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business
managerial accounting 8th
Managerial Accounting Creating Value In A Dynamic Business Environment Mass Market Paperback Jan 01 2013 Hilton Platt 10th Edition David Platt Ronald W Hilton - Solutions
Refer to the new target prices calculated in the preceding problem for Gigabyte’s three products, based on the new activity-based costing system.Required: Write a memo to the company president commenting on the situation Gigabyte, Inc., has been facing regarding the market for its products and
Gigabyte, Inc., manufactures three products for the computer industry:Gismos (product G): annual sales, 8,000 units Thingamajigs (product T): annual sales, 15,000 units Whatchamacallits (product W): annual sales, 4,000 units The company uses a traditional, volume-based product-costing system with
Scott Manufacturing produces two items in its Virginia Beach plant: Tuff Stuff and Ruff Stuff. Since inception, Scott has used only one manufacturing-overhead cost pool to accumulate costs. Overhead has been allocated to products based on direct-labor hours. Until recently, Scott was the sole
Ultratech, Inc., manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company’s sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of
Queensland Electronics Company manufactures two large-screen television models, the Novelle, which has been produced for 10 years and sells for $910, and the Zodiac, a new model introduced in early 20x3, which sells for $1,160. Based on the following income statement for 20x4, a decision has been
Pensacola Air Industries (PAI) manufactures aircraft parts for small aircraft. Over the past decade, PAI’s management has met its goal of reducing its reliance on government contract work to 50 percent of total sales. Thus, PAI’s sales are now roughly evenly split between government and
Gourmet Specialty Coffee Company (GSCC) is a distributor and processor of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. GSCC currently has 12 different coffees that it offers to gourmet shops in one-pound bags. The
Knickknack, Inc., manufactures two products: odds and ends. The firm uses a single, plantwide overhead rate based on direct-labor hours. Production and product-costing data are as follows:Knickknack, Inc., prices its products at 120 percent of cost, which yields target prices of $796.80 for odds
Refer to the original data given in the preceding problem for Rapid City Technology, Inc.Required:1. Calculate the unit cost of a production order for 100 specially coated containers used in transporting chemicals. In addition to direct material costing $210 per container and direct labor costing
Rapid City Technology, Inc. manufactures chemicals used in agricultural pest control. The controller has established the following activity cost pools and cost drivers.Activity Cost Pool Budgeted Overhead Cost Cost Driver Budgeted Level for Cost Driver Pool Rate Machine setups .................
John Patrick has recently been hired as controller of Valdosta Vinyl Company (VVC), a manufacturer of vinyl siding used in residential construction. VVC has been in the vinyl siding business for many years and is currently investigating ways to modernize its manufacturing process. At the first
Meditech, Inc. manufactures two types of medical devices, Medform and Procel, and applies overhead on the basis of direct-labor hours. Anticipated overhead and direct-labor time for the upcoming accounting period are $710,000 and 20,000 hours, respectively. Information about the company’s
Digital Light Corporation has just completed a major change in its quality control (QC) process. Previously, products had been reviewed by QC inspectors at the end of each major process, and the company’s 10 QC inspectors were charged as direct labor to the operation or job. In an effort to
Wilmington Office Equipment Corporation manufactures two types of filing cabinets—Deluxe and Executive—and applies manufacturing overhead to all units at the rate of $80 per machine hour. Production information follows.Required:1. Compute the unit manufacturing cost of Deluxe and Executive
Refer to your solution to requirement (2) of the preceding problem.Required: Prepare an exhibit similar to Exhibit 5–6 in the text to explain the ABC calculations for the material-handling activity. Use your exhibit to explain ABC to a friend who is not a business major.
Kitchen King’s Toledo plant manufactures three product lines, all multi-burner, ceramic cook tops. The plant’s three product models are the Regular (REG), the Advanced (ADV), and the Gourmet (GMT).Until recently, the plant used a job-order product-costing system, with manufacturing overhead
Clark and Shiffer LLP perform activities related to e-commerce consulting and information systems in Vancouver, British Columbia. The firm, which bills $140 per hour for services performed, is in a very tight local labor market and is having difficulty finding quality help for its overworked
Service-industry firms can make effective use of ABC systems as well as manufacturers. For each of the following businesses, list five key activities that are important in the provision of the firm’s service. For each activity cost pool, suggest an appropriate cost driver to use in assigning
Windy City Design Company specializes in designing commercial office space in Chicago. The firm’s president recently reviewed the following income statement and noticed that operating profits were below her expectations. She had a hunch that certain customers were not profitable for the company
The customer-profitability analysis for Patio Grill Company, which is displayed in Exhibit 5–14 , ranks customers by operating income. An alternative, often-used approach is to rank customers by sales revenue.Required:1. List the customer numbers in the left-hand column of Exhibit 5–14 by sales
As a group, think carefully about the various activities and steps involved in the course registration process at your college or university.Required:1. List the steps in the registration process in the sequence in which they occur.2. Prepare an activity analysis of the registration process.
Visit a restaurant for a meal or think carefully about a recent visit to a restaurant. List as many a ctivities as you can think of that would be performed by the restaurant’s employees for its customers.Required: For each activity on your list, indicate the following:1. Value-added or
List five activities performed by the employees of an airline on the ground.Required: For each of these activities, suggest a performance measure that could be used in activitybased management.
Since you have always wanted to be an industrial baron, invent your own product and describe at least five steps used in its production.Required: Explain how you would go about identifying non-value-added costs in the production process.
Non-value-added costs occur in nonmanufacturing organizations, just as they do in manufacturing firms.Required: Identify four potential non-value-added costs in (1) an airline, (2) a bank, and (3) a hotel.
Visit the website of a city, state, or Canadian province of your choosing (e.g., the City of Charlotte, www.charmeck.org ).Required: Read about the services offered to the public by this governmental unit. Then discuss how activity-based costing could be used effectively by the governmental unit to
As a group, discuss the activities of your college or university admission, registration, etc.). List as many activities as you can.Required: Make a presentation to your class that includes the following:1. Your list of activities.2. The classification of each activity (e.g., unit level).3. An
United Technologies Corporation is using activity-based costing in two of its subsidiaries: Otis Elevator Company and Carrier Corporation. The following table shows 27 activities and eight accounts identified at Carrier, along with the classification determined by the ABC project team?Required:
Zodiac Model Rocketry Company sells model rocketry kits and supplies to retail outlets and through its catalog. Some of the items are manufactured by Zodiac, while others are purchased for resale. For the products it manufactures, the company currently bases its selling prices on a product-costing
Seneca Falls Winery is a small, family-run operation in upstate New York. The winery produces two varieties of wine: riesling and chardonnay. Among the activities engaged in by the winery are the following:1. Trimming: At the end of a growing season, the vines are trimmed, which helps prepare them
Refer to the description given for Wheelco, Inc., in the preceding exercise. Suppose the firm’s president has decided to implement an activity-based costing system.Required:1. List and briefly describe the key features that Wheelco’s new product-costing system should have.2. What impact will
Wheelco, Inc. manufactures automobile and truck wheels. The company produces four basic, h ighvolume wheels used by each of the large automobile and pickup truck manufacturers. Wheelco also has two specialty wheel lines. These are fancy, complicated wheels used in expensive sports cars it’s just
Rainbow Spray Paints, Inc. has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 16 percent of direct-labor cost. Monthly direct-labor cost for the enamel paint line is $98,000. In an attempt to more equitably distribute quality-control
Refer to the information given in the preceding exercise. For each of the activity cost pools identified, indicate whether it represents a unit-level, batch-level, product-sustaining-level, or facility-level activity.
Digitech, Ltd. manufactures various computer components in its Tokyo plant. The following costs are budgeted for January. (Yen is the Japanese monetary unit.)Required: Divide these costs into activity cost pools, and identify a cost driver for assigning each pool of costs to products. Calculate the
Precision Lens Company manufactures sophisticated lenses and mirrors used in large optical telescopes.The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to
Give an example of a customer-value-added activity and a business-value-added activity in a hotel.
What is a customer profitability profile?
Explain the relationship between customer profitability analysis and activity-based costing.
What is meant by customer-profitability analysis? Give an example of an activity that might be performed more commonly for one customer than for another.
Distinguish between an activity’s trigger and its root cause. Give an example of each.
What is meant by the term activity analysis? Give three criteria for determining whether an activity adds value.
Explain the concept of two-dimensional ABC. Support your explanation with a diagram.
Explain a key difference in the interpretation of the ABC data in Exhibit 5–7 (Patio Grill Company) and Exhibit 5–16 (Delaware Medical Center).
How could the administration at Delaware Medical Center’s Primary Care Unit use the activity-based costing information developed by the ABC project team?
Explain why the maintenance of the medical-services provider network is treated as a product-sustaininglevel activity by Pennsylvania Blue Shield.
Are activity-based costing systems appropriate for the service industry? Explain.
Explain why a manufacturer with diverse product lines may benefit from an ABC system.
Explain why a new product-costing system may be needed when line managers suggest that an apparently p rofitable product be dropped.
What is the role of activity dictionary in an ABC project?
List three factors that are important in selecting cost drivers for an ABC system.
Briefly explain two factors that tend to result in product cost distortion under traditional, volume-based productcosting systems.
Explain the concept of a pool rate in activity-based costing. (Refer to Exhibit 5–6 .)
How is the distinction between direct and indirect costs handled differently under volume-based versus activitybased costing systems?
Why do product-costing systems based on a single, volume-based cost driver tend to overcost high-volume products? What undesirable strategic effects can such distortion of product costs have?
How can an activity-based costing system alleviate the problems Patio Grill Company’s management was having under its traditional, volume-based product-costing system?
List and briefly describe the four broad categories of activities identified in stage one of an activity-based costing system.
What are cost drivers? What is their role in an activitybased costing system?
Why was Patio Grill Company’s management being misled by the traditional product-costing system? What mistakes were being made?
Briefly explain how a traditional, volume-based product-costing system operates.
Understand and discuss how activity-based costing is used in service-industry organizations.
Explain and execute a customer-profitability analysis.
Explain the concepts of activity-based management and two-dimensional ABC.
Discuss several key issues in activity-based costing, including data collection and storyboarding.
Explain three criteria for selecting cost drivers.
Explain why traditional, volume-based costing systems tend to distort product costs.
Compute product costs under an activity-based costing system.
Explain the concept of cost levels, including unit-level, batch-level, product-sustaining-level, and facility-level costs.
Explain how an activity-based costing system operates, including the use of a two-stage procedure for cost assignment, the identification of activity cost pools, and the selection of cost drivers.
Compute product costs under a traditional, volume-based product-costing system.
Orbital Industries of Canada, Ltd. manufactures a variety of materials and equipment for the aerospace industry. A team of R&D engineers in the firm's Winnipeg plant has developed a new material that will be useful for a variety of purposes in orbiting satellites and spacecraft. Tradenamed Ceralam,
Plattsburg Plastics Corporation manufactures a variety of plastic products, including a series of molded chairs. The three models of molded chairs, which are all variations of the same design, are Standard(can be stacked), Deluxe (with arms), and Executive (with arms and padding). The company uses
(Based on a problem contributed by Roland Minch.) Celestial Glass Company manufactures a variety of glass windows in its Charleston plant. In department I clear glass sheets are produced, and some of these sheets are sold as finished goods. Other sheets made in department I have metallic oxides
SolarTech Company manufactures a special lacquer, which is used in the aeronautical and space industries. Two departments are involved in the production process. In the Mixing Department, various chemicals are entered into production. After processing, the Mixing Department transfers a chemical
The following data pertain to the Canandaigua Carpet Company for January.Additional Information:a. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process.b. The company uses weighted-average process costing.c. The January
Beowulf and Grendel, a public accounting firm in London, is engaged in the preparation of income tax returns for individuals. The firm uses the weighted-average method of process costing for internal reporting. The following information pertains to February. (£ denotes the British monetary unit,
Lawncraft, Inc. manufactures wooden lawn furniture using an assembly-line process. All direct materials are introduced at the start of the process, and conversion cost is incurred evenly throughout manufacturing. An examination of the company's Work-in-Process Inventory account for June revealed
The following data pertain to the Fantasia Flour Milling Company for the month of October.Work in process, October 1 (in units) ....................................................................................................... ?Units started during October
Texarkana Corporation assembles various components used in the computer industry. The company's major product, a disk drive, is the result of assembling three parts: JR1163, JY1065, and DC0766. The following information relates to activities of April:• Beginning work-in-process inventory: 3,000
CircleD Fastener Corporation accumulates costs for its single product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. A partially completed production report for the month of June
Atlantic City Taffy Company produces various kinds of candy, but salt-water taffy is by far its most important product. The company accumulates costs for its product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly
Jupiter Corporation manufactures home security devices. During 20x4, 1,000,000 units were completed and transferred to finished-goods inventory. On December 31, 20x4, there were 310,000 units in work in process. These units were 48 percent complete as to conversion and 100 percent complete as to
Moravia Company processes and packages cream cheese. The following data have been compiled for the month of April. Conversion activity occurs uniformly throughout the production process.Work in process, April 1—10,000 units:Direct material: 100% complete, cost of
Toronto Titanium Corporation manufactures a highly specialized titanium sheathing material that is used extensively in the aircraft industry. The following data have been compiled for the month of June.Conversion activity occurs uniformly throughout the production process.Work in process, June
The November production of MVP's Minnesota Division consisted of batch P25 (2,000 professional basketballs) and batch S33 (4,000 scholastic basketballs). Each batch was started and finished during November, and there was no beginning or ending work in process. Costs incurred were as follows:Direct
Raleigh Textiles Company manufactures a variety of natural fabrics for the clothing industry. The following data pertain to the Weaving Department for the month of November.Equivalent units of direct material (weighted-average method)
The following data pertain to Tuscaloosa Paperboard Company, a manufacturer of cardboard boxes.Work in process, March 1 10,000 units*Direct material .............................................................................................................................. $ 10,900 Conversion
Montana Lumber Company grows, harvests, and processes timber for use in construction. The following data pertain to the firm's sawmill during June.Work in process, June 1 Direct material
Duluth Glass Company manufactures window glass for automobiles. The following data pertain to the Plate Glass Department.Work in process, February 1 Direct material
Use the Internet to access the website for Weyerhaeuser ( www.weyerhaeuser.com ), International Paper( www.internationalpaper.com ), or Boise Cascade ( www.boisecascade.com ).Required: Skim over the information presented on the website about the company's products and operations. Then discuss why
Andromeda Glass Company manufactures decorative glass products. The firm employs a processcosting system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. The company's production
PetroTech Company refines a variety of petrochemical products. The following data are from the firm's Amarillo plant.Work in process, July 1 ............................................................................................................... 1,900,000 liters Direct material
The Milwaukee plant of Healthy Life Styles, Inc. produces low-fat salad dressing. The following data pertain to the year just ended.Percentage of Completion Units Direct Material Conversion Work in process, January 1 ................................................................... 30,000 gal.
In each case below, fill in the missing amount.1. Work in Process, June 1 .................................................................................................................. 10,000 pounds Units started during June
What is the purpose of a departmental production report prepared using process costing?
Explain the concept of operation costing. How does it differ from process or job-order costing? Why is operation costing well suited for batch manufacturing processes?
How would the process-costing computations differ from those illustrated in the chapter if overhead were applied on some activity base other than direct labor?
How does process costing differ under normal or actual costing?
Explain the reasoning underlying the name of the weighted-average method.
A food processing company has two sequential production departments: mixing and cooking. The cost of the January 1 work in process in the cooking department is detailed as follows:Direct material ............................................................... $ 79,000 Conversion
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