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Management Accounting 5th Edition Don R Hansen, Maryanne M Mowen - Solutions
Derby Chips is an international producer of corn chips. At the end of 2001, Mary Hahn, president of Derby, appointed a task force to focus on the packaging and product use segments of its product's life cycle. Since customers consumed the con- tents of the package (if not consumed, the contents are
Identify the core environmental objective associated with each of the following measures.Tons of greenhouse gas emissions Tons of hazardous waste delivered for off-site management Pounds of plastic recycled British Thermal Units (BTUs)Cars produced/ pounds of steel used Percentage of vehicles
At the beginning of 1998, Henderson Company, an international telecommunications company, embarked on an environmental improvement program. The company set a goal to have all its facilities ISO 14001 registered by 2001 (there are 30 facilities worldwide). It also adopted the Balanced Scorecard with
Refer to Exercise 12-9. As part of its environmental cost reporting system, Henderson tracks its total environmental costs. Consider the cost and sales data given below.Year Total Environmental Costs Sales Revenue 1998 $30,000,000 $250,000,000 1999 25,000,000 250,000,000 2000 22,000,000 275,000,000
Refer to Problem 12-13. In 1999, Jack Carter, president of Kartel, requested that en- vironmental costs be assigned to the two major products produced by the company. He felt that knowledge of the environmental product costs would help guide the design decisions that would be necessary to improve
Identify and describe the four types of quality costs. lop54
Prepare a quality cost report and explain the difference between the conventional view of acceptable quality level and the view espoused by total quality control. lop54
Explain why quality cost information is needed and how it is used. lop54
Explain what productivity is and calculate the impact of productivity changes on profits. lop54
Why has measurement of productivity and quality become so important? lop54
What are quality costs? lop54
How can improving quality reduce quality costs? lop54
What kind of quality cost reports should be prepared by the accounting department? lop54
What is meant by “productivity”? lop54
How is productivity measured? lop54
Explain what is meant by "quality." lop54
What is reliability? durability? lop54
What is quality of conformance? lop54
Explain the difference between the traditional view of conformance and the robust view. lop54
Why are quality costs the costs of doing things wrong? lop54
Identify and discuss the four kinds of quality costs. lop54
Explain why external failure costs can be more devastating to a firm than internal failure costs. lop54
What are hidden quality costs? Provide an ex- ample. lop54
What are the three methods for estimating hid- den quality costs? lop54
Discuss the value of a quality cost report. lop54
What is the difference between the AQL model and the zero-defects model? lop54
What is the difference between the zero-defects model and the robust quality model? lop54
13. Explain the purpose of multiple-period trend analysis for quality costs. lop54
Define total productive efficiency. lop54
Explain the difference between partial and total measures of productivity. lop54
Discuss the advantages and disadvantages of par- tial measures of productivity. lop54
How can a manager measure productivity im- provement? lop54
What is profit-linked productivity measurement? lop54
Explain why profit-linked productivity measure- ment is important. lop54
What is the price-recovery component? lop54
Can productivity improvements be achieved without improving quality? Explain.lop5
Why is it important for managers to be concerned with both productivity and quality? nj5
What are the differences between quality and pro- ductivity? similarities? mk6
What is gainsharing? mk5
During 2000 and 2001, Hunington Company reported sales of $6,000,000 (for each year). Hunington listed the following quality costs for the past two years. Assume that all changes in the quality costs are due to a quality-improvement program. mk6 Required: 2000 Design review $ 150,000 Recalls
Lakay Company had sales of $40 million in 1994. In 2001, sales had increased to $50 million. A quality-improvement program was implemented in 1994. Overall conformance quality was targeted for improvement. The quality costs for 1994 and 2001 follow. Assume any changes in quality costs are
Mendara Company has sales of $4 million and quality costs of $800,000. The company is embarking on a major quality-improvement program. During the next three years, Mendara intends to attack prevention costs by increasing its appraisal and prevention costs. The “right” prevention activities
At the end of 2001, Minot Metal Works began to focus on its quality costs. As a first step, it identified the following costs in its accounting records as quality-related:2001 Sales (50,000 units @ $20) $1,000,000 Scrap 30,000 Rework 40,000 Training program 12,000 Consumer complaints 20,000
Nestten Company manufactures a product that has a target value of 20 ounces.Specification limits are 20 ounces plus or minus 0.50 ounce. The value of K is $80. A sample of five units produced the following measures:Unit Measured Weight 20.20 20.50 20.30 19.50 oF WN WIS)During April, 12,500 units
The controller of Golden Company has computed quality costs as a percentage of sales for the past five years (1997 was the first year the company implemented a quality-improvement program). This information follows:Prevention Appraisal Internal Failure External Failure Total Is 2% 3% 8% 12% 25%1998
Doran Company produces a product that uses two inputs, energy and labor. During the past month, 40 units of the product were produced, requiring 32 units of energy and 128 hours of labor. An engineering study revealed that Doran can produce the same output of 40 units using either of the following
Rington Company is considering the acquisition of an automated system that would decrease the number of units scrapped because of poor quality. (This proposal is part of an ongoing effort to improve quality.) The production manager is pushing for the acquisition because he believes that
Lau Company gathered the following data for the past two years:Base Year Current Year Output 150,000 180,000 Output prices $20 $20 Input quantities:Materials (1b) 200,000 180,000 Labor (hr) 50,000 90,000 Input prices:Materials $5 $6 Labor $8 $8 Required:1. Calculate the partial operational
Norton Company produces handcrafted leather belts. Virtually all the manufacturing cost consists of materials and labor. Over the past several years, profits have been declining because the cost of the two major inputs has been increasing. Barry Norton, the president of the company, has indicated
Reece Manufacturing rewards its plant managers for their ability to meet budgeted quality cost reductions. The bonus is increased if the productivity goal is met or exceeded. The productivity goal is computed by multiplying the units produced by the prevailing market price and dividing this measure
Using the Internet, answer the following questions:1. What is the Malcolm Baldrige National Quality Award?2. Identify three companies who have been given the award during the most recent award year. Describe each company and the actions they took that apparently led to their selection.3. Go to
Explain how unit standards are set and why standard cost systems are adopted. lop5
Explain the purpose of a standard cost sheet. lop5
Describe the basic concepts underlying variance analysis and explain when variances should be investigated. lop5
Compute the materials and labor variances and explain how they are used for control. lop5
Compute the variable and fixed overhead variances and explain their meanings. lop5
Prepare journal entries for materials and labor variances and describe the accounting for overhead variances. (Appendix). lop5
What was motivating Millie to implement a more formal cost control system? lop5
Why does a standard cost system provide more detailed control information? lop5
How can standards be used to control costs? lop5
Discuss the difference between budgets and stan- dard costs. lop5
Describe the relationship that unit standards have with flexible budgeting. lop5
What is the quantity decision? the pricing decision? lop5
Why is historical experience often a poor basis for establishing standards? lop5
Should standards be set by engineering studies? Why or why not? lop5
What are ideal standards? currently attainable stan- dards? Of the two, which is usually adopted? Why? lop5
Explain why standard costing systems are adopted. lop5
How does standard costing improve the control function? lop5
Discuss the differences among actual costing, nor- mal costing, and standard costing. lop5
What is the purpose of a standard cost sheet? lop5
The budget variance for variable production costs is broken down into quantity and price variances. Explain why the quantity variance is more useful for control purposes than the price variance. lop5
When should a standard cost variance be investi- gated? lop5
What are control limits and how are they set? lop5
Explain why the materials price variance is often computed at the point of purchase rather than at the point of issuance. lop5
The materials usage variance is always the re- sponsibility of the production supervisor. Do you agree or disagree? Why? lop5
The labor rate variance is never controllable. Do you agree or disagree? Why? lop5
Suggest some possible causes of an unfavorable labor efficiency variance. lop5
Explain why the variable overhead spending vari- ance is not a pure price variance. lop5
The variable overhead efficiency variance has nothing to do with efficient use of variable over- head. Do you agree or disagree? Why? lop5
Explain why the fixed overhead spending vari- ance is usually very small. lop5
What is the cause of an unfavorable volume vari- ance? Does the volume variance convey any mean- ingful information to managers? lop5
Which do you think is more important for control of fixed overhead costs: the spending variance or the volume variance? Explain. lop5
Associated Media Graphics (AMG) is a rapidly expanding company involved in Werke the mass reproduction of instructional materials. Ralph Boston, owner and manager of AMG, has made a concerted effort to provide a quality product at a fair price with delivery on the promised due date. Expanding sales
During the year, Marsing Company produced 45,000 mechanical components for a tractor manufacturer. Marsing’s materials and labor standards are:Direct materials (3 components @ 8.00) $24.00 Direct labor (0.8 hr @ $12.00) 9.60 Required:1. Compute the standard hours allowed for the production of
Jugo Company produces fruit juices, sold in gallons. Recently, the company adopted the following standards for one gallon of its apple juice: lop5 Direct materials (128 oz @ $0.025) $3.20 Direct labor (0.06 hr @ $9.00) 0.54 Standard prime cost $3.74 During the first week of operation, the company
Young, Inc., has gathered the following data on last year’s operations: lop5 Units produced: 28,000 Direct labor: 20,000 hours at $9 Actual fixed overhead: $280,000 oe aoActual variable overhead: $92,000 Young employs a standard costing system. During the year, the following rates were used:
Cordero Corporation produces high-quality leather purses. The company uses a standard cost system and has set the following standards for materials and labor: lop5 Leather (6 strips @ $8) $48 Direct labor (1.5 hr @ $12) _18 Total prime cost $66 During the year, Cordero produced 10,000 leather
Escrevem Products produces instructional aids. Among the company’s products are“white boards,” which use colored markers instead of chalk. They are particularly popular for conference rooms in educational institutions and executive offices of large corporations. The standard costs of
Tules Company is planning to produce 2,400,000 power drills for the coming year.Each drill requires one-half standard hour of labor for completion. The company uses direct labor hours to assign overhead to products. The total overhead budgeted for the coming year is $2,700,000, and the standard
Underwood Company uses the following rule to determine whether materials usage variances ought to be investigated: A materials usage variance will be investigated anytime the amount exceeds the lesser of $8,000 or 10 percent of the standard cost. Reports for the past five weeks provided the
Tavera Company uses a standard cost system. The direct labor standard indicates that four direct labor hours should be used for every unit produced. Tavera pro- duces one product. The normal production volume is 120,000 units of this product. The budgeted overhead for the coming year (2001)
At the beginning of 2001, Ammondar Company had the following standard cost sheet for one of its chemical products: lop5 Direct materials (10 lb @ 3.20) $32.00 Direct labor (4 hr @ $9.00) 36.00 Fixed overhead (4 hr @ $4.00) 16.00 Variable overhead (4 hr @ $1.50) 6.00 Standard cost per unit $90.00
Refer to the data in Exercise 9-10. Prepare journal entries for the following:The purchase of raw materials The issuance of raw materials to production (Work in Process)The addition of labor to Work in Process The addition of overhead to Work in Process al ce Eo Closing out of materials, labor, and
Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month ago, she had given him a salary increase and a bonus for his performance. She had been especially pleased with his ability to meet or beat the price standards. But now she had found out that it was
Basura Company produces plastic garbage cans. The following standards for producing one unit have been established:Direct materials (5 lb @ $0.90) $ 4.50 Direct labor (1.5 hr @ $7.00) 10.50 Standard prime cost $15.00 During December, 53,000 pounds of material were purchased and used in production.
Refer to Exercise 9-13. Prepare journal entries for the following:1. The purchase of raw materials 2. The issuance of raw materials 3. The addition of labor to Work in Process 4. Closing of variances to Cost of Goods Sold lop5
Layner Company uses a standard costing system. During the past quarter, the following variances were computed:Variable overhead efficiency variance $ 8,000 U Labor efficiency variance 20,000 U Labor rate variance 6,000 U Layner applies variable overhead using a standard rate of $2 per direct labor
Kascara Company manufactures plastic football helmets. The following standards have been established for the helmet’s variable inputs:Standard Quantity Standard Price (Rate) Standard Cost Direct materials 2.40 Ib $ 3.00 Dae) Direct labor 0.32 hr 10.00 3.20 Variable overhead 0.32 hr 2.50 0.80
The Lubbock plant of Morril’s Small Motor Division produces a major subassembly for a 6.0 horsepower motor for lawn mowers. The plant uses a standard costing system for production costing and control. The standard cost sheet for the subassembly follows:Direct materials (6.0 Ib @ $5.00) $30.00
Lorale Company, a producer of recreational vehicles, recently decided to begin producing a major subassembly for jet skis. The subassembly would be used by Lorale’s jet ski plants and also would be sold to other producers. The decision was made to lease two large buildings in two different
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