Question: Marcus McQueen has run In-A-Flash

> Inbee is concerned that she still does not understand the relationship between output and labor consumption. She consults with Jim Park, the head of engineering, and shares the results of her regression estimation. Jim indicates that the production of ne

> Hankuk Electronics started production on a sophisticated new smartphone run- ning the Android operating system in January 2020. Given the razor-thin margins in the consumer electronics industry, Hankuk’s success depends heavily on being

> The Blue Seas Company, which is under contract to the Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the first of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It req

> Unicorn Freightways is a leader in transporting agricultural products in the western provinces of Italy. Rita Bonnie, a financial analyst at Unicorn Freightways, is studying the behavior of transportation costs for budgeting purposes. Transportation cost

> Parker Manufacturing has been using activity-based costing to determine the cost of product X-678. One of the activities, “Inspection”, occurs just before the product is finished. Fitzgerald inspects every 10th unit an

> Anna Schaub, the financial manager at the Mangiamo restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She obtains the following data for the past 10 months: She estimates the fo

> Farm Fresh, a cooperative of organic family- owned farms outside of New South Wales, Australia, has recently started a fresh produce club to provide support to the group’s member farms and to promote the benefits of eating organic, loca

> Brilliant Travel Agency specializes in flights between Toronto and Vishakhapatnam. It books passengers on EastWest Air. Brilliant’s fixed costs are $36,000 per month. EastWest Air charges passengers $1,300 per round-trip ticket. Calculate the number of t

> Which of the following statements does not accurately describe the flow of costs in a job costing system? a. Direct materials used and direct manufacturing labor can be easily traced to jobs. b. Direct materials and direct manufacturing labor become part

> Rollalong Inc. produces wheelchairs that are sold primarily to hospitals. Rollalong’s three plant managers’ bonuses are based on operating income that is produced using absorption costing. The company suspects that the cur- rent buildup of inventory is a

> JetStar produces jet bridges for many domestic and international airports. Cost information for JetStar’s jet bridges is as follows: Additional information for the first three quarters of 2020 for JetStar are shown below: JetStarâ

> In 2021, only 740,000 TopStuff meals were produced and sold to the hospitals. Smith suspects that hospital controllers had systematically inflated their 2021 meal estimates. Required 1. Recall that TopStuff uses the master-budget capacity utilization to

> Top Catering operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, TopStuff, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,025,000 meals a year. In 2020, based on estimates fr

> The Beta Company started business on January 1, 2020. Beta manufactures a specialty honey soda, which it sells directly to state-owned distributors in Abu Dhabi. Honey soda is produced and sold in six-packs, and in 2020, Beta produced more six-packs than

> If Kappa sells all 350,000 CFLs produced, what would be the effect on operating income of using each type of capacity as a basis for calculating manufacturing cost per unit? 2. Compare the results of operating income at different capacity levels when 275

> Kappa Electricals, a producer of energy-efficient compact fluorescent lamps (CFLs), expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, Kappa has decided to evaluate its financial perform

> Gostkowski Company is about to enter the highly competitive personal electronics market with a new optical reader. In anticipation of future growth, the company has leased a large manufacturing facility and has purchased several expensive pieces of equip

> Whistler, Inc., manufactures a specialized snowboard made for the advanced snowboarder. Whistler began 2020 with an inventory of 240 snow- boards. During the year, it produced 900 boards and sold 995 for $750 each. Fixed production costs were $280,000, a

> Donaldson Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2020: There are no price, spending, or efficiency variances. Actual operating costs equal budgeted oper

> Simplex Inc. sells its product at $80 per unit with a contribution margin of 40%. During 2016, Simplex sold 540,000 units of its product; its total fixed costs are $2,100,000. Required 1. Calculate the (a) contribution margin, (b) variable costs, and

> Zing Lager has just purchased the Chicago Brewery. The brewery is 2 years old and uses absorption costing. It will “sell” its product to Zing Lager at $44 per barrel. Peter Bryant, Zing Lager’s contro

> Horizon Press produces textbooks for college courses. The company recently hired a new editor, Billie White, to handle production and sales of books for an introduction to accounting course. Billie’s compensation depends on the gross ma

> Gammaro Company uses standard costing. Tim St. Germaine, the new president of Gammaro Company, is presented with the following data for 2020: Required 1. At what percentage of denominator level was the plant operating during 2020? 2. How much fixed manu

> Johnson Stores produce and sell face powder called the ‘Success’ in cases. Each case is sold for £80. The following information relates to the product in the autumn and summer of 2020: Other related inform

> BlueBox Company uses standard costing. The company has two manufacturing plants, one in Shanghai and the other in Shenzhen. For the Shanghai plant, BlueBox has budgeted annual output of 2,000,000 units. Standard labor-hours per unit are 0.50, and the var

> The Delta Company started business on January 1, 2020. The company adopted a standard absorption costing system to produce ergonomic backpacks. Delta chose direct labor as the application base for overhead and decided to use the proration method to accou

> NWI is a service provider that offers computing resources measured in RAM (random-access memory)-hours to handle enterprise-wide applications. Information about variable overhead costs for March 2020 are as follows: Information about fixed overhead costs

> The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct m

> Ronaldo’s Ice Cream produces summer ice creams for school pupils in Alaska. The company has identified three significant activities and established three standard rates to allocate variable manufacturing overhead instead of one rate bas

> Johns Manufacturing Company manufactures and sells rolling suitcases. After several years of increased sales, Johns experiences a drop in sales in 2020 from increased competition. Johns uses machine-hours as the cost-allocation base for variable and fixe

> Fill in the blanks for each of the following independent cases.

> Omega’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 cost

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

> Consider the following two situations—cases A and B—independently. Data refer to operations for April 2020. For each situation, assume standard costing. Also assume the use of a flexible budget for control of variable

> Delta Rubber Plastic Company Ltd manufactures rubber chairs and tables. The company’s accountant, has prepared the overhead budget shown below: The company had a great year with the actual sales of 125,000 units. However, the overhead b

> Bruno Limited manufactures padlocks for which they have established unit standard costs as shown below: During July, 400 padlocks were manufactured at the costs shown below. There was no opening stock. The flexible budget for this company required 1,400

> Chef Whiz manufactures premium food processors. The following are some manufacturing overhead data for Chef Whiz for the year ended December 31, 2020: Budgeted number of output units: 588 Planned allocation rate: 3 machine-hours per unit Actual number of

> Sunto Scientific manufactures GPS devices for a chain of retail stores. Its most popular model, the Magellan XS, is assembled in a dedicated facility in Savannah, Georgia. Sunto is keenly aware of the competitive threat from smartphones that use Google M

> Cathy Jeffries operates Relaxing Day, a day spa with 15 employees. Jim Ryan has recently been hired by Jeffries as a controller. Relaxing Day’s previous accountant had done very little in the area of variance analysis, but Ryan believes

> The Shirt Company produces cotton/polyester blend T-shirts to supply a custom T-shirt customer. The company experienced a computer failure and some of the data were lost and could not be recovered. The data the company were able to recover are shown belo

> Trevor Joseph employs two workers in his guitar-making business. The first worker, George, has been making guitars for 20 years and is paid $30 per hour. The second worker, Earl, is less experienced and is paid $20 per hour. One guitar requires, on avera

> Futuremart is an international retail store. They are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Futuremart $2,500,000 per month and $62 per order. Futuremart h

> You are a new junior ac- countant at Clearvision 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 len

> Zanella’s Smart Shawls, Inc., is a small business that Zanella 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. Zanella’s sha

> On May 1, 2020, Lowell Company began the manufacture of a new paging machine known as Qwik. The company in- stalled a standard costing system to account for manufacturing costs. The standard costs for a unit of Qwik follow: The following data were obtain

> GoodFoods produces snack mixes for the gourmet and natural foods market. Its most popular product is Tempting Trail Mix, a mixture of peanuts, dried cranberries, and chocolate pieces. For each batch, the budgeted quantities, budgeted prices, and budgeted

> Young Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $223 per board. This includes 40 pounds of direct materials, at the budgeted price of $2 per pound, and 10 hours of direct ma

> You have been invited to interview for an internship with an international food manufacturing company. When you arrive for the interview, you are given the following information related to a fictitious Belgian chocolatier for June 2020. The chocolatier m

> Andrew Scheid Ltd manufactures kitchen cabinets. The company’s budget for fixed costs per month is $7,500 and budgeted variable costs per cabinet are: The company had budgeted to make and sell 1,000 cabinets per month at a selling price

> Milan 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 2020: Standard quantities, standard prices, and

> Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2021 and has estimated sales based o

> Roma Skincare manufactures and sells a face cream to small specialty stores in Victoria, Australia. It presents the monthly operating income statement shown here to Jacob Scott, a potential investor in the business. Help Mr. Scott understand Roma Skincar

> Angler Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2021 are140,000 metric tons per quarter (or 560,000 metric tons in 2021). Angler manage

> Jayzee 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 provid

> Refer to the information in Problem 6-44. All purchases made in a given month are paid for in the following month, and direct material purchases make up all of the accounts payable balance and are reflected in the accounts payable balances at the beginni

> Butler, Inc., operates at capacity and makes wooden playground equipment. Although Butler’s swing sets and play forts are a matching set, they are sold individually and so the sales mix is not 1:1. Butler’s management

> Refer to the information in Problem 6-42. Budgeted balances at January 31, 2021, are as follows: Selected budget information for December 2020 follows: Customer invoices are payable within 30 days. From past experience, Skulas’s account

> Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2020, Skulas’s management accountant gathered the following data to prepare budgets for January 2021: Skulas’s CEO

> Refer to the information in Problem 6-40. Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AG gets the

> Akanson Crafts Ltd. is an arts gallery that produces three different arts products namely: Akra, Omra, and Okore. The budgeted sales of the products for 2020 were as follow: Materials used in the production of the products are: Two types of labor are use

> Christa Schuller owns an outlet of a popular chain of restaurants in the southern part of Germany. One of the chain’s popular lunch items is the cheeseburger. It is a hamburger topped with cheese. On demand, purchasing agents from each outlet orders the

> Spin Cycle Company is a manufacturer of commercial- grade exercise bikes that are sold to hotels and health clubs. Maintaining the bikes is an important area of customer satisfaction. Because of increased industry competition, Spin Cycleâ€&#15

> Consider the following details of the income statement of Fountain Pen Ltd, a Swedish company that produces special pens, for the last year: An analysis of Fountain Pen Ltd’s costs reveals that its fixed manufacturing costs were 2,400,0

> John Dawling Brothers is a company that produces two well-known domestic appliance models, the Tablefrig and Tablefrez. The following details have been estimated for 2021 for the sales and production of the appliances: Total cost estimates for Tablefrig

> EverGreen Store, Singapore, manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following: Budgeted sales and selling price per unit are as follows: EverGreen has the opportunity to switch from using its current dye to using

> Woodechuck’s manufactures, among other things, jerseys for the girls’ football teams in two high schools in Australia. The company uses fabric to create the jerseys and sews on a logo patch purchased from a licensed st

> Main Street Books and Café (MSBC) is a large city bookstore that sells books and music CDs and has a café. MSBC operates at capacity and allocates selling, general, and administration (S, G, & A) costs to each product line u

> Plum Electronics, a division of Berry Corporation, manufactures two large-screen television models: the Mammoth, which has been produced since 2016 and sells for $990, and the Maximum, a newer model introduced in early 2018 that sells for $1,254. Based o

> Whitewater Adventures manufactures two models of kayaks, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect manufacturing labor costs increase with direct manufacturing

> Adamac Clinic is a specialist healthcare provider which operates in Lagos, Nigeria. Output is defined as patient days. The clinic uses ABC in its accounting system and provides the following three services to patients. Note all costs are presented using

> Phoenix Medical Associates operates a walk-in medical clinic in Tempe, Arizona. The clinic includes two different departments, Urgent Care, which serves patients with minor to moderate acute illnesses and injuries, and Living Well, which administers vacc

> Shades & Hues (S&H) is a designer of high-quality curtains and bedsheets. Each design is made in small batches. Each spring, S&H comes out with new designs for the curtains and for the bedsheets. The company uses these designs for a year and

> Pharmassist, 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 Pharm

> Essential College Supplies (ECS) is a store on the campus on a large Midwestern university. The store has both an apparel section (t-shirts with the school logo) and a convenience section. ECS reports revenues for the apparel section separately from the

> Yahama Ltd makes several spare parts for motorbikes including Suzuka and Yahama parts. The company has recently switched from the traditional absorption costing to the activity-based costing system. The following details relate to the manufacturing of th

> Marshall’s Devices uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding. Direct material and direct manufacturing labor costs are traced

> Bradley has two classifications of professional staff: partners and associates. Harrington asks his assistant to examine the relative use of partners and associates on the recent Campa Coal and St. Edith’s jobs. The Campa job used 50 pa

> Harrington asks his assistant to collect details on those costs included in the $25,000 indirect-cost pool that can be traced to each individual job. After analysis, Bradley is able to reclassify $15,000 of the $25,000 as direct costs: Harrington decides

> Bradley Associates is a recently formed law partnership. Emmit Harrington, the managing partner of Bradley Associates, has just finished a tense phone call with Martin Omar, president of Campa Coal. Omar strongly complained about the price Bradley charge

> Eware Ltd, a bakery, records the following trans- actions in its books for the month of August. a. Raw materials of $182,000 were purchased on credit. b. The total of stores requisitions for direct materials issued for the period was $165,000. c. The tot

> Beth Bledsoe joined Baker Brothers, Inc. as controller in October 2019. Baker Brothers manufactures and installs custom kitchen countertops. The company uses a normal-costing sys- tem with two direct-cost pools, direct materials and direct manufacturing

> Kitchen Works Ltd is a carpentry business that specializes in the production of kitchen cabinets. The company budgeted to produce 44,000 kitchen chairs for the month of January, but actually produced 48,800. Its sales were 40,800 units at a price of &Aci

> Brandon 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

> Oregon Outfitters, a manufacturer of fly fishing flies, uses a normal-costing system with a single overhead cost pool and direct labor cost as the cost-allocation base. The following data are for 2020: Manufacturing overhead allocated data and the ending

> The following items appear as cost of a manufacturing company: A. Depreciation on plant and equipment B. Depreciation on delivery vans C. Insurance on plant and building D. Marketing manager’s salary E. Raw materials F. Manufacturing overheads G. Electri

> Premier Golf Carts makes custom golf carts that it sells to dealers across the Southeast. The carts are produced in two departments, fabrication (a mostly automated department) and custom finishing (a mostly manual department). The company uses a normal-

> Gordon Bros Ltd manufactures plastic products. The following details relates to Job #369: April 1, 2020: Direct materials of $420,000 and indirect materials of $17,000 were purchased. However, the company used direct materials costing $355,000 April 2, 2

> 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 2020: Machine-hours data and the ending balances (before proration of under- or

> Kidman 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. Manage

> Kidman & Associates is a law firm specializing in labor relations and employee-related work. It employs 30 professionals (5 partners and 25 associates) who work directly with its clients. The average budgeted total compensation per professional for 2020

> Daewoong Medicals, a healthcare company based in South Korea, uses a job-costing system at Hyangnam plant. The plant has a technology department and a finishing department. Daewoong uses normal costing with two direct-cost categories (direct materials an

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

> Carlisle Engine Company manufactures and sells diesel engines for use in small farming equipment. For its 2020 budget, Carlisle Engine Company estimates the following: The first-quarter income statement, as of March 31, reported that sales were not meeti

> TopHats operates a kiosk at a local mall, selling hats for $30 each. TopHats currently pays $900 a month to rent the space and pays three full-time employees to each work 160 hours a month at $12 per hour. The store shares a manager with a neighboring ma

> Sunshine Printing Company currently leases its only copy machine for $1,500 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based. Under the new agreement, Sunshine would pay a commissi

> The Big Event (TBE) recently started a business organizing food and music at weddings and other large events. In order to better understand the profitability of the business, the owner has asked you for an analysis of costs—what costs are fixed, what cos

> Refer to requirement 3 of Problem 3-43. In this problem, assume the role of the owner of LadyStyle. Required 1. As owner, which sales compensation plan would you choose if forecasted annual sales of the new store were at least 25,000 units? What do you

> The LadyStyle sells women’s shoes across the country through its chain of shoe stores. It sells 20 different styles of shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store mana

> Mundial Nails produces a famous nail polish with a unique glossy feature and sells it for $25 per unit. The operating income for 2017 is as follows: Mundial Nails would like to increase its profitability over the next year by at least 20%. To do so, the

> J.T. Brooks and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brooks, the president, to believe that an aggressive marketing campaign will be ne