Question: Kingston Company manufactures modular homes. The

> Dawn Floral Creations, Inc., makes jewelry in the shape of flowers. Each piece is hand-made and takes an average of 1.5 hours to produce because of the intricate design and scrollwork. Dawn uses direct labor hours to allocate the overhead cost to product

> Jo Nathan Publishing Company specializes in printing specialty textbooks for a small but profitable college market. Due to the high setup costs for each batch printed, Jo Nathan holds the book requests until demand for a book is approximately 500. At tha

> Pointe’s Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping department records both variable direct batch-level cos

> Sarah Beth’s Art Supply Company produces various types of paints. Actual direct manufacturing labor hours in the factory that produces paint have been higher than budgeted hours for the last few months and the owner, Sarah B. Jones, is

> Nolton Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Nolton develops its manufacturing overhead rate from the current annual budg

> Consider the following two situations—cases A and B— independently. Data refer to operations for April 2012. For each situation, assume standard costing. Also assume the use of a flexible budget for control of variable

> Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2012, budgeted fixed manufacturing overhead cost was $17,000,0

> Required: 1. Prepare journal entries for variable and fixed manufacturing overhead (you will need to calculate the various variances to accomplish this). 2. Overhead variances are written off to the Cost of Goods Sold (COGS) account at the end of the fis

> Kitchen Whiz manufactures premium food processors. The following is some manufacturing overhead data for Kitchen Whiz for the year ended December 31, 2012: Budgeted number of output units: 888 Planned allocation rate: 2 machine-hours per unit Actual nu

> The Wellesley Corporation makes printed cloth in two departments: weaving and printing. Currently, all product first moves through the weaving department and then through the printing department before it is sold to retail distributors for $1,250 per rol

> Stuckey, Inc., manufactures industrial 55 gallon drums for storing chemicals used in the mining industry. The body of the drums is made from aluminum and the lid is made of chemical resistant plastic. Andy Jorgenson, the controller, is becoming increasin

> Iceland, Inc., is a fast-growing ice-cream maker. The company’s new ice-cream flavor, CherryStar, sells for $9 per pound. The standard monthly production level is 300,000 pounds, and the standard inputs and costs are as follows: Molly

> Sonnet, Inc., has the following budgeted standards for the month of March 2011: Sales of 1,500,000 units are budgeted for March. The expected total market for this product was 7,500,000diskettes. Actual March results are as follows: Unit sales and prod

> You are a new junior accountant at Clearview Corporation, maker of lenses for eyeglasses. Your company sells generic-quality lenses for a moderate price. Your boss, the Controller, has given you the latest month’s report for the lens tr

> Shayna’s Smart Shawls, Inc., is a small business that Shayna developed while in college. She began hand-knitting shawls for her dorm friends to wear while studying. As demand grew, she hired some workers and began to manage the operation. Shayna’s shawls

> On May 1, 2012, Bovar Company began the manufacture of a new paging machine known as Dandy. The company installed a standard costing system to account for manufacturing costs. The standard costs for a unit of Dandy follow: The following data were obtai

> Morro Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $225 per board. This includes 30 pounds of direct materials, at the budgeted price of $3 per pound, and 9 hours of direct man

> KatharineStanley is the owner of Better Bikes, a company that produces high quality cross-country bicycles. Better Bikes participates in a supply chain that consists of suppliers, manufacturers, distributors, and elite bicycle shops. For several years Be

> You are a student preparing for a job interview with a Fortune 100 consumer products manufacturer. You are applying for a job in the finance department. This company is known for its rigorous case-based interview process. One of the students who successf

> Styles, Inc., manufactures a full line of well-known sunglasses frames and lenses. Styles uses a standard costing system to set attainable standards for direct materials, labor, and overhead costs. Styles reviews and revises standards annually, as necess

> Snark Corporation manufactures a product called the snark, which it sells to merchandising firms such as Snark Republic (SR), Snarks-R-Us (SRU), Neiman Snark-us (NS), Snark Buy (SB), Snark-Mart (SM), and Wal-Snark (WS). The list price of a snark is $50,

> Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static budget and actual results for June 2011 are provided next. Stevie has one employee who has been with him for all 10 years that he has been in business. In addition, at any g

> Tuscany Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2011: Standard quantities, standard prices,

> Jag Meerkat owns three upscale hair salons: Hair Suite I, II, and III. Each of the salons has a manager and 10 stylists who rent space in the salons as independent contractors and who pay a fee of 10% of each week’s revenue to the salon as rent. In excha

> Delma Company manufactures a variety of products in a variety of departments, and evaluates departments and departmental managers by comparing actual cost and output relative to the budget. Departmental managers help create the budgets, and usually provi

> Follete Inc. operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1:1. Follette Inc. is planning its annual budget for fiscal year 2011. In

> On December 1, 2011, the Itami Wholesale Co. is attempting to project cash receipts and disbursements through January 31, 2012. On this latter date, a note will be payable in the amount of $100,000. This amount was borrowed in September to carry the comp

> Retail outlets purchase snowboards from Slopes, 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 pay

> Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2011, Slopes’ management accountant gathered the following data to prepare budgets for 2012: Slopes’ CE

> Refer to the information in Problem 6-33. Assume the following: Pet Luggage (PL) does not make any sales on credit. PL sells only to the public, and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which PL gets th

> Pet Luggage Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables: Pet L

> Unified Chemical Company has a joint production process that converts Zeta into two chemicals: Alpha and Beta. The company purchases Zeta for $12 per pound and incurs a cost of $30 per pound to process it into Alpha and Beta. For every 10 pounds of Zeta,

> Barney Briggs owns a restaurant franchise that is part of a chain of “southern homestyle” restaurants. One of the chain’s popular breakfast items is biscuits and gravy. Central Warehouse makes and freezes the biscuit dough, which is then sold to the fran

> Easecom Company is a manufacturer of videoconferencing products. Regular units are manufactured to meet marketing projections, and specialized units are made after an order is received. Maintaining the videoconferencing equipment is an important area of

> The Scarborough Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2011, Scarborough’s budget department gathered the following data to prepare budgets for 2012: The following direct materials are used in

> DryPool T-Shirt Factory manufactures plain white and solid colored T-shirts. Inputs include the following: Additionally, the colored T-shirts require 3 ounces of dye per shirt at a cost of $0.20 per ounce. The shirts sell for $15 each for white and $20

> Logo Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as foll

> Applewood Electronics, a division of Elgin Corporation, manufactures two large-screen television models: the Monarch, which has been produced since 2006 and sells for $900, and the Regal, a newer model introduced in early 2009 that sells for $1,140. Base

> The Tracy Corporation has a machining facility specializing in jobs for the aircraft-components market. Tracy’s previous simple job-costing system had two direct-cost categories (direct materials and direct manufacturing labor) and a si

> Nivag’s Netballs is a manufacturer of high quality basketballs and volleyballs. Setup costs are driven by the number of batches. Equipment and maintenance costs increase with the number of machine-hours, and lease rent is paid per squar

> Uppervale Health Center runs two programs: drug addict rehabilitation and aftercare (counseling and support of patients after release from a mental hospital). The center’s budget for 2010 follows: Muriel Clayton, the director of the c

> Pumpkin Bags (PB) is a designer of high quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year, and then moves on to the

> Pacific Décor, Inc., designs, manufactures, and sells contemporary wood furniture. Ling Li is a furniture designer for Pacific. Li has spent much of the past month working on the design of a high-end dining room table. The design has been we

> Pharmacare, 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 Pharma

> Annie Warbucks runs a dance studio with childcare and adult fitness classes. Annie’s budget for the upcoming year is as follows: Other budget information follows: Required: 1. Determine which costs are direct costs and which costs a

> Roxbury’s Radiology Center (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top Radiology Center in the state. RRC has achieved this status because it constantly reexamines its processes and pr

> Allen’s Aero Toys makes two models of toy airplanes, fighter jets, and cargo planes. The fighter jets are more detailed and require smaller batch sizes. The controller has asked you to compare plant-wide, department, and activity-based

> Wigan has two classifications of professional staff: partners and associates. Hanley asks his assistant to examine the relative use of partners and associates on the recent Widnes Coal and St. Helen’s jobs. The Widnes job used 24 partne

> Hanley asks his assistant to collect details on those costs included in the $21,000 indirect-cost pool that can be traced to each individual job. After analysis, Wigan is able to reclassify $14,000 of the $21,000 as direct costs: Hanley decides to calc

> Tamden, Inc., prints custom marketing materials. The business was started January 1, 2010. The company uses a normal-costing system. It has two direct cost pools, materials and labor and one indirect cost pool, overhead. Overhead is charged to printing j

> Brady 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: Additional information

> Needham Company uses normal costing in its job-costing system. Partially completed T-accounts and additional information for Needham for 2011 are as follows: Additional information follows: a. Direct manufacturing labor wage rate was $15 per hour. b. M

> Parson Container Corporation is considering implementing a JIT production system. The new system would reduce current average inventory levels of $2,000,000 by 75%, but would require a much greater dependency on the company’s core suppliers for on-time d

> New Rise, Inc., produces porcelain figurines. The production is semi-automated where the figurine is molded almost entirely by operator-less machines and then individually hand-painted. The overhead in the molding department is allocated based on machine

> Gibson Manufacturing uses normal costing for its job-costing system, which has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost category (manufacturing overhead). The following information is obtained for

> The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2011: Machine-hours data and the ending balances (before proration of under-

> Keating has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about what factors drive the level of indirect costs. Manag

> Keating & Associates is a law firm specializing in labor relations and employee-related work. It employs 25 professionals (5 partners and 20 associates) who work directly with its clients. The average budgeted total compensation per professional for 2011

> The Fasano Company uses a job-costing system at its Dover, Delaware, plant. The plant has a machining department and a finishing department. Fasano uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and

> Agro Engine Company manufactures and sells diesel engines for use in small farming equipment. For its 2012 budget, Agro Engine Company estimates the following: Selling price …………………………………………..$ 3,000 Variable cost per engine ……………………………..$ 500 Annual fi

> PC Planet has just opened its doors. The new retail store sells refurbished computers at a significant discount from market prices. The computers cost PC Planet $100 to purchase and require 10 hours of labor at $15 per hour. Additional variable costs, in

> Stylewise Printing Company currently leases its only copy machine for $1,000 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based. Under the new agreement Stylewise would pay a commiss

> Refer to requirement 3 of Problem 3-38. In this problem, assume the role of the owner of WalkRite. Required: 1. Calculate the number of units sold at which the owner of WalkRite would be indifferent between the original salary-plus-commissions plan for

> Exclusive Resorts (ER) operates a five-star hotel with a championship golf course. ER has a decentralized management structure, with three divisions: Lodging (rooms, conference facilities) Food (restaurants and in-room service) Recreation (golf course, t

> The WalkRite Shoe Company operates a chain of shoe stores that sell 10different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is

> The Brown Shoe Company produces its famous shoe, the Divine Loafer that sells for $60 per pair. Operating income for 2011 is as follows: Sales revenue ($60 per pair) ……………………$300,000 Variable cost ($25 per pair) …………………..……125,000 Contribution margin ……

> R. A. Ro and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past five years. However, increased competition has led Mr. Ro, the president, to believe that an aggressive marketing campaign will be necess

> Technology Solutions sells a ready-to-use software product for small businesses. The current selling price is $300. Projected operating income for 2011 is $490,000 based on a sales volume of 10,000 units. Variable costs of producing the software are $120

> Snow Leopard Daycare provides daycare for children Mondays through Fridays. Its monthly variable costs per child are as follows: Lunch and snacks ……………………………………………………………$150 Educational supplies …………………………………………………………..60 Other supplies (paper products,

> Pure Water Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cum-filter that only purifies water meant for drinking. The unit that attaches to the faucet i

> Lifetime Escapes generates average revenue of $5,000 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are as follows: Annual fixed costs total $520,000. Required: 1. Calculate the number of package tou

> Marston Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. Marston is considering replacing the sales agents with its own salespeople, who would

> The following data are for Montgomery Retail Outlet Stores. The account balances (in thousands) are for 2011. Required: 1. Compute(a)the cost of goods purchased and (b)the cost of goods sold. 2. Prepare the income statement for 2011. $ 24,000 Marke

> Scott Hewitt, the new Plant Manager of Old World Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Hewitt receives a year-end bonus of 10% of the plant’s operating income before tax. The year-end income stateme

> Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2011. Variable cost per unit is $60 and total fixed costs are $1,640,000. Required: 1. Calculate (a) contribution margin and (b) operating income. 2. Garrett’s current manufactu

> What criteria might be used to guide cost-allocation decisions? Which are the dominant criteria?

> Denver Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2011. Costs incurred for 2011 are as follows (V stands for variable; F stands for fixed): Variable manufacturing costs are variable with respect to units p

> Ron Williams recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report fi

> Jim Anderson works in the production department of Midwest Steelworks as a machine operator. Jim, a long-time employee of Midwest, is paid on an hourly basis at a rate of $20 per hour. Jim works five 8-hour shifts per week Monday–Friday

> 1. Calculate total prime costs and total conversion costs. 2. Calculate total inventoriable costs and period costs. 3. Design costs and R&D costs are not considered product costs for financial statement purposes. When might some of these costs be regarde

> The following items (in millions) pertain to Calendar Corporation: Calendar’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturing labor, and manufacturing overhead costs. Required:

> Required: 1. How would the answer to Problem 2-34 be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. 2. Would the sales manager’s salary (included in marke

> The Howell Corporation has the following account balances (in millions): Required: Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2011. (For additional questions regarding these facts

> Consider the following account balances (in thousands) for the Piedmont Corporation: Required: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $600 million. Prepare the income statement for 2011. Beginni

> Consider the following account balances (in thousands) for the Canseco Company: Required: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $300 million. Prepare the income statement for 2011. Home Insert

> Renka’s Heaters selected data for October 2011 are presented here (in millions): Required: Calculate the following costs: 1. Direct materials inventory 10/31/2011 2. Fixed manufacturing overhead costs for October 2011 3. Direct manufa

> Fill in the blanks for each of the following independent cases. Variable Contribution Operating Income Case Revenues Costs Fixed Costs Total Costs Margin Percentage $500 $ 800 $1,200 $ 200 a. $2,000 $1,000 $1,500 b. $300 С. $700 $1,000 d. $300 40%

> Deacon Publishing House is a publishing company that produces consumer magazines. The house and home division, which sells home-improvement and home-decorating magazines, has seen a 20% reduction in operating income over the past nine months, primarily d

> The following data are for Marvin Department Store. The account balances (in thousands) are for 2011. Required: 1. Compute(a)the cost of goods purchased and (b)the cost of goods sold. 2. Prepare the income statement for 2011. $ 37,000 Marketing, di

> Consider the following selected cost data for the Pittsburgh Forging Company for 2011. The company uses normal costing. Its job-costing system has a single manufacturing overhead cost pool. Costs are allocated to jobs using a budgeted machine-hour rate

> Splash Manufacturing produces outdoor wading and slide pools. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the company’s production and sales occ

> Turner & Associates, a consulting firm, has the following condensed budget for 2011: Turner has a single direct-cost category (professional labor) and a single indirect-cost pool (client support). Indirect costs are allocated to jobs on the basis o

> The Lynn Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and two m

> Gammaro Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2011: Required: 1. Calculate the budgeted manufacturing over head rate. 2. Calculate the manufac

> Amesbury Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Direct labor-hours is the allocation base for assembly sup

> Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing over head cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. D

> In each of the following situations, determine whether job costing or process costing would be more appropriate. a. ACPA firm b. An oil refinery c. A custom furniture manufacturer d. A tire manufacturer e. A textbook publisher f. A pharmaceutical company

> Sweetum Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,100 per month. The machine costs $9,000 and is depreciated using straight line depreciation over 10 yea

> Foodmart Corp, an international retail giant, is considering implementing a new business to business (B2B) information system for processing purchase orders. The current system costs Foodmart $2,500,000 per month and $50 per order. Foodmart has two optio

> Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating income statement shown here to George Lopez, a potential investor in the business. Help Mr. Lopez understand Mi