“If the interest rate is 10 percent, a present value of $100 and a future value of $133.10 at the end of three years are economically equivalent.” Explain.
> Morelli Electric Motor Corporation’s controller, Erin Jackson, developed new product costs for the standard, deluxe, and heavy-duty models using activity-based costing. It was apparent that the firm’s traditional product-costing system had been under cos
> Can you describe any internal controls you observed in a job you have held? Alternatively, what kinds of internal controls do you think are in place at your college?
> Refer to the product costs developed in requirement 2 of the preceding case. Prepare a table showing how Morelli Electric Motor Corporation’s traditional, volume-based product-costing system distorts the product costs of the standard, d
> Morelli Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models, designated as standard, deluxe, and heavy-duty. The company uses a job-order cost-accounting system with manufacturing overhead applied
> Whitestone Company produces two subassemblies, JR-14 and RM-13, used in manufacturing trucks. The company is currently using an absorption costing system that applies overhead based on directlabor hours. The budget for the current year ending December 31
> Bo Vonderweidt, the production manager for Sportway Corporation, had requested to have lunch with the company president. Vonderweidt wanted to put forward his suggestion to add a new product line. As they finished lunch, Meg Thomas, the company president
> General Instrumentation Company manufactures dashboard instruments for heavy construction equipment. The firm is based in Baltimore, but operates several divisions in the United States, Canada, and Europe. The Hudson Bay Division manufactures complex ele
> InterGlobal Industries is a diversified corporation with separate operating divisions. Each division’s performance is evaluated on the basis of profit and return on investment. The Air Comfort Division manufactures and sells air-conditi
> Holiday Entertainment Corporation (HEC), a subsidiary of New Age Industries, manufactures go-carts and other recreational vehicles. Family recreational centers that feature not only go-cart tracks but miniature golf, batting cages, and arcade games as we
> Pacific Rim Industries is a diversified company whose products are marketed both domestically and internationally. The company’s major product lines are furniture, sports equipment, and household appliances. At a recent meeting of Pacif
> Cathy’s Classic Clothes is a retailer that sells to professional women in the northeast. The firm leases space for stores in upscale shopping centers, and the organizational structure consists of regions, districts, and stores. Each region consists of tw
> You just started a summer internship with the successful management consulting firm of Kirk, Spock, and McCoy. Your first day on the job was a busy one, as the following problems were presented to you. Required: Supply the requested comments in each of
> Refer to the original data given in the preceding exercise III-5 for Fiber Technology, Inc. Required: 1. Prepare a table showing the total annual cost of ordering and storing XL-20 for each of the following order quantities: 400, 600, and 800 canisters.
> CompTech, Inc., manufactures printers for use with home computing systems. The firm currently manufactures both the electronic components for its printers and the plastic cases in which the devices are enclosed. Jim Cassanitti, the production manager, re
> Aunt Molly’s Old Fashioned Cookies bakes cookies for retail stores. The company’s best-selling cookie is chocolate nut supreme, which is marketed as a gourmet cookie and regularly sells for $8.00 per pound. The standar
> Your next-door neighbor recently began a new job as assistant controller for Conundrum Corporation. As her first assignment, she prepared a performance report for January. She was scheduled to present the report to management the next morning, so she bro
> MacGyver Corporation manufactures a product called Miracle Goo, which comes in handy for just about anything. The thick tarry substance is sold in six-gallon drums. Two raw materials are used; these are referred to by people in the business as A and B. T
> Niagara Falls Sporting Goods Company, a wholesale supply company, engages independent sales agents to market the company’s products throughout New York and Ontario. These agents currently receive a commission of 20 percent of sales, but
> Oakley Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new units as well as replacement canopies. Oakley developed its 20x2 business plan based on the assumption that canopies would sell
> Delaware Medical Centre operates a general hospital. The medical centre also rents space and beds to separately owned entities rendering specialized services, such as Pediatrics and Psychiatric Care. Delaware charges each separate entity for common servi
> Refer to the data and accompanying information in the Case 6-51. Required: 1. Use the high-low method to estimate the cost behaviour for the clinic’s administrative costs. Express the cost behaviour in formula form (Y = a + bX). What i
> What does SOX section 404 require of management?
> What does SOX section 302 require of management?
> What is the PCAOB? Describe its mission.
> List five ways that management can seek to relax a constraint by expanding the capacity of a bottleneck operation.
> Aloha Hotels and Resorts uses number of employees as the allocation base for its administration cost pool. Briefly explain why this probably makes sense for Aloha, and describe the characteristics of a company for which this may not be the right allocati
> Using the measures selected in the prior question, explain the difference between lead and lag measures.
> Identify four measures that an airline might use in the internal business processes perspective of a balanced scorecard.
> List and describe the four perspectives included in the balanced scorecard.
> How does cloud-based budgeting make use of the Internet? What are its risks and benefits?
> Discuss this comment by a small-town bank president: “Budgeting is a waste of time. I’ve been running this business for 40 years. I can run it in my sleep.”
> “I don’t understand this cost report at all,” exclaimed Jeff Mahoney, the newly appointed administrator of Mountain View General Hospital. “Our administrative costs in the new pediat
> What are ESG outcomes and costs, and why does reporting this information matter?
> Describe the use of practical capacity in a TDABC system.
> East Company manufactures DVD players using a completely automated production process. West Company also manufactures DVD players, but its products are assembled manually. How will these two firms’ cost structures differ? Which company will have a higher
> How can an activity-based costing system alleviate the problems Dronze Inc.’s management was having under its traditional, volume-based product-costing system?
> Why was Dronze Inc.’s management being misled by the traditional product-costing system? What mistakes were being made?
> How could the administration at Immunity Medical Center’s Primary Care Unit use the information developed by the TDABC project team?
> Which of the following university cost drivers is likely to be associated with the behavior of variable costs? (a) number of students, (b) number of disciplines offered for study, (c) urban versus rural location
> Provide three examples of ways in which Walt Disney Company could apply insights from big data and data analytics to promote the success of their ESPN sports television operation.
> Based on the discussions in this chapter, what would you expect is meant by the term non–value-added costs?
> Give three examples of cost drivers in the airline industry that could apply to a particular flight.
> Earth and Artistry, Inc., provides commercial landscaping services. Sasha Cairns, the firm’s owner, wants to develop cost estimates that she can use to prepare bids on jobs. After analysing the firm’s costs, Cairns has
> Fiber Technology, Inc., manufactures glass fibers used in the communications industry. The company’s materials and parts manager is currently revising the inventory policy for XL-20, one of the chemicals used in the production process. The chemical is pu
> List three costs that are likely to be controllable by a city’s airport manager. List three costs that are likely to be uncontrollable by the manager.
> Give examples of each of the four primary management activities in the context of a national fast-food chain such as Chipotle.
> The volume of business-to-consumer (B2C) electronic retail transactions is estimated to exceed $2 trillion, and business-to-business (B2B) e-commerce transactions are estimated at over an additional $1 billion. What additional decision-making challenges
> Explain the differences in the basic philosophies underlying the JIT and EOQ approaches to inventory management.
> Define and give examples of inventory ordering, holding, and shortage costs.
> “The greater the discount rate, the greater the present value of a future cash flow.” True or false? Explain your answer.
> Define the term present value.
> Explain in words the following future value formula: Fn = P (1 + r)n.
> What is meant by the term compound interest?
> European Styles, Inc., manufactures women’s blouses of one quality, which are produced in lots to fill each special order. Its customers are department stores in various cities. European Styles sews the particular storesâ€
> Why did some managers complain about the requirements imposed by SOX sections 302 and 404?
> Show how to prepare a journal entry to enter direct material costs into the Work-in-Process Inventory account for the first department in a sequential production process. Show how to prepare the journal entry recording the transfer of goods from the firs
> Now that we have studied different kinds of costs and the systems used to accumulate them, let’s think about how these concepts might apply in the social media industry. Suppose you are the CFO (chief financial officer) of Facebook, Twitter, Instagram, o
> Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process
> Timing Technology, Inc., manufactures timing devices. During 20x1, 900,000 units were completed and transferred to finished-goods inventory. On December 31, 20x1 there were 300,000 units in work in process. These units were 50 percent complete as to conv
> Glass Glow Company manufactures a variety of glass windows in its Egalton plant. In Department I, clear glass sheets are produced, and some of these sheets are sold as finished goods. Other sheets made in Department I have metallic oxides added in Depart
> Plasto Corporation manufactures a variety of plastic products including a series of molded chairs. The three models of molded chairs, which are all variations of the same design, are Standard (can be stacked), Deluxe (with arms), and Executive (with arms
> GroFast Company manufactures a high-quality fertilizer, which is used primarily by commercial vegetable growers. Two departments are involved in the production process. In the Mixing Department, various chemicals are entered into production. After proces
> Scrooge and Zilch, a public accounting firm in London, is engaged in the preparation of income tax returns for individuals. The firm uses the weighted-average method of process costing for internal reporting. The following information pertains to Februar
> The following data pertain to the Hercules Tire and Rubber Company for the month of May. Additional Information: a. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. b. H
> Gargantuan Industries is a multiproduct company with several manufacturing plants. The Boise Plant manufactures and distributes two household cleaning and polishing compounds, standard and commercial, under the Super Clean label. The forecasted operating
> A-1 Products manufactures wooden furniture using an assembly-line process. All direct materials are introduced at the start of the process, and conversion cost is incurred evenly throughout manufacturing. An examination of the company’s Work-in-Process I
> Goodson Corporation assembles various components used in the telecommunications industry. The company’s major product, a relay switch, is the result of assembling three parts: XY634, AA788, and GU321. The following information relates to activities of Ap
> Albany Company accumulates costs for its product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. Required: Use weighted-average process costing
> Triangle Fastener Corporation accumulates costs for its single product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. A partially completed prod
> The following data pertain to the Vesuvius Tile Company for July. Work in process, July 1 (in units) …………………………………………………………… 20,000 Units started during July ………………………………………………………………………. ? Total units to account for ……………………………………………………………………….
> Rainbow Glass Company manufactures decorative glass products. The firm employs a process-costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly througho
> The November production of MVP’s Minnesota Division consisted of batch P25 (2,000 professional basketballs) and batch S33 (4,000 scholastic basketballs). Each batch was started and finished during November, and there was no beginning or ending work in pr
> The following data pertain to Tulsa Paperboard Company, a manufacturer of cardboard boxes. The equivalent units of activity for February were as follows: Required: Compute the following amounts using weighted-average process costing. 1. Cost of goods c
> Otsego Glass Company manufactures window glass for automobiles. The following data pertain to the Plate Glass Department. The equivalent units of activity for June were as follows: 17,000 equivalent units of direct material and 48,500 equivalent units of
> Idaho Lumber Company grows, harvests, and processes timber for use in construction. The following data pertain to the firm’s sawmill during November. The equivalent units of activity for November were as follows: 7,000 equivalent units
> Jeffrey Vaughn, president of Frame-It Company, was just concluding a budget meeting with his senior staff. It was November of 20x0, and the group was discussing preparation of the firm’s master budget for 20x1. “I&acir
> The Evanston plant of Fit-for-Life Foods Corporation produces low-fat salad dressing. The following data pertain to the year just ended. During the year, the company started 120,000 pounds of material in production. Required: Prepare a schedule analysin
> Terra Energy Company refines a variety of petrochemical products. The following data are from the firm’s Lodi plant. Required: Compute the equivalent units of direct material and conversion for the month of November. Use the weighted-a
> Savannah Textiles Company manufactures a variety of natural fabrics for the clothing industry. The following data pertain to the Weaving Department for the month of September. The cost data for September are as follows: There were 20,000 units in process
> Orbital Industries of Canada, Inc., manufactures a variety of materials and equipment for the aerospace industry. A team of R & D engineers in the firm’s Winnipeg plant has developed a new material that will be useful for a variety
> Laredo Leather Company manufactures high-quality leather goods. The company’s profits have declined during the past nine months. In an attempt to isolate the causes of poor profit performance, management is investigating the manufacturi
> Explain how a non-profit organization like Doctors Without Borders might assign overhead costs to their operations in a particular refugee camp.
> Describe how a large retailer such as Lowes would assign overhead costs to the products it sells in its stores.
> Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs
> The following data refer to Twisto Pretzel Company for the year 20x1. Required: 1. Prepare Twisto Pretzel Company’s schedule of cost of goods manufactured for 20x1. 2. Prepare the company’s schedule of cost of goods s
> TeleTech Corporation manufactures two different colour printers for the business market. Cost estimates for the two models for the current year are as follows: Each model of printer requires 20 hours of direct labor. The basic system requires 5 hours in
> Patricia Eklund, controller in the division of social services for the state, recognizes the importance of the budgetary process for planning, control, and motivational purposes. She believes that a properly implemented participative budgetary process fo
> Conundrum Corporation manufactures furniture. Due to a fire in the administrative offices, the accounting records for November of the current year were partially destroyed. You have been able to piece together the following information from the ledger. U
> Refer to the problem 3-57 regarding Scholastic Brass Corporation. Complete the following job cost record for job number T81. (Assume that all of the direct-labor hours for job T81 occurred during the week of 3/8 through 3/12.) Data from Problem 3-57: Sc
> Scholastic Brass Corporation manufactures brass musical instruments for use by high school students. The company uses a normal costing system, in which manufacturing overhead is applied on the basis of direct-labor hours. The company’s
> Tiana Shar, the controller for Bondi Furniture Company, is in the process of analyzing the overhead costs for the month of November. She has gathered the following data for the month. The firm’s job-order costing system uses direct-labo
> Troy Electronics Company calculates its predetermined overhead rate on a quarterly basis. The following estimates were made for the current year. The firm’s main product, part number A200, requires $100 of direct material and 20 hours o
> Marc Jackson has recently been hired as a cost accountant by Offset Press Company, a privately held company that produces a line of offset printing presses and lithograph machines. During his first few months on the job, Jackson discovered that Offset ha
> Midnight Sun Apparel Company uses normal costing, and manufacturing overhead is applied to work-in-process on the basis of machine hours. On January 1 of the current year, there were no balances in work-in-process or finished-goods inventories. The follo
> Marco Polo Map Company’s cost of goods sold for March was $345,000. March 31 work-in-process inventory was 90 percent of March 1 work-in-process inventory. Manufacturing overhead applied was 50 percent of direct-labor cost. Other inform
> Refer to the schedule of cost of goods manufactured prepared for Huron Corporation in the problem 3-50. Required: 1. How much of the manufacturing costs incurred during 20x2 remained associated with work-in process inventory on December 31, 20x2? 2. Sup
> MarineCo, Inc., manufactures outboard motors and an assortment of other marine equipment. The company uses a job-order costing system. Normal costing is used, and manufacturing overhead is applied on the basis of machine hours. Estimated manufacturing ov
> City Racquetball Club (CRC) offers racquetball and other physical fitness facilities to its members. There are four of these clubs in the metropolitan area. Each club has between 1,800 and 2,500 members. Revenue is derived from annual membership fees and
> Garcia, Inc., uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily automated; in contrast, the Assembly Department perform
> JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR, but no
