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 ……………………………………………………………………………………………. $95,600 Actual direct labor hours worked (AH) ………………………………….…………… 56,200 Actual production in units ………………………………………………………………….. 14,000 Standard hours (SH) allowed for actual units produced ……………………… 56,000 VOH: Inspection ………………………………………………………………………….. 4 hours @ $2.00 Power …………………………………………………………………………………… 4 hours @ $1.70 Required: Prepare a performance report that shows the variances for each variable overhead item (inspection and power).
> 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
> 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 dest
> 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
> 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
> 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.
> Master Budget …………………..……………………………….. Actual Data Budgeted production: 4,200 …….Actual production: 4,100 units Materials: 2 leather strips @ $7.00 ……………………… Materials cost: $58,700 Labor: 1.5 hr. @ $18.00 Labor cost: ………………………..…………….. $112,900 Required
> Escuchar Products, a producer of DVD players, has established a labor standard for its product— direct labor: 2 hrs at $9.65 per hour. During January, Escuchar produced 12,800 DVD players. The actual direct labor used was 25,040 hours at a total cost of
> Esteban Products produces instructional aids, including white boards, which use colored markers instead of chalk. These are particularly popular for conference rooms in educational institutions and executive offices of large corporations. The standard co
> Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards f
> Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards f
> Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month ago, she had given him a salary increase and a bonus for his performance. She had been especially pleased with his ability to meet or beat the price stan
> At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products: Direct materials (6 lbs. @ $5) ………………………. $30.00 Direct labor (2 hrs. @ $12) …………………………….. 24.00 Standard prime cost per unit ………………………..
> Manzana Company produces apple juice sold in gallons. Recently, the company adopted the following material standard for one gallon of its apple juice: Direct materials 128 oz. @ $0.05 = $6.40 During the first week of operation, the company experienced t
> Cinturon Corporation produces high-quality leather belts. The company’s plant in Boise uses a standard costing system and has set the following standards for materials and labor: Leather (3 strips @ $4) …………………………… $12.00 Direct labor (0.75 hr. @ $12) …
> Cinturon Corporation produces high-quality leather belts. The company’s plant in Boise uses a standard costing system and has set the following standards for materials and labor: Leather (3 strips @ $4) …………………………… $12.00 Direct labor (0.75 hr. @ $12) …
> The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $736. b. Actual sales for April and May are as follows: c. Credit sales are c
> Fein Company provided the following information relating to cash payments: a. Fein purchased direct materials on account in the following amounts: June …………………………………….. $68,000 July ………………………………………… 77,000 August ……………………………………. 73,000 b. Fein pays 20%
> Roybal Inc. sells all of its product on account. Roybal has the following accounts receivable payment experience: Percent paid in the month of sale …………………………………………………. 20 Percent paid in the month after the sale ……………………………………….. 55 Percent paid in the
> Bennett Inc. found that about 15% of its sales during the month were for cash. Bennett has the following accounts receivable payment experience: Percent paid in the month of sale ……………………………………….. 25 Percent paid in the month after the sale ……………………………
> Jani Subramanian, owner of Jani’s Flowers and Gifts, produces gift baskets for various special occasions. Each gift basket includes fruit or assorted small gifts (e.g., a coffee mug, deck of cards, novelty cocoa mixes, scented soap) in a basket that is w
> Alger Inc. manufactures six models of leaf blowers and weed eaters. Alger’s budgeting team is finalizing the sales budget for the coming year. Sales in units and dollars for last year follow: In looking over the previous yearâ&#
> Evans Company produces asphalt roofing materials. The production budget in bundles for Evans’ most popular weight of asphalt shingle is shown for the following months: Units March ……………………………………… 4,000 April ……………………………………….. 13,000 May ……………………………………….
> Explain why the fixed overhead spending variance is usually very small.
> Why would an activity-based performance report be more accurate than a report based on a traditional flexible budget?
> What is the cause of an unfavorable volume variance?
> What is target costing? Describe how costs are reduced so that the target cost can be met.
> All budgets depend on the sales budget. Is this true? Explain.
> What is the role of top management in participative budgeting?
> What is participative budgeting? Discuss some of its advantages.
> Discuss the roles of monetary and nonmonetary incentives. Do you believe that nonmonetary incentives are needed? Why?
> Explain the difference between the direct method and the sequential method.
> Identify and define four different ways to manage activities so that costs can be reduced.
> What are value-added activities? Value-added costs?
> Assume that a company has decided not to allocate any support department costs to producing departments. Describe the likely behavior of the managers of the producing departments. Would this be good or bad? Explain why allocation would correct this type
> Under what conditions will the weighted average and FIFO methods give the same results?
> How can a departmental overhead system be converted to a plant wide overhead system?
