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Ex 2-15 Name: Enter the appropriate amounts in the shaded cells in columns E and F. 1) LEMANS COMPANY Statement of Cost of Goods Manufactured For the Month of June Direct materials Direct materials beginning inventory Add: Purchases Materials available […]

Ex 3-17 Name: Enter the data in columns C and E below. When you have entered all data points, the scattergraph to the right and below will be correct. Radiology Total Month Tests Cost January 2800 133500 February 2600 135060 […]

Ex 4-21 Name: Enter the appropriate amounts in the shaded cell in columns D, F, H, and J. 1) Activity Cost x Usage Model X Model Y Setting up equipment Model X x Model Y x Ordering Materials Model X […]

Ex 5-16 Name: Overhead Control Work in process Beg. Bal. – – 1) a) b) c) d) e) f) g) 2. a. Materials b. Work-in-Process c. Overhead d. Finished Goods Record the journal entries below. Use the pull-down lists to […]

Ex 6-11 Name: 1) Select the appropriate accounts from the pull-down menus in the shaded cells in columns B and C. Enter the appropriate amounts in the shaded cells in columns I and J. 2) Enter the appropriate amounts in […]

Ex 7-18 Name: Enter the appropriate amounts in the shaded cells in columns I and K. 1) Cost Driver Information Dept. A Dept B. Total Year 1 Actual direct labor hours Cost allocation ratios Year 2 Actual direct labor hours […]

Ex 9-14 Name: Enter the appropriate amounts in the shaded cells in columns B, D, F, H, J, and L. 1) Material variances: AQ xAP AQ xSP SQ xSP x x x MPV MUV 2) Labor variances: AH xAR AH […]

CHAPTER 1 Introduction to Cost Management COLLABORATIVE LEARNING EXERCISE SOLUTION 1. and 2. Potential questions Queen Isabella might have asked during the eight-month voyage follow. (F) refers to a financial accounting type of question; (CM) refers to a cost management […]

1-1 CHAPTER 1 INTRODUCTION TO COST MANAGEMENT DISCUSSION QUESTIONS 1. Cost management is concerned with assign- ing costs and using information for planning, controlling, continuous improvement, and decision making. It encompasses cost accounting and management accounting but has a broader […]

Method I $15.00 $22.00 $28.00 Method II* 10.50 15.40 19.60 There may be, and very likely is, very little R&D function in the Cable Service Division. Thus, this first unit cost could satisfy both value-chain and operat- ing cost definitions. […]

CHAPTER 1 INTRODUCTION TO COST MANAGEMENT Chapter 1 can be covered on the first day of class. Students should understand what cost management is and how it is changing over time. This chapter is also a good place to introduce […]

If the selling unit is not operating at full capacity, it should reduce the trans- fer price to the market price if this would allow the recovery of variable costs plus a portion of the fixed costs. This price reduction […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exercise 10.19 1. The value of the option for the entire amount would be: […]

10-1 CHAPTER 10 DECENTRALIZATION: RESPONSIBILITY ACCOUNTING, PERFORMANCE EVALUATION, AND TRANSFER PRICING DISCUSSION QUESTIONS 1. Decentralization is the delegation of decision– making authority to lower levels. In central- ized decision making, decisions are made at the very top level, and lower-level […]

CHAPTER 10 DECENTRALIZATION: RESPONSIBILITY ACCOUNTING, PERFORMANCE EVALUATION, AND TRANSFER PRICING As a firm grows, there is a need to delegate decision-making responsibilities to subordinates. Most firms tend to be decentralized in decision-making authority. Performance evaluation, management compensation, and transfer pricing […]

Ex 10-7 Name: Enter the appropriate amounts in the shaded cells in column C and E. 1) ROI forYear 1 Furniture Division Margin xTurnover NOI x Sales Sales Avg Op. Assets x = Margin xTurnover =ROI x = ROI for […]

CHAPTER 11 STRATEGIC COST MANAGEMENT DISCUSSION QUESTIONS 1. A competitive advantage is providing better customer value for the same or lower cost or equivalent value for lower cost. The cost management system must provide infor- mation that helps identify strategies […]

Exercise 11.18 (Concluded) 2. Basic: $228,000/45,000 = $5.07* per unit Advanced: $720,000/24,000 = $30 per unit The JIT cost is more accurate because it has more costs that can be assigned using direct tracing. *Rounded to the nearest cent. 3. […]

Ex 11-10 Name: Enter the appropriate numbers in the shaded cells in columns D, F, K, and M. 1) Activity Cost / Units Activity Rate Inspection components / = Expediting work / = Reworking products / = Warranty work / […]

cussed the performance of two of his company’s products and information about when some products may come out. Both Don and Spencer—but especially Don—violated the standard of confidentiality. They should refrain from disclosing confidential information acquired in the course of […]

Problem 11.29 1. Target cost = Target price – Target profit = $130 – $15 = $115 per unit The projected cost is $122 [$120 + ($100,000/50,000 units)], so the target is not met. The projected total life-cycle profit is […]

CHAPTER 11 STRATEGIC COST MANAGEMENT Activity-based costing (ABC) was introduced in Chapter 4. ABC can significantly improve the accuracy of product costing. Yet, the value of traditional product cost definition is limited and may not be very useful in certain […]

CHAPTER 12 ACTIVITY- BASED MANAGEMENT Many firms that operate in today’s rapidly changing environment must not only know what it currently costs to do things, but they must continually re-examine why and how they do things. Continuous improvement involves improving […]

Ex 12-13 Name: Enter the appropriate numbers in the shaded cells in columns B, D, F, H, K, and M. 1) Fixed activity rate = SP SP = Cost Capacity, orders SP = = Enter the appropriate numbers in the […]

efficiency variance. Howard’s behavior is unethical. Howard (and perhaps others) is de- liberately subverting the organization’s legitimate and ethical objective of providing a high-quality product used in the manufacture of an airplane—in exchange for a favorable performance rating and, presumably, […]

12–17 PROBLEMS Problem 12.23 1. An activity driver measures the amount of an activity consumed by a cost object. It is a measure of activity output. Activity drivers are used to assign activity costs to cost objects. On the other […]

12-1 CHAPTER 12 ACTIVITY-BASED MANAGEMENT DISCUSSION QUESTIONS 1. The two dimensions are the cost dimension and the process dimension. The cost dimen- sion is concerned with accurate assignment of costs to cost objects, such as products and customers. Activity-based costing […]

13–14 PROBLEMS Problem 13.20 MEMO TO: Carson Wellington FROM: Emily Sorensen RE: Comparison of Activity- and Strategic-Based Responsibility Accounting DATE: July 14, 2014 As requested, I am providing, in advance, a list of some of the most important similarities and […]

Ex 13-9 Name: Enter the appropriate numbers in the shaded cells in columns G and I. 1) Velocity = Capacity Production hours Velocity (theoretical) = = Velocity (actual) = = Cycle time = Minutes per hour laptops per hour Cycle […]

CHAPTER 13 THE BALANCED SCORECARD: STRATEGIC-BASED CONTROL The Balanced Scorecard is a strategic management system that translates the vision and strategy of an organization into operational objectives and measures. The Balanced Scorecard is compatible with activity-based responsibility accounting because it […]

strategic-based system, rewards are linked to four perspectives and over multiple measures within each perspective. The amount of compensation that goes to each per- spective is a function of the emphasis the organization wishes to place on each perspec- tive. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 13 THE BALANCED SCORECARD: STRATEGIC-BASED CONTROL DISCUSSION QUESTIONS 1. A strategic-based responsibility accounting […]

CHAPTER 14 Quality and Environmental Cost Management COLLABORATIVE LEARNING EXERCISE SOLUTION 1. Trend in Hazardous Waste 50,000 48,000 46,000 40,000 0 10,000 20,000 30,000 40,000 2010 2011 2012 2013 Year Tons of Waste 50,000 60,000 2. Hazardous Waste for 2010 […]

14–54 Problem 14.39 (Concluded) 5. Iona Company Long-Range Performance Report For the Years Ended December 31, 2015 and 2020 Actual Long-Range Costs Target 2015a Costsb Variance Prevention costs: Fixed: Quality planning ………….. $ 150,000 $ 0 $ 150,000 U Quality […]

14-1 CHAPTER 14 QUALITY AND ENVIRONMENTAL COST MANAGEMENT DISCUSSION QUESTIONS 1. Quality of design is a function of the product’s specifications, whereas quality of conformance is a measure of how a product meets its specifications. 2. All quality costs are […]

CHAPTER 14 QUALITY AND ENVIRONMENTAL COST MANAGEMENT As discussed in Chapter 13, improving process quality and quality of products and services is a fundamental strategic objective that is part of any well-designed Balanced Scorecard. Improving quality can increase profitability in […]

Ex 14-10 Name: Use the pull-down list on each cell to select the appropriate quality cost. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. Ex […]

14–21 Exercise 14.14 (Concluded) 5. Gainsharing provides a strong incentive for managers to improve quality and reduce quality costs. Gainsharing is a good idea, provided the incentive sys- tem is carefully designed. The bonus must be truly based on quality […]

14–41 Problem 14.34 (Concluded) 4. The company should increase prevention and appraisal costs. The additional amounts spent on these programs will be recouped with additional savings from a resulting decrease in failure costs. 5. Quality costs: $15,000,000 × 2.5% = […]

Ex 15-16 Name: Enter the appropriate amounts in the shaded cells in columns C, F, H, L, and N. 1) Profile: / Base Year Materials / = Labor / = Current Year Materials / = Labor / = 2) Base […]

Exercise 15.16 1. Productivity profiles: Base Yeara Current Yearb Materials productivity ratio ……….. 0.75 1.00 Labor productivity ratio …………….. 3.00 2.00 aMaterials: 900,000/1,200,000; Labor: 900,000/300,000 bMaterials: 1,080,000/1,080,000; Labor: 1,080,000/540,000 2. Income statements: Base Year Current Year Sales …………………. $13,500,000 $16,200,000 […]

($12  150,000) …………………….. (1,800.000) Machine hours: ($12  75,000) ………………………. (900,000) ($12  37,500) ………………………. (450,000) Gross profit ……………………………………… $ 1,200,000 $ 750,000 Setting A provides the greatest increase. Materials ………… 0.40 1.00 0.50 Equipment………. 1.67 1.00 2.00 Setting […]

CHAPTER 15 LEAN ACCOUNTING AND PRODUCTIVITY MEASUREMENT DISCUSSION QUESTIONS 1. Lean manufacturing is an approach de- signed to eliminate waste and maximize customer value. It is characterized by deliv- ering the right product, in the right quantity, with the right […]

3. Discuss and define productive efficiency and partial productivity measurement. 2. Lean Accounting (LO 2) 1. Precisely specify value by each particular product. 3. Make value flow without interruption. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, […]

CHAPTER 16 COST-VOLUME-PROFIT ANALYSIS Cost-volume-profit (CVP) analysis can be used to illustrate how managers use accounting data for planning and decision making. Students who enjoy solving puzzles will probably enjoy the discussion of CVP. A more complete analysis of the […]

Ex 16-8 Name: Enter the appropriate amount in the shaded cells in columns C and E. Variable 1) Contribution margin = Price – costs = – = 2) Fixed Contribution Break-even in units = costs / margin = / = […]

16–18 Exercise 16.25 1. Bread Sweet Rolls Total Sales …………………………………… $600,000 $300,000 $900,000 Less: Variable cost ………………. 390,000 186,000 576,000 Contribution margin ………… $210,000 $114,000 $324,000 Less: Fixed costs ………………… 185,000 Operating income ……………. $139,000 2. Contribution margin ratio = […]

16-1 CHAPTER 16 COST-VOLUME-PROFIT ANALYSIS DISCUSSION QUESTIONS 1. CVP analysis allows managers to focus on prices, volume, costs, profits, and sales mix. Many different “what–if” questions can be asked to assess the effect on profits of changes in key variables. […]

R2 = 0.510 c. Overhead = $1,264 + $4.73 machine hours + $89.42 setups R2 = 0.962 The multiple regression equation is best. It has the highest R2, the signs on the variables make sense, and both independent variables are […]

importance of her job and her department. Additional outsourcing would decrease the relative value of production and increase the relative value of purchasing. James is obligated by standard I-1 to “maintain an appropriate level of professional competence by ongoing development […]

17-1 CHAPTER 17 ACTIVITY RESOURCE USAGE MODEL AND TACTICAL DECISION MAKING DISCUSSION QUESTIONS 1. Tactical decision making is choosing among alternatives with an immediate or limited end in mind. 2. Tactical decisions should support the overall strategic objectives of an […]

CHAPTER 17 ACTIVITY RESOURCE USAGE MODEL AND TACTICAL DECISION MAKING Tactical decision making consists of choosing among alternatives with an immediate or limited end in view. Tactical decisions can be short term or small scale in nature but must be […]

17–16 Exercise 17.16 1. Number of lawns for LStar = 5 months × 2 weeks × 20 houses = 200 lawn mowings over the five months Accept Reject Revenue ($20 × 200 lawn mowings) …………. $ 4,000 $0 Payments to […]

Ex 17-9 Name: Enter the appropriate amount in the shaded cells. 1) Make Buy Direct materials $2,508,000 $0 Direct labor 539,000 0 =$3,213,650 /55,000 =$58.43 2) Lowest Maximum price = total cost / Units Variable overhead 151,250 0 Fixed overhead […]

18-1 CHAPTER 18 PRICING AND PROFITABILITY ANALYSIS DISCUSSION QUESTIONS 1. Price elasticity of demand is measured by the percentage change in quantity divided by the percentage change in price. If de- mand is relatively elastic, a price change of X […]

Ex 18-18 Name: Enter the appropriate amount in the shaded cells in column C. 1) Direct material Direct labor Machine time Variable overhead Administrative costs Total 2) Full-cost criteria and max. allow. return price: Relevant costs (above) Fixed overhead Subtotal […]

18–19 PROBLEMS Problem 18.26 Chain store costs: Small retail store costs: Sales salaries …………. $ 110,000 Sales support ……………… $ 328,000 Delivery cost* …………. 51,000 Delivery cost** …………….. 142,800 Total ………………….. $ 161,000 Total ………………………. $ 470,800 Number of units […]

production (55) 0 0 0 0 0 0 0 Rebates** (10) 0 0 0 0 0 0 0 Advertising (25) (50) (20) (20) (20) (20) (20) 0 Commission (3) (9) (16) (18) (18) (18) (9) 0 Profit (loss) $ (29) […]

CHAPTER 18 PRICING AND PROFITABILITY ANALYSIS What is profit? How do we measure it? Many considerations factor into the determination of price. In this chapter, the authors focus on the measurement of cost, price, and revenues. Economic factors, legal considerations, […]

CHAPTER 19 Capital Investment COLLABORATIVE LEARNING EXERCISE SOLUTION 1. Peter’s suggestion is unethical. The guidelines for capital projects are in place to help en- sure sound decisions. Falsifying data to bypass the guidelines shows a lack of integrity. 2. Laura […]

19–17 Problem 19.24 (Concluded) 4. Most of the factors mentioned can be quantified. Furthermore, they should be included in the analysis. All direct and indirect costs as well as costs of in- tangible factors should be included; otherwise, it is […]

CHAPTER 19 CAPITAL INVESTMENT Capital investment decisions are concerned with the acquisition of long-term assets and usually involve a significant outlay of funds. This chapter covers the basic capital budgeting models and decision making. Taxes and inflation are considered later […]

19-1 CHAPTER 19 CAPITAL INVESTMENT DISCUSSION QUESTIONS 1. Independent projects are such that the acceptance of one does not preclude the ac- ceptance of another. With mutually exclusive projects, however, acceptance of one pre- cludes the acceptance of others. 2. […]

Ex 19-15 Name: Enter the appropriate amounts in the shaded cells in columns E and G. 1) Payback period = Investment / Annual net cash flow Payback period = / = Enter the appropriate amounts in the shaded cells in […]

3. Define tangible and intangible products, and explain why there are different product cost definitions. 1. A Systems Framework (LO 1) 3. Product and Service Costs (LO 3) © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied […]

CHAPTER 2 BASIC COST MANAGEMENT CONCEPTS DISCUSSION QUESTIONS 1. An accounting information system is a sys- tem consisting of interrelated manual and computer parts, using processes such as collecting, recording, classifying, summariz- ing, analyzing, and managing data to pro- vide […]

2-17 © a ac cc ce es ss si ib bl le e w we eb bs si it te e, , i in n w wh ho ol le e o or r i in n p pa ar […]

No. 2 common 1,875,000 0.25 225,000 No. 3 common 1,125,000 0.15 135,000 Totals 7,500,000 1.00 $900,000 *Percentage × $900,000 Unit cost: Firsts and seconds $0.12 ($180,000/1,500,000) No. 1 common 0.12 ($360,000/3,000,000) No. 2 common 0.12 ($225,000/1,875,000) No. 3 common 0.12 […]

CHAPTER 20 INVENTORY MANAGEMENT: ECONOMIC ORDER QUANTITY, JIT, AND THE THEORY OF CONSTRAINTS Inventory represents a significant investment of capital for most companies. Inventory management is fundamental to establishing a long-term competitive advantage. The focus of this chapter is how […]

Ex 20-7 Name: 1) Enter the appropriate amounts in cells E9, G9, I9, and G10. EOQ = 2DP C EOQ = x x EOQ = 2) Enter the appropriate amounts in cells C21, C22, and G22. Ordering cost is Number […]

tive maintenance, total quality control (strives for zero defects), and building the right kind of relationship with suppliers. d. Unreliable production processes are addressed by total quality management. As fewer and fewer defective units are produced, there is less and […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 20 INVENTORY MANAGEMENT: ECONOMIC ORDER QUANTITY, JIT, AND THE THEORY OF CONSTRAINTS DISCUSSION […]

20–16 Problem 20.23 (Concluded) 4. EOQ = 2DP / C = ( ) 3$/10$000,362 = 000,240 = 490 (batch size, rounded) This further reduction in setup time and cost reduces the batch size even more. As the setup time is […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exercise 3.23 (Concluded) 3. Cumulative Cumulative Cumulative Time Number Average Time Total Time: for […]

CHAPTER 3 COST BEHAVIOR Chapter 3 provides the basics of cost behavior, focusing on expanded definitions of fixed and variable costs and introducing the concept of mixed costs. Methods of separating mixed costs into fixed and variable elements are presented […]

3-1 CHAPTER 3 COST BEHAVIOR DISCUSSION QUESTIONS 1. Knowledge of cost behavior allows a man- ager to assess changes in costs that result from changes in activity. This allows a man- ager to assess the effects of choices that change […]

Customer Increase market share Market share Increase customer Satisfaction index from satisfaction survey Minimize use of Types and quantities virgin materials Minimize release of Pounds of toxic waste Decrease time for Cycle time product development Decrease time to market Time […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Problem 3.35 (Concluded) 4. Regression output from spreadsheet, leaving out the first quarter observation […]

3. Provide a detailed description of activity-based product costing. 2. Limitations of Plantwide and Departmental Rates (LO 2) © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in […]

4-1 CHAPTER 4 ACTIVITY-BASED COSTING DISCUSSION QUESTIONS 1. A predetermined overhead rate is simply an estimate of the overhead used per unit of driver. It is calculated using budgeted over- head and budgeted levels of the associated driver. Predetermined rates […]

MTC4-1 MAKING THE CONNECTION: INTEGRATIVE EXERCISE PART 4: CHAPTERS 16–20 1. The following are the steps of the tactical decision-making model outlined in Chapter 17. Step 1. Recognize and define the problem. Sabrina defined the problem as a need to […]

4-33 Problem 4.32 (Continued) 2. Activities Cost Driver Activity Rate Setup Runs $240,000/300 = $800/run Machine Machine hours $1,750,000/185,000 = $9.46*/MHr Receiving Receiving orders $2,100,000/1,400 = $1,500/order Engineering Engineering hours $2,000,000/10,000 = $200/eng. hr. Materials handling Material moves $900,000/900 = […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exercise 4.21 1. Activity rates: Setting up equipment = $126,000/150 = $840 per setup […]

Less shipping and warehousing ……………………….. 292.68 Profit ………………………………………………………. $ 209.32 Original profit per ton: Selling price ………………………………………………….. $ 2,500.00 Less manufacturing costs ……………………………….. 1,998.00 Shipping cost per shipping item = $9,200,000/380,000 = $24.21* per shipping item Shipping ($24.21  7) […]

5. Explain how activity-based costing is applied to job-order costing. 4. Job-Order Costing: Specific Cost Flow Description (LO 4) © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, […]

5-16 Exercise 5.19 1. a. Materials ………………………………………………… 113,300 Accounts Payable ……………………………….. 113,300 b. Work in Process …………………………..………… 82,500 Overhead Control …………………………………… 8,800 Materials …………………………………………….. 91,300 c. Work in Process …………………………………….. 67,000 Overhead Control …………………………………… 18,750 Wages Payable …………………………………… 85,750 d. […]

5-1 CHAPTER 5 PRODUCT AND SERVICE COSTING: JOB-ORDER SYSTEM DISCUSSION QUESTIONS 1. Cost measurement is the process of deter- mining the dollar amounts of direct materi- als, direct labor, and overhead that should be assigned to production. Cost accumula- tion […]

6-1 CHAPTER 6 PROCESS COSTING DISCUSSION QUESTIONS 1. A process is a series of activities (opera- tions) that are linked to perform a certain ob- jective. For example, the bottling process of a pain medication manufacturer consists of four linked […]

credit his profession. Finally, Stoney has an ethical obligation to communicate information fairly and objectively, disclosing all information that would be needed for the loan officer to fairly assess the merits of the company’s request for a loan. Clearly, Stoney […]

CHAPTER 6 PROCESS COSTING Process costing exposes students to a different method of collecting costs for products. The material in this chapter is generally difficult for students because of the amount of detail. LEARNING OBJECTIVES After studying Chapter 6, students […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CPA-TYPE EXERCISES Exercise 6.26 a. (the only difference between the two is how beginning […]

6-38 Problem 6.38 (Concluded) Costs accounted for: Transferred Ending Work Out in Process Total Goods transferred out (198,000 × $0.1090) ………………………. $21,582 — $21,582 Ending work in process: Transferred in (6,000 × $0.0766) ……. — $460* 460* Direct materials (6,000 […]

CHAPTER 7 ALLOCATING COSTS OF SUPPORT DEPARTMENTS AND JOINT PRODUCTS Allocation of support center costs is an important topic for product costing. In recent years, the issue of accurate product costing has assumed considerable importance. Managers need to be fully […]

7-1 CHAPTER 7 ALLOCATING COSTS OF SUPPORT DEPARTMENTS AND JOINT PRODUCTS DISCUSSION QUESTIONS 1. Stage one assigns service costs to produc- ing departments. Costs are assigned using factors that reflect the consumption of the services by each producing department. Stage […]

(0.3333 × $340,000) …………….. $ 113,322 Power: (0.5556 × $200,000) …………….. 111,120 (0.4444 × $200,000) …………….. 88,880 Direct costs………………………………. 75,000 55,000 $ 412,798 $ 257,202 Cooking ($10.32 × 2) …………………………………. 20.64 Packaging and freezing ($8.57 × 0.5) …………… 4.29 Total […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exercise 7.20 1. Allocation ratios: Pesticide Liquid Fertilizer Square feet ………………. 0.4667 0.5333 Machine […]

CHAPTER 8 BUDGETING FOR PLANNING AND CONTROL Budgeting is one topic that most students can relate to since they are involved with their own personal budgets. Failure to plan, either formally or informally, can lead to financial disaster. Careful planning […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Credit sales ($500,000 × 0.85 × 0.30) ………………………………………………………. 127,500 Cash received in March from […]

8-1 CHAPTER 8 BUDGETING FOR PLANNING AND CONTROL DISCUSSION QUESTIONS 1. Budgets are the quantitative expressions of plans. Budgets are used to translate the goals and strategies of an organization into operational terms. 2. Control is the process of setting […]

Problem 8.37 (Continued) Accounts receivable for August 31 is computed as follows: Given accounts payable, the total assets must equal $569,750 ($81,000 + $220,000 + $268,750). Cash is computed as the difference between total as- sets and all other assets […]

Exercise 8.24 Del Spencer’s Men’s Clothing Store Schedule of Cash Receipts For the months of August and September August September (0.9)(0.14)($45,000)(1.03) ………… 5,840 August: [(0.9 × 0.15) × $56,000] …………… 7,560 [(0.9 × 0.65) × $56,000] …………… 32,760 September: [(0.9 […]

9-1 CHAPTER 9 STANDARD COSTING: A FUNCTIONAL-BASED CONTROL APPROACH DISCUSSION QUESTIONS 1. Standard costs are essentially budgeted amounts on a per-unit basis. Unit standards serve as inputs in building budgets. 2. The quantity decision is determining how much input should […]

CHAPTER 9 STANDARD COSTING: A FUNCTIONAL-BASED CONTROL APPROACH The responsibilities of management include planning, controlling, and decision making. Chapter 8 discussed static and flexible budgeting, which have a significant impact on the functions of planning and controlling. Flexible budget variances […]

they may become frustrated and lower their performance as a consequence. Many firms elect to use currently attainable standards in lieu of ideal standards. The standard suggested by the presi- dent is a good starting point. If experience indicates that […]

Problem 9.33 (Continued) 4. Fixed overhead variances: Variable overhead variances: Note: SH = (0.1 × 35,000) + (0.15 × 70,000) = 14,000 = $40 × 14,800 = $592,000 = $40 × 14,000 = $560,000 Spending Variance $15,500 U Efficiency Variance […]

Exercise 9.23 Exercise 9.24 b. Variable overhead spending variance = ($8 × 25) − ($10 × 25) = $50 F Exercise 9.25 c. Volume Variance = $65,000 − ($5 × 12,000) = $5,000 U Exercise 9.26 d. Materials Quantity Variance […]

CHAPTER 1: INTRODUCTION TO COST MANAGEMENT 1. An accounting information system collects, records, summarizes, analyzes, and manages data to transform inputs into information that is provided to users. a. True b. False ANSWER: True 2. The two major subsystems of […]

Chapter 1: Introduction to Cost Management 89. All of the following would be considered staff functions EXCEPT the a. vice president of finance. b. vice president of corporate planning. c. vice president of marketing. d. vice president of research and […]

Chapter 10: Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing 122. Panther Company had the following historical accounting data per unit: Direct materials $60 Direct labor 30 Variable overhead 15 Fixed overhead 24 Variable selling expenses 45 Fixed selling expenses […]

CHAPTER 10: DECENTRALIZATION: RESPONSIBILITY ACCOUNTING, PERFORMANCE EVALUATION, AND TRANSFER PRICING 1. Responsibility accounting is a system that measures the results of each responsibility center and compares those results with some expected or budgeted outcome. a. True b. False ANSWER: True […]

Chapter 10: Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing 84. Cornwall Company has two divisions, A and B. Information for each division is as follows: A B Net earnings for division $40,000 $260,000 Asset base for division $100,000 $1,200,000 […]

CHAPTER 11: STRATEGIC COST MANAGEMENT 1. Strategic cost management is the identification of strategies to develop a competitive advantage. a. True b. False ANSWER: True 2. Strategic decision making is important to achieve good inventory control. a. True b. False […]

Chapter 11: Strategic Cost Management 137. Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6–inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine […]

Chapter 11: Strategic Cost Management 100. Lavalier Company developed the following budgeted life-cycle income statement for two proposed products. Each product’s life cycle is expected to be two years. Product AA Product BB Total Sales $400,000 $350,000 $750,000 Cost of […]

Chapter 12: Activity-Based Management 98. The maintenance subcycle is defined by what sequence? a. establish-do-check-act b. establish-act-do-check c. do-act-establish-check d. check-do-plan-act ANSWER: a 99. A technique for improving performance of activities and processes that searches for best practices is called […]

CHAPTER 12: ACTIVITY-BASED MANAGEMENT 1. Activitybased management focuses management’s attention on activities resulting in improving customer value and profits. a. True b. False ANSWER: True 2. Activity-based costing does not provide good information for activity-based management. a. True b. False […]

Chapter 12: Activity-Based Management 125. Which of the following is descriptive of financial-based responsibility accounting? a. It assumes that activities are linked. b. It assigns responsibility to organization units. c. Its control emphasis is costs. d. Its goal is continuous […]

Chapter 13: The Balanced Scorecard: Strategic-Based Control 91. At the beginning of 2016, Haroldson Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company’s products. Theoretical annual capacity 9,000 Actual production […]

CHAPTER 13: THE BALANCED SCORECARD: STRATEGIC-BASED CONTROL 1. Activity-based responsibility accounting focuses on processes and uses both operational and financial measures. a. True b. False ANSWER: True 2. Activity-based responsibility accounting employs dynamic standards and emphasizes and supports continuous improvement. […]

Chapter 14: Quality and Environmental Cost Management 193. In 2016, Creative Design, Inc., instituted a quality improvement program. At the end of 2017, the management of the corporation requested a report to show the amount saved by the measures taken […]

CHAPTER 14: QUALITY AND ENVIRONMENTAL COST MANAGEMENT 1. A quality product or service is one that meets or exceeds customer expectations. a. True b. False ANSWER: True 2. If costs of quality were evaluated accurately, they would range in the […]

Chapter 14: Quality and Environmental Cost Management 173. Hannibal Company produces a number of chemical products, two of which are Product X1 and Product X2. The controller and environmental manager have identified the following environmental activities and costs associated with […]

Chapter 14: Quality and Environmental Cost Management 101. The following information pertains to Molotov, Inc., for 2016: Sales $20,000,000 Internal failure costs 600,000 External failure costs 400,000 Appraisal costs 250,000 Prevention costs 100,000 Cost of goods sold 10,000,000 Quality costs […]

CHAPTER 15: LEAN ACCOUNTING AND PRODUCTIVITY MEASUREMENT 1. Lean manufacturing is concerned with eliminating waste in manufacturing processes. a. True b. False ANSWER: True 2. Lean manufacturing adds value by reducing labor costs. a. True b. False ANSWER: False 3. […]

Chapter 15: Lean Accounting and Productivity Measurement Materials (per pound) $5.00 $5.50 Labor (per hour) $7.00 $7.50 142. Information about Bodacious Corporation is as follows: 2014 2015 Output (units) 120,000 126,000 Selling price per unit $25 $25 Input quantities: Materials […]

Chapter 15: Lean Accounting and Productivity Measurement 98. The quantitative assessment of productivity changes is called: a. Productivity measurement b. Operational productivity measure c. Technical efficiency d. Financial productivity measure ANSWER: a 99. The process of producing output efficiently, using […]

Chapter 15: Lean Accounting and Productivity Measurement Model 1 3 minutes 6 minutes 10 minutes 5 minutes Model 2 4 minutes Required: 9 minutes 12 minutes 5 minutes 160. a. What are the cycle times for each model? b. What […]

CHAPTER 16: COST-VOLUME-PROFIT ANALYSIS 1. Cost-volume-profit analysis focuses on the break-even point and the impact of changes in fixed costs and price. a. True b. False ANSWER: True 2. The break-even point is the point where total costs equal sales […]

Chapter 16: Cost-Volume-Profit Analysis 121. Bugatti, Inc. decided to institute an advertising campaign that would cost $75,000. Variable costs will remain at $15 per unit. Bugatti is currently selling 100,000 units of its product at $25 per unit. The marketing […]

Chapter 16: Cost-Volume-Profit Analysis 82. The following data pertain to the three products produced by Culdesac Corporation: A B C Selling price per unit $5.00 $7.00 $6.00 Variable costs per unit 4.00 5.00 3.00 Contribution margin per unit $1.00 $2.00 […]

Chapter 17: Activity Resource Usage Model and Tactical Decision Making 76. Refer to Figure 17–1. When Montrose converted over to ABC it discovered the following: inspecting products — 20 percent of the inspection activity was unused. The inspections used were […]

Chapter 17: Activity Resource Usage Model and Tactical Decision Making 105. Modesto Company produces CD Players for home stereo units. The CD Players are sold to retail stores for $30. Manufacturing and other costs are as follows: Variable costs per […]

CHAPTER 17: ACTIVITY RESOURCE USAGE MODEL AND TACTICAL DECISION MAKING 1. Tactical decision making consists of choosing among alternatives with an immediate or limited end in view. a. True b. False ANSWER: True 2. Sound tactical decision making is limited […]

Chapter 18: Pricing and Profitability Analysis 132. The market share variance is calculated by a. [(Actual industry sales in units – Budgeted industry sales in units) × (Budgeted market share percentage)] × (Budgeted average unit contribution margin). b. [(Actual market […]

Chapter 18: Pricing and Profitability Analysis 157. Hang 10 Inc. produces two types of surfboards: basic and deluxe. The basic surfboard sells for $25 and the deluxe sells for $100. Hang 10 is budgeting sales for 2016 of 1,000 basic […]

CHAPTER 18: PRICING AND PROFITABILITY ANALYSIS 1. The relationship between supply and demand helps set pricing. a. True b. False ANSWER: True 2. Price elasticity of demand is the percent change in price demanded for a given percent change in […]

Chapter 18: Pricing and Profitability Analysis 79. Lorillard Corporation has the following information for April, May, and June 2016: April May June Units produced 12,500 12,500 12,500 Units sold 8,750 10,625 13,125 Production costs per unit (based on 12,500 units) […]

Chapter 19: Capital Investment 109. Under the current tax law, an asset that is classified as 7-year property and has a cost of $400,000 would result in a depreciation deduction in Year 3 of a. $97,920. b. $69,960. c. $66,667. […]

Chapter 19: Capital Investment 72. The following information pertains to an investment by the Town of Sutton: Investment $140,000 Annual revenues $96,000 Annual variable costs $32,000 Annual fixed out–of–pocket costs $20,000 Salvage value $12,000 Discount rate 12% Expected life of […]

CHAPTER 19: CAPITAL INVESTMENT 1. Capital investment decisions are concerned with planning, setting goals, arranging financing, and the selection of long-term assets. a. True b. False ANSWER: True 2. Independent projects directly affect the cash flows of other projects once […]

Chapter 2: Basic Cost Management Concepts 116. Which of the following costs are expensed in the period in which they are incurred? a. Direct materials costs b. Product costs c. Factory overhead costs d. Nonproduction costs ANSWER: d 117. Order-getting […]

Chapter 2: Basic Cost Management Concepts Figure 2-16 A small engine repair shop purchased materials costing $9,000 in July. The beginning inventory of material parts was $4,500 and the ending inventory of material parts was $4,000. Payments for direct labor […]

CHAPTER 2: BASIC COST MANAGEMENT CONCEPTS 1. The cost management information system is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy management objectives. a. True b. False ANSWER: True 2. The Financial accounting […]

Chapter 20: Inventory Management: Economic Order Quantity, JIT, and the Theory of Constraints 95. The correct order for the four steps that must be followed to solve problems graphically is a. Graph each constraint, Identify the feasible set of solutions, […]

CHAPTER 20: INVENTORY MANAGEMENT: ECONOMIC ORDER QUANTITY, JIT, AND THE THEORY OF CONSTRAINTS 1. Effective inventory management conserves investment capital and facilitates response to customer demands. a. True b. False ANSWER: True 2. Just-in–case inventory management is a traditional inventory […]

Chapter 3: Cost Behavior 120. The method for analyzing cost behavior that generally classifies general ledger accounts is a. account analysis method. b. multiple regression method. c. industrial engineering method. d. learning curve method. ANSWER: a 121. The cost behavior […]

Chapter 3: Cost Behavior 175. Refer to Figure 3-8. What is the predicted overhead cost? a. $2,500 b. $75,000 c. $76,000 d. none of these ANSWER: c RATIONALE: overhead = $25(1,000) + $100 (500) + $1,000= $76,000 176. Which of […]

CHAPTER 3: COST BEHAVIOR 1. Costs can display variable, fixed, or mixed behavior, and it important that they are classified accurately. a. True b. False ANSWER: True 2. A cost that does not change as output changes is a variable […]

Chapter 4: Activity-Based Costing 197. Maroone, Inc., has identified the following overhead costs and activity drivers for next year: Overhead Item Expected Cost Activity Driver Expected Setup costs $150,000 Number of setups 1,200 Ordering costs 40,000 Number of orders 10,000 […]

Chapter 4: Activity-Based Costing 129. Refer to Figure 4-14. If material moves are used to assign material handling costs, the amount of material handling costs allocated to the proposed job would be a. $ 60. b. $147. c. $170. d. […]

Chapter 4: Activity-Based Costing 167. Refer to Figure 4-21. Under this new approach, which two activities would be selected as the cost pools? a. materials handling and labor related b. labor related and batch inspections c. product design and batch […]

CHAPTER 4: ACTIVITY-BASED COSTING 1. Unit based costing first assigns overhead costs to departmental pools and then assigns these costs to products using predetermined overhead rates. a. True b. False ANSWER: True 2. Management information systems can be divided into […]

Chapter 4: Activity-Based Costing 84. Lamar Corporation uses departmental manufacturing overhead rates to apply overhead. Direct labor cost is used to apply manufacturing overhead in Department A and machine hours are used for Department B. Dept. A Dept. B Direct […]

Chapter 5: Product and Service Costing: Job-Order System Figure 5-5 Tonneau Corporation had the following information available for October 2016: Work in Process, October 1 $20,000 Materials placed into production, October 27,500 Direct labor, October 37,500 Factory overhead rate is […]

CHAPTER 5: PRODUCT AND SERVICE COSTING: JOB-ORDER SYSTEM 1. A production process may yield a tangible product or a service and their unique characteristics determine the best approach for developing a cost management system. a. True b. False ANSWER: True […]

Chapter 5: Product and Service Costing: Job-Order System 144. Sound of Thunder Company has a job costing system. The following items appeared in the Work-in–Process account during April 2016: April 1, 2016, balance $20,000 Materials placed into production ? Direct […]

Chapter 6: Process Costing 172. Refer to Figure 6-22. Department C’s cost per unit for materials using the weighted average method is a. $2.16. b. $2.88. c. $3.43. d. $3.60. ANSWER: b RATIONALE: SUPPORTING CALCULATIONS: Conversion Units completed 42,000 Ending […]

Chapter 6: Process Costing 86. Refer to Figure 6-6. What are the equivalent units for materials and conversion respectively? a. 20,000; 20,000 b. 20,000; 16,000 c. 15,000; 15,000 d. 15,000; 14,000 e. none of the above ANSWER: b RATIONALE: EQU […]

Chapter 6: Process Costing 124. The following information pertains to Southland Company: Units Work in process, April 1 (20% complete) 8,000 Started in January 40,000 Work in process, April 30 12,000 Materials are added at the beginning of the process. […]

CHAPTER 6: PROCESS COSTING 1. A process is a series of activities or operations, which are linked to perform a specific objective. a. True b. False ANSWER: True 2. The cost flows for a process-costing system are totally different from […]

Chapter 7: Allocating Costs of Support Departments and Joint Products 87. Evergreen Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and […]

Chapter 7: Allocating Costs of Support Departments and Joint Products 121. Products with substantial value which are produced simultaneously by the same process up to a split-off point are called: a. Joint products b. Minor products c. By–products d. Both […]

CHAPTER 7: ALLOCATING COSTS OF SUPPORT DEPARTMENTS AND JOINT PRODUCTS 1. Common costs are mutually beneficial costs, used in the output of two or more services or products. a. True b. False ANSWER: True 2. Allocation increases total costs. a. […]

Chapter 7: Allocating Costs of Support Departments and Joint Products 160. Silver Chariots Trucking Company incurred $5,000 of indirect advertising costs for its operations. The following data have been collected for 2016 for its three departments: Determine the costs assigned […]

CHAPTER 8: BUDGETING FOR PLANNING AND CONTROL 1. A budget is a financial plan for the future used for planning, controlling, and decision making. a. True b. False ANSWER: True 2. Budgeting means to set standards, receive feedback, and executing […]

Chapter 8: Budgeting for Planning and Control 158. Walterboro, Inc., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance $11,000 + $0.11 per machine hour Machining […]

Chapter 8: Budgeting for Planning and Control 192. Realistic budgets reflect a. actual levels of activity, full capacity usage, efficiencies, and general economic trends. b. actual levels of activity, seasonal variations, efficiencies, and general economic trends. c. ideal levels of […]

Chapter 8: Budgeting for Planning and Control 91. The following forecasted sales pertain to Rapid City: Month Sales June $160,000 July 200,000 August 120,000 September 80,000 Finished goods inventory as of May 31 6,000 units Rapid City has a selling […]

CHAPTER 9: STANDARD COSTING: A FUNCTIONAL-BASED CONTROL APPROACH 1. Developing standards for input prices and quantities allows for a more detailed understanding of flexible budget variances. a. True b. False ANSWER: True 2. Price standards specify amounts and quantity standards […]

Chapter 9: Standard Costing: A Functional-Based Control Approach Required: a. Calculate the materials price variance. b. Calculate the materials usage variance. c. Calculate the direct labor rate variance. d. Calculate the direct labor efficiency variance. e. Calculate the variable manufacturing […]

Chapter 9: Standard Costing: A Functional-Based Control Approach 84. If a company produces fewer units than expected, there will be a. a favorable budget variance. b. an unfavorable spending variance. c. a favorable volume variance. d. an unfavorable volume variance. […]