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Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. interested outside parties to have confidence in the organization’s financial reports. Internal controls over financial reporting include a range of […]

now will be equal to a $161.10 cash flow at the end of five years. If the $100 received now is invested for five years at 10%, it will accumulate to $161.10 at the end of five years. Copyright © […]

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Appendix II – Compound Interest and the Concept of Present Value II-1 APPENDIX II COMPOUND INTEREST AND THE CONCEPT OF […]

2. Understand the differences between the economic-order-quantity and just-in– time approaches to inventory management. Appendix III – Inventory Management III-1 APPENDIX III INVENTORY MANAGEMENT Learning Objectives 1. Calculate the economic order quantity (EOQ) using the EOQ decision model. Copyright © […]

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Appendix I – The Sarbanes-Oxley Act, Internal Controls, and Management Accounting AppI-1 APPENDIX I THE SARBANES-OXLEY ACT, INTERNAL CONTROLS, AND […]

such as unloading and inspection.) (b) Holding costs: The cost incurred in keeping inventory on hand for some period of time. (Examples include the costs of storage space such as a warehouse, depreciation, security, insurance, forgone interest on working capital […]

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. (a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on-line sales of books, music, and other goods. […]

Chapter 01 – The Changing Role of Managerial Accounting in a Dynamic Business Environment 1-1 CHAPTER 1 THE CHANGING ROLE OF MANAGERIAL ACCOUNTING IN A DYNAMIC BUSINESS ENVIRONMENT Learning Objectives 1. Define managerial accounting and describe its role in the […]

DATA INPUT Standard Standard Direct-Labor Direct-Labor Hours Rate per Hour Allowed, Given April Output Labor Class III 24.00$ 1,000 Labor Class II 21.00 1,000 Labor Class I 15.00 1,000 Actual Actual Direct-Labor Direct-Labor Rate per Hour Hours Labor Class III […]

DATA INPUT Quantity 0.25 hour Quantity 4 kilograms Rate 12.00$ per hour Price 0.60$ per kilogram Actual data: Material purchases 240,000 kilograms Price 0.62$ per kilogram Actual costs incurred in the production of: 50,000 units were as follows: Direct labor: […]

DATA INPUT Control valves manufactured in March: 15,600 units Actual costs: Direct labor 80,200 hr. at 10.95$ Direct material purchased 50,000 lb. at 5.20$ Direct material used 46,200 lb. Standard prime costs: Direct material 3 lbs. at 5.00$ per lb […]

Case 10-49 Student Name: Class: 1. Standard cost of lots N42, N43, and N44: METRO FASHIONS, INC. Standard Total Quantity Cost per Standard Lot (boxes) Box Cost N42 * * * N43 * * * N44 * * * Standard […]

Problem 10-47 Student Name: Class: 1. McCartney Company Standard Cost Schedule: Direct Material Construction Finishing Department Department Standard quantity: Direct material and parts in finished product: Veneered wood *lbs. – set(s) Bridge and strings *lbs. *set(s) Allowance for normal waste […]

9. Prepare journal entries to record and close out cost variances (appendix). Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 3. Compute and interpret the direct-material price and […]

10–21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 10-35 (15 MINUTES) Direct Material Initial Mix Unit Cost Standard Material Cost Nyclyn …………………………………………………………… 12 kg R$ 4.35 […]

Chapter 10 – Standard Costing and Analysis of Direct Costs 10-1 CHAPTER 10 Standard Costing and Analysis of Direct Costs ANSWERS TO REVIEW QUESTIONS 10-1 Any control system has three basic parts: a predetermined or standard performance level, a measure […]

10–41 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 10-46 (50 MINUTES) 1. a. Direct-labor rate variance = (AH  AR) – (AH  SR) = (36,500 […]

Fixed overhead 270,000 Fixed general and administrative 180,000 450,000 Operating income 183,600$ Revenue 1,728,000$ 1,728,000$ –$ Variable costs Direct material 480,000$ 432,000$ 48,000$ U Direct labor 288,000 316,800 (28,800) F Deduct: Total variable costs 1,170,000$ 1,094,400$ 75,600$ U Contribution margin […]

Problem 11-44 Student Name: Class: 1. Citing the benefits of flexible budgeting, explain why Susan Porter would propose using flexible budgeting in this situation. 2. Flexible Budget Actual Variance Advertising * * * * Staff salaries * * Sales salariesa* […]

Problem 11-42 Student Name: _________________ Class:_________________________ Lakemaster Company Flexibile Budget For the Month of June Revenue * Deduct: Variable costs: Direct material * Direct labor * Variable overhead * Variable selling * Total variable costs * Contribution margin * Deduct: […]

7. Explain how an activity-based flexible budget differs from a conventional flexible budget. 9. Compute and interpret the sales-price and sales-volume variances (Appendix B). Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written […]

DATA INPUT Containers (cases) of frozen food produced 725 Actual costs: Variable overhead 5,500$ Fixed overhead 13,000 Actual labor cost 4,000 direct-labor hours 75,600 Actual material cost 15,000 pounds purchased and used 33,000 Standard costs per case: Direct labor 5 […]

DATA INPUT Actual output 13,500 cases Actual variable overhead (Actual VOH) 607,500$ Actual fixed overhead (actual FOH) 183,000$ Actual machine time 60,750 machine hours Standard variable-overhead rate 9.00$ per machine hour Standard quantity of machine hours 4 hours per case […]

Chapter 11 – Flexible Budgeting and Analysis of Overhead Costs CHAPTER 11 Flexible Budgeting and Analysis of Overhead Costs ANSWERS TO REVIEW QUESTIONS 11-1 A static budget is based on only one level of activity. A flexible budget allows for […]

11–56 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 11-51 (CONTINUED) VARIABLE-OVERHEAD SPENDING AND EFFICIENCY VARIANCES (Hours = Direct-Labor Hours) Actual Hours (AQ) Actual Rate (AVR) Actual […]

11–41 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 11-45 (CONTINUED) bTotal standard overhead rate = variable overhead rate + fixed overhead rate = $7.50 + $21.00 […]

Chapter 11 – Flexible Budgeting and Analysis of Overhead Costs SOLUTIONS TO PROBLEMS PROBLEM 11-35 (45 MINUTES) PROJECTED VARIABLE OVERHEAD VARIABLE-OVERHEAD SPENDING AND EFFICIENCY VARIANCES (Hours = Direct-Labor Hours) Actual Hours (AQ) Actual Rate (AVR) Actual Hours (AQ) Standard Rate […]

DATA INPUT Department Annual Cost Admissions 117,000$ Registrar 195,000 Computer Services 416,000 Planned Courses Budgeted Budgeted Requiring Division Enrollment Credit Hours Computer Work Liberal Arts 1,000 30,000 12 Sciences 800 28,000 24 Business Adminstration 700 22,000 24 Total 2,500 80,000 […]

Problem 12-44 Student Name: Class: BUCKEYE DEPARTMENT STORES, INC. Segmented Income Statement (in thousands) Segments of Company Segments of Columbus Division Buckeye Department Cleveland Columbus Olentangy Scioto Downtown Not Stores, Inc. Division Division Store Store Store Allocated Sales revenue * […]

DATA INPUT Cost Cost Pool Allocation Base Annual Cost Facilities: Building depreciation Square feet of space 380,000$ Equipment depreciation Insurance Utilities: Electricity Cubic feet of space 48,000 Waste disposal Water and sewer Cable TV and phone Heat General adminstration: Administrator […]

5. Prepare a segmented income statement. 7. Describe the balanced scorecard concept and explain the reasoning behind it. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 12 […]

Problem 12-42 Student Name: Class: MOUNT RANIER GENERAL HOSPITAL Performance Report August Flexible Budget Actual Cost Variance August YTD August YTD August F/U YTD F/U Mount Ranier * * * * * * * * General Hospital General Medicine Division […]

DATA INPUT Metro Suburban Outlying Service revenue 950,000$ 750,000$ 350,000$ Variable expenses 150,000 100,000 50,000 Controllable fixed expenses 350,000 270,000 100,000 Fixed expenses controlled by others 180,000 150,000 40,000 Common fixed expenses 45,000$ Income tax expense 245,000$ SOLUTION Segmented income […]

Case 12-52 Student Name: Class: 1. NORTH AMERICAN INDUSTRIES Segmented Income Statement by Geographic Areas For the Fiscal Year Ended April 30, 20×4 Geographic Areas United States Canada Mexico Unallocated Total Sales in unitsa Furniture * * * * Sports […]

12–35 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 12-50 (45 MINUTES) 1. a. The semiannual installments and total bonus for the Charter Division are calculated as […]

12–21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 12-42 (CONTINUED) 3. A variety of responses are reasonable for this question. Since the data given in the […]

Chapter 12 – Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard CHAPTER 12 Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard ANSWERS TO REVIEW QUESTIONS 12-1 Goal congruence results when the managers of subunits throughout an organization strive […]

DATA INPUT (All numbers in thousands) Ending Balance 12/31/x1 25,200$ Increase since last year 5% Minimum Return 15% Sales Revenue 48,000$ Cost of Goods Sold 31,600$ Gross Margin 16,400$ Operating Expenses Administrative 4,280$ Selling 7,200$ 11,480$ Income from operations before […]

5. Explain how to measure a division’s income and invested capital. 7. Explain how to base a transfer price on market prices, costs, or negotiations. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior […]

DATA INPUT Cost of Debt Capital 9% Market Value of Debt 120,000,000$ Cost Equity Capital 14% Market Value of Equity $180,000,000 Tax Rate 40% Division Total Assets Current Liabilities Before Tax Operating Income (numbers in millions) Properties 217.5$ 4.5$ 43.5$ […]

13–33 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 13-49 (CONTINUED) 3. (a) The head of the German division should be a team player; however, when the […]

DATA INPUT German Selling price of final product 1,080$ Shipping fees to import circuit board 60$ Labor, overhead, and additional material costs of final product 345$ Import duties levied on circuit board 10% (of transfer price) German Tax Rate 60% […]

13–21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 13-41 (40 MINUTES) Year Income Before Depreciation Annual Depreciation Income Net of Depreciation Average Net Book Value* ROI […]

Chapter 13 – Investment Centers and Transfer Pricing 13-1 CHAPTER 13 Investment Centers and Transfer Pricing ANSWERS TO REVIEW QUESTIONS 13-1 The managerial accountant’s primary objective in designing a responsibility- accounting system is to provide incentives for the organization’s subunit […]

DATA INPUT Overhead cost per machine hour $48 Fixed manufacturing overhead $30 Machine hours limit 50,000 Blender Food Processor Direct Material 18$ 33$ Direct Labor 12$ 27$ Manufacturing overhead 48$ 96$ Cost if purchased from outside supplier 60$ 114$ Annual […]

DATA INPUT Paints & Supplies Carpeting Wallpaper Sales 190,000$ 230,000$ 70,000$ Variable Costs 114,000$ 161,000$ 56,000$ Fixed Costs 28,000$ 37,500$ 22,500$ Total Costs 142,000$ 198,500$ 78,500$ Operating Income (loss) 48,000$ 31,500$ (8,500)$ Remodeling Remodeling Costs 6,200$ Increased Sales 60,000$ Increased […]

Chapter 14 – Decision Making: Relevant Costs and Benefits 14–21 Remaining machine hours ……………………………………………………………………… 30,000 Number of food processors to be produced (30,000 ÷ 2) ………………………….. 15,000 Conclusion: Manufacture 20,000 blenders Manufacture 15,000 food processors Purchase 13,000 food processors PROBLEM […]

5. Prepare analyses of various special decisions, properly identifying the relevant costs and benefits. 7. Explain the impact of an advanced manufacturing environment and activity- based costing on a relevant-cost analysis. Copyright © 2014 McGraw-Hill Education. All rights reserved. No […]

14–39 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 14-58 (45 MINUTES) 1. Machine hour requirements: Department Product 1 2 3 4 M50 ………………………………………………………. 500 500 1,000 […]

DATA INPUT Monthly capacity 2500 cabanas per month Current production 1875 cabanas per month 1875 Price per cabana 525.00$ Variable Costs Manufacturing Direct Labor 281,250$ Direct Material 196,875$ Marketing 140,625$ Total Variable Costs 618,750$ Fixed Costs Manufacturing 206,250$ Marketing 131,250$ […]

Chapter 14 – Decision Making: Relevant Costs and Benefits 14-1 CHAPTER 14 Decision Making: Relevant Costs and Benefits ANSWERS TO REVIEW QUESTIONS 14-1 The seven steps in the decision-making process are as follows: Clarify the decision Specify the criterion Identify […]

Problem 15-46 Student Name: Class: Super Sounds, Inc. Computations 1. Budgeted overhead costs: Department I Department II Variable overhead * * Fixed overhead * * Total overhead * * Total budgeted overhead for both departments * Total expected direct-labor hours […]

7. Explain how product-cost distortion can undermine a firm’s pricing strategy. 11. Describe the legal restrictions on setting prices. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter […]

DATA INPUT Sales Revenue 12,500$ Less Sales Commission 1,250$ Sales Commission 10% Net Sales 11,250$ Expenses: Direct Material 3,000$ Direct Labor 3,750$ Manufacturing Overhead-variable 1,125$ Manufacturing Overhead-fixed 750$ Corporate Administration-fixed 375$ Total Costs 9,000$ Income before Taxes 2,250$ Income Taxes […]

DATA INPUT Direct material 7.50$ Sales Commission 5% Direct labor 9.00$ Freight Expense 1.50$ Manufacturing Overhead 13.50$ Markup 40% Total Product Cost 30.00$ Selling Price 42$ Manufacturing overhead is applied per standard direct-labor hour at the following rate: Add’l Fixed […]

DATA INPUT Market Price 585$ Markup 25% Direct Material 90$ Direct Labor 225$ Manufacturing overhead 150$ Selling and Admin Expenses 75$ SOLUTION 2. The current selling price is 675$ 3. Leno’s markup is 135$ which is 20% of the current […]

15–20 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 15-38 (CONTINUED) 3. The break-even price is $56,667, computed as follows: Let P = break-even bid price P […]

Chapter 15 – Target Costing and Cost Analysis for Pricing Decisions 15-1 CHAPTER 15 Target Costing and Cost Analysis for Pricing Decisions ANSWERS TO REVIEW QUESTIONS 15-1 In the long run, every organization must price its product or service above […]

Case 16-58 Student Name: Class: 1. The net present value of the proposed investment: * Calculation: Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 New equipment * Working capital * […]

DATA INPUT Annual Savings 27,000$ Acquisition Cost 129,750$ Lifetime of lighting system (years) 8 SOLUTION Present Value of Discount Rate Annuity Discount Factor Annual Savings Annual Savings Acquisition Cost Net Present Value 8% 5.747 27,000$ 155,159$ 129,750$ 25,409$ 10% 5.335 […]

DATA INPUT Construction Costs 780,000$ First Installment (20×0) 390,000$ Second Installment (20×1) 390,000$ Equipment (paid in 20×1) 150,000$ Staffing costs (per year)(start 20×2) 800,000$ Other operating costs (per year) 200,000$ Increased Charitable Contributions 250,000$ Annual Cost Savings 1,000,000$ Major Reburbishment […]

DATA INPUT Initial Investment 124,200$ After Tax Cash Flow 27,000$ Useful Life (years) 7 SOLUTION 1. Payback Period = initial investment / annual after tax cash flow 2. Net Present Value Analysis 10% 12% 14% Present value of after-tax savings: […]

7. Discuss the difficulty of ranking investment proposals, and use the profitability index. 9. Describe the impact of activity-based costing and advanced manufacturing technology on capital-budgeting decisions. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without […]

16–21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 16-44 (40 MINUTES) 1. Net present-value analysis: Old machine: Annual costs: Variable 300,000  $.38 ………………………………………………………. $(114,000 ) […]

Problem 16-41 Student Name: Class: Enter appropriate data in the yellow cells. An asterisk (*) to the right indicates an incorrect amount. Answers should be entered as whole numbers not formulas. Time 0 Year 1 Year 2 Year 3 Year […]

16–36 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 16-53 (30 MINUTES) 1. Payback period = inflow cash tax–after annual investment initial (a) Mall restaurant: Payback period […]

Chapter 16 – Capital Expenditure Decisions CHAPTER 16 Capital Expenditure Decisions ANSWERS TO REVIEW QUESTIONS 16-1 “Time is money” is an apt phrase for the evaluation of capital investment projects. A cash flow today is not economically equivalent to a […]

Problem 17-33 Student Name: Class: 1. Reciprocal-services method: Equations: M = 48,000 + .2C C = 250,000 + .1M where M denotes the total cost of the Maintenance Department C denotes the total cost of the Computing Department Solution of […]

DATA INPUT User of Service Library Computing Service Library 0% 20% Computing Services 0% 0% Liberal Arts 60% 30% Sciences 40% 50% Budgeted costs in two service departments Library 900,000$ Computer Services 360,000$ SOLUTION Provider of Service Cost to be […]

DATA INPUT USAGE User of Service HR Maintenance CAD HR – – – Maintenance 500 – – CAD 500 500 – Machining 4,000 3,500 4,500 Assembly 5,000 4,000 1,500 Total 10,000 8,000 6,000 Budgeted costs in service departments HR Maintenance […]

6. Allocate service department costs using the reciprocal-services method (appendix). Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 17 – Allocation of Support Activity Costs and Joint […]

DATA INPUT User of Service Library Computing Service Library 0% 20% Computing Services 0% 0% Liberal Arts 60% 30% Sciences 40% 50% Budgeted costs in two service departments Library 900,000$ Computer Services 360,000$ SOLUTION Computing Services Library Liberal Arts Sciences […]

Problem 17-24 Student Name: Class: 1. Direct Method Production Department Etching Finishing Cost to Be Provider of Service Allocated Proportion Amount Proportion Amount Maintenance * * * * * Computing * * * * * Total service department costs allocated […]

DATA INPUT Costs: Input Cost $180,000 Processing Cost $450,000 Outputs Resoline (lbs) 8,000 Krypto (lbs) 2,000 Conversion Prices Resoline into Resolite 15$ Krypto into Kryptite 45$ Kryptite into Omega 120$ Packaging Omega 18$ Sale Price (per lb) Resoline 75$ Krypto […]

Chapter 17 – Allocation of Support Activity Costs and Joint Costs CHAPTER 17 Allocation of Support Activity Costs and Joint Costs ANSWERS TO REVIEW QUESTIONS 17-1 A service department is a unit in an organization that is not involved directly […]

17–21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 17-28 (CONTINUED) 2. October production cost per gallon: Product HTP-3 PST-4 RJ-5 Joint cost allocation …………………………… $ 654,840 […]

DATA INPUT Inventory Classification January 1, 20×1 December 31, 20×1 Raw material 55,000$ 75,000$ Work in process 110,000 125,000 Finished goods 160,000 155,000 Raw materials purchased 240,000 Direct labor expenses 420,000 Manufacturer overhead costs Indirect material 12,000$ Indirect labor 22,000 […]

Problem 02-43 Student Name: Class: Enter appropriate solution in the yellow cells. An asterisk (*) to the right indicates an incorrect amount. Part 1 Direct Materials: Raw-material inventory, January 1 * Add: Purchases of raw material * Raw material available […]

Problem 02-45 Student Name: Class: Enter appropriate data in the yellow cells. An asterisk (*) to the right indicates an incorrect amount. Case A Case B Case C Sales * * Beginning inventory, raw material * Ending inventory, raw material […]

Chapter 02 – Basic Cost Management Concepts Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. CHAPTER 2 Basic Cost Management Concepts ANSWERS TO REVIEW QUESTIONS 2-1 Product costs […]

3. Describe the role of costs in published financial statements. 5. Give examples of three types of manufacturing costs. 7. Understand the importance of identifying an organization’s cost drivers. 9. Distinguish among direct, indirect, controllable, and uncontrollable costs. Copyright © […]

DATA INPUT Accounting Records: Raw materials purchases 350,000$ Direct Labor 508,000 Indirect labor 218,000 Selling and administration salaries 266,000 Building depreciation 160,000 Other selling and administration expenses 380,000 Other factory costs 688,000 Sales revenue 2,990,000 Sales price 260 Building devoted […]

DATA INPUT Laredo Luggage Company for the year 20×2 Sales revenue 475,000$ Work-in-process inventory, December 31 15,000 Work-in-process inventory, January 1 20,000 Selling and administrative expenses 75,000 Income tax expense 45,000 Purchase of raw material 90,000 Raw-material inventory, December 31 […]

2-19 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 2-45 (40 MINUTES) Case A Case B Case C Sales …………………………………………………………………….. $1,600,000* $1,500,000* $240,000 Beginning inventory, raw material […]

Exercise 3-37 Student Name: Class: Budgeted Overhead Rate = Budgeted Overhead/Budgeted Direct Professional Labor Budgeted Overhead * Budgeted Direct Professional Labor * Budgeted Overhead Rate * Contract to redecorate Mayor’s offices: Direct Material * Direct Professional Labor * Overhead applied […]

DATA INPUT Superior Metals Corporation Sales revenue 1,578,750$ Raw-material inventory, 12/31/x3 66,750 Purchases of raw material in 20×4 548,250 Raw-material inventory, 12/31/x4 44,250 Direct-labor cost incurred 355,500 Selling and administrative expenses 201,750 Indirect labor cost incurred 112,500 Property taxes on […]

Problem 03-44 Name: Class: Enter appropriate data in the blue cells. An asterisk (*) to the right indicates an incorrect amount. Mister Munchie, Inc. Schedule of Cost of Goods Manufactured For the Year Ended December 31, 20×1 Direct material: Raw-material […]

8. Describe the process of project costing used in service industry firms and nonprofit organizations. 5. Prepare journal entries to record the costs of direct material, direct labor, and manufacturing overhead in a job-order costing system. Chapter 03 – Product […]

DATA INPUT Paramus Metal Works hours per hour Budgeted direct-labor cost: 77,000 17$ Actual direct-labor cost: 79,000 18$ Budgeted manufacturing overhead: 993,300$ Actual manufacturing overhead: Depreciation 225,000$ Property taxes 19,000 Indirect labor 79,000 Supervisory salaries 210,000 Utilities 58,000 Insurance 32,000 […]

Case 03-62 Student Name: Class: Opticom, Inc. Requirements 1 – 6 1. Explain why manufacturers use a predetermined overhead rate to apply manufacturing overhead to their jobs. 2. Manufacturing overhead applied through November 30: Machine hours * Predetermined overhead rate […]

DATA INPUT Crunchem Cereal Company incurred costs Direct material used 412,500$ Direct labor 180,000 Manufacturing overhead 378,000 Overhead rate 210% January 1 inventory balances End of Year Raw material 45,000$ 49,500$ Work in process 58,500 64,350 Finished goods 63,000 69,300 […]

Chapter 03 – Product Costing and Cost Accumulation in a Batch Production Environment 3-1 CHAPTER 3 Product Costing and Cost Accumulation in a Batch Production Environment ANSWERS TO REVIEW QUESTIONS 3-1 (a) Use in financial accounting: In financial accounting, product […]

3-41 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 3-56 (25 MINUTES) 1. Quarter Predetermined Overhead Rate Calculations 1st ……………………………………………………….. $8 per hour $400,000/50,000 2nd ………………………………………………………. 10 […]

3-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 3-43 (35 MINUTES) 1. Predetermined overhead rate = budgeted overhead ÷ budgeted direct-labor cost = $2,730,000 ÷ $2,100,000 […]

DATA INPUT Moravia Company Work in process, April 1 – 10,000 units: Direct material: 100% complete, cost of 22,000$ Conversion: 20% complete, cost of 4,500 Balance in work in process, April 1 26,500$ Units started during April 100,000 Units completed […]

Rolling, molding, punching 4,000 4,000 Rolling, molding, punching, dipping 1,500 Conversion cost per unit 150.00$ 140.00$ 160.00$ 150.00$ Ceralam sheets 960,000$ 400,000$ 240,000$ 1,600,000$ Chemical dip 60,000 60,000 DATA INPUT Direct Materials Direct Materials Orbital Industries of Canada, Ltd. Used […]

Problem 4-27 Student Name: Class: 1. Physical flow of units: Physical Units Work in process, 1/1/x4 * Units started during 20×4 * Total units to account for * Units completed and transferred out during 20×4 * Work in process, 12/31/x4 […]

3. Prepare a table of equivalent units under weighted-average process costing. 5. Analyze the total production costs for a department under the weighted-average method of process costing. 7. Describe how an operation costing system accumulates and assigns the costs of […]

DATA INPUT Raleigh Textiles Company Equivalent units of direct material (weighted-average) 62,500 Equivalent units of conversion (weighted-average) 49,000 Units completed and transferred out during September 47,000 Work in process, September 1 Direct material 85,750$ Conversion 16,900 Costs incurred during September […]

4-34 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 4-35 (CONTINUED) Cost of goods completed and transferred out during November:        […]

Chapter 04 – Process Costing and Hybrid Product-Costing Systems 4-1 CHAPTER 4 Process Costing and Hybrid Product-Costing Systems ANSWERS TO REVIEW QUESTIONS 4-1 In a job-order costing system, costs are assigned to batches or job orders of production. Job-order costing […]

4-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 4-29 (40 MINUTES) 1. a. Equivalents units: Physical Units Percentage of Completion with Respect to Conversion Equivalent Units […]

Direct material 30.00$ 45.00$ Direct labor 45.00$ 60.00$ Manufacturing overhead 106.50$ 142.00$ Total cost 181.50$ 247.00$ Machine processing 500,000 50,000 10$ Product inspection 90,000 15,000 6$ Machine processing 230,000 270,000 Product inspection 24,000 66,000 Total 324,000 386,000$ Production volume (units) […]

4. Compute product costs under an activity-based costing system. 6. Explain three criteria for selecting cost drivers. 8. Explain the concepts of activity-based management and two-dimensional ABC. 10. Understand and discuss how activity-based costing is used in service-industry organizations. Copyright […]

DATA INPUT Customer-Related Activities Cost Driver Base Cost Driver Rate Sales activity Sales visits 2,000$ Order taking Purchase orders 400 Special handling Units handled 100 Special shipping Shipments 1,000 Customer-Related Activities Caltex Computer Trace Telecom Sales activity 8 6 Order […]

5-74 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 5-66 (CONTINUED) 2. In the electronic version of the solutions manual, press the CTRL key and click on […]

Problem 05-55 Student Name: Class: 1. (a.) Predetermined overhead rate using direct-labor as single cost driver: Total manufacturing overhead cost * Budgeted direct-labor cost * Overhead per direct-labor dollar * 1. (b) Full product costs and selling prices per one-pound […]

5-41 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 5-54 (50 MINUTES) 1. Activity Cost Pool Type of Activity I: Machine-related costs Unit-level II: Setup and inspection […]

5-61 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 5-59 (CONTINUED) 3. The unit costs of the products using activity-based costing are calculated as follows: Fabricating: Total […]

DATA INPUT: Cost Cost Product Activity Cost Driver Driver Line Cost Cost Driver Product Quantity for Quantity for Production Activity Pool Driver Quantity Line Product Line Product Line Volume Machine 310,500$ Machine 115,000 REG 50,000 50,000 5,000 Related Hours ADV […]

DATA INPUT Gismos (product G): 8,000 units Thingamijigs (product T): 15,000 units Whatchamacallits (product W): 4,000 units Product G Product T Product W Raw material 105.00$ 157.50$ 52.50$ Direct labor 48.00 36.00 24.00 Manufacturing overhead 420.00 315.00 210.00 Total product […]

DATA INPUT Budgeted Budgeted Level Activity Cost Pool Overhead Cost Driver for Cost Driver Pool Rate Machine setups 1,000,000$ Number of setups 250 4,000$ Material handling 300,000 Weight of raw material 75,000 4$ Hazardous waste control 100,000 Weight of hazardous […]

DATA INPUT Budgeted Budgeted Level Activity Cost Pool Overhead Cost Driver for Cost Driver Pool Rate Machine setups 1,000,000$ Number of setups 250 4,000$ Material handling 300,000 Weight of raw material 75,000 4$ Hazardous waste control 100,000 Weight of hazardous […]

Problem 05-59 Student Name: Class: 1 a. The calculation of total budgeted costs for the Manufacturing Department at Scott Manufacturing is as follows: Direct Material: * Tuff Stuff * Ruff Stuff * Total direct Material * * Direct Labor * […]

Case 05-68 Student Name: Class: 1. Explain how activity-based costing differs from traditional product- costing methods. 2. Cincinnati Cycle Company Activity Cost Pools and Pool Rates Material handling * Overhead increase rate * Total activity cost pool * JY-63 parts […]

Problem 05-58 Student Name: Class: 1. Identify at least four general advantages associated with activity-based costing. a. b. c. d. 2. ULTRATECH, INC. Expected Contribution Margin Total for 40,000 PC Board Per Unit Units Revenue * * Direct material * […]

Chapter 05 – Activity-Based Costing and Management 5-1 CHAPTER 5 Activity-Based Costing and Management ANSWERS TO REVIEW QUESTIONS 5-1 In a traditional, volume-based product-costing system, only a single predetermined overhead rate is used. All manufacturing-overhead costs are combined into one […]

5-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. EXERCISE 5-44 (20 MINUTES) There are many key activities that can be suggested for each business. Some possibilities are […]

DATA INPUT Cost of Number of On-Board Flight Month Passengers Service January 16,000 54,000$ February 17,000 54,000 March 16,000 57,000 April 18,000 60,000 May 15,000 54,000 June 17,000 57,000 SOLUTION 1. Cost behavior of the airline’s on-board flight service using […]

DATA INPUT Month Flights Airport Costs January 1,200 20,000$ February 1,000 19,000 March 900 18,000 April 1,400 19,000 May 800 17,000 June 1,100 20,000 July 1,500 21,000 August 900 17,000 September 1,200 21,000 October 1,000 19,000 November 1,400 24,000 December […]

6-41 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 6-42 (40 MINUTES) 50 100 150 200 250 The lower part of the vertical axis has been shortened. […]

3. Explain the importance of the relevant range in using a cost behavior pattern for cost prediction. 5. Describe and use the following cost estimation methods: account classification, visual fit, high-low, and least-squares regression. 7. Describe some problems often encountered […]

DATA INPUT Material-Handling Month Units of Activity Department Costs January 1,800 11,700$ February 1,600 11,300 March 1,300 11,250 April 1,000 10,200 May 2,200 11,100 June 2,400 12,550 July 2,000 12,000 August 1,800 11,400 September 2,600 12,120 October 1,100 11,050 November […]

DATA INPUT Hours of Month Operation Utility Cost January 550 3,240$ February 600 3,400 March 700 3,800 April 500 3,200 May 450 2,700 June 400 2,600 SOLUTION 3. Least- squares regression: Fixed- and variable-cost components:* Monthly fixed cost (intercept): 1,002$ […]

DATA INPUT Miles Traveled Month by Tour Buses Cost November 12,750 17,100 real December 15,900 17,400 January 19,050 17,550 February 22,500 18,000 March 30,000 18,750 April 12,000 16,500 SOLUTION 1. Variable cost per tour mile traveled and fixed cost per […]

Chapter 06 – Activity Analysis, Cost Behavior, and Cost Estimation EXERCISE 6-33 (45 MINUTES) 1. Variable utility cost per hour = 400 700 $2,600 $3,800 − − = $4.00 Total utility cost at 700 hours ……………………………………………………………. $ 3,800 Variable utility […]

6-52 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 6-46 (CONTINUED) (c) Fixed- and variable-cost components: Monthly fixed cost = $11,796 Variable cost = $677 per hundred […]

Chapter 06 – Activity Analysis, Cost Behavior, and Cost Estimation 6-1 CHAPTER 6 Activity Analysis, Cost Behavior, and Cost Estimation ANSWERS TO REVIEW QUESTIONS 6-1 Cost behavior patterns are important in the process of making cost predictions. Cost predictions are […]

Problem 06-46 Student Name: Class: Airport Month Flights Costs January * * February * * March * * April * * May * * June * * July * * August * * September * * October * * November […]

7. Prepare and interpret a contribution income statement. 9. Understand the implications of activity-based costing for CVP analysis. 11. Understand the effect of income taxes on CVP analysis (appendix). Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or […]

DATA INPUT Mall Store Downtown Store Total Sales 360,000$ 240,000$ 600,000$ Less: Variable expenses 252,000 96,000 348,000 Contribution margin 108,000$ 144,000$ 252,000$ Less: Fixed expenses 120,000 60,000 180,000 Operating income (12,000)$ 84,000$ 72,000$ Closing of mall store: 10% decrease in […]

Problem 07-49 Student Name: Class: 1. TOLEDO TOOL COMPANY Budgeted Income Statement For the Year Ended December 31, 20×4 Hedge Line Leaf Clippers Trimmers Blowers Total Unit selling price * * * Variable manufacturing cost * * * Variable selling […]

7-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 7-36 (30 MINUTES) 1. Break-even point in units, using the equation approach: $24X – ($15 + $3)X – […]

7-41 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 7-46 (35 MINUTES) 1. units 15,000 $20 $300,000 margin oncontributiunit costs fixed units) (inpoint even–Break unit per $20 […]

DATA INPUT Units sold 100,000 Sales 2,000,000$ Costs: Fixed Variable Direct material –$ 600,000$ Direct labor – 400,000 Manufacturing overhead 200,000 300,000 Selling and administrative 220,000 100,000 Total costs 420,000$ 1,400,000$ 1,820,000 Budgeted operating income 180,000$ Tax rate 40% SOLUTION […]

Case 07-54 Student Name: Class: 1. SUSQUEHANNA MEDICAL CENTER Break-Even Point in Patient Days: Pediatrics For the Year Ended June 30, 20×6 Total fixed costs: Medical center charges * Supervising nurses * Nurses * Aids * Total fixed costs * […]

DATA INPUT Current Year’s Net Income 600,000$ Current Year’s Sales Volume 400,000 Sales price per DVD 24$ Variable cost per unit purchase price 15$ Handling cost per unit 3$ Annual fixed costs 1,800,000$ Expected increase in unit purchase price 30% […]

7-53 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 7-51 (35 MINUTES) 1. .34 $120.00 $79.20 $120.00 ratio margin onContributi = − = 2. Number of units […]

Chapter 07 – Cost-Volume-Profit Analysis 7-1 CHAPTER 7 Cost-Volume-Profit Analysis ANSWERS TO REVIEW QUESTIONS 7-1 a. In the contribution-margin approach, the break-even point in units is calculated using the following formula: margin oncontributiunit b. In the equation approach, the following […]

8-34 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 8-40 (40 MINUTES) 1. The factors that should be present for an organization’s quality program to be successful […]

Chapter 08 – Variable Costing and the Costs of Quality and Sustainability 8-1 CHAPTER 8 Variable Costing and the Costs of Quality and Sustainability ANSWERS TO REVIEW QUESTIONS 8-1 Under absorption costing, fixed manufacturing-overhead costs are assigned to units of […]

Case 8-42 Student:_________________________________ Class:___________________________________ DATA INPUT Year 1 Year 2 Sales Price * * Production Costs: Variable Manufacturing Costs * * Fixed Manufacturing Overhead * * Selling & Administrative Costs Variable * * Fixed * * Actual Production (containers) * […]

DATA INPUT Sales Price 30$ Direct Material 10$ Direct Labor 4$ Variable Overhead 6$ Budgeted Fixed Overhead 600,000$ Actual Production (containers) 150,000 Units Sold 125,000 Selling & Administrative Expenses Fixed $100,000 (for the year) Variable $2 (per container sold) SOLUTION […]

DATA INPUT Planned Production (units) 10,000 Actual Production (units) 10,000 Sales (unit) 9,600 Sales Price (per unit) 216$ Cost Data Direct Material (per unit) 36$ Conversion Costs: Direct Labor 135,000$ Variable Manufacturing Overhead 195,000$ Fixed Manufacturing Overhead 660,000$ Selling and […]

8-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 8-34 (45 MINUTES) 1. To compute fixed overhead per unit: Predetermined fixed overhead rate = production budgeted overhead […]

7. Prepare a quality-cost report. 9. Understand the different types of environmental costs and discuss management of environmental costs. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter […]

Problem 8-34 Student:_________________________________ Class:___________________________________ SOLUTION 1. Predetermined fixed overhead rate (per unit) * per unit Standard Cost per unit Direct Material * Direct Labor * Variable Overhead * Standard cost per unit under variable costing * Fixed overhead per unit […]

Problem 09-39 Student Name: Class: EDGEWORTH BOX CORPORATION Master Budget 1. Sales Budget: Box C Box P Total Sales (in units) * * Sales price per unit * Sales revenue * 2. Production Budget (in units): Box C Box P […]

DATA INPUT Budgeted Sales on Account: Collection Schedule: June 122,500$ In month of sale 70 % July 150,000 In 1st month after sale 15 % August 175,000 In 2nd month after sale 10 % September 200,000 In 3rd month after […]

DATA INPUT Total annual office visits 48,000 1/2 Hour appointments 80% Average rate for 1/2-hour visits 60$ 1 Hour appointments 20% Average rate for 1-hour visits 105$ Revenue collected during month when services are rendered 90% Revenue collected the month […]

9-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 9-33 (CONTINUED) 3. Since the 20×1 usage of Islin is 200,000 gallons, the firm’s raw-material purchases budget (in […]

DATA INPUT July 5,000 desk-and-chair sets August 6,000 desk-and-chair sets September 7,500 desk-and-chair sets Each desk-and chair set requires: 10 board feet of pine planks 1.5 hours of direct labor Costs for material: 0.60$ per board foot 21.00$ per hour […]

4. Explain the concept of activity-based budgeting and the logic it brings to the budgeting process. 6. Prepare the additional master budget schedules required by a manufacturing firm. 8. Describe a typical organization’s process of budget administration. Copyright © 2014 […]

9-40 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. PROBLEM 9-42 (CONTINUED) 4. Cash disbursements budget: 20×1 January February March First Quarter Inventory purchases: Cash payments for purchases […]

Case 09-48 Student Name: Class: PHOTO ARTISTRY COMPANY Master Budget 1. Sales Budget: 20×4 20×5 4th 1st 2nd 3rd 4th Entire Quarter Quarter Quarter Quarter Quarter Year S frame unit sales x S sales price S frame sales revenue L […]

Chapter 09 – Financial Planning and Analysis: The Master Budget 9-1 CHAPTER 9 Financial Planning and Analysis: The Master Budget ANSWERS TO REVIEW QUESTIONS 9-1 A budget facilitates communication and coordination by making each manager throughout the organization aware of […]

Process Costing in Sequential Production Departments: Weighted-Average Method Solutions Manual to accompany Process Costing in Sequential Production Departments: Weighted-Average Method to accompany MANAGERIAL ACCOUNTING Tenth Edition Ronald W. Hilton Cornell University David G. Platt University of Texas at Austin Process […]

1) Which variance is commonly associated with measuring the cost of under- or over-utilization of plant capacity? A.The variable-overhead spending variance B.The variable-overhead efficiency variance C.The fixed-overhead budget variance D.The fixed-overhead volume variance E.The total fixed-overhead variance 2) Bentson Corporation, […]

1) Telfair & Company had 3,000 units in finished-goods inventory on December 31 . The following data are available for the upcoming year: The number of units the company expects to sell in January is: A.6,900 B.8,900 C.9,400 D.9,900 E.11,900 […]

1) Your Uncle Otto has struck it rich by investing in racehorses and desires to share some of his newfound wealth with you. Assume that you must choose from among the following three options: Receive a lump sum of $400,000 […]

1) Barrey, Inc. is subject to a 40% income tax rate. The following data pertain to the period just ended when the company produced and sold 45,000 units: How many units must Barrey sell to earn an after-tax profit of […]

1) Pretty Lady is an upscale boutique that operates various stores throughout Florida. The company, which has three divisions (Miami, Naples, and Tampa), reported the following information for the year just ended (in thousands): Pretty Lady also reported $600 of […]

1) The following selected costs were extracted from the accounting records of Louisiana Machining (LAM): 1> Direct materials used in production 2> Wages of machine operators 3> Factory utilities 4> Sales commissions 5> Salary of LAM’s president 6> Factory depreciation […]

1) The budget variance arises from a comparison of: A.budgeted fixed overhead expenditures with budgeted fixed overhead costs B.actual fixed overhead costs with budgeted fixed overhead costs C.actual variable overhead expenditures with budgeted variable overhead costs D.variable overhead costs with […]

1) Draco, Inc. has the following overhead standards: Variable overhead: 4 hours at $8 per hour Fixed overhead: 4 hours at $10 per hour The standards were based on a planned activity of 20,000 machine hours when 5,000 units were […]

1) At the end of the accounting period, most companies close variance accounts to: A.Raw-Material Inventory B.Work-in-Process Inventory C.Finished-Goods Inventory D.Cost of Goods Sold E.Income Summary 2) Assume that a capital project is being analyzed by a discounted-cash-flow approach, and […]

1) Yes! Co., had 3,000 units of work in process on April 1 that were 60% complete. During April, 11,000 units were started and as of April 30, 4,000 units that were 40% complete remained in production. How many units […]

1) The point in a joint production process where each individual product becomes separately identifiable is commonly called the: A.decision point B.separation point C.individual product point D.split-off point E.joint product point 2) At the Nassau Advertising Agency, partner and staff […]

1) The variable-overhead spending and efficiency variances are: A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E 2) Cartwright Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100-sheet packages at a […]

1) Manufacturing overhead is applied to production. A. Describe several situations that may give rise to underapplied overhead. B. Assume that underapplied manufacturing overhead is treated as an adjustment to Cost of Goods Sold. Explain why an underapplication of overhead […]

1) Which of the following statements best describes the relationship between the sales-forecasting process and the master-budgeting process? A.The sales forecast is typically completed after completion of the master budget B.The sales forecast is typically completed approximately halfway through the […]

1) Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, […]

1) Variances are computed by taking the difference between the product cost and standard cost. 2) When income taxes are considered in capital budgeting, the cash flows related to a company’s advertising expense would be correctly figured by taking the […]

1) Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process […]

1) Indirect labor is not a component of manufacturing overhead. 2) Equivalent-unit calculations are necessary to allocate manufacturing costs between units sold and ending work in process. Answer: FALSE 3) The upper limit on the production of goods and services […]

1) Assume that the company computes variances at the earliest point in time. The standard hours allowed for the work performed are: A.5 B.5.14 C.39,000 D.40,100 E.none of the other answers are correct 2) Ohio, Inc., which uses a process-cost […]

1) Which of the following statements about financial planning models (FPMs) is (are) false? A.FPMs express a company’s financial and operating relationships in mathematical terms B.FPMs allow a user to explore the impact of changes in variables C.FPMs are commonly […]

1) Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. In order to produce a target profit of $22,000, […]

1) Aloha Hotels owns numerous hotels on each of the Hawaiian Islands. The company’s performance reporting system is structured around the firm’s organizational structure, with information flowing from operating departments at a particular property and later respectively grouped by individual […]

1) Bowman, Inc., has only variable costs and fixed costs. A review of the company’s records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $800,000 and the cost per unit manufactured totaled $11. On the basis […]

1) The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses: A.over the short run B.over the long run C.over both the short run and the long run D.in periods of sustained profits E.in periods […]

1) The contribution-margin ratio is calculated as unit contribution margin divided by the selling price per unit. 2) Finished goods inventory is ordinarily held for sale by a manufacturing company. Answer: TRUE 3) Middle-level managers would likely be considered internal […]

1) Which of the following situations would cause variable-costing income to be higher than absorption-costing income? A.Units sold equaled 39,000 and units produced equaled 42,000 B.Units sold and units produced were both 42,000 C.Units sold equaled 55,000 and units produced […]

1) Which of the following is not a type of quality cost? A.External failure costs B.Internal failure costs C.All of the answers are correct D.Prevention costs E.Appraisal costs 2) Johnstone Company makes two products: Carpet Kleen and Floor Deodorizer. Operating […]

1) Rock Star, Inc., which uses a job-costing system, began business on January 1, 20×3 and applies manufacturing overhead on the basis of direct-labor cost. The following information relates to 20×3: Budgeted direct labor and manufacturing overhead were anticipated to […]

1) If the cost of goods manufactured for the year was $385,000, what was the cost of goods sold for the year? A.$395,400 B.$385,000 C.$390,200 D.$400,600 E.None of the other answers are correct 2) Which of the following activity cost […]

1) The manufacturing overhead applied to Work-in-Process Inventory by a company that uses standard costing would be computed as actual hours times a predetermined (standard) overhead rate. 2) Companies that use a process-cost accounting system would establish a separate Work-in-Process […]

1) Consider the following statements about depreciation tax shields: I. A depreciation tax shield provides distinct benefits to a business. II. A depreciation tax shield should be ignored when doing a net-present-value analysis. III. A depreciation tax shield can occur […]

1) Which of the following would not be considered a direct cost with respect to the service department of a new car dealership? A.Wages of repair technicians B.Property taxes paid by the dealership C.Repair parts consumed D.Salary of the department […]

1) That employees make little effort to achieve budgetary goals is an outcome sometimes associated with participative budgeting. 2) CFF, Inc. overstated the percentage of work completed with respect to conversion cost on the ending work-in-process inventory. This overstatement caused […]

1) Swanson and Associates presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000 copies and paid a total of $360 in March; in […]

1) If the cost of goods manufactured for the year was $565,000, what was the amount of direct materials used during the year? A.$155,500 B.$140,500 C.$150,000 D.$145,500 E.None of the other answers are correct 2) Which of the following methods […]

1) Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target […]

1) Barry Chemical Company manufactures X-111, X-112, and X-113 from a joint process. The following information is available for the period just ended: Required: A. Does Barry allocate joint costs by using the physical-units method? Explain. B. Assume that Barry […]

1) Signature Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division’s variable manufacturing cost is $2, shipping cost is $0.10, and the […]

1) Operating leverage is an important concept for many companies. Required: A. Define operating leverage. B. Assume that a firm pays no income taxes and is planning to increase its selling price. If sales volume in units does not change, […]

1) Variable costs change in direct proportion to a change in the activity level. 2) Mismatched time periods isnot an issue in the collection of data for cost estimation. Answer: FALSE 3) Efficient or inefficient use of a specific component […]

1) Which of the following outcomes is (are) sometimes associated with participative budgeting? A.Employees make little effort to achieve budgetary goals B.Budget preparation time can be somewhat lengthy C.The problem of budget padding may arise D.Financial modeling becomes much more […]

1) As activity increases, unit variable cost: A.increases proportionately with activity B.decreases proportionately with activity C.remains constant D.increases by a fixed amount E.decreases by a fixed amount 2) Northwest’s production data for one of its products were taken from the […]

1) Which of the following employees would not be classified as indirect labor? A.Plant Custodian B.Salesperson C.Assembler of wooden furniture D.Plant security guard E.Salesperson and assembler of wooden furniture 2) Sullivan Enterprises had a sales margin of 5%, sales of […]

1) The revenue curve shows the relationship between the sales price and quantity sold. 2) Absorption costing is required for tax purposes. Answer: TRUE 3) Under- or overapplied manufacturing overhead at year-end is most commonly charged or credited to Work-in-Process […]

1) Western Kentucky State College has two service departments, the Library and Computing Services, that assist the School of Business and the School of Health. Budgeted costs of the Library and Computing Services are $800,000 and $1,800,000, respectively. Usage of […]

1) Delicious Treats (DT) anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 92,000 hours were actually worked. One of the company’s cost functions is expressed as follows: Y = $16PH + $640,000 […]

1) Which of the following is the correct mathematical expression to derive a company’s capital turnover? A.Sales revenue invested capital B.Contribution margin invested capital C.Income invested capital D.Invested capital sales revenue E.Invested capital income 2) The following selected data were […]

1) Mahler, Inc., applies manufacturing overhead at the rate of $40 per machine hour. Budgeted machine hours for the current period were anticipated to be 120,000; however, a lengthy strike resulted in actual machine hours being worked of only 90,000. […]

1) Pumpkin Enterprises began operations on January 1, 20×1, with all of its activities conducted from a single facility. The company’s accountant concluded that the year’s building depreciation should be allocated as follows: selling activities, 20%; administrative activities, 35%; and […]

1) Lone Star has computed the following unit costs for the year just ended: Under absorption costing, each unit of the company’s inventory would be carried at: A.$35 B.$55 C.$65 D.$84 E.None of the other answers are correct 2) If […]

1) Which of the following methods of cost estimation relies on only two data points? A.Least-squares regression B.The high-low method C.The visual-fit method D.Account analysis E.Multiple regression 2) Which of the following is not a function of the treasurer? A.Safeguarding […]

1) Operation costing is a popular type of accounting system, one that combines selected features of job-order and process-cost accounting. Required: A. Briefly discuss the basic features that are associated with an operation-costing system. B. Explain why a sweater manufacturer […]

1) Which of the following is not an issue in the collection of data for cost estimation? A.Outliers B.Missing data C.Mismatched time periods D.Inflation E.All of the other answers are issues in data collection 2) Around Town, Inc. operates a […]

1) Wooster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $165,000; fixed overhead, $250,000. If Wooster now revises its anticipated production slightly upward, it would expect: A.total fixed overhead of $250,000 and a […]

1) Which of the following is an example of a fixed cost? A.Paper used in the manufacture of textbooks B.Property taxes paid by a firm to the City of Los Angeles C.The wages of part-time workers who are paid $8 […]

1) As production takes place, all manufacturing costs are added to the: A.Work-in-Process Inventory account B.Manufacturing-Overhead Inventory account C.Cost-of-Goods-Sold account D.Finished-Goods Inventory account E.Production Labor account 2) Which of the following elements is not used in the calculation of economic […]

1) Operation costing: A.tends to parallel job-order costing with respect to the treatment of conversion cost B.tends to parallel process costing with respect to the treatment of conversion cost C.tends to parallel process costing with respect to the treatment of […]

1) Which of the following would have a low likelihood of being organized as a profit center? A.A movie theater of a company that operates a chain of theaters B.A maintenance department that charges users for its services C.The billing […]

1) Prime costs are comprised of: A.direct materials and manufacturing overhead B.direct labor and manufacturing overhead C.direct materials, direct labor, and manufacturing overhead D.direct materials and direct labor E.direct materials and indirect materials 2) Xin Co., had 3,000 units of […]

1) What type of cost exhibits the behavior shown below? A.Variable cost B.Fixed cost C.Semivariable cost D.Step-variable cost E.Mixed cost 2) Lido manufactures A and B from a joint process (cost = $80,000). Five thousand pounds of A can be […]

1) The Gingham Company’s budgeted income statement reflects the following amounts: Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. One percent of sales is uncollectible […]

1) Dover Enterprises recently used 14,000 labor hours to produce 7,500 completed units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company’s actual payroll cost amounted to $158,200. If the standard labor cost […]

1) If a company uses a cost-plus approach to pricing, it will find that there are several different definitions of cost and the higher the cost, the higher the markup percentage. 2) Inventoriable costs are expensed when incurred. Answer: FALSE […]

1) The amounts charged for goods and services exchanged between two divisions are known as: A.opportunity costs B.transfer prices C.standard variable costs D.residual prices E.target prices 2) The internal rate of return: A.ignores the time value of money B.equates a […]

1) The accounting records of Reynolds Corporation revealed the following selected costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000. Reynolds’s period costs total: A.$250,000 B.$440,000 C.$375,000 D.$255,000 E.$185,000 2) If direct materials used during the year were […]

1) Lester Corporation had 8,200 units of work in process on November 1 . During November, 26,800 units were started and as of November 30, 7,900 units remained in production. How many units were completed during November? A.16,100 B.26,500 C.27,100 […]

1) Which of the following conditions would cause absorption-costing income to be lower than variable-costing income? A.Units sold exceeded units produced B.Units sold equaled units produced C.Units sold were less than units produced D.Sales prices decreased E.Selling expenses increased 2) […]

1) Operation costing tends to parallel job-order costing with respect to the treatment of conversion cost. 2) Activity-based costing systems have a tendency to distort product costs. Answer: FALSE 3) The income calculation for a division manager’s ROI should be […]

1) The break-even point is that level of activity where total revenue equals total cost. 2) The City of Columbus should not consider the purchase price of its old vehicle when making the decision to replace it with a more […]

1) Which of the following measures would reflect the variable costs incurred by a business segment? A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E 2) Sunrise Corporation has a return on investment of 15%. A Sunrise division, which […]

1) Which of the following statements about materials is false? A.Acquisitions of materials are normally charged to the Purchases account B.The use of direct materials gives rise to a debit to Work-in-Process Inventory C.The use of indirect materials gives rise […]