Cost Accounting 15th Edition

ISBN 13

978-0133428704

ISBN 10

0133428702

Authors

Charles T. Horngren, Madhav V. Rajan, Srikant M. Datar

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313 documents found.

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978-0133428704 Chapter 1 Solution Manual Part 1

1- 1 CHAPTER 1 THE MANAGER AND MANAGEMENT ACCOUNTING See the front matter of this Solutions Manual for suggestions regarding your choices of assignment material for each chapter. 1-1 Management accounting measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals

Cost Accounting 15th Edition

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978-0133428704 Chapter 1 Solution Manual Part 2

1-27 (15 min.) Planning and control decisions, Internet company. PostNews.com offers its subscribers several services, such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main revenue sources are fees for banner advertisements and fees from subscribers. Recent data are as follows: The following

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 1

CHAPTER 10 DETERMINING HOW COSTS BEHAVE 10-1 The two assumptions are 1. Variations in the level of a single activity (the cost driver) explain the variations in the related total costs. 2. Cost behavior is approximated by a linear cost function within the relevant range. A linear cost function

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 2

10-1 SOLUTION 1. Manufacturing cost classification for 2014: Account Total Costs (1) % of Total Costs That is Variable (2) Variable Costs (3) = (1) (2) Fixed Costs (4) = (1) (3) Variable Cost per Unit (5) = (3) 75,000 Direct materials Direct manufacturing labor Power Supervision labor Materials-handling

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978-0133428704 Chapter 10 Solution Manual Part 3

SOLUTION 1. Solution Exhibit 10-26 plots the relationship between labor-hours and overhead costs and shows the regression line. y = $96,541 + $3.93 X Economic plausibility. Labor-hours appears to be an economically plausible driver of overhead costs for a catering company. Overhead costs such as scheduling, hiring and training

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 4

10-1 SOLUTION EXHIBIT 10-30 Plot and High-Low Line of Maintenance Costs as a Function of Machine-Hours $100,000$120,000$140,000$160,000$180,000$200,000$220,000$240,000$260,000$280,000$300,00090,000 100,000 110,000 120,000 130,000 140,000 150,000Maintenance CostsMachine-Hours 10-1 SOLUTION EXHIBIT 10-30 Plot and High-Low Line of Maintenance Costs as a Function of Machine-Hours $100,000$120,000$140,000$160,000$180,000$200,000$220,000$240,000$260,000$280,000$300,00090,000 100,000 110,000 120,000 130,000 140,000 150,000Maintenance CostsMachine-Hours 10-1

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 5

SOLUTION EXHIBIT 10-33B Plot and Regression Line for Inspection Labor-Hours and Inspection Costs for Parker Manufacturing Goodness of fit. As you can see from the two graphs, the regression line based on number of units inspected better fits the data (has smaller vertical distances from the points to the

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 6

SOLUTION 1. Cost to produce the second through the seventh boats: Direct materials, 6 $201,000 $1,206,000 Direct manufacturing labor (DML), 76,0621 $43 3,270,666 Variable manufacturing overhead, 76,062 $24 1,825,4888 Other manufacturing overhead, 15% of DML costs 490,600 Total costs $6,792,754 1The direct labor hours to produce the second through

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 7

3. Multicollinearity is an issue that can arise with multiple regression but not simple regression analysis. Multicollinearity means that the independent variables are highly correlated. The correlation feature in Excels Data Analysis reveals a coefficient of correlation of 0.61 between number of procedures and number of patient-hours. This is close

Cost Accounting 15th Edition

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978-0133428704 Chapter 10 Solution Manual Part 8

3. Here is the summary output for the regression of monthly Sales Revenue on the prior months Online Advertising Expense: SUMMARY OUTPUT Regression Statistics Multiple R 0.808588 R Square 0.653815 Adjusted R Square 0.61535 Standard Error 7393.922 Observations 11 ANOVA df SS MS F Significance F Regression 1 9.29E+08 929262059

Cost Accounting 15th Edition

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978-0133428704 Chapter 11 Solution Manual Part 1

11- 1 CHAPTER 11 DECISION MAKING AND RELEVANT INFORMATION 11-1 The five steps in the decision process outlined in Exhibit 11-1 of the text are 1. Identify the problem and uncertainties. 2. Obtain information. 3. Make predictions about the future. 4. Make decisions by choosing among alternatives. 5. Implement the

Cost Accounting 15th Edition

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978-0133428704 Chapter 11 Solution Manual Part 2

11-1 11-1 11-1 11-21 (10 min.) Inventory decision, opportunity costs. Best Trim, a manufacturer of lawn mowers, predicts that it will purchase 204,000 spark plugs next year. Best Trim estimates that 17,000 spark plugs will be required each month. A supplier quotes a price of $9 per spark

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978-0133428704 Chapter 11 Solution Manual Part 3

11-1 11-27 (20 min.) Relevance of equipment costs. Papas Pizza is considering replacement of its pizza oven with a new, more energy-efficient model. Information related to the old and new pizza ovens follows: The old oven had been purchased a year ago. Papas Pizza estimates

Cost Accounting 15th Edition

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978-0133428704 Chapter 11 Solution Manual Part 4

11-1 SOLUTION 1. Easyspread 2.0 has a higher relevant operating income than Easyspread 1.0. Based on this analysis, Easyspread 2.0 should be introduced immediately: Easyspread 1.0 Easyspread 2.0 Relevant revenues $165 $215 Relevant costs: Manuals, diskettes, compact discs $ 0 $38 Total relevant costs

Cost Accounting 15th Edition

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978-0133428704 Chapter 11 Solution Manual Part 5

11-1 11-1 11-1 SOLUTION 1. A110 B382 C657 Selling price $168 $ 112 $140 Variable costs: Direct materials (DM) 48 30 18 Labor and other costs 56 54 80 Total variable

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978-0133428704 Chapter 11 Solution Manual Part 6

SOLUTION 1. and 2. Division A Division B Sales $504,000 $948,000 Variable costs of goods sold ($440,000 0.90; $930,000 0.80) 396,000 744,000 Variable S,G & A ($96,000 0.50; $202,500 0.50) 48,000 101,250 Total variable costs 444,000 845,250 Contribution margin $ 60,000 $102,750 Division A Division B Fixed costs of goods

Cost Accounting 15th Edition

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978-0133428704 Chapter 11 Solution Manual Part 7

SOLUTION 1. Let D represent the batches of Dellas Delight made and sold. Let B represent the batches of Bonnys Bourbon made and sold. The contribution margin per batch of Dellas Delight is $300. The contribution margin per batch of Bonnys Bourbon is $250. The LP formulation for the decision

Cost Accounting 15th Edition

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978-0133428704 Chapter 12 Solution Manual Part 1

12- 1 CHAPTER 12 STRATEGY, BALANCED SCORECARD, AND STRATEGIC PROFITABILITY ANALYSIS 12-1 Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives. 12-2 The five key forces to consider in industry analysis are: (1) competitors, (2) potential entrants into the

Cost Accounting 15th Edition

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978-0133428704 Chapter 12 Solution Manual Part 2

SOLUTION Effect of the industry-market-size factor on operating income Of the 28,000-unit (233,000 205,000) increase in sales between 2012 and 2013, 20,500 (10% 205,000) units are due to growth in market size, and 7,500 (28,000 20,500) units are due to an increase in market share. The change in Ramiros operating

Cost Accounting 15th Edition

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978-0133428704 Chapter 12 Solution Manual Part 3

The Productivity Component Cost effect ofproductivity forvariable costs = Actual units of Units of inputinput used required to to produce produce 20132013 output ouput in 2012 Inputpricein 2013 Cost effect ofproductivity forfixed costs = Actual Actual units of capacity inunits of 2012 because adequate capacity capacity exists to producein 2013

Cost Accounting 15th Edition

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978-0133428704 Chapter 12 Solution Manual Part 4

SOLUTION Effect of the industry-market-size factor on operating income Of the 3,000-unit increase in sales from 8,000 to 11,000 units, 10% or 800 (10% 8,000) units are due to growth in market size, and 2,2000 (3,000 800) units are due to an increase in market share. The change in Scotts

Cost Accounting 15th Edition

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978-0133428704 Chapter 12 Solution Manual Part 5

Required: 1. Was Cerebral successful in implementing its strategy in 2013? Explain your answer. 2. Would you have included some measure of customer satisfaction in the customer perspective? Are these objectives critical to Cerebral for implementing its strategy? Why or why not? Explain briefly. 3. Explain why Cerebral did not

Cost Accounting 15th Edition

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978-0133428704 Chapter 13 Solution Manual Part 1

13-1 CHAPTER 13 PRICING DECISIONS AND COST MANAGEMENT 13-1 The three major influences on pricing decisions are 1. Customers 2. Competitors 3. Costs 13-2 Not necessarily. For a one-time-only special order, the relevant costs are only those costs that will change as a result of accepting the order.

Cost Accounting 15th Edition

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978-0133428704 Chapter 13 Solution Manual Part 2

SOLUTION 1. and 2. Manufacturing costs of HJ6 in 2012 and 2013 are as follows: 2012 2013 Per Unit Per Unit Total (2) = Total (4) = (1) (1) 2,700 (3) (3) 4,600 Direct materials, $1,400 2,700; $1,300 4,600 $3,780,000 $1,400 $5,980,000 $1,300 Batch-level costs, $8,900 60; $8,000 70 534,000

Cost Accounting 15th Edition

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978-0133428704 Chapter 13 Solution Manual Part 3

13-24 (25 min.) Considerations other than cost in pricing decisions. Fun Stay Express operates a 100-room hotel near a busy amusement park. During June, a 30-day month, Fun Stay Express experienced a 65% occupancy rate from Monday evening through Thursday evening (weeknights). On Friday through Sunday evenings (weekend nights),

Cost Accounting 15th Edition

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978-0133428704 Chapter 13 Solution Manual Part 4

13-28 (25 min.) Cost-plus, target return on investment pricing. Zoom-o-licious makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Zoom-o-licious makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Zoom-o-licious has a

Cost Accounting 15th Edition

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978-0133428704 Chapter 13 Solution Manual Part 5

13-33 (30 min.) Airline pricing, considerations other than cost in pricing. Northern Airways is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how to price its round- trip tickets. The market research group at Northern Airways segments the market into business and

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 1

14-1 N CHAPTER 14 COST ALLOCATION, CUSTOMER-PROFITABILITY ANALYSIS, AND SALES-VARIANCE ANALYSIS 14-1 Disagree. Cost accounting data plays a key role in many management planning and control decisions. The division president will be able to make better operating and strategy decisions by being involved in key decisions about cost pools

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 2

14-19 (2025 min.) Customer profitability, distribution. Best Drugs is a distributor of pharmaceutical products. Its ABC system has five activities: Rick Flair, the controller of Best Drugs, wants to use this ABC system to examine individual customer profitability within each distribution market. He focuses first on the Ma and Pa

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 3

SOLUTION Note: In some editions of the book, the revenues for the Pulp division has a zero missing at the end. It is shown as $9,800,00 instead of $9,800,000. Percentages for various allocation bases (old and new): Pulp Paper Fibers Total (1) Division margin percentages $3,000,000; $7,300,000; $9,700,000 $20,000,000 15.0%

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 4

SOLUTION Actual Budgeted Western region 12.3 million 10 million Soda King 1.23 million 1.25 million Market share 10% 12.5% Average budgeted contribution margin per unit = $3.90 ($4,875,000 1,250,000). Solution Exhibit 14-26 presents the sales-quantity variance, market-size variance, and market-share variance for 2014. Market sharevariance = Actual marketsize in units

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 5

14-31 (30 min.) Customer-cost hierarchy, customer profitability. Denise Nelson operates Interiors by Denise, an interior design consulting and window treatment fabrication business. Her business is made up of two different distribution channels, a consulting business in which Denise serves two architecture firms (Attractive Abodes and Better Buildings) and a commercial

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 6

SOLUTION 1. Customer A Customer B Customer C Others Division Revenue $1,054,826 $1,544,680 $2,210,162 $480,332 $5,290,000 Customer-level costs 675,378 951,669 1,517,895 266,058 3,411,000 Customer-level operating income 379,448 593,011 692,267 214,274 1,879,000 Wholesale channel costs1 149,437 233,543 272,633 84,387 740,000 Customer-level operating income after allocating distribution costs 230,011 359,468 419,634 129,887

Cost Accounting 15th Edition

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978-0133428704 Chapter 14 Solution Manual Part 7

SOLUTION EXHIBIT 14-37 Market-Share and Market-Size Variance Analysis of Houston Infonautics for the Third Quarter 2014. Static Budget: Actual Market Size Actual Market Size Budgeted Market Size Actual Market Share Budgeted Market Share Budgeted Market Share Budgeted Average Budgeted Average Budgeted Average Contribution Margin Contribution Margin Contribution Margin Per Unit

Cost Accounting 15th Edition

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978-0133428704 Chapter 15 Solution Manual Part 1

15-1 CHAPTER 15 ALLOCATION OF SUPPORT-DEPARTMENT COSTS, COMMON COSTS, AND REVENUES 15-1 The single-rate (cost-allocation) method makes no distinction between fixed costs and variable costs in the cost pool. It allocates costs in each cost pool to cost objects using the same rate per unit of the single allocation

Cost Accounting 15th Edition

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978-0133428704 Chapter 15 Solution Manual Part 2

15-1 15-1 15-1 SOLUTION 1a. Support Departments Operating Departments AS I S Govt. Corp. Costs $600,000 $2,400,000 Alloc. of AS costs (0.25, 0.40, 0.35) (861,538) 215,385 $ 344,615 $ 301,538 Alloc. of IS costs

Cost Accounting 15th Edition

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978-0133428704 Chapter 15 Solution Manual Part 3

15-1 SOLUTION In some print editions of the book, requirement 1 states the airfare to be $1,600. The airfare in requirement 1 should be $1,200 instead of $1,600. 1. Alternative approaches for the allocation of the $1,200 airfare include the following: a. The stand-alone cost allocation method.

Cost Accounting 15th Edition

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978-0133428704 Chapter 15 Solution Manual Part 4

Cost Accounting 15th Edition

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978-0133428704 Chapter 15 Solution Manual Part 5

15-1 15-28 (20 min.) Revenue allocation Yang Inc. produces and sells DVDs to business people and students who are planning extended stays in China. It has been very successful with two DVDs: Beginning Mandarin and Conversational Mandarin. It is introducing a third DVD, Reading Chinese Characters. It has decided

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978-0133428704 Chapter 15 Solution Manual Part 6

3. Comparison of Methods: Step-down method: Job 88: Machining 17 $7.686 $130.66 Assembly 7 $3.584 25.09 $155.75 Job 89: Machining 9 $7.686 $ 69.17 Assembly 20 $3.584 71.68 $140.85 Direct method: Job 88: Machining 17 $7.475 $127.08 Assembly 7 $3.637 25.46 $152.54 Job 89: Machining 9 $7.475 $ 67.28 Assembly

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978-0133428704 Chapter 15 Solution Manual Part 7

SOLUTION 1. Stand-alone cost-allocation method. Taylor Inc. = (600 $60) (1,000 $54)(600 $60) (400 $60) + = $36,000 $54,000($36,000 $24,000) + = $32,400 Victor Inc. = (400 $60) (1,000 $54)(600 $60) (400 $60) + = $24,000 $54,000($36,000 $24,000) + = $21,600 $54,000 2. With Taylor Inc. as the primary party:

Cost Accounting 15th Edition

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978-0133428704 Chapter 15 Solution Manual Part 8

Collaborative Learning Problem 15-35 (2025 min.) Revenue allocation, bundled products. Premier Resorts (PR) operates a five-star hotel with a championship golf course. PR has a decentralized management structure, with three divisions: Lodging (rooms, conference facilities) Food (restaurants and in-room service) Recreation (golf course, tennis courts, swimming

Cost Accounting 15th Edition

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978-0133428704 Chapter 16 Solution Manual Part 1

16-1 CHAPTER 16 COST ALLOCATION: JOINT PRODUCTS AND BYPRODUCTS 16-1 Exhibit 16-1 presents many examples of joint products from four different general industries. These include: Industry Separable Products at the Splitoff Point Food Processing: Lamb Lamb cuts, tripe, hides, bones, fat Turkey Breasts, wings, thighs,

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978-0133428704 Chapter 16 Solution Manual Part 2

16-1 SOLUTION EXHIBIT 16-19 Joint Costs Separable Costs Processing $120000 for 10000 gallons Processing $2 per gallon Processing $3 per gallon 7500 gallons 2500 gallons Methanol: 2500 gallons at $21 per gallon Turpentine: 7500 gallons at $14 per gallon Splitoff Point 16-2 16-20 (40 min.) Alternative

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978-0133428704 Chapter 16 Solution Manual Part 3

SOLUTION 1a. PANEL A: Allocation of Joint Costs using Sales Value at Splitoff Method Special B/ Beef Ramen Special S/ Shrimp Ramen Total Sales value of total production at splitoff point (20,000 tons $5 per ton; 28,000 $20 per ton) $100,000 $560,000 $660,000 Weighting ($100,000; $560,000 $660,000) 0.15 0.85 Joint

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978-0133428704 Chapter 16 Solution Manual Part 4

SOLUTION 1. Net realizable value of human product: (2,000 gallons $585) $120,000 = $1,050,000 Net realizable value of veterinarian product: 500 gallons ($410 $10) = $200,000 Joint costs: $60,000 + $90,000 = $150,000 Joint costs charged to human product: 1,050,000 $150,0001,250,000 = $126,000 Joint costs charged to veterinarian product: 200,000

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978-0133428704 Chapter 16 Solution Manual Part 5

3. Further processing of chocolate-powder liquor base into chocolate powder: Incremental revenue, $81,900 $14,000 ($20 700) $67,900 Incremental costs 50,100 Incremental operating income from further processing $17,800 Further processing of milk-chocolate liquor base into milk chocolate: Incremental revenue, $149,800 $42,000 ($60 700) $107,800 Incremental costs 60,115 Incremental operating income from

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978-0133428704 Chapter 16 Solution Manual Part 6

SOLUTION 1. Byproductproduction method journal entries i) At time of production: Work-in-process Inventory 600,000 Accounts Payable, etc. 600,000 For Byproduct: Finished Goods Inv Shreds 35,000 Work-in-process Inventory 35,000 For Joint Products Finished Goods Inv Floor 226,000 Finished Goods Inv Car 339,000 Work-in-process Inventory 565,000 ii) At time of sale: For

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978-0133428704 Chapter 17 Solution Manual Part 1

17- 1 CHAPTER 17 PROCESS COSTING 17-1 Industries using process costing in their manufacturing areas include chemical processing, oil refining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor chips, beverages, and breakfast cereals. 17-2 Process costing systems separate costs into cost categories according to the timing of when costs are

Cost Accounting 15th Edition

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978-0133428704 Chapter 17 Solution Manual Part 2

17- 1 17-23 (20-25 min.) Operation costing. Whole Goodness Bakery needs to determine the cost of two work orders for the month of June. Work order 215 is for 2,400 packages of dinner rolls, and work order 216 is for 2,800 loaves of multigrain bread. Dinner rolls are mixed

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978-0133428704 Chapter 17 Solution Manual Part 3

17-27 (3540 min.) Transferred-in costs, FIFO method. Refer to the information in Exercise 17-26. Suppose that Trendy uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise 17-26 under the FIFO method are that total transferred-in costs of beginning work

Cost Accounting 15th Edition

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978-0133428704 Chapter 17 Solution Manual Part 4

SOLUTION 1. Because direct materials are added at the beginning of the assembly process, the units in this department must be 100% complete with respect to direct materials. Solution Exhibit 17-31A shows equivalent units of work done to date: Direct materials 25,000 equivalent units Conversion costs 24,250 equivalent

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978-0133428704 Chapter 17 Solution Manual Part 5

17-35 (30 min.) Transferred-in costs, FIFO method (continuation of 17-34). Refer to the information in Problem 17-34. Suppose that Larsen Company uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17- 34 under the FIFO method are that total transferred-in

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978-0133428704 Chapter 17 Solution Manual Part 6

SOLUTION 1. & 2. The equivalent units of work done in April 2014 in the Assembly Department for direct materials and conversion costs are shown in Solution Exhibit 17-37A. Solution Exhibit 17-37B summarizes the total Assembly Department costs for April 2014, calculates the cost per equivalent unit of

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978-0133428704 Chapter 17 Solution Manual Part 7

SOLUTION EXHIBIT 17-39A Summarize the Flow of Physical Units and Compute Output in Equivalent Units; FIFO Method of Process Costing, Binding Department of Publishers, Inc., for April 2014. (Step 1) (Step 2) Equivalent Units Flow of Production Physical Units Transferred-in Costs Direct Materials Conversion Costs Work in process, beginning (given)

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978-0133428704 Chapter 17 Solution Manual Part 8

17-41 (25 min.) Multiple processes or operations, costing. The Sedona Company is dedicated to making products that meet the needs of customers in a sustainable manner. Sedona is best known for its KLN water bottle, which is a BPA-free, dishwasher-safe, bubbly glass bottle in a soft silicone sleeve. The

Cost Accounting 15th Edition

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978-0133428704 Chapter 18 Solution Manual Part 1

18- 1 CHAPTER 18 SPOILAGE, REWORK, AND SCRAP 18-1 Managers have found that improved quality and intolerance for high spoilage have lowered overall costs and increased sales. 18-2 Spoilageunits of production that do not meet the standards required by customers for good units and that are discarded or sold

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978-0133428704 Chapter 18 Solution Manual Part 2

SOLUTION Spoilage represents the amount of resources that go into the process but do not result in finished product. A simple way to account for spoilage in process costing is to calculate the amount of direct material that was spoiled. The journal entry to record the spoilage incurred in Safeclears

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978-0133428704 Chapter 18 Solution Manual Part 3

18-30 (25 min.) Scrap, job costing. The Russell Company has an extensive job-costing facility that uses a variety of metals. Consider each requirement independently. Required: 1. Job 372 uses a particular metal alloy that is not used for any other job. Assume that scrap is material in amount and sold

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978-0133428704 Chapter 18 Solution Manual Part 4

SOLUTION 1. Inspection Inspection Inspection at 30% at 60% at 100% Work in process, beginning (40%)* Started during November To account for 2,400 12,000 14,400 2,400 12,000 14,400 2,400 12,000 14,400 Good units completed and transferred out Normal spoilage 9,000a 1,224b 9,000a 1,512c 9,000a 1,080d Abnormal spoilage (1,800 normal spoilage)

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978-0133428704 Chapter 19 Solution Manual Part 1

19- 1 CHAPTER 19 BALANCED SCORECARD: QUALITY, TIME, AND THE THEORY OF CONSTRAINTS 19-1 Quality costs (including the opportunity cost of lost sales because of poor quality) can be as much as 10% to 20% of sales revenues of many organizations. Quality-improvement programs can result in substantial cost savings

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978-0133428704 Chapter 19 Solution Manual Part 2

SOLUTION 1. Cell Designs managers plan to increase spending on CAD design improvement improving machine calibrations to achieve product specifications. These are prevention activities. Cell Designs managers plan to increase prevention costs to improve quality. This is consistent with much of the research on quality. Preventing defects from occurring in

Cost Accounting 15th Edition

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978-0133428704 Chapter 19 Solution Manual Part 3

19-24 (25 min.) Waiting time, cost considerations, and customer satisfaction (continued from 19-23). Refer to the information presented in Exercise 19-23. The head of the registration advisors at SMU has decided that the advisors must finish their advising in 2 weeks and therefore must advise 420 students a day. However,

Cost Accounting 15th Edition

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978-0133428704 Chapter 19 Solution Manual Part 4

SOLUTION EXHIBIT 19-28A Quality improvement, Pareto diagram, cause-and-effect diagram 2. Prevention activities that could reduce failures in Paulis Pizza deliveries could include the following: a. Better staff training b. Improved technology for order processing c. Additional time for delivery personnel to review orders prior to pick-up d. Additional procedure checks

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978-0133428704 Chapter 19 Solution Manual Part 5

3. Delays occur in the processing of B7 and A3 because of (a) uncertainty about how many orders Brandt will actually receive (Brandt expects to receive 125 orders of B7 and 10 orders of A3), and (b) uncertainty about the actual dates when Brandt will receive the orders. The uncertainty

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978-0133428704 Chapter 2 Solution Manual Part 1

2-1 CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a brand category, an activity, and a department. 2-2 Direct costs of a

Cost Accounting 15th Edition

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978-0133428704 Chapter 2 Solution Manual Part 2

SOLUTION 1. Variable manufacturing cost per vehicle Steel $1,500 per Surfer Tires 625 per Surfer Direct manufacturing labor 700 per Surfer Total $2,825 per Surfer Fixed manufacturing costs per month Plant management costs ($1,200,000 12) $ 100,000 Cost of leasing equipment ($1,800,000 12) 150,000 City license (for 110 surfers or

Cost Accounting 15th Edition

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978-0133428704 Chapter 2 Solution Manual Part 3

2-28 (2030 min.) Inventoriable costs versus period costs. Each of the following cost items pertains to one of these companies: Star Market (a merchandising-sector company), Maytag (a manufacturing-sector company), and Yahoo! (a service-sector company): a. Cost of lettuce and tomatoes on sale in Star Markets produce department b. Electricity used

Cost Accounting 15th Edition

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978-0133428704 Chapter 2 Solution Manual Part 4

SOLUTION Shaler Corporation Schedule of Cost of Goods Manufactured Year Ended December 31, 2014 (in thousands) Direct materials costs Beginning inventory, January 1, 2014 $130,000 Purchases of direct materials 256,000 Cost of direct materials available for use 386,000 Ending inventory, December 31, 2014 68,000 Direct materials used $318,000 Direct manufacturing

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978-0133428704 Chapter 2 Solution Manual Part 5

SOLUTION 1.(a) Total cost of hours worked at regular rates 48 hours $20 per hour $ 960 44 hours $20 per hour 880 43 hours $20 per hour 860 46 hours $20 per hour 920 3,620 Minus idle time (6.4 hours $20 per hour) (2.0 hours $20 per hour) (5.8

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978-0133428704 Chapter 20 Solution Manual Part 1

20-1 CHAPTER 20 INVENTORY MANAGEMENT, JUST-IN-TIME, AND SIMPLIFIED COSTING METHODS 20-1 Cost of goods sold (in retail organizations) or direct materials costs (in organizations with a manufacturing function) as a percentage of sales frequently exceeds net income as a percentage of sales by many orders of magnitude. In the

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978-0133428704 Chapter 20 Solution Manual Part 2

20-1 SOLUTION EXHIBIT 20-21 Annual Relevant Costs of Current Production System and JIT Production System for Colonial Hardware Company Relevant Items Relevant Costs under Current Production System Relevant Costs under JIT Production System Annual tooling costs $200,000 Required return on investment: 15% per year $2,000,000 of

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978-0133428704 Chapter 20 Solution Manual Part 3

SOLUTION 1. 2 DP 2 10,400 $100EOQ C $13== EOQ = 400 steering wheels 2. Average weekly demand = 10,400 52 weeks = 200 steering wheels per week Purchasing lead time = 1.5 weeks Reorder point at each plant = 200 steering wheels 1.5 weeks = 300 steering wheels 3.

Cost Accounting 15th Edition

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978-0133428704 Chapter 20 Solution Manual Part 4

SOLUTION 1. (a) Record purchases of direct materials Materials and In-Process Inventory Control Accounts Payable Control 550,000 550,000 (b) Record conversion costs incurred Conversion Costs Control Various Accounts (such as 440,000 Wages Payable Control) 440,000 (c) Record cost of good finished units completed Finished Goods Controla Materials and In-Process 945,000

Cost Accounting 15th Edition

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978-0133428704 Chapter 21 Solution Manual Part 1

21-1 CHAPTER 21 CAPITAL BUDGETING AND COST ANALYSIS 21-1 No. Capital budgeting focuses on an individual investment project throughout its life, recognizing the time value of money. The life of a project is often longer than a year. Accrual accounting focuses on a particular accounting period, often a

Cost Accounting 15th Edition

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978-0133428704 Chapter 21 Solution Manual Part 2

SOLUTION 1. Present value of annuity of savings in cash operating costs ($31,250 per year for 8 years at 14%): $31,250 4.639 $144,969 Present value of $37,500 terminal disposal price of machine at end of year 8: $37,500 0.351 13,163 Present value of $10,000 recovery of working capital at end

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978-0133428704 Chapter 21 Solution Manual Part 3

21-1 SOLUTION 1. The after-tax cash inflow per year is $24,400 ($19,600 + $4,800), as shown below: Annual cash flow from operations ($43,000 $15,000) $28,000 Deduct income tax payments (0.30 $28,000) 8,400 Annual after-tax cash flow from operations $19,600 Annual depreciation on upgrades

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978-0133428704 Chapter 21 Solution Manual Part 4

21-1 1. Modernizing alternative: Present Value Discount Factors Net Cash Present Year At 10% Flow Value Jan. 1, 2015 1.000 $(36,800000) $(36,800,000) Dec. 31, 2015 0.909 10,432,500 9,483,143 Dec. 31, 2016 0.826 11,700000 9,664,200 Dec. 31, 2017 0.751 12,967,500 9,738,593 Dec. 31, 2018 0.683 14,235,000

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978-0133428704 Chapter 21 Solution Manual Part 5

21-1 Difference in after-tax cash flow from terminal disposal of machines: $23,020 $14,720 = $8,300 (in favor of new machine) 2. The Frooty Company should retain the old equipment because the net present value of the incremental cash flows from the new machine is negative. The computations,

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978-0133428704 Chapter 22 Solution Manual Part 1

CHAPTER 22 MANAGEMENT CONTROL SYSTEMS, TRANSFER PRICING, AND MULTINATIONAL CONSIDERATIONS 22-1 A management control system is a means of gathering and using information to aid and coordinate the planning and control decisions throughout an organization and to guide the behavior of its managers and employees. The goal of the

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978-0133428704 Chapter 22 Solution Manual Part 2

22-21 (30 min.) Effect of alternative transfer-pricing methods on division operating income. (CMA, adapted) Ajax Corporation has two divisions. The mining division makes toldine, which is then transferred to the metals division. The toldine is further processed by the metals division and is sold to customers at a price of

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978-0133428704 Chapter 22 Solution Manual Part 3

SOLUTION 1. The minimum transfer price that the SD would demand from the AD is the net price it could obtain from selling its screens on the outside market: $100 minus $8 marketing and distribution cost per screen, or $92 per screen. The SD is operating at capacity. The incremental

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978-0133428704 Chapter 22 Solution Manual Part 4

22-30 (25 min.) Goal congruence problems with cost-plus transfer-pricing methods, dual pricing system (continuation of 22-29). Assume that Pat Borges, CEO of Cranergy, had mandated a transfer price equal to 150% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states the

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978-0133428704 Chapter 22 Solution Manual Part 5

22-33 (3040 min.) International transfer pricing, taxes, goal congruence. Castor, a division of Gemini Corporation, is located in the United States. Its effective income tax rate is 30%. Another division of Gemini, Pollux, is located in Canada, where the income tax rate is 40%. Pollux manufactures, among other things, an

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978-0133428704 Chapter 22 Solution Manual Part 6

22-35 (25 min.) Transfer pricing, goal congruence. The Croydon Division of CC Industries supplies the Hauser Division with 100,000 units per month of an infrared LED that Hauser uses in a remote control device it sells. The transfer price of the LED is $8, which is the market price. However,

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978-0133428704 Chapter 23 Solution Manual Part 1

23- 1 CHAPTER 23 PERFORMANCE MEASUREMENT, COMPENSATION, AND MULTINATIONAL CONSIDERATIONS 23-1 Examples of financial and nonfinancial measures of performance are Financial: ROI, residual income, economic value added, and return on sales Nonfinancial: Customer perspective: Market share, customer satisfaction Internal-business-processes perspective: Manufacturing lead time, yield, on-time performance,

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978-0133428704 Chapter 23 Solution Manual Part 2

23-20 (20 min.) ROI, RI, EVA. Hamilton Corp. is a reinsurance and financial services company. Hamilton strongly believes in evaluating the performance of its standalone divisions using financial metrics such as ROI and residual income. For the year ended December 31, 2013, Hamiltons CFO received the following information about the

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978-0133428704 Chapter 23 Solution Manual Part 3

SOLUTION 1. ROI and residual income: Clothing Cosmetics Operating income after tax $ 800,000 $ 1,800,000 Net assets $3,200,000 $7,500,000 ROI ($800,000 $3,200,000; $1,800,000 $7,500,000) 25.00% 24.00% RI ($800,000 11% 3,200,000; $1,800,000 11% $7,500,000) $ 448,000 $ 975,000 The choice of measure used to evaluate performance will determine which division

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978-0133428704 Chapter 23 Solution Manual Part 4

SOLUTION 1. ROI = Operating income Net book value of total assets St. Louis ROI = $1,446,000 ($9,000,000 $6,600,000 + 1,999,600) = $1,446,000 $4,399,600 = 32.87% Memphis ROI = $1,008,000 ($7,500,000 $3,500,000 + 1,536,400) = $1,008,000 $5,536,400 = 18.21% New Orleans ROI = $932,000 ($8,100,000 $2,160,000 + 1,649,200) = $932,000

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978-0133428704 Chapter 23 Solution Manual Part 5

23-34 (30 min.) Financial and nonfinancial performance measures, goal congruence. (CMA, adapted) Precision Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately 2 years ago, Pedro Mendez, president of Precision, decided to revise the bonus plan (based, at the time, entirely on operating

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978-0133428704 Chapter 3 Solution Manual Part 1

3- 1 CHAPTER 3 COSTVOLUMEPROFIT ANALYSIS NOTATION USED IN CHAPTER 3 SOLUTIONS SP: Selling price VCU: Variable cost per unit CMU: Contribution margin per unit FC: Fixed costs TOI: Target operating income 3-1 Cost-volume-profit (CVP) analysis examines the behavior of total revenues, total

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978-0133428704 Chapter 3 Solution Manual Part 2

3- 1 SOLUTION 1. Variable cost percentage is $3.80 $9.50 = 40% Let R = Revenues needed to obtain target net income R 0.40R $456,000 = $159,600 1 0.30 0.60R = $456,000 + $228,000 R = $684,000 0.60 R = $1,140,000 or, Fixed costs + Target

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978-0133428704 Chapter 3 Solution Manual Part 3

SOLUTION 1. Sales of A, B, and C are in ratio 24,000 : 96,000 : 48,000. So for every 1 unit of A, 4 (96,000 24,000) units of B are sold, and 2 (48,000 24,000) units of C are sold. Contribution margin of the bundle = 1 $5+ 4 $4

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978-0133428704 Chapter 3 Solution Manual Part 4

SOLUTION 1. Monthly Number of Orders Cost of Current System 300,000 $1,000,000 + $45(300,000) = $14,500,000 400,000 $1,000,000 + $45(400,000) = $19,000,000 500,000 $1,000,000 + $45(500,000) = $23,500,000 600,000 $1,000,000 + $45(600,000) = $28,000,000 700,000 $1,000,000 + $45(700,000) = $32,500,000 Monthly Number of Orders Cost of Partially Automated System 300,000

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978-0133428704 Chapter 3 Solution Manual Part 5

SOLUTION 1. CMU (SP VCU = $60 $40) $ 20.00 a. Breakeven units (FCCMU = $180,000 $20 per unit) 9,000 b. Breakeven revenues (Breakeven units SP = 9,000 units $60 per unit) $540,000 2. Pairs sold 8,000 Revenues, 8,000 $60 $480,000 Total cost of shoes, 8,000 $37 296,000 Total sales

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978-0133428704 Chapter 3 Solution Manual Part 6

SOLUTION 1. We can recast BioPharms income statement to emphasize contribution margin, and then use it to compute the required CVP parameters. BioPharm Corporation Income Statement for the Year Ended December 31, 2014 Using Sales Agents Using Own Sales Force Revenues $32,000,000 $32,000,000 Variable Costs Cost of goods soldvariable $12,160,000

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978-0133428704 Chapter 3 Solution Manual Part 7

SOLUTION 1. Sales of standard and deluxe carriers are in the ratio of 187,500 : 62,500. So for every 1 unit of deluxe, 3 (187,500 62,500) units of standard are sold. Contribution margin of the bundle = 3 $10 + 1 $20 = $30 + $20 = $50 Breakeven point

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978-0133428704 Chapter 4 Solution Manual Part 1

CHAPTER 4 JOB COSTING 4-1 Cost poola grouping of individual indirect cost items. Cost tracingthe assigning of direct costs to the chosen cost object. Cost allocationthe assigning of indirect costs to the chosen cost object. Cost-allocation basea factor that links in a systematic way an indirect cost or group of

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978-0133428704 Chapter 4 Solution Manual Part 2

4-1 SOLUTION 1. An overview of the product costing system is COST OBJECT: PRODUCT COST ALLOCATION BASE DIRECT COST Machining Department Manufacturing Overhead Machine-Hours Direct Materials INDIRECT COST POOL Direct Manufacturing Labor Indirect Costs Direct Costs Assembly Department Manufacturing Overhead Direct Manuf. Labor Cost Budgeted manufacturing overhead divided by allocation base: Machining Department overhead: 000,50 000,800,1$ = $36 per machine-hour Assembly Department overhead: 000,000,2$ 000,600,3$ = 180%

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978-0133428704 Chapter 4 Solution Manual Part 3

4-1 4-1 4-1 SOLUTION Some instructors may also want to assign Exercise 4-25. It demonstrates the relationships of the general ledger to the underlying subsidiary ledgers and source documents. 1. An overview of the product costing system is:

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978-0133428704 Chapter 4 Solution Manual Part 4

SOLUTION Some instructors may wish to assign Problem 4-25. It demonstrates the relationships of journal entries, general ledger, subsidiary ledgers, and source documents. 1. An overview of the product-costing system is 2. Amounts in millions. (1) Materials Control Accounts Payable Control 154 154 (2) Work-in-Process Control Materials Control 152 152

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978-0133428704 Chapter 4 Solution Manual Part 5

SOLUTION overhead rate1. Budgeted manufacturing = Budgeted manufacturing overhead costBudgeted direct manufacturing labor cost $125,000 50% of direct manufacturing labor cost$250,000== 2. Overhead allocated = 50% Actual direct manufacturing labor cost = 50% $228,000 = $114,000 Underallocated manufacturing overhead = Actual manufacturing overhead costs Allocated plant overhead costs = $117,000

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978-0133428704 Chapter 4 Solution Manual Part 6

SOLUTION Although not required, the following overview diagram is helpful to understand Kidmans job- costing system. 1. Professional Partner Labor Professional Associate Labor Budgeted compensation per professional Divided by budgeted hours of billable time per professional Budgeted direct-cost rate $ 210,000 1,500 $140 per hour*

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978-0133428704 Chapter 4 Solution Manual Part 7

4-38 (4055 min.) Overview of general ledger relationships. Brandon Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers. The beginning balances (December 1) and ending balances (as of December 30) in their inventory accounts are as follows: Beginning Balance 12/1 Ending Balance 12/31 Materials

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978-0133428704 Chapter 5 Solution Manual Part 1

5-1 CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT 5-1 Broad averaging (or peanut-butter costing) describes a costing approach that uses broad averages for assigning (or spreading, as in spreading peanut butter) the cost of resources uniformly to cost objects when the individual products or services, in fact, use those resources

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978-0133428704 Chapter 5 Solution Manual Part 2

SOLUTION 1. Actual plantwide variable MOH rate based on machine hours, $308,6004,000 $77.15 per machine hour United Motors Holden Motors Leland Auto Total Variable manufacturing overhead, allocated based on machine hours ($77.15 120; $77.15 2,800; $77.15 1,080) $9,258 $216,020 $83,322 $308,600 2. Department MOH in 2014 Total Driver Units Rate

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978-0133428704 Chapter 5 Solution Manual Part 3

SOLUTION Note: The cost driver for engineering is number of engineering-hours, not number of engineers. This change does not, however, affect the solution itself. 1. Using the simple costing system, total overhead costs are equally allocated to projects. There were 3 projects in 2014, so the overhead cost per project

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978-0133428704 Chapter 5 Solution Manual Part 4

SOLUTION EXHIBIT 5-25 Product-Costing Overviews of Henderson Supermarkets PANEL A: SIMPLE COSTING SYSTEM COST OBJECT:PRODUCT LINEIndirect CostsDirect CostsStoreSupportCOGSCOGSINDIRECTCOSTPOOLCOSTALLOCATIONBASE DIRECTCOST PANEL B: ABC SYSTEM Ordering Delivery Shelf-StockingCustomerSupportNumber ofPurchase OrderNumber ofDeliveriesHours ofShelf-StockingNumber ofItems SoldIndirect CostsDirect CostsCOGSINDIRECT COST POOL COST ALLOCATION BASE COST OBJECT: PRODUCT LINE DIRECT COST SOLUTION EXHIBIT 5-25 Product-Costing Overviews

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978-0133428704 Chapter 5 Solution Manual Part 5

SOLUTION 1. Pricing decisions at Bradley Associates are heavily influenced by reported cost numbers. Suppose Bradley is bidding against another firm for a client with a job similar to that of Campa Coal. If the costing system overstates the costs of these jobs, Bradley may bid too high and fail

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978-0133428704 Chapter 5 Solution Manual Part 6

5-36 (3040 min.) Activity-based costing, merchandising. Pharmahelp, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. Mom-and-pop single-store pharmacies Rick Flair, the new controller of Pharmahelp, reported the following data for 2014 For many years,

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978-0133428704 Chapter 5 Solution Manual Part 7

5-40 (30 min.) Unused capacity, activity-based costing, activity-based management. Whitewater Adventures manufactures two models of kayaks, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect manufacturing labor costs increase with direct manufacturing labor costs. Equipment and maintenance

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978-0133428704 Chapter 6 Solution Manual Part 1

6-1 CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING 6-1 The budgeting cycle includes the following elements: a. Planning the performance of the company as a whole as well as planning the performance of its subunits. Management agrees on what is expected. b. Providing a frame of reference, a set

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978-0133428704 Chapter 6 Solution Manual Part 2

6-1 6-23 (45 min.) Budgeting: service company. Sunshine Window Washers (SWW) provides window-washing services to commercial clients. The company has enjoyed considerable growth in recent years due to a successful marketing campaign and favorable reviews on service-rating Web sites. Sunshine owner Sam Davis makes sales calls himself and quotes

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978-0133428704 Chapter 6 Solution Manual Part 3

6-1 1. When the office manager receives calls from potential customers, she is instructed to handle the contracts herself. Recently, however, the number of contracts written up by the office manager has declined. At the same time, one of the sales representatives has experienced a significant increase in contracts.

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978-0133428704 Chapter 6 Solution Manual Part 4

6-1 SOLUTION 1. Increase in Costs for the Year Assume Trendy uses New Dye Units to dye 60,000 Cost differential ($1.25 $0.40) per ounce 3 ounces $2.55 Increase in costs $153,000 Because the fine is only $120,000, Trendy would be financially better off by not switching.

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978-0133428704 Chapter 6 Solution Manual Part 5

6-1 SOLUTION 1. Revenue Budget For the Month of April Units Selling Price Total Revenues Cat-allac 530 $205 $108,650 Dog-eriffic 225 310 69,750 Total $178,400 2. Production Budget For the Month of April Product

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978-0133428704 Chapter 6 Solution Manual Part 6

6-1 6-38 (30 min.) Cash budgeting, chapter appendix. Retail outlets purchase snowboards from Skulas, Inc., throughout the year. However, in anticipation of late summer and early fall purchases, outlets ramp up inventories from May through August. Outlets are billed when boards are ordered. Invoices are payable within 60 days.

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978-0133428704 Chapter 6 Solution Manual Part 7

5. Direct Material Usage Budget in Quantity and Dollars For the Year Ending December 31, 2015 Material Plastic Bristles Total Physical Units Budget Direct materials required for Combs (12,600 units 5 oz and 0 bunches) 63,000 oz. Brushes (14,200 units 8 oz and 16 bunches) 113,600 oz. 227,200 bunches Total

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978-0133428704 Chapter 6 Solution Manual Part 8

Required: 1. Prepare each of the following for June: a. Revenues budget b. Production budget in units c. Direct material usage budget and direct material purchases budget in both units and dollars; round to dollars d. Direct manufacturing labor cost budget e. Manufacturing overhead cost budgets for setup, processing, and

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978-0133428704 Chapter 7 Solution Manual Part 1

CHAPTER 7 FLEXIBLE BUDGETS, DIRECT-COST VARIANCES, AND MANAGEMENT CONTROL 7-1 Management by exception is the practice of concentrating on areas not operating as expected and giving less attention to areas operating as expected. Variance analysis helps managers identify areas not operating as expected. The larger the variance, the more

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978-0133428704 Chapter 7 Solution Manual Part 2

SOLUTION 1. The key information items are: Actual Budgeted Output units (scones) Input units (pounds of pumpkin) Cost per input unit 60,800 16,000 $ 0.82 60,000 15,000 $ 0.89 Peterson budgets to obtain four pumpkin scones from each pound of pumpkin. The flexible-budget variance is $408 F. Actual Results

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978-0133428704 Chapter 7 Solution Manual Part 3

SOLUTION For requirement 1 from Exercise 7-25: a. Direct Materials Control 18,500 Direct Materials Price Variance 370 Accounts Payable Control 18,870 To record purchase of direct materials. b. Work-in-Process Control 20,000 Direct Materials Efficiency Variance 1,500 Direct Materials Control 18,500 To record direct materials used. c. Work-in-Process Control 10,000

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978-0133428704 Chapter 7 Solution Manual Part 4

7-30 (30 min.) Variance analysis, nonmanufacturing setting. Marcus McQueen has run In-A-Flash Car Detailing for the past 10 years. His static budget and actual results for June 2014 are provided next. Marcus has one employee who has been with him for all 10 years that he has been in

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978-0133428704 Chapter 7 Solution Manual Part 5

SOLUTION 1. Materials Variances Actual Costs Incurred (Actual Input Qty. Actual Price) Actual Input Qty. Budgeted Price Flexible Budget (Budgeted Input Qty. Allowed for Actual Output Budgeted Price) Direct Materials (5,200 $17a) $88,400 Purchases Usage (5,200 $18) (4,700 $18) $93,600 $84,600 (400 8 $18) (3,200 $18) $57,600 $5,200 F

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978-0133428704 Chapter 7 Solution Manual Part 6

SOLUTION 1. Direct Materials: Actual Costs Incurred (Actual Input Qty. Actual Price) Actual Input Qty. Budgeted Price Flexible Budget (Budgeted Input Qty. Allowed for Actual Output Budgeted Price) Wool (given) $9,000 3,500 $3.40 $11,900 200 13 $3.40 $8,840 $2,900 F $3,060 U Price variance Efficiency variance $160 U Flexible-budget

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978-0133428704 Chapter 7 Solution Manual Part 7

SOLUTION 1. Computing unit selling prices and unit costs of inputs: Actual selling price = $3,626,700 462,000 = $7.85 Budgeting selling price = $3,360,000 420,000 = $8.00 Selling-pricevariance = Actualselling price Budgetedselling price Actualunits sold = ($7.85/unit $8.00/unit) 462,000 units = $69,300 U 2., 3., and 4. The actual

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978-0133428704 Chapter 8 Solution Manual Part 1

8- 1 CHAPTER 8 FLEXIBLE BUDGETS, OVERHEAD COST VARIANCES, AND MANAGEMENT CONTROL 8-1 Effective planning of variable overhead costs involves: 1. Planning to undertake only those variable overhead activities that add value for customers using the product or service, and 2. Planning to use the drivers of costs in

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978-0133428704 Chapter 8 Solution Manual Part 2

Fixed Manufacturing Costs and Variances a. Fixed Manufacturing Overhead Control 12,180 Salaries Payable, Acc. Depreciation, various other accounts 12,180 To record actual fixed manufacturing overhead costs incurred. b. Work-in-Process Control 22,050 Fixed Manufacturing Overhead Allocated 22,050 To record fixed manufacturing overhead allocated. c. Fixed Manufacturing Overhead Allocated 22,050 Fixed Manufacturing

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978-0133428704 Chapter 8 Solution Manual Part 3

SOLUTION 1. Easy Meals Now (May 2014) Actual Results Flexible Budget Static Budget Output units (number of deliveries) 8,600 8,600 12,000 Hours per delivery 0.66a 0.70 0.70 Hours of delivery time 5,660 6,020b 8,400c Variable overhead costs per delivery hour $2.00d $1.75 $1.75 Variable overhead (VOH) costs $11,320 $10,535e $14,700f

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978-0133428704 Chapter 8 Solution Manual Part 4

Required: 1. For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U): a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor efficiency variance e. Variable manufacturing overhead spending

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978-0133428704 Chapter 8 Solution Manual Part 5

SOLUTION Known figures denoted by an * Case A: Actual Costs Incurred Actual Input Qty. Budgeted Rate Flexible Budget: Budgeted Input Qty. Allowed for Actual Output Budgeted Rate Allocated: Budgeted Input Qty. Allowed for Actual Output Budgeted Rate Variable Manufacturing Overhead $120,400* (6,270 $20) $125,400 (6,200* $20) $124,000* (6,200* $20)

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978-0133428704 Chapter 8 Solution Manual Part 6

7. Fixed Setup Overhead Variance Analysis for Rae Steven Publishing Company for 2014 Actual Static Budget Standard hours Fixed Overhead Fixed Overhead Budgeted Rate (434 7.0 $20) $68,000 $53,200 $60,760 $14,800 U $7,560 F Spending variance Production-volume variance 8. Rejecting an order may have implications for future orders (i.e., professors

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978-0133428704 Chapter 8 Solution Manual Part 7

SOLUTION 1. In the columnar presentation of variable overhead variance analysis, all numbers shown in bold are calculated from the given information, in the order (a)(e). VARIABLE MANUFACTURING OVERHEAD Flexible Budget: Budgeted Input Qty. Actual Costs Incurred Actual Input Qty. Budgeted Rate Allowed for Budgeted Actual Output Rate (b) (a)

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978-0133428704 Chapter 9 Solution Manual Part 1

9-1 CHAPTER 9 INVENTORY COSTING AND CAPACITY ANALYSIS 9-1 No. Differences in operating income between variable costing and absorption costing are due to accounting for fixed manufacturing costs. Under variable costing, only variable manufacturing costs are included as inventoriable costs. Under absorption costing, both variable and fixed manufacturing costs

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978-0133428704 Chapter 9 Solution Manual Part 2

2. operating income operating income = costs inending inventory costs inbeginning inventory January: $1,797,500 $1,762,500 = ($350 100) $0 $35,000 = $35,000 February: $1,899,375 $1,899,375 = ($350 100) ($350 100) $0 = $0 March: $2,036,625 $2,045,375 = ($350 75) ($350 100) $8,750 = $8,750 The difference between absorption and variable

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978-0133428704 Chapter 9 Solution Manual Part 3

9-23 (40 min.) Variable and absorption costing, sales, and operating-income changes. Smart Safety, a three- year-old company, has been producing and selling a single type of bicycle helmet. Smart Safety uses standard costing. After reviewing the income statements for the first three years, Stuart Weil, president of Smart Safety, commented,

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978-0133428704 Chapter 9 Solution Manual Part 4

SOLUTION This problem always generates active classroom discussion. 1. The treatment of fixed manufacturing overhead in absorption costing is affected primarily by what denominator level is selected as a base for allocating fixed manufacturing costs to units produced. In this case, is 10,000 tons per year, 20,000 tons, or some

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978-0133428704 Chapter 9 Solution Manual Part 6

SOLUTION 1. Fixed manufacturing overhead rate = $576,000/24,000 units = $24 per unit Manufacturing cost per unit: $20 direct materials + $35 direct mfg. labor + $9 var. mfg. OH + $24 fixed mfg. OH = $88 Selling price: $88 130% = $114.40 2. Fixed manufacturing overhead rate = $576,000/18,000

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978-0133428704 Chapter 9 Solution Manual Part 7

9-40 (20 min.) Cost allocation, responsibility accounting, ethics (continuation of 9-39). In 2015, only 740,000 Topman meals were produced and sold to the hospitals. Smith suspects that hospital controllers had systematically inflated their 2015 meal estimates. Required: 1. Recall that Topman uses the master-budget capacity utilization to allocate fixed costs

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AC 109

1) The return on investment is usually considered the most popular approach to measure performance because ________. A) it blends all the ingredients of profitability into a single percentage B) once determined, there is no need to use it with other measures of performance C) it throws light on the company's working capital D) it

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AC 117 Homework

1) ________ is also called lean production. A) Economic order quantity production B) Just-in-time production C) Materials requirements planning production D) Push-through system Answer: B Answer: B Answer: B 2) Financial accounting provides a historical perspective, whereas management accounting emphasizes ________. A) the future B) past transactions C) a current perspective D) reports to shareholders Answer: A Answer: A Answer: A 3) Shrinkage is measured by

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AC 202

1) An efficient management accounting system traces direct costs and allocates indirect costs to products. Answer: TRUE Answer: TRUE Answer: TRUE 2) Absorption costing enables managers to increase operating income by increasing the unit level of sales, as well as by producing more units. Answer: TRUE Answer: TRUE Answer: TRUE 3) Engineered costs contain a higher level of

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AC 205 Quiz 1

1) When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated. Answer: TRUE Answer: TRUE Answer: TRUE 2) Bottom-up budgets entrusts senior managers to prepare budgets and lower-level managers to execute them. Answer: FALSE Explanation: Bottom-up budgets encourage lower-level managers to

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AC 250 Quiz 1

1) In markets with little or no competition, the key factor affecting price is the cost of production to the company. Answer: FALSE Explanation: In markets with little or no competition, the key factor affecting priceis the customers' willingness to pay, not costs or competitors. Answer: FALSE Explanation: In markets with little

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AC 271 Quiz 1

1) In a combined 3-variance analysis, the total spending variance would be ________. A) $20,500 F B) $22,500 U C) $20,500 U D) $37,500 F Answer: C Explanation: C) Spending variance = $7,500 F + $28,000 U = $20,500 U Answer: C Explanation: C) Spending variance = $7,500 F + $28,000 U = $20,500 U Answer: C

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AC 468

1) Investing in a new equipment, such as flexible manufacturing systems that can be programmed to switch quickly from producing one product to producing another can decrease capacity as it would incur excess overhead costs. Answer: FALSE Explanation: One of the ways to increase capacity is to invest in new equipment,

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AC 565 Homework

1) Ruben intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $150 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs

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AC 575 Quiz 3

1) Fixed costs are sometimes allocated to individual products as part of the standard costing system. When this is the case, they should be treated as variable costs for purposes of future cost estimation. Answer: FALSE Explanation: The danger is to regard these costs as variable rather than fixed. The analyst

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AC 609 1 Which Of The Following Is An

1) Which of the following is an example of division-sustaining costs? A) research and development cost B) corporate administration costs C) corporate brand advertising D) shipment costs Answer: A Answer: A Answer: A 2) Beta Corp reported the following: Required: a.Compute contribution margin. b.Compute gross margin. c.Compute operating income. Answer: a.Contribution margin $2,500 - $300 - $480 = $1,720b.Gross margin $2,500 - $300

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AC 668

1) Longer manufacturing cycle times increase the inventory carrying costs and decrease revenues. Answer: TRUE Answer: TRUE Answer: TRUE 2) The DuPont method recognizes the two basic ingredients in profit making: increasing the income per dollar of revenues and using assets to generate more revenues. Answer: TRUE Answer: TRUE Answer: TRUE 3) Efficiency is the relative amount of inputs used

Cost Accounting 15th Edition

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AC 687 Test 2

1) An Enterprise Resource Planning System can best be described as ________. A) a collection of programs that use a variety of unconnected databases B) a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales C) a

Cost Accounting 15th Edition

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AC 767 Final

1) Hammond and Jarrett provide tax consulting for estates and trusts. Their job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (research support). The indirect-cost pool contains all the costs except direct personnel costs. All budgeted indirect costs are allocated to individual jobs using actual

Cost Accounting 15th Edition

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AC 822 Quiz 3

1) Quality-inspection costs is an example of batch-level costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) Identifying and minimizing the sources of non-value-added manufacturing time increases a firm's responsiveness to its customers and reduces its costs. Answer: TRUE Answer: TRUE Answer: TRUE 3) Simple regression analysis estimates the relationship between the dependent variable and one independent variable. Answer: TRUE Answer:

Cost Accounting 15th Edition

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AC 838 Quiz 2

1) All other things being equal, the longer the time horizon the more likely a cost will be fixed. Answer: FALSE Explanation: All other things being equal, the longer the time horizon, the more likely the cost will be variable. Answer: FALSE Explanation: All other things being equal, the longer the time

Cost Accounting 15th Edition

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AC 887 Midterm 1

1) If one of five distribution channels is discontinued, corporate-sustaining costs such as general administration costs will most likely be reduced by 20%. Answer: FALSE Explanation: If one of five distribution channels is discontinued, corporate-sustaining costs such as general administration costs will most likely not be affected. Answer: FALSE Explanation: If one of

Cost Accounting 15th Edition

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Acc 113 Quiz

1) Which of the following costs can be classified into both value-added and non-value-added costs? A) production control costs B) machine breakdown costs C) rework costs D) direct material costs Answer: A Answer: A Answer: A 2) The cost components of a heater include $30 for the compressor, $10 for the sheet molded compound frame, and $75 per

Cost Accounting 15th Edition

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ACC 137

1) Which of the following is true of the Work-in-Process Control account? A) It tracks all direct material purchases. B) Its balance is the sum of amounts from all in-process individual job-cost records. C) It is an expense account. D) It tracks overhead costs in-process from beginning through completion. Answer: B Answer: B Answer: B 2) Henry Inc.,

Cost Accounting 15th Edition

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ACC 151 Homework

1) Pearl Manufacturing Company provides glassware machines for major department store retailers. The company has been investigating a new piece of machinery for its production department. The old equipment has a remaining life of five years and the new equipment has a value of $239,400 with a five-year life. The

Cost Accounting 15th Edition

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Acc 155 Homework

1) Implementing activity-based costing system involves use of different cost rates for different activities to compute indirect costs of a product. Answer: TRUE Answer: TRUE Answer: TRUE 2) Fixed costs for the period are by definition a lump sum of costs that remain unchanged and therefore the fixed overhead spending variance is always zero. Answer:

Cost Accounting 15th Edition

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ACC 162 Quiz

1) Which of the following is true of flexible budget? A) It calculates total variable cost by multiplying actual units by budgeted variable cost per unit. B) It calculates total fixed cost by multiplying actual units by budgeted fixed cost per unit. C) It calculates revenues by multiplying budgeted units by actual selling

Cost Accounting 15th Edition

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ACC 199 Quiz 2

1) Contribution margin = Contribution margin percentage x Revenues (in dollars). Answer: TRUE Answer: TRUE Answer: TRUE 2) It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures. Answer: FALSE Explanation: It is best to rely on a combination of financial and nonfinancial performance

Cost Accounting 15th Edition

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Acc 211 Midterm 1

1) Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and Buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is

Cost Accounting 15th Edition

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Acc 213 Homework 1 If The

1) If the production planners set the budgeted machine hours standards too tight, one could anticipate there would be a favorable variable overhead efficiency variance. Answer: FALSE Explanation: If the production planners set the budgeted machine hours standards too tight, one could anticipate there would be an unfavorable variable overhead efficiency

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ACC 288 Midterm 2

1) The formal management control system includes shared values, loyalties, and mutual commitments among members of the company, company culture, and norms about acceptable behavior for managers and other employees. Answer: FALSE Explanation: The informal management control system includes shared values, loyalties, and mutual commitments among members of the company, company culture,

Cost Accounting 15th Edition

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ACC 290 Midterm

1) In joint costing, outputs with no sales value are always excluded when costs are allocated using physical measures. Answer: TRUE Answer: TRUE Answer: TRUE 2) A capital budgeting project is accepted if the required rate of return equals or exceeds the internal rate of return. Answer: FALSE Explanation: A capital budgeting project is accepted if

Cost Accounting 15th Edition

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Acc 294 Homework

1) Roberson Corporation manufactured 30,000 ice chests during September. The variable overhead cost-allocation base is $11.25 per machine-hour. The following variable overhead data pertain to September: What is the flexible-budget amount? A) $121,500 B) $151,875 C) $165,000 D) $168,750 Answer: B Explanation: B) 30,000 x (10,800/24,000) x $11.25 = $151,875 Answer: B Explanation: B) 30,000 x (10,800/24,000)

Cost Accounting 15th Edition

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ACC 305

1) ABC systems and department costing systems use totally different approaches towards indirect cost allocation and can never be used together. Answer: FALSE Explanation: ABC systems, with its focus on specific activities, are a further refinement of department costing systems. Companies often use ABC systems and department costing systems together. Answer: FALSE

Cost Accounting 15th Edition

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ACC 305 Test 1

1) The ideal database for estimating cost functions contains ________. A) numerous cost driver observations B) only the independent variable and not the dependent variable C) cost driver observations spanning a narrow range D) a few values of the cost driver that are grouped closely together Answer: A Answer: A Answer: A 2) A cost function is a

Cost Accounting 15th Edition

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ACC 349 Test 1

1) When actual cost-allocation rates are used, managers of the supplier division are motivated to improve efficiency. Answer: FALSE Explanation: When budgeted cost-allocation rates are used, managers of the supplier division are motivated to improve efficiency. Answer: FALSE Explanation: When budgeted cost-allocation rates are used, managers of the supplier division are motivated

Cost Accounting 15th Edition

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ACC 397

1) The Fortise Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2015 were as follows: What is the contribution margin for the flexible budget? A) $1,250,000 B) $4,200,000 C) $5,250,000 D) $5,850,000 Answer: D Explanation: D)Budgeted contribution margin

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Acc 402 Quiz 2

1) Product-cost cross-subsidization is very common when costs are uniformly spread across various products. Answer: TRUE Answer: TRUE Answer: TRUE 2) The net present value (NPV) method calculates the expected monetary gain or loss from a project by discounting all expected future cash inflows and outflows back to the present point in time using

Cost Accounting 15th Edition

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Acc 414 Test

1) The standard error of the estimated coefficient indicates how much the estimated value, b, is likely to be affected by random factors. Answer: TRUE Answer: TRUE Answer: TRUE 2) The single cost-allocation method makes no distinction between fixed and variable costs. Answer: TRUE Answer: TRUE Answer: TRUE 3) When new products are introduced, learning-curve effects can have

Cost Accounting 15th Edition

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Acc 434 Test

1) Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000, a Contribution Income Statement emphasizing contribution margin would show a different operating income. Answer: FALSE Explanation: If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin

Cost Accounting 15th Edition

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Acc 440

1) Favorable overhead variances are always recorded with credits in a standard cost system. Answer: TRUE Answer: TRUE Answer: TRUE 2) The stand-alone method of allocating determines the weights for cost allocation by considering each user of the cost as a separate entity. Answer: TRUE Answer: TRUE Answer: TRUE 3) Return on investment, Residual income, or Economic value

Cost Accounting 15th Edition

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Acc 442 Test 2

1) Budgeted fixed manufacturing costs of a product using practical capacity ________. A) represents the cost per unit of supplying capacity B) can result in setting selling prices that are not competitive C) includes the cost of unused capacity D) should be used to evaluate a marketing manager's performance in the current year Answer: A Answer:

Cost Accounting 15th Edition

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Acc 460 Test 1

1) The main difference between variable costing and absorption costing is the way in which fixed manufacturing costs are accounted for. Answer: TRUE Answer: TRUE Answer: TRUE 2) Step fixed-cost functions are variable over the long run. Answer: TRUE Answer: TRUE Answer: TRUE 3) Cross-sectional data pertain to the same entity (organization, plant, activity, and so on) over successive

Cost Accounting 15th Edition

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Acc 498 Midterm

1) Companies that only record the invoice price can usually track the magnitude of price discounting. Answer: FALSE Explanation: To track discounting, the discount must be recorded. Answer: FALSE Explanation: To track discounting, the discount must be recorded. Answer: FALSE Explanation: To track discounting, the discount must be recorded. 2) Economic value added, unlike

Cost Accounting 15th Edition

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ACC 501 Test

1) The opportunity cost of the stockout includes lost contribution margin on the sale not made plus any contribution margin lost on future sales due to customer ill will. Answer: TRUE Answer: TRUE Answer: TRUE 2) Cost of quality financial measures will usually deteriorate when nonfinancial measures of quality are emphasized and improved. Answer: FALSE Explanation:

Cost Accounting 15th Edition

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ACC 510 Midterm 2

1) The financial perspective of the balanced scorecard identifies targeted customers and market segments and measures the company's success in these segments. Answer: FALSE Explanation: The customer perspective of the balanced scorecard identifies targeted customers and market segments and measures the company's success in these segments. Answer: FALSE Explanation: The customer perspective

Cost Accounting 15th Edition

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ACC 522 Test

1) Cost bases that include fewer costs also have lower markups. Answer: FALSE Explanation: Cost bases that include fewer costs have higher markups. Answer: FALSE Explanation: Cost bases that include fewer costs have higher markups. Answer: FALSE Explanation: Cost bases that include fewer costs have higher markups. 2) If U.S dollar strengthens against the

Cost Accounting 15th Edition

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Acc 537 Midterm 1

1) Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better. Answer: TRUE Answer: TRUE Answer: TRUE 2) Proration is the spreading of underallocated or overallocated overhead among ending work in process, finished goods, and costs of goods sold. Answer: TRUE Answer: TRUE Answer:

Cost Accounting 15th Edition

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Acc 641 Midterm 1

1) The economic order quantity model completely ignores ________. A) carrying costs B) ordering costs C) stockout costs D) the size of a purchase order Answer: C Answer: C Answer: C 2) Ways to "produce for inventory" that result in increasing operating income include ________. A) switching production to products that absorb the least amounts of fixed manufacturing costs B)

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Acc 666 Quiz 3

1) Bar charts and a whale curve are some of the common ways of displaying the results of customer-profitability analysis. Answer: TRUE Answer: TRUE Answer: TRUE 2) Financial accounting information focuses on internal reporting. Answer: FALSE Explanation: Management accounting information focuses on internal reporting and financial accounting focuses on external reporting. Answer: FALSE Explanation: Management accounting

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ACC 677 Test 2

1) In joint costing, the physical measures are generally used for products or services that are processed and, after splitoff, additional value is added to the product and a selling price can be determined. Answer: FALSE Explanation: The net realizable value method is generally used for products or services that are

Cost Accounting 15th Edition

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ACC 710 Quiz

1) Direct materials and direct manufacturing labor become a part of work-in-process inventory on the balance sheet because the direct manufacturing labor transforms the direct materials to another asset, work-in-process inventory. Answer: TRUE Answer: TRUE Answer: TRUE 2) Service-sector companies have no use of variance analysis as only few costs can be traced to

Cost Accounting 15th Edition

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ACC 776 Test

1) A budget serves as much as a control tool as a planning tool because ________. A) it aids in the coordination and communication among various business functions B) it helps to evaluate customer needs and feedback C) it is a benchmark against which actual performance can be compared D) it helps.to make predictions

Cost Accounting 15th Edition

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Acc 842 Quiz

1) Supply the missing data for each of the following proposals: Proposal A Proposal B Proposal C Initial investment (a) $62,900 $226,000 Annual net cash inflow $60,000 (c) (e) Life, in years 10 6 10 Salvage value $0 $10,000 $0 Payback period in years (b) (d) 5.65 Internal rate of return 12% 24% (f) Answer: a.b.Payback period =

Cost Accounting 15th Edition

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Accounting 134

1) A time driver is any factor that causes a change in the speed of an activity when the factor changes. Answer: TRUE Answer: TRUE Answer: TRUE 2) Companies that overcost products will most likely lose market share. Answer: TRUE Answer: TRUE Answer: TRUE 3) All cost functions are linear. Answer: FALSE Explanation: All cost functions are not linear,

Cost Accounting 15th Edition

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Accounting 164 Test

1) Under the weighted-average method, the stage of completion of beginning work in process ________. A) is relevant in determining the equivalent units B) must be combined with the work done during the current period to determine the equivalent units C) is irrelevant in determining the equivalent-unit calculation D) can almost always be determined

Cost Accounting 15th Edition

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Accounting 190 Midterm 1

1) Accounting methods for internal reporting purposes are specified by Generally Accepted Accounting Principles (GAAP). Answer: FALSE Explanation: Accounting methods for internal reporting are not specified by Generally Accepted Accounting principles (GAAP). Answer: FALSE Explanation: Accounting methods for internal reporting are not specified by Generally Accepted Accounting principles (GAAP). Answer: FALSE Explanation: Accounting

Cost Accounting 15th Edition

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Accounting 252

1) Customer life-cycle costs focus on the total costs incurred by a customer to acquire, use, maintain, and dispose of a product or service. Answer: TRUE Answer: TRUE Answer: TRUE 2) Inflation and fluctuations in foreign-currency exchange rates affect performance measurement. Answer: TRUE Answer: TRUE Answer: TRUE 3) The actual indirect-cost rate is calculated by dividing actual total

Cost Accounting 15th Edition

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Accounting 260

1) Some companies present financial and nonfinancial performance measures for various organization units in a single report called the balanced scorecard. Answer: TRUE Answer: TRUE Answer: TRUE 2) If indirect-cost rates were based on actual short-term usage, periods of lower demand would result in lower costs per unit. Answer: FALSE Explanation: If indirect-cost rates were based

Cost Accounting 15th Edition

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Accounting 298 Quiz 1

1) Bonuses given to employees based on performance is an example of extrinsic reward. Answer: TRUE Answer: TRUE Answer: TRUE 2) The breakeven points are the same under both variable costing and absorption costing. Answer: FALSE Explanation: The breakeven points are generally different under both variable costing and absorption costing. If variable costing is used,

Cost Accounting 15th Edition

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Accounting 354 Quiz 3

1) Direct material price variance is likely to be unfavorable if the purchasing manager switched to a lower-price supplier. Answer: FALSE Explanation: Direct material price variance is likely to be favorable if the purchasing manager switched to a lower-price supplier. Answer: FALSE Explanation: Direct material price variance is likely to be favorable

Cost Accounting 15th Edition

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Accounting 480 Homework

1) The contribution-margin format of the income statement distinguishes manufacturing costs from nonmanufacturing costs. Answer: FALSE Explanation: The contribution-margin format of the income statement distinguishes variable costs from fixed costs. Answer: FALSE Explanation: The contribution-margin format of the income statement distinguishes variable costs from fixed costs. Answer: FALSE Explanation: The contribution-margin format of the

Cost Accounting 15th Edition

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Accounting 584

1) A company with sales of $50,000, variable costs of $35,000, and fixed costs of $25,000 will earn a net income of $15,000. Answer: FALSE Explanation: Net income = $50,000 - $35,000 - $25,000 = ($10,000) Answer: FALSE Explanation: Net income = $50,000 - $35,000 - $25,000 = ($10,000) Answer: FALSE Explanation: Net

Cost Accounting 15th Edition

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Accounting 607 Test

1) At the end of the fiscal year, the fixed overhead spending variance is always prorated among work-in-process control, finished goods control, and cost of goods sold on the basis of the fixed overhead allocated to these accounts. Answer: FALSE Explanation: At the end of the fiscal year, the fixed overhead

Cost Accounting 15th Edition

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Accounting 614 Midterm 1

1) A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line. Answer: TRUE Answer: TRUE Answer: TRUE 2) Long-run pricing is an operational decision and not a strategic decision as perceived by many. Answer: FALSE Explanation: Long-run pricing is a

Cost Accounting 15th Edition

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Accounting 638 Quiz 3

1) Activity-based costing attempts to identify the most relevant cause-and-effect relationship for each activity pool without restricting the cost driver to only units of output or variables related to units of output. Answer: TRUE Answer: TRUE Answer: TRUE 2) Practical capacity rather than master-budget volume is a better way to price product and avoid

Cost Accounting 15th Edition

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Accounting 672

1) Under the step-down method, once a support department's costs have been allocated, all subsequent support-department costs are allocated back to it. Answer: FALSE Explanation: Under the step-down method, once a support department's costs have been allocated, no subsequent support-department costs are allocated back to it. Answer: FALSE Explanation: Under the step-down

Cost Accounting 15th Edition

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Accounting 789 Test

1) Fox Studios, the movie production house, uses process costing to estimate costs. Answer: FALSE Answer: FALSE Answer: FALSE 2) Merchandising companies hold only one type of inventory: direct material. Answer: FALSE Explanation: Merchandising companies normally hold only one type of inventory: merchandise inventory. Answer: FALSE Explanation: Merchandising companies normally hold only one type of inventory:

Cost Accounting 15th Edition

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Accounting 792

1) Fixed costs remain constant at $400,000 per month. During high-output months variable costs are $320,000, and during low-output months variable costs are $80,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 for low-output months? A) $45.00 per hour;

Cost Accounting 15th Edition

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Accounting 835 Homework

1) Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows: Using the stand-alone method with selling price as the weight for revenue allocation,

Cost Accounting 15th Edition

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Accounting 836

1) Benchmarking is the continuous process of measuring products, services, and activities against the best possible levels of performance, either inside or outside the organization. Answer: TRUE Answer: TRUE Answer: TRUE 2) An individual cost item can be simultaneously a direct cost of one cost object and an indirect cost of another cost object. Answer:

Cost Accounting 15th Edition

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Accounting 860 Test 1

1) A variance is the difference between the actual cost for the current and expected (or budgeted) performance. Answer: TRUE Answer: TRUE Answer: TRUE 2) Operating income plus total fixed costs equals the contribution margin. Answer: TRUE Explanation: Total revenues less total variable costs equal the contribution margin. Answer: TRUE Explanation: Total revenues less total variable

Cost Accounting 15th Edition

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Accounting 894

1) Aerated Water Company makes internal transfers at 180% of full cost. The Soda Refining Division purchases 30,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $30 per container via an external shipper. To reduce costs, the company located an independent supplier

Cost Accounting 15th Edition

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Acct 134 Quiz 3

1) One problem with total factor productivity revolves around the measurement of combined productivity of all inputs. Answer: TRUE Answer: TRUE Answer: TRUE 2) The t-value of a coefficient measures how large the value of the estimated coefficient is relative to its standard error. Answer: TRUE Answer: TRUE Answer: TRUE 3) In the profit-volume graph the point at which

Cost Accounting 15th Edition

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ACCT 145 Quiz 3

1) One way to increase capacity is to reduce the time it takes for setups and processing. Answer: TRUE Answer: TRUE Answer: TRUE 2) Direct costs are traced the same way for actual costing and normal costing. Answer: TRUE Answer: TRUE Answer: TRUE 3) All inventory costs are available in financial accounting systems. Answer: FALSE Explanation: Opportunity costs are

Cost Accounting 15th Edition

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Acct 175

1) The purchase-order lead time is the ________. A) time between placing an order and its delivery B) time between receiving a customer order and producing the products C) time between receiving a customer order and delivering the items D) time required to correct errors in the defective products Answer: A Answer: A Answer: A 2) Goldfarb's Book

Cost Accounting 15th Edition

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ACCT 205 Test 1

1) Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2015, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. For 2015 Velshi Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it

Cost Accounting 15th Edition

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Acct 211 Quiz 2

1) Under the incremental method of allocating common costs ________. A) the parties are interested in being viewed as primary users B) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs C) the first-incremental user bears a higher proportion of the cost in comparison with

Cost Accounting 15th Edition

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Acct 224 Quiz

1) In a cost center, a manager is responsible for investments, revenues, and costs. Answer: FALSE Explanation: In a cost center, a manager is responsible for costs, but not revenues or investments. Answer: FALSE Explanation: In a cost center, a manager is responsible for costs, but not revenues or investments. Answer: FALSE Explanation:

Cost Accounting 15th Edition

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ACCT 234 Quiz 3

1) Rework labor time is considered an overhead cost and not a direct labor cost. Answer: TRUE Answer: TRUE Answer: TRUE 2) As a company reduces its inventory levels, operating income differences between absorption costing and variable costing become immaterial. Answer: TRUE Answer: TRUE Answer: TRUE 3) A company usually prepares a budget for nonmanufacturing costs after preparing

Cost Accounting 15th Edition

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ACCT 250 Test 2

1) To evaluate overall aggregate performance, return on investment and residual income measures are more appropriate than return on sales. Answer: TRUE Answer: TRUE Answer: TRUE 2) The cost driver of an indirect cost is often used as the cost-allocation base. Answer: TRUE Answer: TRUE Answer: TRUE 3) Fixed cost per unit reduces with an increase in production volume. Answer:

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ACCT 255 Midterm

1) Distribution of questionnaires to customers regarding product quality and improving the product on certain key areas based on the inferences drawn from the questionnaires is an example of a nonfinancial measure of quality. Answer: TRUE Answer: TRUE Answer: TRUE 2) An example of a physical cause-and-effect relationship is when additional units of production

Cost Accounting 15th Edition

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Acct 259

1) The tariffs and customs duties governments levy on imports of products into a country also affect the transfer pricing practices of multinationals. Answer: TRUE Answer: TRUE Answer: TRUE 2) An organization should design its management control system independently of its strategies, so that the system is not affected by change of strategies in

Cost Accounting 15th Edition

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ACCT 277 Test 2

1) Absorption costing helps managers to artificially inflate profits by encouraging the production of products that absorb the highest amount of fixed manufacturing costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units

Cost Accounting 15th Edition

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ACCT 293 Quiz

1) Variable cost per labor-hour is $8.50. Fixed cost is $10,500. Calculate the total cost for 350 labor hours. Machine hours during the period are 50. A) $10,925 B) $13,475 C) $13,900 D) $3,400 Answer: B Explanation: B) Total cost = $10,500 + ($8.50 x 350) = $13,475 Answer: B Explanation: B) Total cost = $10,500

Cost Accounting 15th Edition

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ACCT 341

1) Use of practical capacity results in an unrealistically small fixed manufacturing cost per unit because it is based on an idealistic and unattainable level of capacity. Answer: FALSE Explanation: Use of theoretical capacity results in an unrealistically small fixed manufacturing cost per unit because it is based on an idealistic

Cost Accounting 15th Edition

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Acct 347

1) Reverse engineering can be used to analyze competitors' products to determine product designs and materials and to understand the technologies competitors use. Answer: TRUE Answer: TRUE Answer: TRUE 2) The dependent variable is a cost to be predicted and managed, whereas an independent variable or cost driver is the factor used to predict

Cost Accounting 15th Edition

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ACCT 399 Midterm 2

1) Indirect manufacturing costs should be allocated equally to each job. Answer: FALSE Explanation: Not equally to each job, but according to the use of indirect resourcesby individual jobs. Answer: FALSE Explanation: Not equally to each job, but according to the use of indirect resourcesby individual jobs. Answer: FALSE Explanation: Not equally to

Cost Accounting 15th Edition

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ACCT 426

1) A price-bidding decision for a one-time-only special order includes an analysis of all ________. A) manufacturing costs B) cost drivers related to the product C) direct and indirect variable costs of each function in the value chain D) fixed manufacturing costs Answer: C Answer: C Answer: C 2) Costs incurred in precluding the production of products that

Cost Accounting 15th Edition

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Acct 441

1) The prime cost for September was: A) $114,000 B) $100,000 C) $103,000 D) $47,000 Answer: B Prime cost = Direct materials + Direct labor = $57,000 + $43,000 = $100,000Abare Corporation reported the following data for the month of December: Answer: B Prime cost = Direct materials + Direct labor = $57,000 + $43,000 =

Cost Accounting 15th Edition

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Acct 544 Midterm

1) The selling price per unit is $25, variable cost per unit $15, and fixed cost per unit is $4. When this company operates above the breakeven point, the sale of one more unit will increase net income by $6. Answer: FALSE Explanation: The sale of one more unit will increase

Cost Accounting 15th Edition

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Acct 545 1 Determining The

1) Determining the "right" level of capacity is one of the most strategic and difficult decisions managers face. Answer: TRUE Answer: TRUE Answer: TRUE 2) The difference between total revenues and total variable costs is called contribution margin. Answer: TRUE Answer: TRUE Answer: TRUE 3) Multiple regression analysis estimates the relationship between the dependent variable and two or

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ACCT 553

1) Supervision costs have both value-added and non-value-added components. Answer: TRUE Answer: TRUE Answer: TRUE 2) Evaluating a performance helps in the future decision-making process. Answer: FALSE Explanation: Feedback and learning helps in the future decision-making process. Answer: FALSE Explanation: Feedback and learning helps in the future decision-making process. Answer: FALSE Explanation: Feedback and learning helps in

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Acct 558 Quiz 3

1) The internal rate-of-return (IRR) method calculates ________. A) the discount rate at which an investment's present value of the total of all expected cash inflows equals the present value of its expected cash outflows. B) the discount rate at which an investment's future value of all expected cash inflows equals the

Cost Accounting 15th Edition

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ACCT 569

1) Too high a price may ________. A) deter a customer from purchasing a product B) increase demand for the product C) indicate supply is too plentiful D) decrease a competitor's market share Answer: A Answer: A Answer: A 2) Which of the following is an example of price discrimination? A) Larry's offers a 30% discount to buyers making

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Acct 589 Quiz 3

1) The two broad strategies that companies follow are cost leadership strategy and product differentiation strategy. Answer: TRUE Answer: TRUE Answer: TRUE 2) In a series of interdepartmental transfers, each department is regarded as separate and distinct for accounting purposes. Answer: TRUE Answer: TRUE Answer: TRUE 3) Management by exception is the practice of concentrating on areas not operating

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Acct 606 Quiz 1

1) Lukehart Industries, Inc., produces air purifiers. Lukehart, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, Lukehart, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level costs because they are associated with batches rather than individual units of products.

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ACCT 627 Test 2

1) Pearl Lights sells only pearl necklaces. 8,000 units were sold resulting in $240,000 of sales revenue, $60,000 of variable costs, and $40,000 of fixed costs. The breakeven point in total sales dollars is ________. A) $40,000 B) $53,334 C) $100,000 D) $58,334 Answer: B Explanation: B) $40,000 / ($240,000 - 60,000) / 240,000 = $53,334

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ACCT 681 Final

1) Gambino Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $138.80 per unit. The best estimate of the total monthly fixed cost is: A) $776,400 B) $340,200 C) $812,750 D) $849,100 Answer: B Variable cost

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ACCT 701 Test 1

1) In joint costing, using physical measures at splitoff to allocate costs enables the accountant to obtain individual product costs and gross margins. Answer: FALSE Explanation: In joint costing, using sales value at splitoff to allocate costs enables the accountant to obtain individual product costs and gross margins. Answer: FALSE Explanation: In

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Acct 749 Midterm 2

1) Products S5 and CP8 each are assigned $100.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, S5 requires 45 minutes less setup time than CP8. According to an ABC system, CP8 is ________ under the traditional system. A) undercosted B) overcosted C) fairly

Cost Accounting 15th Edition

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ACCT 752 Midterm 1

1) Under both variable and absorption costing, research and development costs are period costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) Actual prices paid for materials usually serve as actual direct-cost rates for charging material costs to jobs. Answer: TRUE Answer: TRUE Answer: TRUE 3) Backflush costing is a costing method that supports creating value for the customer

Cost Accounting 15th Edition

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Acct 771 Midterm

1) Bismite Corporation purchases trees from Cheney lumber and processes them up to the splitoff point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month

Cost Accounting 15th Edition

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ACCT 786

1) Post-investment audits prevent managers from overstating the expected cash inflows from projects and accepting projects they should reject. Answer: TRUE Answer: TRUE Answer: TRUE 2) Activity-based budgeting would permit the use of multiple drivers and multiple cost pools in the budgeting process. Answer: TRUE Answer: TRUE Answer: TRUE 3) From an accounting standpoint, favorable cost variances are

Cost Accounting 15th Edition

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ACCT 787 Test

1) The high-low method uses cost and activity data from just two periods to establish the formula for a mixed cost. Answer: T Answer: T Answer: T 2) Direct costs of a cost object are costs related to a particular cost object that can be allocated to that cost object in an economically feasible

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Acct 807 Homework

1) The production method for recognizing byproducts reduces the cost of manufacturing the main or joint products in the income statement. Answer: TRUE Answer: TRUE Answer: TRUE 2) All costs other than direct materials and direct manufacturing labor are classified as indirect costs. Answer: TRUE Answer: TRUE Answer: TRUE 3) A capital budget spans only a one-year period. Answer:

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ACCT 809 Test 1

1) Management is primarily a human activity that should focus on encouraging individuals to do their jobs better. Answer: TRUE Answer: TRUE Answer: TRUE 2) As budgeting is not a cross-functional activity, it tends to be accurate and reliable with regard to forecasts. Answer: FALSE Explanation: Budgeting is a cross-functional activity involving inputs from different

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ACCT 839 Midterm 1

1) Tracking price discounts by customer and by salesperson helps improve customer profitability. Answer: TRUE Answer: TRUE Answer: TRUE 2) As companies increase supply, the cost of producing an additional unit initially declines but eventually increases. Answer: TRUE Answer: TRUE Answer: TRUE 3) A cost function is a mathematical description of how a cost changes with changes in

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ACCT 847 Quiz 3

1) The classification of costs as variable and fixed depends on the relevant range, the length of the time horizon, and the specific decision situation. Answer: TRUE Answer: TRUE Answer: TRUE 2) To determine outputs at each stage of production, MRP uses a bill of materials detailing the materials, components, and subassemblies for each

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Acct 883 Quiz 2

1) Productivity describes the relationship between different quantities of inputs consumed and the quantities of output produced. Answer: TRUE Answer: TRUE Answer: TRUE 2) When budgeted cost-allocation rates are used, variations in actual usage by one division affect the costs allocated to other divisions. Answer: FALSE Explanation: When actual cost-allocations rates are used, variations in

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Acct 887 Midterm 2

1) Competence includes maintaining an appropriate level of professional expertise by continually developing knowledge and skills. Answer: TRUE Explanation: Competence includes maintaining an appropriate level of professional expertise by continually developing knowledge and skills. Answer: TRUE Explanation: Competence includes maintaining an appropriate level of professional expertise by continually developing knowledge and skills. Answer:

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ACT 106 Test 2

1) For each cost pool listed select an appropriate allocation base from the list below. An allocation base may be used only once. Assume a manufacturing company. Allocation bases for which the information system can provide data: 1.Number of employees per department 2.Employee wages and salaries per department 3.Number of sales orders 4.Hours of operation

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ACT 126 Homework

1) To comply with antitrust laws, a company must not engage in predatory pricing, dumping, or collusive pricing which lessen competition, put another company at a competitive disadvantage, or harm consumers. Answer: TRUE Answer: TRUE Answer: TRUE 2) Total factor productivity explicitly considers gains from using fewer physical inputs as well as substitution among

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ACT 249 Quiz

1) Ventaz Corp manufactures glasses. The manufacturing cycle efficiency is 70%. What is its waiting time if the manufacturing lead time is 120 minutes per keyboard? A) 38.00 minutes B) 42.00 minutes C) 48.00 minutes D) 36.00 minutes. Answer: D Answer: D Answer: D 2) Gloria's Decorating produces and sells a mantel clock for $100 per unit. In 2015,

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ACT 310 Test 2

1) In a just-in-time production system, inventory carrying costs would be high. Answer: FALSE Explanation: A financial benefit of a just-in-time system is that inventory carrying costs are reduced. Answer: FALSE Explanation: A financial benefit of a just-in-time system is that inventory carrying costs are reduced. Answer: FALSE Explanation: A financial benefit of

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ACT 383 Midterm 1

1) Process costing ________. A) allocates all product costs, including materials, and labor B) results in different costs for different units produced C) is commonly used by general contractors who construct custom-built homes D) is used exclusively in manufacturing Answer: A Answer: A Answer: A 2) A push-through system that manufactures finished goods for inventory on the basis

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ACT 388 Midterm 1

1) The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order$450 Relevant carrying costs per year for each package: Required annual return on investment15% Required other costs per year$4 Annual demand is 30,000 packages per year. The purchase price per

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ACT 397

1) The weighted-average cost of capital (WACC) equals ________. A) the after-tax average cost of all the long-term and short-term funds B) the after-tax average cost of all the long-term funds C) the pre-tax average cost of all the short-term funds D) the pre-tax average cost of all the long-term and short-term funds Answer: B Answer:

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ACT 425 Final

1) Ridez Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers: The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. What is the per unit cost of producing 2,000 bicycles? A) $78.50 per unit B) $170 per unit C)

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ACT 427 Homework

1) Inventoriable costs and period costs flow through the income statement at a merchandising company similar to the way costs flow at a manufacturing company. Answer: TRUE Explanation: Depreciation on a factory is classified as a product cost. Answer: TRUE Explanation: Depreciation on a factory is classified as a product cost. Answer: TRUE

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ACT 444 Test 2

1) All else being constant, an increase in operating income will result in an increase in net income. Answer: TRUE Answer: TRUE Answer: TRUE 2) Throughput costing results in a higher amount of manufacturing costs being placed in inventory than either variable or absorption costing. Answer: FALSE Explanation: Throughput costing results in a lower amount

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ACT 539

1) It is appropriate to incorporate expected learning-curve efficiencies when evaluating performance. Answer: TRUE Answer: TRUE Answer: TRUE 2) An organization which uses product differentiation strategy will charge higher prices. Answer: TRUE Answer: TRUE Answer: TRUE 3) After a budget is agreed upon and finalized by the management team, the amounts should NOT be changed for any reason. Answer:

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ACT 554 Test 2

1) Customer response time comprises of ________. A) manufacturing cycle time and delivery time only B) receipt time and manufacturing cycle time only C) receipt time, manufacturing cycle time, and delivery time D) manufacturing time and delivery time only Answer: C Answer: C Answer: C 2) Marvelous Motors is a small motor supply outlet that sells motors to

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ACT 565

1) Manufacturing overhead cost is an example of indirect engineered costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) Downsized capacity is the amount of productive capacity available over and above the productive capacity employed to meet customer demand in the current period. Answer: FALSE Explanation: The amount of productive capacity available over and above the

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ACT 614 Test 2

1) The Standards of Ethical Conduct for management accountants include concepts related to ________. A) competence, performance, diligence, and reporting B) competence, confidentiality, integrity, and credibility C) experience, diligence, reporting, and objectivity D) diligence, objectivity, conflicts of interest, and credibility Answer: B Answer: B Answer: B 2) Axelia Corporation has two divisions, Refining and Extraction. The company's primary

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ACT 674 Quiz

1) Budgeted production equals ________. A) beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory B) targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit sales C) budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory D) budgeted unit sales

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ACT 679

1) The NPV method is the preferred method over IRR for selecting projects because ________. A) its use leads to shareholder value maximization B) it accounts for the time value of money C) it assumes that cash flows are reinvested at the internal rate of return D) it gives a project ranking consistent with

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ACT 690

1) Total manufacturing costs is comprised of ________. A) direct materials costs and period costs B) direct materials costs, direct manufacturing labor costs, and manufacturing overhead costs C) indirect materials costs, indirect manufacturing labor costs, and manufacturing overhead costs D) prime costs and period costs Answer: B Answer: B Answer: B 2) Which of the following statements is

Cost Accounting 15th Edition

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ACT 706

1) An assumption of the FIFO process-costing method is that ________. A) the units in beginning inventory are not necessarily assumed to be completed by the end of the period B) the units in beginning inventory are assumed to be completed first C) ending inventory will always be completed in the next accounting

Cost Accounting 15th Edition

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ACT 712 Quiz 3

1) To prepare budgets based on actual data from past periods is preferred since past inefficiencies are EXCLUDED. Answer: FALSE Explanation: A deficiency of using budgeted input quantity information based on actual quantity data from past periods is that past inefficiencies are included. Answer: FALSE Explanation: A deficiency of using budgeted input

Cost Accounting 15th Edition

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ACT 717 Test

1) A major advantage of using actual costs for transfer prices is that often inefficiencies are NOT passed along to the receiving division. Answer: FALSE Explanation: When actual costs are used inefficiencies are passed along to the receiving division. Answer: FALSE Explanation: When actual costs are used inefficiencies are passed along to

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ACT 747 Homework

1) ISO 9000 are standards designed to encourage organizations to develop environmental management systems to reduce environmental costs. Answer: FALSE Explanation: ISO 14000 are standards designed to encourage organizations to develop environmental management systems to reduce environmental costs. Answer: FALSE Explanation: ISO 14000 are standards designed to encourage organizations to develop environmental

Cost Accounting 15th Edition

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ACT 761

1) Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) The objective of maximizing return on investment may induce managers of highly profitable divisions to reject projects that from the viewpoint of the overall organization should be accepted. Answer: TRUE Answer: TRUE Answer: TRUE 3) Managers

Cost Accounting 15th Edition

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ACT 779

1) Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in

Cost Accounting 15th Edition

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ACT 798 Quiz 3 1 Transferpricing

1) Transfer-pricing systems enable managers to focus on maximizing the performance of their subunits. Answer: TRUE Answer: TRUE Answer: TRUE 2) Managers can always view a favorable variable overhead spending variance as desirable. Answer: FALSE Explanation: Managers should not always view a favorable variable overhead spending variance as desirable. For example, the variable overhead spending

Cost Accounting 15th Edition

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ACT 862

1) In flexible budgets, costs that remain the same regardless of the output levels within the relevant range are ________. A) allocated costs B) budgeted costs C) fixed costs D) variable costs Answer: C Answer: C Answer: C 2) ________ is the continuing reduction in the demand for a company's products that occurs when competitor prices are not

Cost Accounting 15th Edition

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Chapter 9 Denominator Level Capacity Concepts

Absorption-Costing Income Statement Theoretical Capacity Practical Capacity Normal Capacity Utilization Revenues (2,460,000 bbls. $47 per bbl.) $115,620,000 $115,620,000 $115,620,000 Cost of goods sold Beginning inventory 0 0 0 Variable mfg. costs 80,634,000 80,634,000 80,634,000 Fixed mfg. overhead costs allocated (2,670,000 units $6.50; $7.86; $9.78 per unit) 17,355,000 20,986,200 26,112,600 Cost

Cost Accounting 15th Edition

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MET MG 112 Midterm 2

1) A customer cost hierarchy may include distribution-channel costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) Effort in terms of management control systems is defined in terms of physical exertion such as a worker producing at a faster rate. Answer: FALSE Explanation: Effort goes beyond physical exertion and includes both physical and mental actions. Answer: FALSE

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MET MG 128 Quiz 3

1) Depreciation on office equipment would be included in product costs. Answer: F Answer: F Answer: F 2) The account analysis method of cost estimation classifies account costs as fixed, mixed, or variable using qualitative judgments. Answer: TRUE Answer: TRUE Answer: TRUE 3) The coefficient of determination (r2) measures the percentage of variation in X (the independent variable)

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MET MG 169 Quiz 3

1) The best-designed strategies are valuable whether or not they are effectively implemented. Answer: FALSE Explanation: Implementation is essential or the strategy is useless. Answer: FALSE Explanation: Implementation is essential or the strategy is useless. Answer: FALSE Explanation: Implementation is essential or the strategy is useless. 2) The high-low method involves choosing the period

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MET MG 178 Quiz 1

1) Effort refers to physical exertion, such as a worker producing at a faster rate, but excludes non-physical aspects like acumen and diligence of a worker. Answer: FALSE Explanation: Effort is the extent to which managers strive or endeavor in order to achieve a goal. Effort goes beyond physical exertion, such

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MET MG 181 Test

1) In making the decision to buy the model 260 machine rather than the model 330 machine, the sunk cost was: A) $418,000 B) $456,000 C) $474,000 D) $496,000 Answer: B Sunk cost = Cost of old machine = $456,000 Answer: B Sunk cost = Cost of old machine = $456,000 Answer: B Sunk cost = Cost

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MET MG 284 Test 1

1) When fixed costs are $50,000 and variable costs are 60% of the selling price, then breakeven sales are ________. A) $115,000 B) $125,000 C) $175,000 D) $275,000 Answer: B Explanation: B) $50,000 / (1 - 0.60) = $125,000 in BE sales Answer: B Explanation: B) $50,000 / (1 - 0.60) = $125,000 in BE sales Answer:

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MET MG 345 Homework

1) The Green Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result. The following information was collected for the month of October: The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff point to

Cost Accounting 15th Edition

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MET MG 362

1) The journal entry for transfer from Department B to finished goods is: Work in ProcessDepartment B Finished Goods Control Answer: FALSE Explanation: The correct entry is as follows:Finished Goods ControlWork in ProcessDepartment B Answer: FALSE Explanation: The correct entry is as follows:Finished Goods ControlWork in ProcessDepartment B Answer: FALSE Explanation: The correct entry is

Cost Accounting 15th Edition

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MET MG 516 Homework

1) Costs of activities related to a group of units sold to a customer is termed as customer batch-level costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) The revenues budget should be based on the cost of goods sold budget. Answer: FALSE Explanation: The revenues budget provides input to the cost of goods sold budget. Answer: FALSE

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MET MG 517 Quiz 1

1) Job-costing systems separate costs into cost categories according to when costs are introduced into the process of manufacture. Answer: TRUE Explanation: Process-costing systems separate costs into cost categories according to when costs are introduced into the process of manufacture. Answer: TRUE Explanation: Process-costing systems separate costs into cost categories according to

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MET MG 580

1) With the use of a bar chart, the number of "unprofitable" customers and the magnitude of their losses are apparent. Answer: TRUE Answer: TRUE Answer: TRUE 2) Direct manufacturing labor includes plant rent and salaries paid to plant supervisors. Answer: FALSE Answer: FALSE Answer: FALSE 3) The last step in the decision-making process is to make decisions

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MET MG 594 Homework

1) Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of

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MET MG 611 Quiz 1

1) Benchmarking measures how well a company and its managers are doing in comparison to other organizations. Answer: TRUE Answer: TRUE Answer: TRUE 2) A Pareto diagram is usually in a bar-chart format, that indicates how frequently each type of defect occurs, ordered from the most frequent to the least frequent. Answer: TRUE Answer: TRUE Answer: TRUE 3)

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MET MG 645 Quiz

1) A learning curve measures the effect of learning on efficiency. Answer: TRUE Answer: TRUE Answer: TRUE 2) From the perspective of control, the direct materials price variance should be isolated at the time of sales. Answer: FALSE Explanation: From the perspective of control, the direct materials price variance should be isolated at the time of

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MET MG 649

1) In joint costing, the constant gross-margin percentage method recognizes that the profit margin is not just attributable to the joint process but is also derived from the costs incurred after splitoff. Answer: TRUE Answer: TRUE Answer: TRUE 2) Computer-based systems, such as ERP systems, cannot perform calculations for financial planning models. Answer: FALSE Explanation:

Cost Accounting 15th Edition

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MET MG 766 Quiz 2

1) The issue of "allowable costs" is applicable in government cost-plus contracts. Answer: TRUE Answer: TRUE Answer: TRUE 2) An important consideration in designing compensation arrangements is the tradeoff between creating incentives and imposing risks. Answer: TRUE Answer: TRUE Answer: TRUE 3) The key to a company's success is always to be the low cost producer in a

Cost Accounting 15th Edition

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MET MG 767 Quiz

1) A flexible-budget variance pertaining to revenues is often called a sales-volume variance. Answer: FALSE Explanation: A flexible-budget variance for revenues is called the selling-price variance because it arises solely from the difference between the actual selling price and the budgeted selling price. Answer: FALSE Explanation: A flexible-budget variance for revenues is

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MET MG 774

1) Sensitivity analysis is a useful tool that helps managers evaluate risks. Answer: TRUE Answer: TRUE Answer: TRUE 2) Discretionary costs arise from periodic (usually annual) decisions regarding the maximum amount to be incurred. Answer: TRUE Answer: TRUE Answer: TRUE 3) Commissions paid to salespersons are a variable selling expense. Answer: T Answer: T Answer: T 4) The supply chain describes the

Cost Accounting 15th Edition

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MET MG 781

1) Zephyr Apparels is a clothing retailer. Unit costs associated with one of its products, Product DCT121, are as follows: What are the direct variable manufacturing costs per unit associated with Product DCT121? A) $142 B) $90 C) $105 D) $110 Answer: C Explanation: C) Direct variable manufacturing costs = $70 + $20 + $15 =

Cost Accounting 15th Edition

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MET MG 791

1) The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is different under backflush costing and sequential tracking. Answer: FALSE Explanation: The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is exactly the

Cost Accounting 15th Edition

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MET MG 796 Quiz 1

1) Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials. Answer: FALSE Explanation: Estimating the degree of completion is easier for the calculation of direct materials since direct materials can be measured more easily than conversion costs. Answer:

Cost Accounting 15th Edition

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MET MG 846 Quiz

1) When a company has no opening or ending inventory during the month, the cost per unit is calculated by dividing the total costs incurred in the period by the total units produced during the period. Answer: TRUE Answer: TRUE Answer: TRUE 2) Activity-based budgeting provides better decision-making information than budgeting based solely on

Cost Accounting 15th Edition

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MET MG 857 Quiz 2

1) Tax deductions for depreciation result in tax savings that partially offset the cost of acquiring the capital asset. Answer: TRUE Answer: TRUE Answer: TRUE 2) Companies that implement JIT purchasing will emphasize developing short-term supplier relationships to attain flexibility. Answer: FALSE Explanation: Companies that implement JIT purchasing choose their suppliers carefully and develop long-term

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MET MG 892 Final

1) A revenue driver is a variable, such as volume, that causally affects revenues. Answer: TRUE Answer: TRUE Answer: TRUE 2) Machine depreciation can be a cost-driver for a manufacturing company under ABC system. Answer: FALSE Explanation: Machine depreciation is an activity cost rather than a cost driver. Answer: FALSE Explanation: Machine depreciation is an activity

Cost Accounting 15th Edition

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SMG AC 118 Midterm 2

1) Companies operating in markets that are not competitive favor cost-based approaches. Answer: TRUE Answer: TRUE Answer: TRUE 2) Target cost per unit is arrived at by adding the target operating income to the target price of the product. Answer: FALSE Explanation: Target cost per unit is the target price minus target operating income per

Cost Accounting 15th Edition

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SMG AC 203 Midterm

1) In each of the following industries, identify possible joint (or severable) products at the splitoff point. a.Coal b.Petroleum c.Dairy d.Lamb e.Lumber f.Cocoa Beans g.Christmas Trees h.Salt i.Cowhide Answer: a.Coke, Gas, Benzole, Tar, Ammoniab.Crude Oil, Gas, Raw LPGc.Milk, Butter, Cheese, Ice Cream, Skim Milkd.Lamb Cuts, Tripe, Hides, Bones, Fate.Board, Newsprint, Shavings, Chips, etc.f.Cocoa Butter, Cocoa Powder, Cocoa Shellsg.Christmas Trees, Wreaths,

Cost Accounting 15th Edition

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SMG AC 214 Test 2

1) The value chain is the sequence of business functions in which ________. A) value is deducted from the products or services of an organization B) producing and delivering the product or service is of prime importance C) products and services are evaluated with respect to their value to the supply chain D) usefulness

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SMG AC 215

1) Cost of goods sold budget takes inputs from both, ending inventories budget and nonmanufacturing costs budget. Answer: FALSE Explanation: Cost of goods sold budget does not take any input from nonmanufacturing costs budget. Answer: FALSE Explanation: Cost of goods sold budget does not take any input from nonmanufacturing costs budget. Answer: FALSE

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SMG AC 236

1) The cash budget is a schedule of expected cash receipts and disbursements that ________. A) requires an aging of accounts receivable and accounts payable B) is a self-liquidating cycle C) is prepared immediately after the sales forecast D) predicts the effect on the cash position at given levels of operations Answer: D Answer: D Answer: D 2)

Cost Accounting 15th Edition

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SMG AC 248 Midterm 2

1) The cash flow statement includes ________. A) cash discount on sales B) cash outflow towards insurance premium C) sales revenues of the organization D) interest accrued on an investment Answer: C Answer: C Answer: C 2) Many manufacturing, marketing, and design problems require employees with multiple skills; therefore, teams are used and the members have the added

Cost Accounting 15th Edition

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SMG AC 289

1) Which of the following best describes transferred-in costs in process costing? A) These costs are incurred in previous departments that are carried forward to subsequent departments. B) These costs are transferred in to the company by an external vendor. C) These costs are incurred in transferring raw materials and labor from the

Cost Accounting 15th Edition

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SMG AC 298

1) The revenues budget is prepared after all other operating budgets are prepared. Answer: FALSE Explanation: The revenues budget is generally the starting point for preparing operating budgets and is generally the first operating budget to be prepared. Answer: FALSE Explanation: The revenues budget is generally the starting point for preparing operating

Cost Accounting 15th Edition

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SMG AC 466 Quiz 1

1) Buzz's Educational Software Outlet sells two or more of the video games as a single package. Managers are keenly interested in individual product-profitability figures. Information pertaining to three bundled products and the stand-alone prices is as follows: Using the incremental method, what amount of revenue will be allocated to Math

Cost Accounting 15th Edition

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SMG AC 624

1) Throughput costing considers only direct materials and direct manufacturing labor to be truly variable costs. Answer: FALSE Explanation: Throughput costing considers only direct materials to be truly variable costs. Answer: FALSE Explanation: Throughput costing considers only direct materials to be truly variable costs. Answer: FALSE Explanation: Throughput costing considers only direct materials

Cost Accounting 15th Edition

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SMG AC 641 Midterm

1) A responsibility center is a part, segment, or subunit of an organization whose manager is accountable for a specified set of activities. Answer: TRUE Answer: TRUE Answer: TRUE 2) Operating plans are generally expressed through long-run budgets. Answer: FALSE Explanation: Operating plans are generally expressed through short-run budgets. Strategic plans are expressed through long-run

Cost Accounting 15th Edition

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SMG AC 682 Quiz 1

1) Job costing system is an example of absorption costing. Answer: TRUE Answer: TRUE Answer: TRUE 2) When calculating the equivalent units, we should only focus on dollar amounts of inventory. Answer: FALSE Explanation: When calculating the equivalent units, we should disregard dollar amounts and focus should be on quantities. Answer: FALSE Explanation: When calculating the

Cost Accounting 15th Edition

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SMG AC 702 Midterm 2

1) A positive aspect of backflush costing is the presence of the visible audit trail. Answer: FALSE Explanation: In backflush costing, the visible audit trail diminishes. Answer: FALSE Explanation: In backflush costing, the visible audit trail diminishes. Answer: FALSE Explanation: In backflush costing, the visible audit trail diminishes. 2) The credit rating agencies require

Cost Accounting 15th Edition

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SMG AC 741 Quiz

1) The cost-allocation base is a systematic way to link an indirect cost or group of indirect costs to cost objects. Answer: TRUE Answer: TRUE Answer: TRUE 2) A cost driver is a variable, such as the level of activity or volume that causally affects costs over a given time span. Answer: TRUE Answer: TRUE Answer: TRUE 3) Evaluating

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SMG AC 765 Quiz 3

1) Russo Corporation manufactured 16,000 air conditioners during November. The overhead cost-allocation base is $31.50 per machine-hour. The following variable overhead data pertain to November: What is the variable overhead efficiency variance? A) $3,937.50 favorable B) $3,937.50 unfavorable C) $4,500 favorable D) $4,500 unfavorable Answer: A Explanation: A) [7,875 - (16,000 x 9,000/18,000) mh] x $31.50

Cost Accounting 15th Edition

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SMG AC 843 Midterm 2

1) IMA's overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility. Answer: TRUE Answer: TRUE Answer: TRUE 2) The key to a company's success is creating value for customers while differentiating itself from its competitors. Answer: TRUE Answer: TRUE Answer: TRUE 3) Companies operating in competitive markets should ideally use cost-plus approach to pricing. Answer: FALSE Explanation: Companies operating in

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SMG AC 847 Test

1) When forecasting fixed costs, managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs. Answer: TRUE Answer: TRUE Answer: TRUE 2) Treasury includes banking and short- and long-term financing, investments, and cash management. Answer: TRUE Answer: TRUE Answer: TRUE 3) A firm operating at breakeven point will pay an income tax of 10%. Answer: FALSE Explanation:

Cost Accounting 15th Edition

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SMG AC 894 Midterm

1) Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All

Cost Accounting 15th Edition

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SMG AC 895 Test

1) Using net book value as an investment base will result in a lower ROI than using gross book value as an investment base. Answer: FALSE Explanation: Using gross book value as an investment base will result in a lower ROI than using net book value as an investment base. Answer: FALSE

Cost Accounting 15th Edition

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Cost Accounting 15th Edition

Trusted by Thousands ofStudents

Albert

Anna

Collins

Jill

Drake

Karen

Hill

Rachel

Kristopher

Resources

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Trusted by Thousands of
Students