On September 25, 2010, a hurricane destroyed the work in process inventory of Biloxi Corporation. At that time, the company was in the process of manufacturing two custom jobs (B325 and Q428). Although all of Biloxi’s on-site accounting records were destroyed, the following information is available from some backup off-site records: • Biloxi Corp. applies overhead at the rate of 85 percent of direct labor cost. • The cost of goods sold for the company averages 75 percent of selling price. Sales from January 1 to the date of the hurricane totaled $1,598,000. • The company’s wage rate for production employees is $12.90 per hour. A total of 25,760 direct labor hours were recorded from January 1 through September 25. • As of September 25, $21,980 of direct material and 128 hours of direct labor had been recorded for Job B325. Also at that time, $14,700 of direct material and 240 hours of direct labor had been recorded for Job Q428. • January 1, 2010, inventories were as follows: $19,500 of Raw Material and $68,900 of Finished Goods. Raw materials purchased during 2010 totaled $843,276. • The amount of work in process Inventory at January 1, 2010, was $14,600. Jobs B325 and Q428 were not in process on January 1. • One job, R91, was completed and in the warehouse awaiting shipment on September 25. The total cost of this job was $165,600. Determine the following amounts: a. Cost of goods sold for the year b. Cost of goods manufactured during the year c. Amount of applied overhead for each job in WIP Inventory d. Cost of WIP Inventory destroyed by the hurricane e. Cost of RM Inventory destroyed by the hurricane
> In manufacturing its products, Trevano Corp. adds all direct material at the beginning of the production process. The company’s direct labor and overhead are considered to be continuously at the same degree of completion. September production information
> Hebert Industries uses a weighted average process costing system. Management has specified that the normal loss from shrinkage cannot exceed 3 percent of the units started in a period. All raw material is added at the start of the production process. Spo
> Oehkle Inc. produces paint in a process in which spoilage occurs continually. Spoilage of 2 percent or fewer of the gallons of raw material placed into production is considered normal. The following operating statistics are available for June 2010: Begin
> Green Shade manufactures insulated windows. The firm’s repair and maintenance (R&M) cost is mixed and varies most directly with machine hours worked. The following data have been gathered from recent operations: a. Use the high&acir
> Pat Koontz makes necklaces from glass beads, metal beads, and natural beads. After reading about hybrid costing, she realized that the different types of necklaces did not cost the same amount of money to make, even though they took the same amount of ti
> Batwings makes one-size-fits-most capes. Each cape goes through the same conversion process, but three types of fabric (Dacron, denim, and cotton) are available. The company uses a standard costing system, and standard costs for each type of cape follow.
> Najm Company uses a standard costing system to account for its pita bread manufacturing process. The bread is sold in packages of one dozen pieces. The company has set the following cost standards for each package: Direct material—ingredients …………………………$
> Alberton Co. uses a standard costing system to account for its production of toys. Plastic is added at the start of production; labor and overhead are incurred at equal rates throughout the process. The standard cost of one toy is as follows: Direct mate
> Baum Co. has two processing departments: Fabrication and Assembly. In the Fabrication Department, metal is cut and formed into various components, which are then transferred to Assembly. The components are welded, polished, and coated with sealant in the
> Use the information in Exercise 36 and assume that Lamb Inc. uses the FIFO method of process costing. For the Assembly Department, compute the following: a. equivalent units of production for each cost component b. cost per EUP for each cost component c.
> Lamb Inc. produces calendars in a two-process, two-department operation. In the Printing Department, calendars are printed and cut. In the Assembly Department, the material received from Printing is assembled into individual calendars and bound. Each dep
> Found Sound Company mass-produces miniature speakers for personal sound systems. The following cost information is available for June 2010: Beginning inventory direct material cost …………………………$ 4,133.20 Beginning inventory conversion cost …………………………………….8
> In November 2010, Angerstein Co. computed its equivalent unit costs under FIFO process costing as follows: Direct material ………………………….$29.50 Packaging …………………………………….3.00 Direct labor …………………………………10.84 Overhead ………………………………………7.68 Direct material and pa
> In October 2010, Tibbetts Company had the following production and cost data: Beginning inventory units (80% complete as to DM; 45% complete as to DL; 30% complete as to OH)……………………….42,600 October completed production ……….………………………………………1,570,000 Units
> Wisconsin Dairy determined that the total predetermined OH rate for costing purposes is $26.80 per cow per day (referred to as an animal day). Of this, $25.20 is the variable portion. Overhead cost information for two levels of activity within the releva
> During August 2010, Berman Company’s Department Y equivalent unit product costs, computed under the weighted average method, were as follows: Material …………………………$2 Conversion ………………………6 Transferred in ……………….10 All material is introduced at the end of th
> The following production and cost per EUP data are available for Vendome Corp. for February 2010: Units completed during February ……………………………………………………390,000 Units in ending inventory (100% complete as to direct material; 30% complete as to direct labor;
> Use the information in Exercise 15 except assume that Waltham Mfg. uses FIFO costing. Prepare a schedule showing the August 2010 computation of FIFO equivalent units of production and cost per equivalent unit. Data given in Exercise 15: Waltham Mfg. mak
> Use the information in Exercise 27 except assume that BeGone uses FIFO process costing. Prepare a schedule showing the BeGone August 2010 computation of FIFO equivalent units of production and cost per equivalent unit. Data given in Exercise 27: BeGone
> In a team of three or four people, choose a company whose mass production process you would like to study. Use the library, the Internet, and (if possible) personal resources to gather information. Prepare a visual representation (similar to Exhibit 6&ac
> How can information produced by a job order costing system assist managers in operating their firms more efficiently?
> In choosing a product costing system, what are the three valuation method alternatives? Explain how these methods differ.
> In choosing a product costing system, what are the two choices available for a cost accumulation system? How do these systems differ?
> Why are normal and abnormal spoilage accounted for differently? Typically, how does one determine which spoilage is normal and which is abnormal?
> If normal spoilage is generally anticipated to occur on all jobs, how should the cost of that spoilage be treated?
> Grand Island Brake Co. budgeted the following variable and fixed overhead costs for 2010: Variable indirect labor …………………………………………$100,000 Variable indirect materials ………………………………………20,000 Variable utilities ………………………………………………………80,000 Variable portion o
> How can the variance information provided by standard costing be used to improve cost control?
> In using standard costing in a job order costing system, are standards established for material and labor costs and quantities?
> In a job order costing system, what key documents support the cost accumulation process and what is the purpose of each?
> Production data for the first week in November 2010 for Florida Fabricators were as follows: Finished Goods Inventory, Nov. 1: $23,800 Finished Goods Inventory, Nov. 5: $0 Direct labor hours worked in the first week of November were 680 at a cost of $15
> Stockman Co. began 2010 with three jobs in process: During 2010, the following transactions occurred: 1. The firm purchased and paid for $542,000 of raw material. 2. Factory payroll records revealed the following: • Indirect labor incur
> Ialani Corp. uses a job order costing system for the yachts it constructs. On September 1, 2010, the company had the following account balances: Raw Material Inventory …………………………………$ 332,400 Work in Process Inventory ………………………………1,512,600 Cost of Goods S
> Polaski Inc. uses an actual cost, job order system. The following transactions are for August 2010. At the beginning of the month, Direct Material Inventory was $2,000, Work in Process Inventory was $10,500, and Finished Goods Inventory was $6,500. • Dir
> Summer Shade installs awnings on residential and commercial structures. The company had the following transactions for February 2010: • Purchased $790,000 of building (raw) material on account. • Issued $570,000 of building (direct) material to jobs. • I
> PlastiCo produces plastic pipe to customer specifications. Losses of less than 5 percent are considered normal because they are inherent in the production process. The company applies overhead to products using machine hours. PlastiCo used the following
> Prudoe Compounds produces a variety of chemicals that are used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compounds includes normal spoilage cost in its predetermined O
> Because your professor is scheduled to address a national professional meeting at the time your class ordinarily meets, the class has been divided into teams to discuss selected issues. Your team’s assignment is to prepare a report arguing whether fixed
> One of the main rationales for using a job order costing system is to achieve profitability by charging a price for each job that is proportionate to the related costs. The fundamental underlying concept is that the buyer of the product should be charged
> Timbuk2 is a San Francisco company that makes a variety of messenger, cyclist, and laptop bags. The company’s Web site (Timbuk2.com) allows customers to design their own size, color, and fabric bags with specific features and accessories; then the compan
> Two types of contracts are commonly used when private firms contract to provide services to governmental agencies: cost-plus and fixed-price contracts. The cost-plus contract allows the contracting firm to recover the costs associated with providing the
> During July 2010, Pull-Along worked on two production runs ( Jobs #918 and #2002) of the same product, a trailer hitch component. Job #918 consisted of 1,200 units of the product, and Job #2002 contained 2,000 units. The hitch components are made from 1/
> Modern Convenience specializes in making robotic conveyor systems to move materials within a factory. Model #89 accounts for approximately 60 percent of the company’s annual sales. Because the company has produced and expects to continue to produce a sig
> Pip Squeaks Inc. is a manufacturer of furnishings for infants and children. The company uses a job order cost system. Pip Squeaks’ Work in Process Inventory on April 30, 2010, consisted of the following jobs: The companyâ€
> Lincoln Construction Company builds bridges. In October and November 2010, the firm worked exclusively on a bridge spanning the Calamus River in northern Nebraska. Lincoln Construction’s Precast Department builds structural elements of the bridges in tem
> Gigi LeBlanc is an advertising consultant who tracks costs for her jobs using a job order costing system. During September, LeBlanc and her staff worked on and completed jobs for the following companies: Direct material can be traced to each job because
> Edward Nabors owns Enclose, which designs and manufactures perimeter fencing for large retail and commercial buildings. Each job goes through three stages: design, production, and installation. Three jobs were started and completed during the first week
> All jobs at Frankfurt Inc., which uses a job order costing system, go through two departments (Fabrication and Assembly). Overhead is applied to jobs based on machine hours in Fabrication and on labor hours in Assembly. In December 2009, corporate manage
> Porta Light manufactures a highquality LED flashlight for home/office use. Data pertaining to the company’s 2010 operations are as follows: Production for the year …………………………………………………45,000 units Sales for the year (sales price per unit, $8) ……………………..48
> You have applied for a cost accounting position with Chelsea Containers. The company controller has asked all candidates to take a quiz to demonstrate their knowledge of job order costing. Chelsea’s job order costing system is based on
> Blaine Corp. makes floats for Mardi Gras in New Orleans. The company’s fiscal year ends on March 31. On January 1, 2010, the company’s WIP Inventory account appeared as follows: The direct labor cost contained in the b
> The following costs were incurred in February 2010 by Container Corp., which produces customized steel storage bins: The balance in Work in Process Inventory on February 1 was $16,800, which consisted of $11,200 for Job #217 and $5,600 for Job #218. The
> Croftmark Co. began operations on May 1, 2010. Its Work in Process Inventory account on May 31 appeared as follows: The company applies overhead on the basis of direct labor cost. Only one job was still in process on May 31. That job had $75,450 in direc
> Nottaway Flooring produces custom-made floor tiles. The company’s Raw Material Inventory account contains both direct and indirect materials. Until the end of April 2010, the company worked solely on a large job (#4263) for a major client. Near the end o
> Salem Corp. contracted for a specialized production machine from Quindo Industries, a tool company. The contract specified a price equal to “production cost plus 15% of production cost.” A sales executive at Quindo told Salem’s management that the machin
> Calista London, after spending 20 years working for a large engineering firm, has decided to start her own business. She has designed a product to remove jar lids with minimal physical effort. London believes this product will sell 1 million units per ye
> Describe how the following occurrences should be accounted for based on the fact pattern presented: a. Certain amounts of spoilage and waste are normal in the production system and affect all jobs. b. A certain amount of spoilage occurs that is unique to
> Canyon City Co. uses a job order costing system that combines actual direct material and actual direct labor costs with a predetermined overhead charge based on machine hours. Expected overhead and machine hours of $1,421,000 and 145,000, respectively,
> The April 2010 income statement for Fabio’s Fashions has just been received by Diana Caffrey, Vice-President of Marketing. The firm uses a variable costing system for internal reporting purposes. The following notes were attached to the
> La Mia’s Casas builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant owner has decided to use machine hours as the basis for predicting maintenance costs. The following data are available fro
> At the beginning of the year, Hallett Company estimated the following: Now, assume that Hallett has decided to use a plant wide overhead rate based on direct labor hours. Required: 1. Calculate the predetermined plant wide overhead rate. (Note: Round
> Manzer Enterprises produces premier raspberry jam. Output is measured in pints. Manzer uses the weighted average method. During January, Manzer had the following production data: Units in process, January 1, 60% complete ………………………………. 36,000 pints Units
> At the end of the year, Ilberg Company provided the following actual information: Overhead ……………………………………….. $423,600 Direct labor cost ……………………………….. 532,000 Ilberg uses normal costing and applies overhead at the rate of 80% of direct labor cost. At t
> At the beginning of the year, Ilberg Company estimated the following costs: Overhead …………………………………………. $416,000 Direct labor cost …………………………………. 520,000 Ilberg uses normal costing and applies overhead on the basis of direct labor cost. (Direct labor co
> Patrick Inc. sells industrial solvents in five-gallon drums. Patrick expects the following units to be sold in the first three months of the coming year: January ………………………… 41,000 February ………………………. 38,000 March ………………………….. 50,000 The average price f
> Golding’s finishing department had the following data for July: Required: 1. Calculate unit costs for the following categories: transferred-in, materials, and conversion. 2. Calculate total unit cost. Transferred-In Materials Conv
> La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. Each year, 8,000 pounds of lava stone is used; it is u
> Inchon produced 312,000 units last year. The information on the actual costs and budgeted costs at actual production of four activities follows. Required: Prepare an activity-based performance report for the four activities for the past year. Activ
> Fermi Company decided to look more closely at the materials receiving activity in its factory. The driver for receiving is the number of receiving orders. The following information for a year was collected: Demand for receiving orders: 130,000 Resources
> Terry Linens Inc. manufactures bed and bath linens. The bath linens department sews terry cloth into towels of various sizes. Terry uses the weighted average method. All materials are added at the beginning of the process. The following data are for the
> Nelrok Company manufactures fertilizer. Department 1 mixes the chemicals required for the fertilizer. The following data are for the year: BWIP (40% complete) ……………………………. 25,000 Units started ………………………………………… 142,500 Units in EWIP (60% complete) ………………
> Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: Unit Sales April ……………………………. 180,000 May ……………………………. 220,000 June ………………………….. 200,000 July ……………………………. 240,000
> Palladium Inc. produces a variety of household cleaning products. Palladium’s controller has developed standard costs for the following four overhead items: Next year, Palladium expects production to require 90,000 direct labor hours.
> Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data
> Goforth Company produces a product where all manufacturing inputs are applied uniformly. Goforth produced the following physical flow schedule for April: Units to account for: Units in BWIP (40% complete) ………………………………… 180,000 Units started ………………………………
> a. Dr. Jones, a dentist, wants to increase the size and profitability of his business by building a reputation for quality and timely service. b. To achieve this, he plans on adding a dental laboratory to his building so that crowns, bridges, and denture
> Verde Company produces wheels for bicycles. During the year, 660,000 wheels were produced. The actual labor used was 360,000 hours at $9.50 per hour. Verde has the following labor standard: 0.5 hour at $10. Required: 1. Compute the labor rate variance.
> When a job costing $2,000 is finished but not sold, the following journal entry is made: a. Cost of Goods Sold 2,000 Finished Goods 2,000 b. Finished Goods 2,000 Cost of Goods Sold 2,000 c. Finished Goods 2,000 Work in Process 2,000 d. Work in Proce
> Lane Company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. The company chose practical activity—at 50,000 units—to compute its predetermined overhead rate. Manufacturing costs are as follows: Direct materials
> Lawson Company produces a product where all manufacturing inputs are applied uniformly. Lawson produced the following physical flow schedule for March: Units to account for: Units in BWIP (40% complete) …………….... 15,000 Units started ………………………………………… 35
> Madison Company decided to look more closely at the inspection activity in its factory. The following information for a year was collected: Demand for inspections: 170,000 Resources needed: a. 6 inspectors, capable of inspecting 30,000 units per year; s
> Smokey Company provided the following information: Standard variable overhead rate (SVOR) per direct labor hour …………… $3.70 Actual variable overhead costs: Inspection ……………………………………………………………………………………… $112,300 Power …………………………………………………………………………………………….
> Bowling Company budgeted the following amounts: Variable costs of production: Direct materials ………………………… 3 pounds @ $0.60 per pound Direct labor ……………………………………. 0.5 hr. @ $16.00 per hour VOH …………………….………………………………………… 0.5 hr. @ $2.20 FOH: Materials hand
> Frasco Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.025 hours. During the month of April, 750,000 bottles were produced using 21,000 labor hours @ $10.00. The standard wage rate is $9.50 per hour. Required: Calculate
> Lata Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.5 ounces of aluminum per can. During the month of April, 300,000 cans were produced using 1,250,000 ounces of aluminum. The actual cost of aluminum was $0.09
> During the last six weeks, the actual costs of materials for Mandarin Company were as follows: The standard materials cost for each week was $50,000 with an allowable deviation of ±5,000. Required: Plot the actual costs over time against
> Avena Company produces ready-to-cook oatmeal. Each carton of oatmeal requires 16 ounces of rolled oats per carton (the unit quantity standard) and 0.05 labor hours (the unit labor standard). During the year, 800,000 cartons of oatmeal were produced. Req
> Karsen Company takes 7,200 hours to produce 28,800 units of a product. Required: What is the velocity? Cycle time?
> During the most recent year, Judson Company had the following data associated with the product it makes: Units in beginning inventory ………………………….. 300 Units produced …………………………………………. 15,000 Units sold ($300 per unit) …………………………. 12,700 Variable costs p
> Boothe Inc. has the following two activities: (1) Retesting reworked products, cost: $480,000. The retesting cost of the most efficient competitor is $150,000. (2) Welding subassemblies, cost: $900,000 (45,000 welding hours). A benchmarking study reveals
> Kailua and Company is a legal services firm. All sales of legal services are billed to the client (there are no cash sales). Kailua expects that, on average, 20% will be paid in the month of billing, 50% will be paid in the month following billing, and 2
> Fazel Company makes and sells paper products. In the coming year, Fazel expects total sales of $19,730,000. There is a 3% commission on sales. In addition, fixed expenses of the sales and administrative offices include the following: Salaries …………………………
> Baker Company produces small engines for lawnmower producers. The accounts payable department at Baker has six clerks who process and pay supplier invoices. The total cost of their salaries is $320,000. The work distribution for the activities that they
> Wight Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: April ………………………. $374,400 May ………………………….. 411,200 June ……………………….. 416,000 Wight typically pa
> Botas Company produces two types of boots: vaquero and vaquera. There are four activities associated with the two products. Drivers for the four activities are as follows: The following activity data have been collected: Cutting …
> Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour and the fixed overhead rate is $1.60 pe
> Buckner Inc. just finished its second month of operations. Buckner mass produces integrated circuits. The following production information is provided for December: Units in process, December 1, 80% complete …………………… 100,000 Units completed and transfer
> During April, the grinding department of Moriba Inc. completed and transferred out 105,000 units. At the end of April, there were 37,500 in process, 60% complete. Moriba incurred manufacturing costs totaling $1,530,000. Required: 1. Calculate the unit c
> Fried Manufacturing produces cylinders used in internal combustion engines. During June, Fried’s welding department had the following data: Units in BWIP ………………………..……………………………………… — Units completed …………………………………………………….. 70,000 Units in EWIP (40% compl
> Wilson Company has a predetermined overhead rate of $5 per direct labor hour. The job order cost sheet for Job 145 shows 500 direct labor hours costing $10,000 and materials requisitions totaling $17,500. Job 145 had 1,000 units completed and transferred
> Rostand Inc. operates a delivery service for over 70 restaurants. The corporation has a fleet of vehicles and has invested in a sophisticated, computerized communications system to coordinate its deliveries. Rostand has gathered the following actual data
