROBLEM 1-8. Incremental Analysis The Jefferson Plaza Hotel is a deluxe four star establishment. Late on Friday, it had 10 of its 200 rooms available when the desk clerk received a call from the Riley Hotel. The Riley Hotel made a booking error, and did not have room for three guests (each of whom
PROBLEM 1-7. You get what you measure! Each year, the president of Quantum Electronics selects a single performance measure, and offers significant financial bonuses to all key employees if the company achieves a 10 percent improvement on the measure in comparison to the prior year. He recently
PROBLEM 1-6. Financial vs. Managerial Accounting SportShop.com sells sporting goods and athletic apparel over the Internet. In its first two years of business the company had relatively high sales but also suffered large losses. The company's income statement (filed with the Securities and Exchange
PROBLEM 1-5. Performance Reports At the end of 2006, Max Gunther, CFO for Abbot Products, received a report comparing budgeted and actual production costs for the company's plant in Northup, Oregon:Manufacturing Costs Northup Plant Budget versus Actual 2006 Budget Actual Difference Materials
PROBLEM 1-4. Performance Reports Below is a performance report that compares budgeted and actual profit in the children's clothing department of Newport Beach Department Store for the month of December.Newport Beach Department Store Children's Clothing Performance Report December 2006 Budget Actual
PROBLEM 1-3. Budgets in Managerial Accounting Kindra Walters, the sales manager of Office Furniture Solutions, prepared the following budget for 2006:Sales Department Budgeted Costs, 2006(Assuming Sales of $10,000,000)Salaries (fixed) $400,000 Commissions (variable) 100,000 Advertising (fixed)
PROBLEM 1-2. Incremental Analysis Consider the production cost information for Marie's Pie Company in problem 1. The company is currently producing and selling 200,000 pies annually. The pies sell for $4.00 each. The company is considering lowering the price to $3.70. Suppose this action will
PROBLEM 1-1. Budgets in Managerial Accounting Marie's Pie Company is in the process of preparing a production cost budget for May. Actual costs in April were:Marie's Pie Company Production Costs April 2006 Production 15,000 Pies Ingredient cost (variable) $18,750 Labor cost (variable) 22,500 Rent
EXERCISE 1-17. Information Age In recent years, successful companies have begun to focus on managing cross-company processes with suppliers to reduce costs, increase speed, and improve quality. In its print advertisements, J.D. Edwards, a producer of ERP software systems notes that companies must
EXERCISE 1-16. You Get What You Measure! At the start of the current year, Ben Abbot, president of Abbot Products, told his managers that the company was going to begin tracking two new performance measures: customer satisfaction measured via a survey, and percent of orders delivered at the

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Managerial Accounting 2nd Edition James Jiambalvo - Solutions

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