Question: Instant Service (IS) repairs printers and
Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tristate area. IS’s costs consist of the cost of technicians and equipment that are directly traceable to the customer site and a pool of office overhead. Until recently, IS estimated customer profitability by allocating the office overhead to each customer based on share of revenues. For 2012, IS reported the following results: 
Tina Sherman, IS’s new controller, notes that office overhead is more than 10% of total costs, so she spends a couple of weeks analyzing the consumption of office overhead resources by customers. She collects the following information: 
Required: 1. Compute customer-level operating income using the new information that Sherman has gathered. 2. Prepare exhibits for IS similar to Exhibit 14-7. Comment on the results. 3. What options should IS consider, with regard to individual customers, in light of the new data and analysis of office overhead? Exhibit 14-7: 
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Home Insert Page Layout Formulas Data Review View C Okie B F G Avery Total $260,000 $200,000 $322,000 $122,000 $212,000 $1,116,000 | 867,000 136,750 Wizard Grainger Duran 2 Revenues 3 Technician and equipment cost 4 Office overhead allocated 5 Operating income 107,000 14,949 51 $ 8,022 $ 112,250 182,000 175,000 24,507 493 $ 57,543 $ 225,000 178,000 39,457 31,859 $ 46,141 $ 25,978 Home Insert Page Layout Formulas Data Review Activity Area Cost Driver Rate 2 Service call handling 3 Parts ordering 4 Billing and collection 5 Customer database maintenance $75 per service call $80 per Web-base parts order $50 per bill (or reminder) $10 per service call Home Insert Page Layout Formulas Data Review View A В D Avery Okie Wizard Grainger Duran 150 8 9 Number of service calls 10 Number of Web-based parts orders 11 Number of bills (or reminders) 240 40 120 180 120 210 60 150 150 30 90 90 60 120 Home Insert Page Layout Formulas Data Review View A Customers Ranked on Customer-Level Operating income D E 1 Cumulative Customer-Level 4 Operating income Customer-Level Cumulative as a % of Total Operating income Divided by Revenue Operating income (3) = (1) + (2) Retail Customer-Level Customer Customer-Level Customer-Level Customer Operating income (1) $ 51,160 Operating income (5) = (4) + $133,920 7 Revenue Code (2) $ 467,280 |(4) $ 51,160 9 B 10.9% 38% 64% 10 A 35,100 564,480 6.2% 86,260 11 C 27,070 295,640 9.2% 113,330 85% 12 20,580 277,000 7.4% 133,910 100% F 12,504 3,330 13 143,500 8.7% 146,414 109% J 8.1% 41,000 123,000 38,280 149,744 149,920 148,730 143,040 133,920 14 112% 15 176 0.1% 112% 16 G -1,190 -3.1% 111% H -5,690 -9,120 $133,920 17 38,220 -14.9% 107% 18 -21.7% 42,000 $2,030,400 100% 19 20
> Manufacturing Company uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.
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> Whole Goodness Bakery needs to determine the cost of two work orders for the month of June. Work order 215 is for 1,200 packages of dinner rolls and work order 216 is for 1,400 loaves of multigrain bread. Dinner rolls are mixed and cut into individual ro
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> Required: For the data in Exercise 17-19, summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed (and transferred out) and to units in ending work in p
> Consider the following data for the assembly division of Fenton Watches, Inc.: The assembly division uses the weighted-average method of process costing. Required: Compute equivalent units for direct materials and conversion costs. Show physical units
> Helner Cell Phones (HCP) is developing a new touch screen smartphone to compete in the cellular phone industry. The phones will be sold at wholesale prices to cell phone companies, which will in turn sell them in retail stores to the final customer. HCP
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> Roary Chemicals has a mixing department and a refining department. Its process-costing system in the mixing department has two direct materials cost categories (chemical P and chemical Q) and one conversion costs pool. The following data pertain to the m
> Refer to requirement 2 of Exercise 17-16. Required: Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out the cost of goods completed. Show the postings to the Wo
> Nihon, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2012, the company incurred $750,000 on direct materials and $798,000 on conversion costs, for a total manufacturing cost of $1,548,000. Required:
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