St. John’s Temps, a large labour contractor, supplies contract labour to building-construction companies. For 2015, St. John’s Temps has budgeted to supply 80,000 hours of contract labour. Its variable costs are $12 per hour, and its fixed costs are $240,000. Roger Mason, the general manager, has proposed a cost-plus approach for pricing labour at full cost plus 20%. Required: 1. Calculate the price per hour that St. John’s Temps should charge based on Mason’s proposal. 2. The marketing manager supplies the following information on demand levels at different prices: Price per Hour ……………………Demand (Hours) $16 ……………………………………………..120,000 17 ………………………………………………100,000 18 ……………………………………………….80,000 19 ……………………………………………….70,000 20 ……………………………………………….60,000 St. John’s Temps can meet any of these demand levels. Fixed costs will remain unchanged for all the demand levels. On the basis of this additional information, calculate the price per hour that St. John’s Temps should charge to maximize operating income. 3. Comment on your answers to requirements 1 and 2. Why are they the same or different?
> Lee Manufacturing makes a component they call P14-31. This component is manufactured only when ordered by a customer, so Lee keeps no inventory of P14-31. The list price is $100 per unit, but customers who place “large”
> Ramish Electronics has only two retail and two wholesale customers. Information relating to each customer for 2015 follows (in thousands): Ramish’s annual distribution-channel costs are $38 million for wholesale customers and $7 milli
> The Sherriton Hotels chain embarked on a new customer loyalty program in 2015. The 2015 year-end data have been collected, and it is now time for you to determine whether the loyalty program should be continued, discontinued, or perhaps altered to improv
> The Department of National Defence (DND) has the difficult decision of deciding which military bases to close down. Military and political factors obviously matter, but cost savings are also an important factor. Consider two naval bases—one in Vancouver,
> Debbie’s Delight attains a 10% market share based on total sales of the Calgary market. The total Calgary market is expected to be 1,000,000 kilograms in sales volume for August 2015. The actual total Calgary market for August 2015 was 960,000 kilograms
> Debbie’s Delight Inc. operates a chain of cookie stores. Budgeted and actual operating data for its three Calgary stores for August 2015 are as follows: Debbie’s Delight focuses on contribution margin in its variance
> Blank Slate’s senior vice-president of marketing prepared his budget at the beginning of the third quarter, assuming a 25% market share based on total sales. The total tablet market was estimated by Fool instead Research to reach sales of 400,000 units w
> Blank Slate Inc. (BSI) produces tablet computers. BSI markets three different handheld models. SlatePro is a souped-up version for the executive on the go; Slate is a consumer-oriented version; and SlateLite is a stripped down version for the young adult
> A number of terms are listed below: absorption costing…………………………………….super-variable costing theoretical capacity…………………………………………..practical capacity normal capacity………………………………………master budget capacity non-productive idle capacity………………………off-limits idl
> Spring Distribution has decided to analyze the profitability of five new customers. It buys bottled water at $12 per case and sells to retail customers at a list price of $14.40 per case. Data pertaining to the five customers are: Activity â€
> Movement Athletics (MA) sells exercise DVDs through television infomercials. It uses a well-known sports celebrity in each DVD. Each celebrity receives a share (typically varying between 10% and 25%) of the revenue from the sale of their DVD. In recent m
> The Princess Corporation classifies animal feed as a byproduct. The byproduct is inventoried at its selling price when produced; the net realizable value of the product is used to reduce the joint production costs before the split off point. Before 2015,
> The Princess Corporation grows, processes, packages, and sells three joint apple products: (a) sliced apples that are used in frozen pies, (b) applesauce, and (c) apple juice. The skin of the apple, processed as animal feed, is treated as a byproduct. Pr
> Pulkits Silk Shirts (PSS) hand-makes blouses and sells them to highend department stores. PSS buys bolts of silk for $300 each. Out of each bolt it gets 30 blouses, which it sells for $90 each. PSS’s new manager has suggested taking the scraps left after
> Cumberland’s accountant needs to record the information about the joint products and byproducts in the general journal, but is not sure what the entries should be. Cumberland Mines has hired you as a consultant to help its accountant. Required: 1. Show
> The Cumberland Mine is a small mine that extracts coal in central Alberta. Each tonne of coal mined is 40% Grade A coal, 40% Grade B coal, and 20% coal tar. All output is sold immediately to a local utility. In May, Cumberland mined 1,000 tonnes of coal.
> Montreal has decided that buttermilk might sell better if it were marketed for baking and sold in pints. This would involve additional packaging at an incremental cost of $0.25 per pint. Each pint could be sold for $0.90. (Note: 1 quart = 2 pints.) Req
> Montreal Dairy Products Corp buys one input, full-cream milk, and refines it in a churning process. From each gallon of milk, Montreal produces two cups (one pound) of butter and two quarts (eight cups) of buttermilk. During May 2015, Montreal bought 10,
> West-Coast Oceanic Water (WOW) desalinates and bottles sea water. The desalinated water is in high demand from a large group of environmentally conscious people on the west coast of Canada. During March, WOW processes 1,000 litres of sea water and obtain
> Amy James is a cost accountant and business analyst for Doorknob Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct cost categories: direct materials and direct manufacturing labour. James feels that manufacturing ove
> Consider the following scenario. Each day, a butcher buys a 200-kilogram pig for $360. The pig can be processed to yield the following three products: Day 1 The butcher buys a pig. The $360 joint cost of the pig is allocated to individual products base
> The Sunshine Oil Company buys crude vegetable oil. Refining this oil results in four products at the splitoff point: A, B, C, and D. Product C is fully processed by the splitoff point. Products A, B, and D can individually be further refined into Super A
> Bill Dundee is the owner and operator of Western Bottling, a bulk soft-drink producer. A single production process yields two bulk soft drinks, Rainbow Dew (the main product) and Resi-Dew (the byproduct). Both products are fully processed at the splitoff
> Jason Miller and Eric Jackson would like to lease an office building to open their separate law offices. The building has a total of 1,700 square metres of office space. Miller and Jackson need 1,000 square metres and 700 square metres, respectively. If
> Bulldog Inc. is a large manufacturing company that runs its own electrical power plant from the excess steam produced in its manufacturing process. Power is provided to two production departments—Department A and Department B. The capac
> Forber Bakery makes baked goods for grocery stores, and has three divisions: bread, cake, and doughnuts. Each division is run and evaluated separately, but the main headquarters incurs costs that are indirect costs for the divisions. Costs incurred in th
> Black Gold Petroleum Company is engaged in all phases of exploring, refining, and marketing of oil and petrochemical products. To ensure full compliance with all applicable laws, the company has a legal department staffed by lawyers who have expertise in
> Magnum T.A. Inc. specializes in the assembly and installation of high-quality security systems for the home and business segments of the market. The four departments at its highly automated state-of-the-art assembly plant are as follows: The budgeted l
> Ransom Inc. and Downey Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Ransom needs the machine for 900 hours and Downey needs it for 600 hours. If ea
> The Manes Company has two products. Product 1 is manufactured entirely in Division X. Product 2 is manufactured entirely in Division Y. To produce these two products, the Manes Company has two support divisions: A (a materials-handling division) and B (a
> Purdue Inc. manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. Required: For each independent scenario given, indicate whether each of the manufacturing v
> Gether Corporation manufactures appliances. It has four divisions: refrigerator, stove, dishwasher, and microwave oven. Each division is located in a different city and the headquarters is located in Mississauga, Ontario. Headquarters incurs a total of $
> Total Body Inc. has a new promotional program that offers a free gift-wrapping service for its customers. Total’s customer-service division has practical capacity to wrap 7,500 gifts at a budgeted fixed cost of $6,750 each month. The bu
> Mayfair Corporation currently subsidizes cafeteria services for its 250 employees. Mayfair is in the process of reviewing the cafeteria services as cost-cutting measures are needed throughout the organization to keep the prices of its products competitiv
> Refer to the data for Exercise 13-37. Assume the fabric costs $4 per metre in 2016 and $4.10 per metre in 2015. Required: 1. Compute Guble Company’s total factor productivity (TFP) for 2016. 2. Compare TFP for 2016 with a benchmark TFP for 2015 inputs b
> Guble Company manufactures wallets from fabric. In 2015, Guble made 2,500,000 wallets using 1,875,000 metres of fabric. In 2016, Guble plans to make 2,650,000 wallets and wants to make fabric use more efficient. At the same time, Guble wants to reduce ca
> Lee Corporation manufactures various types of colour laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the market are comparable in terms of features an
> BrightStar, a cable television operator, had 800,000 subscribers in 2015. The company employs eight customer help-desk representatives to respond to customer questions and problems. During 2015, each customer help-desk representative worked eight hours p
> Caltex Inc. refines gasoline and sells it through its own Caltex Gas Stations. On the basis of market research, Caltex determines that 60% of the overall gasoline market consists of “service-oriented customers,” medium
> Refer to the information for Dransfield Company in Exercise 13-31. Required: 1. Calculate the amount and cost of unused capacity for: a. Manufacturing b. Sales and customer service c. AdvertisingIf you are unable to calculate the amount and cost of unus
> Suppose that during 2016, the market for ZP98 grew 8%. All increases in market share (that is, sales increases greater than 8%) are the result of Dransfield’s strategic actions. Required: Calculate how much of the change in operating income from 2015 to
> Dvent budgets 18,000 machine hours for the production of computer chips in August 2015. The budgeted variable overhead rate is $6 per machine-hour. At the end of August there is a $375 favourable rate variance for variable overhead and a $1,575 unfavoura
> Refer to Exercise 13-30. Assume that in 2016, Dransfield has changed its processes and trained workers to recognize quality problems and fix them before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilog
> Dransfield Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by Dransfield’s competitors. Order-processing time is very short; however, approximately 10% of pro
> Sunset Heights Animal Rescue & Protection Society (SHARP) is a non-profit organization dedicated to the rescue and protection of domestic animals. It operates several animal shelters in the Sunset Heights area (including animal adoption services), rescue
> Baker Inc. is preparing to submit a bid for a ball-bearings order. Greg Lazarus, controller of the Bearings Division of Baker, has asked Maria Decker, the cost analyst, to prepare the bid. To determine the amount of the bid, Baker’s pol
> Snowbound Air is about to introduce a daily round-trip flight from Edmonton to Winnipeg and is determining how it should price its round-trip tickets. The market research group at Snowbound Air segments the market into business and pleasure travellers. I
> Fearless Furniture Manufacturing (FFM) has been manufacturing furniture for the home for over 30 years. George Fearless, the owner, has decided he would like to manufacture an executive desk that contains space for not only a laptop dock but also an MP3
> Fane Industries Ltd. has been approached by a customer who wishes to purchase 50,000 units of its product at $52 per unit. The customer requires delivery within one month. The company has capacity to produce 350,000 units per month and has 5,000 units cu
> Best Test Laboratories evaluates the reaction of materials to extreme increases in temperature. Much of the company’s early growth was attributable to government contracts, but recent growth has come from expansion into commercial markets. Two types of t
> Stardom Inc. cans peaches for sale to food distributors. All costs are classified as either manufacturing or marketing. Stardom prepares monthly budgets. The March 2015 budgeted absorption-costing statement of comprehensive income is as follows: Revenue
> Total overhead, three-variance analysis. Cedar Inc. specializes in the production of futons. It uses standard costing and flexible budgets to account for the production of a new line of futons. For 2015, budgeted variable overhead at a level of 3,200 sta
> Cutler Electronics makes a Blu-ray player, CE100, which has 80 components. Cutler sells 7,000 units each month for $70 each. The costs of manufacturing CE100 are $45 per unit, or $315,000 per month. Monthly manufacturing costs incurred are: Direct mater
> The new CEO of Roile Manufacturing has asked for a variety of information about the operations of the firm from last year. The CEO is given the following information, but with some data missing: Total sales revenue ………………………………………………………………..? Number of
> Mazzoli Brothers is an auto repair shop. Mazzoli’s cost accounting system tracks two cost categories: direct labour (working on the cars) and direct materials (parts). Mazzoli uses a time-and-materials pricing system, with direct labour
> Oxford Engineering manufactures small engines. The engines are sold to manufacturers who install them in such products as lawn mowers. The company currently manufactures all the parts used in these engines but is considering a proposal from an external s
> Pendleton Engineering makes cutting tools for metal-working operations. It makes two types of tools: R3, a regular cutting tool, and HP6, a high-precision cutting tool. R3 is manufactured on a regular machine but HP6 must be worked on both the regular ma
> OmniSport’s Plastics Department is currently manufacturing 5,000 pairs of skates annually, making full use of its machine capacity. Presented below are the selling price and costs associated with OmniSport’s skates.
> The TechMech Company produces and sells 6,000 modular computer desks per year at a selling price of $500 each. Its current production equipment, purchased for $1,500,000 and with a five-year useful life, is only two years old. It has a terminal disposal
> The Pastel Company must reach a make/buy decision with respect to a highvolume, easily made metal tool, RG1. Sean Gray, the cost analyst, estimates the following costs and production information for the 50,000 units of RG1 that are expected to be put int
> Air Pacific has leased a single jet aircraft that it operates between Vancouver and the Fiji Islands. Only tourist-class seats are available on its planes. An analyst has collected the following information: Assume that fuel costs are unaffected by the
> Broadway Printers operates a printing press with a monthly capacity of 2,000 machine-hours. Broadway has two main customers: Taylor Corporation and Kelly Corporation. Data on each customer for January follows: Kelly Corporation indicates that it wants
> Meals on Wheels (MOW) operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who phone or fax orders to MOW. MOW allocates variable and fixed overhead costs on the basis of delivery time. MO
> Larry Miller, the general manager of Basil Software, scheduled a meeting on June 2, 2016, with Nicole Nguyen, sales manager, Andy Ayim, accountant, and Ellen Eisner, software operations manager, to discuss the development and release of Basil Software&ac
> Della Simpson Inc. sells two popular brands of cookies, Della’s Delight and Bonnie’s Bourbon. Della’s Delight goes through the Mixing and Baking Departments and Bonnie’s Bourbon, a f
> Information Technology, Inc. assembles and sells two products: printers and desktop computers. Customers can purchase either (a) a computer or (b) a computer plus a printer. The printers are not sold without the computer. The result is that the quantity
> Wolverine Corporation is working at full production capacity producing 10,000 units of a unique product, Rosebo. Manufacturing costs per unit for Rosebo are as follows: Direct materials ……………………………………$2 Direct manufacturing labour …………………$3 Manufacturin
> The Beach Comber is a take-out food store at a popular beach resort. Susan Sexton, owner of the Beach Comber, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows: Sexton has a m
> 6. The company has an inventory of 1,000 units of pens that must be sold immediately at reduced prices. Otherwise, the inventory will become worthless. The unit cost that is relevant for establishing the minimum selling price is (a) $4.50, (b) $4.00, (c)
> The following are the Class Company’s unit costs of manufacturing and marketing a high-style pen at an output level of 20,000 units per month: Manufacturing cost Direct materials……â€&b
> Martin Goretsky examines the output and data from an OLS simple linear regression, what does the plot of the residuals tell Mr. Goretsky? Y Indirect Y-y= e Residual Plot Monthly Produced Q = Q Sold Manufacturing 250 Cost Pool 200 37.8 252 150 39.6 2
> Below are the input and results of an OLS linear regression. The president of a specialty fruit juice company believed that for every single degree change in average temperature during the summer months, the profit would decline 3%. This information was
> OLS simple linear regression analysis. (CIMA, heavily adapted) Lisa Aoli, the financial manager at the Casa Real restaurant, is working with Megan Dryden, the marketing manager, to establish if there is any relationship between the newspaper advertising
> Singh Company uses a standard cost system in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 4,000 output units per year, included 6 machine-hours of variable manufacturing overhead at
> Ken Howard, financial analyst at JVR Corporation, a manufacturer of precision parts, is examining the behaviour of quarterly maintenance costs for budgeting purposes. Howard collects data on machine-hours worked and maintenance costs for the past 26 quar
> Tammy Cat Tree Co. (TCTC) builds luxury cat trees and sells them through the internet to cat owners who want to provide their cats with a more natural environment. At the start of 2015, TCTC carried no inventory. During the year, it produced 1,000 cat tr
> In 2016, only 806,840 Deliman meals were produced and sold to the retirement homes. Smith suspects that retirement home controllers had systematically inflated their 2016 meal estimates. Required: 1. Recall that Deliman uses the master-budget capacity u
> Shen Company is a manufacturer of MP3 players. It implemented standard costs and a flexible budget on January 1, 2015. The president has been pondering how fixed manufacturing overhead should be allocated to products. Machine-hours have been chosen as th
> The Robertson Company uses an absorption-costing system based on standard costs. Total variable manufacturing cost, including direct material cost, is $3 per unit; the standard production rate is 10 units per machine-hour. Total budgeted and actual fixed
> Four Sheets (FS) Company uses standard costing. Kate King, the new president of FS Company, is presented with the following data for 2015: Required: 1. At what percentage of denominator level was the plant operating during 2015? 2. How much fixed manuf
> Shasta Hills, a winery in British Columbia, manufactures a premium white cabernet and sells primarily to distributors. Wine is sold in cases of one dozen bottles. In the year ended December 31, 2015, Shasta Hills sold 242,400 cases at an average selling
> It is the end of 2015. The All-Fixed Company began operations in January 2014. The company is so named because it has no variable costs. All its costs are fixed. All-Fixed is located on the bank of a river and has its own hydroelectric plant to supply po
> University Press produces textbooks for university courses. They recently hired a new editor, Leslie White, to handle production and sales of books for an introduction to accounting course. Leslie’s compensation depends on the gross margin associated wit
> Deli One operates a chain of 10 retirement homes in the Toronto area. Its central food-catering facility, Deliman, prepares and delivers meals to the retirement homes. It has the capacity to deliver up to 1,460,000 meals a year. In 2015, based on estimat
> Pandom Inc. produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 201 Required: Fill in the variances in the table below. Use F for favourable and U for unfavourable. Variable Fixe
> AJG Inc. is a manufacturer of the very popular G36 motorcycles. The management at AJG has recently adopted absorption costing and is debating which denominator level concept to use. The G36 motorcycles sell for an average price of $8,500. Budgeted fixed
> Headsmart, a three-year-old company, has been producing and selling a single type of bicycle helmet. Headsmart uses standard costing. After reviewing the statements of comprehensive income for the first three years, Stuart Weil, president of Headsmart, c
> Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2015: There are no rate or efficiency variances. Actual operating costs equal budgeted operating costs. The pro
> The following information for 2015 is for Morgan Corporation, which uses standard costing: Static-budget machine-hours …………………………………………33,000 Fixed overhead budget costs ………………………………….$ 5,940,000 Fixed overhead actual costs …………………………………..$ 5,400,000 Va
> 1. Prepare appropriate journal entries for variable and fixed manufacturing overhead (you will need to calculate the different variances to accomplish this). 2.Overhead variances may be used to reconcile the Cost of Goods Sold account at the end of the f
> FlatScreen manufactures flat-panel LCD displays. The displays are sold to major PC manufacturers. Following are some manufacturing overhead data for FlatScreen for the year ended December 31, 2015: FlatScreen’s budget was based on the
> CellOne is a cellular phone service reseller, contracting with major cellular operators for airtime in bulk and then reselling service to retail customers. Having adopted an ABC system last year, CellOne has defined the following activity areasâ
> Klein Surgical Instruments Inc. makes a special line of forceps, SFA, in batches. Klein randomly selects forceps from each SFA batch for quality-testing purposes. Quality-testing costs are batch-level costs. A separate quality-testing section is responsi
> Levie Company uses standard costing. The company prepared its static budget for 2015 at 2,500,000 machine-hours for the year. Total budgeted overhead cost is $31,250,000. The variable overhead rate is $10 per machine-hour ($20 per unit). Actual results f
> Rollie Manufacturing makes, among other things, wheels for roller skates. Manufacturing Department B receives plastic wheel casings from Manufacturing Department A and puts them on axles along with some ball bearings. The wheel casings have been inspecte
> G-Force Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overhead cost pools are allocated to each centrifuge using budgeted assembly hours. Budgeted assembly time is two hours per unit. The following table shows the budgete
> How does the planning of fixed overhead costs differ from the planning of variable overhead costs?
> Belle’s Treats produces high-quality dog food distributed only through veterinary offices. To ensure that the food is of the highest quality and has taste appeal, Belle has a rigorous inspection process. For quality-control purposes, Belle has a standard
> Beal Manufacturing Company’s costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manu
> Mancusco Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. Its costing system for manufacturing has two direct cost categories (direct materials and direct manufacturing labour—both v
