Archives: Solution Manual

i. The emphasis is on cost behavior. Variable costs are separate from fixed costs. ii. The contribution margin is defined as the amount remaining from sales revenue after variable expenses have been deducted. iii. Contribution margin is used first to […]

Exercise 4A-9 (continued) 5. Materials Conversion Total Ending work in process inventory: Equivalent units of production …………………………………………… 240 120 Cost per equivalent unit …………………………………………………… $18.20 $23.25 Cost of ending work in process inventory …………………………….. $4,368 $2,790 $7,158 Units transferred out: […]

Problem 4-16 (continued) 2. Accounts Receivable Raw Materials (g) 1,400,000 Bal. 198,600 (a) 192,600 Bal. 6,000 Work in Process Blending Department Work in Process Bottling Department Bal. 32,800 (e) 722,000 Bal. 49,000 (f) 920,000 (a) 147,600 (a) 45,000 (b) 73,200 […]

Chapter 4 Process Costing Solutions to Questions 4-1 A process costing system should be used in situations where a homogeneous product is produced on a continuous basis. 4-2 Job-order and processing costing are similar in the following ways: 1. Job-order […]

76 2. The first step is to determine the equivalent units needed to complete beginning work in 3. The second step is to add the units started and completed during the period (5,100 units for materials and conversion). 4. The […]

63 Chapter 4 Lecture Notes Chapter theme: Managers need to assign costs to products to facilitate external financial reporting and internal I. Comparison of job-order and process costing A. Similarities between job-order and process costing i. Both systems assign material, […]

Exercise 3-17 (30 minutes) 1. The predetermined overhead rate is computed as follows: Y = $106,250 + $0.75 per MH × 85,000 MHs Estimated fixed manufacturing overhead ……………… $106,250 Estimated variable manufacturing overhead $0.75 per MH × 85,000 MHs …………………………… […]

Chapter 3 Job-Order Costing Solutions to Questions 3-1 By definition, manufacturing overhead consists of costs that cannot be practically traced to jobs. Therefore, if these costs are to be assigned to jobs, they must be allocated rather than traced. be […]

Exercise 3A-2 (continued) Consequently, the income statement would appear as follows: Income Statement Sales ……………………………………………. $43,740 Cost of goods sold (see above) ………….. 26,510 Gross margin …………………………………. 17,230 Underapplied manufacturing overhead … $1,920 Selling and administrative expenses ……. 8,180 10,100 […]

Problem 3-26 (continued) 2. Preparation Department overhead applied: 350 machine-hours × $5.20 per machine-hour ….. $1,820 Fabrication Department overhead applied: 130 direct labor-hours × $14.40 per labor-hour …. 1,872 Total overhead cost ……………………………………….. $3,692 3. Total cost of Job 127: […]

vi. Transferring completed units from work in process to finished goods 1. In T-account form: a. The sum of all amounts transferred from work in process to finished 2. In journal entry form: a. Debit Finished Goods and credit Work […]

Chapter 3 Lecture Notes Chapter theme: Managers need to assign costs to products to facilitate external financial reporting and internal decision making. This chapter illustrates an absorption costing approach to calculating product costs known as job-order costing. I. Job-order costing: […]

Problem 2A-4 (continued) 2. a. Quarter DLHs (X) Utilities Cost (Y) Year 1: 1st 5,000 $50,000 2nd 3,000 $45,000 3rd 4,000 $60,000 4th 6,000 $75,000 Year 2: 1st 10,000 $100,000 2nd 9,000 $105,000 3rd 8,000 $85,000 4th 11,000 $120,000 The […]

Exercise 2-13 (continued) 4. The high-low estimate of fixed costs is $1,470.59 higher than the estimate provided by least-squares regression. The high-low estimate of the variable cost per unit is $0.29 lower than the estimate provided by least-squares regression. A […]

Chapter 2 Managerial Accounting and Cost Concepts Solutions to Questions 2-1 The three major elements of product costs in a manufacturing company are direct materials, direct labor, and manufacturing overhead. 2-2 a. Direct materials are an integral part of a […]

Case 2-25 (30 minutes) 1. The scattergraph of janitorial labor cost versus the number of units produced is presented below: © The McGraw-Hill Companies, Inc., 2012. All rights reserved. Solutions Manual, Chapter 2 45 Case 2-25 (continued) 2. The scattergraph […]

Chapter 2 Lecture Notes Chapter theme: This chapter explains how managers need to rely on different cost classifications for different purposes. The four main purposes emphasized in this I. General cost classifications We’ll begin by looking at manufacturing companies because […]

Helpful Hint: The income statement from the annual report of a well-known local manufacturing firm can be used to illustrate the functional income statement. Ask if the various expense categories on the income statement III. Cost classifications for assigning costs […]

© The McGraw-Hill Companies, Inc., 2012. All rights reserved. Solutions Manual, Chapter 1 1 sportscasters, (3) planning how many new television shows to introduce to the market, (4) planning each television show’s designated broadcast time slot, and (5) planning the […]

iii. Relevance of data 1. Financial accounting data should be objective and verifiable. Managerial accountants focus on providing relevant Chapter 1 Lecture Notes Chapter theme: This chapter explains why managerial accounting is important to the future careers of all business […]

23-35 23-33 (20 min.) Executive compensation, balanced scorecard. Mercantile Bank recently introduced a new bonus plan for its business unit executives. The company believes that current profitability and customer satisfaction levels are equally important to the bank’s long-term success. As […]