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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
Explain the advantage of using a flexible budget.
Compute and interpret the sales-price and sales-volume variances (Appendix B).
Prepare journal entries to record production overhead under standard costing(Appendix A).
Explain how an activity-based flexible budget differs from a conventional flexible budget.
Prepare an overhead cost performance report.
Compute and interpret the variable-overhead spending and efficiency variances and the fixed-overhead budget and volume variances.
Explain some important issues in choosing an activity measure for overhead budgeting and application.
Explain how overhead is applied to Work-in-Process Inventory under standard costing.
Prepare a flexible overhead budget, using both a formula and a columnar format.
Distinguish between static and flexible budgets and explain the advantages of a flexible overhead budget.
MacGyver Corporation manufactures a product called Miracle Goo, which comes in handy for just about anything. The thick tarry substance is sold in six-gallon drums. Two raw materials are used; these are referred to by people in the business as A and B. Two types of labor are required also. These
Metro Fashions, Inc., manufactures women’s blouses of one quality, which are produced in lots to fill each special order. Its customers are department stores in various cities. Metro Fashions sews the particular stores’ labels on the blouses. During November the company worked on three orders,
Refer to your solution for the preceding problem regarding Mc C artney Company.Required:1. Prepare journal entries to record all of the events listed for McCartney Company during July. Specifically, these journal entries should reflect the following events.a. Purchase of direct material.b. Use of
Execucraft, Inc., manufactures upholstered office chairs. The standard cost for material a nd labor is$89.20 per chair. This includes 8 kilograms of direct material at a standard cost of $5.00 per kilogram, and 6 hours of direct labor at $8.20 per hour. The following data pertain to September.•
Ozarks Camping Equipment, Inc., has established the following direct-materi a l standards for its two products.During May, the company purchased 4,200 yards of tent fabric for its standard model at a cost of$26,880. The actual May production of the standard tent was 200 tents, and 2,500 yards of
California Housewares’ Merced Division is a small manufacturer of wooden household items.Al Rivkin, divisional controller, plans to implement a standard-costing system. Rivkin has collected information from several co-workers that will assist him in developing standards. One of the Merced
McKeag Corporation manufactures agricultural machinery. At a recent staff meeting, the following direct-labor variance report for the year just ended was presented by the controller.McKeag’s controller uses the following rule of thumb: Investigate all variances equal to or greater than $60,000,
Concord Farms produces items made from local farm products that are distributed to su p ermarkets.For many years, Concord’s products have had strong regional sales on the basis of brand recognition;however, other companies have begun marketing similar products in the area, and price competition
Instructional Resources International (IRI) is a rapidly expanding company involved in the m ass reproduction of instructional materials. Ralph Boston, owner and manager of IRI, has made a concentrated effort to provide a quality product at a fair price, with delivery on the promised date. Boston
The director of c ost management for Peoria Instrument Corporation compares each month’s actual results with a monthly plan. The standard direct-labor rates for the year just ended and the standard hours allowed, given the actual output in April, are shown in the following schedule.Required:1.
SolarPrime, In c . uses a standard-costing system to assist in the evaluation of operations. The company has had considerable trouble in recent months with suppliers and employees, so much so that management hired a new production supervisor, Marc Hoctor. The new supervisor has been on the job for
Valport Valve Company manufactured 15,600 units during March of a control valve used by milk processors in its Shreveport plant. Records indicated the following:The control valve has the following standard prime costs.Required:1. Prepare a schedule of standard production costs for March, based on
The following data pertain to Colgate Palmolive ’s liquid filling line during the first 10 mon t hs of a particular year. The standard ratio of direct-labor hours to machine hours is 4:1. The standard direct-labor rate is $15.08.Required:1. Show how the following amounts were calculated for the
Harrison Wolfe operates a residential landscaping business in an affluent suburb of Atlanta. In an effort to provide quality serv i ce, he has concentrated solely on the design and installation of upscale landscaping plans (e.g., trees, shrubs, fountains, and lighting). With his clients continually
South Atlantic Che m ical Company manufactures industrial chemicals in Rio de Janeiro, Brazil. The company plans to introduce a new chemical solution and needs to develop a standard product cost. The new chemical solution is made by combining a chemical compound (nyclyn) and a solution (salex),
Gandolph Game Company has established the following standards for the prime costs of o n e unit of its chief product, dartboards.During September, Gandolph purchased 320,000 kilograms of direct material at a total cost of$608,000. The total wages for September were $84,000, 90 percent of which were
During March, Manhattan Fabrics Corporation manufactured 1,000 units of a special m ultilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to March.Required: Compute the following variances for the month of March, indicating
Refer to the data in Exercise 10–25 , regarding Canandaigua Container Company. P repare journal entries to:1. Record the purchase of direct material on account.2. Record the direct-material variances and add direct-material cost to Work-in-Process Inventory.3. Record the direct-labor variances
Part of your company’s a c counting database was destroyed when Godzilla attacked the city. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production.
Due to evaporation d uring production, Plasto Company requires 4 pounds of material input for every 3 pounds of good plastic sheets manufactured. During May, the company produced 6,000 pounds of good sheets.Required: Compute the total standard allowed input quantity, given the good output produced.
Choose one of the following man u facturers (or any manufacturer of your choosing), and use the Internet to gather information about any new products the company has recently introduced or plans to introduce.Boeing www.boeing.com Kodak www.kodak.com Caterpillar www.caterpillar.com Pfizer
Refer to the d a ta in the preceding exercise. Use diagrams similar to those in Exhibits 10–2 , 10–3 , and 10–4 to determine the direct-material and direct-labor variances. Indicate whether each variance is favorable or unfavorable.
Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of p roduction is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller.Direct labor: Direct material:Quantity, .25 hour Quantity, 4 kilograms Rate, $12 per
Seneca Hardwoods produces handcrafted jewelry boxes. A standard-size b ox requires 7 board feet of hardwood in the finished product. In addition, 1.5 board feet of scrap lumber is normally left from the production of one box. Hardwood costs $5.00 per board foot, plus $1.20 in transportation charges
Refer to the data in the preceding exercise. Draw diagrams depicting the d irect-material and direct-labor variances similar to the diagrams in Exhibits 10–2 , 10–3 , and 10–4 .
During April, Dryden Company’s material purchases amounted to 6,500 pounds at a price of $7.40 per pound. Actual costs incurred in the production of 2,000 units were as follows:Direct labor: $118,035 ($18.30 per hour)Direct material: $31,820 ($7.40 per pound)The standards for one unit of Dryden
List seven criticisms of standard costing in an advanced manufacturing environment.
List six advantages of a standard-costing system.
Describe how standard costs are used for product costing.
Discuss several ways in which standard-costing systems should be adapted in today’s ma nufacturing environment.
Describe five factors that managers often consider when determining the significance of a va riance.
Refer to Review Question 10–11 . Why does an analogous question not arise in the context of the di rect-labor variances?
What manager is generally in the best position to influence the direct-labor efficiency variance?
What is the interpretation of the direct-labor efficiency variance?
What manager is generally in the best position to influence the direct-labor rate variance?
What is the interpretation of the direct-labor rate variance? What are some possible causes?
Explain why the quantity purchased (PQ) is used in computing the direct-material purchase price variance, but the actual quantity consumed (AQ) is used in computing the direct-material price and quantity variances.
What manager is usually in the best position to influence the direct-material quantity variance?
What is the interpretation of the direct-material quantity variance?
What manager is usually in the best position to influence the direct-material price variance?
What is the interpretation of the direct-material price variance and the direct-material purchase price variance?
Explain how standard material prices and quantities are set.
Describe how a bank might use standards.
Distinguish between perfection and practical standards.Which type of standard is likely to produce the best motivational effects?
Describe two methods of setting standards.
What is meant by the phrase management by exception?
List the three parts of a control system, and explain how such a system works.
Prepare journal entries to record and close out cost variances (appendix).
Explain several common criticisms of standard costing.
Summarize some advantages of standard costing.
Explain how standard costs are used in product costing.
Describe some behavioral effects of standard costing.
Explain several methods for determining the significance of cost variances.
Compute and interpret the direct-material price and quantity variances and the direct-labor rate and efficiency variances.
Describe two ways to set cost standards and distinguish between perfection and practical standards.
Describe the elements of a cost control system.
We really need to get this new material-handling equipment in operation just after the new year begins.I hope we can finance it largely with cash and marketable securities, but if necessary we can get a shortterm loan down at MetroBank.” This statement by Beth Davies-Lowry, president of Global
Fit-for-Life Foods Inc., a manufacturer of breakfast cereals and snack bars, has experienced several years of steady growth in sales, profits, and dividends while maintaining a relatively low level of debt. The board of directors has adopted a long-run strategy to maximize the value of the
Vancouver Consulting Associates, a division of Maple Leaf Services Corporation, offers management and computer consulting services to clients throughout Canada and the northwestern United States. The division specializes in website development and other Internet applications. The corporate
Edgeworth Box Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables. The canned food box (type C) and the perishable food box (type P) have the following material and labor requirements.Type of Box C P Direct material required per 100
Condor Corporation manufactures two different types of coils used in electric motors. In the fall of the current year, the controller compiled the following data.• Sales forecast for 20x3 (all units to be shipped in 20x3):Required: Prepare the following budgets for 20x3.1. Sales budget (in
Continental Security Systems, Inc. (CSSI), manufactures and sells security systems. The company started by installing photoelectric security systems in offices and has expanded into the private-home market. CSSI has a basic security system that has been developed into three standard products, each
Dakota Fan, Inc., manufactures an inexpensive household fan that it sells to retailers for $20 per unit.All sales are on account, with 40 percent of sales collected in the month of sale and 60 percent collected in the following month. The data that follow were extracted from the company’s
School Days Furniture, Inc., manufactures a variety of desks, chairs, tables, and shelf units which are sold to public school systems throughout the midwest. The controller of the company’s Desk Division is currently preparing a budget for the third quarter of the year. The following sales
Eastern State University (ESU) is preparing its master budget for the upcoming academic year. Currently, 12,000 students are enrolled on campus; however, the admissions office is forecasting a 5 percent growth in the student body despite a tuition hike to $75 per credit hour. The following
Niagra Chemical Company produces three products using three different continuous processes. The products are Yarex, Darol, and Norex. Projected sales in gallons for the three products for the years 20x2 and 20x3 are as follows:20x2 20x3 Yarex
Shady Shades, Inc., manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for preparing the company’s master budget. In compiling the budget data for 20x1, Demarest has learned that new automated production equipment will be installed on March 1. This will reduce
Sophisticates, Inc., a distributor of jewelry throughout California, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the company’s accounting records:• All sales are on account. Sixty percent of customer accounts are
Three Rivers Dental Associates (TRDA) is a large dental practice in Pittsburgh. The firm’s controller is preparing the budget for the next year. The controller projects a total of 48,000 office visits, to be evenly distributed throughout the year. Eighty percent of the visits will be half-hour
Splendid Stereo, Inc., is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20x5. Past experience has indicated that 75 percent of the store’s sales are cash sales. The collection experience for the sales on account is as follows:80
Tanya Williams is the new accounts manager at East Bank of Mississippi. She has just been asked to project how many new bank accounts she will generate during 20x5. The economy of the county in which the bank operates has been growing, and the bank has experienced a 10 percent increase in its
Village Hardware is a retail hardware store. Information about the store’s operations follows.• November 20x4 sales amounted to $400,000.• Sales are budgeted at $440,000 for December 20x4 and $400,000 for January 20x5.• Collections are expected to be 60 percent in the month of sale and 38
Choose a city or state in the United States (or a Canadian city or province), and use the Internet to explore the annual budget of the governmental unit you selected. For example, you could check out the budget for Los Angeles at www.losangeles.com . Alternatively, take a look at the U.S. federal
The following information is from White Mountain Furniture Showroom’s financial records.Month Sales Purchases July ............................................................. $180,000 ................................................... $105,000 August
Fill in the missing amounts in the following schedules.July August September 1. Sales* ...................................................................... $240,000 $180,000 $ ?Cash receipts:From cash sales ................................................... $ ? $ ? $135,000 From sales on account
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.70 percent collected in the month of sale.15 percent collected in the first month after sale.10 percent collected in the second month after sale.4 percent collected in the third month
San Fernando Fertilizer Company plans to sell 40,000 units of finished product in July and anticipates a growth rate in sales of 5 percent per month. The desired monthly ending inventory in units of finished product is 80 percent of the next month’s estimated sales. There are 32,000 finished
What are the primary differences in budgeting between manufacturing and nonmanufacturing firms?
Briefly describe three issues that create special challenges for multinational firms in preparing their budgets.
List the steps you would go through in developing a budget to meet your college expenses.
Discuss this comment by a small-town bank president:“Budgeting is a waste of time. I’ve been running this business for 40 years. I don’t need to plan.”
Why is participative budgeting often an effective management tool?
How can an organization help to reduce the problems caused by budgetary slack?
Define the term budgetary slack, and briefly describe a problem it can cause.
Discuss the importance of predictions and assumptions in the budgeting process.
How can a company’s board of directors use the budget to influence the future direction of the firm?
What is the purpose of a budget manual?
Describe the role of a budget director.
Give three examples of how the city of Boston could use a budget for planning purposes.
How does e-budgeting make use of the Internet?
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