Question: The following data were taken from the

> Katy, Inc., manufactures ‘‘smart phones.’’ It is considering the implementation of a JIT system. Costs to reconfigure the production line will amount to $200,000 annually. Estimated benefits from the change to JIT are as follows: The quality advantages o

> The following data are taken from the general ledger and other records of Black Hills Manufacturing Co. on January 31, the end of the first month of operations in the current fiscal year: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Go to the text Website at http://www.cengage.com/accounting/vanderbeck and click on the link to the following article: Benefits From Lean and Cellular Manufacturing, by Strategos, Inc.-Consultants, Engineers, Strategists Required: Read the article and a

> Match the materials control form in the left column with the person responsible for its preparation in the right column. (A selection may be used more than once.) a. Purchase requisition 1. Production department supervisor b. Purchase order 2. Sto

> Patriot Company predicts that it will use 360,000 gallons of material during the year. The material is expected to cost $5 per gallon. Patriot anticipates that it will cost $72 to place each order. The annual carrying cost is $4 per gallon. a. Determine

> Aztec Company expects daily usage of 500 pounds of material Inca, an anticipated lead time of seven days, and a desired safety stock of 2,500 pounds. a. Determine the order point. b. Determine the number of pounds to be issued from safety stock if the ne

> David Mfg. Company manufactures an integrated transistor circuit board for repeat customers but also accepts special orders for the same product. Job No. MS1 incurred the following unit costs for 1,000 circuit boards manufactured: Materials . . . . . . .

> Marcia Young earns $25 per hour for up to 400 units of production per day. If she produces more than 400 units per day, she will receive an additional piece rate of $0.50 per unit. Assume that her hours worked and pieces finished for the week just ended

> Venus, Inc., manufactures tennis clothing. During the month, the company cut and assembled 8,000 skirts. One hundred of the skirts did not meet specifications and were considered ‘‘seconds.’’ Seconds are sold for $9.95 per skirt, whereas first-quality sk

> A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered that the material used was inferior to the specifications

> RDI Company uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials

> Mystic Manufacturing Company maintains the following accounts in the general ledger: Materials, Work in Process, Factory Overhead, and Accounts Payable. On June 1, the materials account had a debit balance of $5,000. Following is a summary of materials t

> Benson Company was franchised on January 1, 2011. At the end of its third year of operations, December 31, 2013, management requested a study to determine what effect different materials inventory costing methods would have had on its reported net income

> Explain in narrative form the flow of direct materials, direct labor, and factory overhead costs through the ledger accounts.

> In tabular form, compare the total materials cost transferred to Work in Process and the cost of the ending inventory for each method used in E2-6, E2-7, and E2-8. Discuss the effect that each method will have on profits, depending on whether it is a per

> Using the moving average method of perpetual inventory costing and the information presented in E2-6, compute the cost of materials used and the cost of the July 31 inventory. In E2-6 July 1 Balance on hand, 1,000 yd of linen@$4.00 each. 3 Issued 250 y

> Using last-in, first-out; perpetual inventory costing; and the information presented, compute the cost of materials used and the cost of the July 31 inventory. In E2-6 July 1 Balance on hand, 1,000 yd of linen@$4.00 each. 3 Issued 250 yd. 5 Received 500

> Using first-in, first-out; perpetual inventory costing; and the following information, determine the cost of materials used and the cost of the July 31 inventory: July 1 Balance on hand, 1,000 yd of linen@$4.00 each. 3 Issued 250 yd. 5 Received 500 yd@ $

> Using the earnings data developed in E3-1 and assuming that this was the first week of employment for A. Jolly with Pittsburgh Manufacturing Company, prepare the journal entries for the following: a. The week’s payroll. b. Payment of th

> Prepare a journal entry to record each of the following materials transactions: a. Total materials purchased on account during the month amounted to $200,000. b. Direct materials requisitioned for the month totaled $175,000. c. Indirect materials requisi

> Catskill Manufacturing, Inc., records the following use of materials during the month of June: Prepare a summary journal entry for the materials requisitions. Materials Requisitions Direct Materials Indirect Date Req. No. Use Materials 1 110 Materia

> Why is unit cost information important to management?

> How is cost accounting information used by management?

> In what ways does a typical manufacturing business differ from a merchandising concern? In what ways are they similar?

> How does the cost accounting function assist in the management of a business?

> Classify the following as direct materials, direct labor, factory overhead, or selling and administrative expense. a. Steel used in an overhead door plant. b. Cloth used in a shirt factory. c. Fiberglass used by a sailboat builder. d. Cleaning solvent f

> What is the difference between a perpetual inventory system and a periodic inventory system?

> Compare the manufacturing, merchandising, and service sectors. How do they differ as to the kinds of businesses in each category, the nature of their output, and type of inventory, if any?

> How would you describe the following accounts—Finished Goods, Work in Process, and Materials?

> A. Jolly of Pittsburgh Manufacturing Company is paid at the rate of $20 an hour for an 8-hour day, with time-and-a-half for overtime and double-time for Sundays and holidays. Regular employment is on the basis of 40 hours a week, five days a week. At the

> How does the computation of cost of goods sold for a manufacturer differ from that of a merchandiser?

> How is cost accounting related to: financial accounting? Managerial accounting?

> If the factory operations and selling and administrative offices are housed in the same building, what would be a good cost allocation basis to use in dividing the depreciation expense between the two areas? Why would it be important to make this allocat

> What are standard costs, and what is the purpose of a standard cost system?

> Name five key elements of the Sarbanes-Oxley Act.

> What are the advantages of accumulating costs by departments or jobs rather than for the factory as a whole?

> When is process costing appropriate, and what types of businesses use it?

> The following data were taken from the general ledger and other data of Thomas Manufacturing on July 31: Finished goods, July 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,000 Cost of goods manufacture

> When is job order costing appropriate, and what types of businesses use it?

> What circumstances created the need for the Sarbanes-Oxley Act, and how are CEOs and CFOs affected by it?

> Clark Kent earns $800 per week for a five-day week, and he is entitled to 12 paid holidays and four weeks of paid vacation. a. Over how many weeks should the holiday pay and vacation pay be expensed? b. What is the amount of the total holiday pay, and h

> What actions should a CMA take when the established policies of the organization do not resolve an ethical conflict?

> How is effective control achieved in a manufacturing concern?

> For a manufacturer, what does the planning process involve, and how is cost accounting information used in planning?

> Distinguish prime cost from conversion cost. Does prime cost plus conversion cost equal the total manufacturing cost?

> How would you define the following costs: direct materials, indirect materials, direct labor, indirect labor, and factory overhead?

> Selected account balances and transactions of Alpine Manufacturing Co. follow: May Transactions: a. Purchased raw materials and factory supplies on account at costs of $45,000 and $10,000, respectively. (One inventory account is maintained.) b. Incurre

> The post-closing trial balance of Beamer Manufacturing Co. on April 30 is reproduced as follows: During the month of May, the following transactions took place: a. Purchased raw materials at a cost of $45,000 and general factory supplies at a cost of $1

> The adjusted trial balance for Indy Furniture Company on November 30, the end of its first month of operation, is as follows: The general ledger reveals the following additional data: a. There were no beginning inventories. b. Materials purchases durin

> The following data were taken from the general ledgers and other data of Alpha Manufacturing, Inc., and Bravo Merchandising Co. on April 30 of the current year: Merchandise inventory, April 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> Beth Elkins, a factory worker, earns $1,000 each week. In addition, she will receive a $4,000 bonus at year-end and a four-week paid vacation. Prepare the entry to record the weekly payroll and the costs and liabilities related to the bonus and the vacat

> Prepare a performance report for the dining room of Leonardo’s Italian Cafe´ for the month of February 2011, using the following data: Budgeted Data: January February Dining room wages $4,300 $4,150 Laundry and houseke

> St. Lawrence Manufacturing Co. manufactures engines that are made only on customers’ orders and to their specifications. During January, the company worked on Jobs 007, 008, 009, 010. The following figures summarize the cost records for

> Spokane Manufacturing Co. obtained the following information from its records for the month of July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record the distribution of materials, labor, and

> Hidalgo Company manufactures goods to special order and uses a job order cost system. During its first month of operations, the following selected transactions took place: a. Materials purchased on account . . . . . . . . . . . . . . . . . . . . . . . .

> Fayetteville Manufacturing Co. produces only one product. You have obtained the following information from the corporation’s books and records for the year ended December 31, 2011: a. Total manufacturing cost during the year was $1,000,000, including dir

> O’Reilly Manufacturing, Inc.’s cost of goods sold for the month ended July 31 was $345,000. The ending work in process inventory was 90% of the beginning work in process inventory. Factory overhead was 50% of the direct labor cost. Other information pert

> Marta Johns is the Division Controller and Kevin Deere is the Division Vice President of Tuffy Tractor, Inc. Due to pressures to meet earnings estimates for 2011, Deere instructs Johns to record as revenue $5,000,000 of orders for tractors that are still

> The following form is used by MoJo Manufacturing Company to compute payroll taxes incurred during the month of April: 1. Using the above form, calculate the employer’s payroll taxes for April. Assume that none of the employees has achi

> Go to the companion Website at www.cengage.com/accounting/vanderbeck and click on the link to ‘‘The Sarbanes-Oxley Act.’’ Read the accompanying PowerPoint presentation, and write a one-page summary of it.

> A weekly payroll summary made from labor time records shows the following data for Musketeer Manufacturing Company: Overtime is payable at one-and-a-half times the regular rate of pay for an employee and is distributed to all jobs worked on during the p

> The total wages and salaries earned by all employees of Cutler Manufacturing Company during the month of March, as shown in the labor cost summary and the schedule of fixed administrative and sales salaries, are classified as follows: Direct labor . . .

> Using the earnings data developed in E3-1, and assuming that this was the eighth week of employment for Jolly and the previous earnings to date were $7,900, prepare the journal entries for the following: a. The week’s payroll. b. Paymen

> Using the earnings data developed in E3-1, and assuming that this was the eighth week of employment for Jolly and the previous earnings to date were $7,900, prepare the journal entries for the following: a. The week’s payroll. b. Payme

> Fontana Fabricating Company paid wages to its employees during the year as follows: Burris . . . . . . . . . . . . . . . . . . . . . . . . $ 15,400 Combs . . . . . . . . . . . . . . . . . . . . . . . 16,700 Detrick . . . . . . . . . . . . . . . . .

> A partial summary of the payroll data for Burrington Manufacturing Company for each week of June is as follows: a. Compute the missing amounts in the summary, assuming that no employees have reached the $100,000 FICA maximum. b. For each payroll period,

> Albert Machine Tool Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Other factory costs for the month totaled $16,800. Factory overhead costs are allocated one-third to Job 401 and

> What kind of information and data are needed to calculate an order point?

> What factors should management consider when determining the amount of investment in materials?

> A rush order was accepted by San Diego Machine Conversions for five van conversions. The labor time records for the week ended January 27 show the following: All employees are paid $10.00 per hour, except Peavy, who receives $20 per hour. All overtime p

> The payroll records of Torero Machining Company show the following information for the week ended April 17: Hourly workers are paid time-and-a-half for overtime. a. Determine the net earnings of each employee. b. Prepare the journal entries for the foll

> Study the performance report for Leonardo’s Italian Cafe´ in Figure and write a brief explanation of the strengths and weaknesses of September and year-to-date operations. H. Leonardo's Italian Café Performance Report-K

> Construct a short-term financial plan for Springfield Snowboards based on its expansion opportunity described in the “Positive Cash Flow Shocks” part of Section 20.1. Base the plan on the following table, which forecas

> The Rasputin Brewery is considering using a public warehouse loan as part of its short-term financing. The firm will require a loan of $500,000. Interest on the loan will be 10% (APR, annual compounding) to be paid at the end of the year. The warehouse c

> Kurz Manufacturing is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. Although investors currently expect Kurz to remain an all-equity firm, Kurz plans to announce that it will borrow $50 million and

> The Ohio Valley Steel Corporation has borrowed $5 million for one month at a stated annual rate of 9%, using inventory stored in a field warehouse as collateral. The warehouser charges a $5000 fee, payable at the end of the month. What is the effective a

> The Signet Corporation has issued four-month commercial paper with a $6 million face value. The firm netted $5,870,850 on the sale. What effective annual rate is Signet paying for these funds?

> Assume that the prime rate is 8% APR, compounded quarterly. How much dollar savings in interest did Treadwater (Problem 12) and Magna (Problem 11) achieve by accessing the commercial paper market? Data from Problem 12: The Mighty Power Tool Company has

> The Needy Corporation borrowed $10,000 from Bank Ease. According to the terms of the loan, Needy must pay the bank $400 in interest every three months for the three-year life of the loan, with the principal to be repaid at the maturity of the loan. What

> Which of the following one-year, $1000 bank loans offers the lowest effective annual rate? a. A loan with an APR of 6%, compounded monthly b. A loan with an APR of 6%, compounded annually, with a compensating balance requirement of 10% (on which no inte

> Magna Corporation has an issue of commercial paper with a face value of $1,000,000 and a maturity of six months. Magna received net proceeds of $973,710 when it sold the paper. What is the effective annual rate of the paper to Magna?

> Consider two loans with one-year maturities and identical face values: an 8% loan with a 1% loan origination fee and an 8% loan with a 5% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate? Why?

> The Hand-to-Mouth Company needs a $10,000 loan for the next 30 days. It is trying to decide which of three alternatives to use: Alternative A: Forgo the discount on its trade credit agreement that offers terms of 2/10, net 30. Alternative B: Borrow the m

> If you want to limit your maximum short-term borrowing to $500, how much excess cash must you carry? Quarter ($000) 2 Cash $100 $100 $100 $100 Accounts Receivable 200 100 100 600 Inventory 200 500 900 50 Accounts Payable 100 100 100 100

> NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 15%. NatNah decides to increase its leverage to maintain a market debt-to-value ratio of 0.5. Suppose its debt cost of capital is 9% and its corporate tax rate is 35%

> Assume the credit terms offered to your firm by your suppliers are 3/5, net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30.

> Your firm currently has net working capital of $100,000 that it expects to grow at a rate of 4% per year forever. You are considering some suggestions that could slow that growth to 3% per year. If your discount rate is 12%, how would these changes impac

> Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will require an initial investment of $2 million in net working capital today. The plant will last ten years, at which point the full investment in net

> Westerly Industries has the following financial information. What is its cash conversion cycle? Sales 100,000 Cost of Goods Sold 80,000 Accounts Receivable 30,000 Inventory 15,000 Accounts Payable 40,000

> Use the following income statement and balance sheet for Global Corp.: Global expects sales to grow by 8% next year. Using the percent of sales method, forecast: a. Costs except depreciation b. Depreciation c. Net income d. Cash e. Accounts receivable f.

> Use the following income statement and balance sheet for Jim’s Espresso: If Jim’s adjusts its payout policy to 70% of net income, how will the net new financing change? Income Statement Balance Sheet Sales 200,000

> The Treadwater Bank wants to raise $1 million using three-month commercial paper. The net proceeds to the bank will be $985,000. What is the effective annual rate of this financing for Treadwater?

> You are long both a call and a put on the same share of stock with the same exercise date. The exercise price of the call is $40 and the exercise price of the put is $45. Plot the value of this combination as a function of the stock price on the exercise

> Assume that you have shorted the put option in Problem 4. a. If the stock is trading at $8 in three months, what will you owe? b. If the stock is trading at $23 in three months, what will you owe? c. Draw a payoff diagram showing the amount you owe at ex

> If you choose to enter the year with $400 total in cash, what is your maximum short-term borrowing? Quarter ($000) 2 Cash $100 $100 $100 $100 Accounts Receivable 200 100 100 600 Inventory 200 500 900 50 Accounts Payable 100 100 100 100

> If you hold only $100 in cash at any time, what is your maximum short-term borrowing and when? Quarter ($000) 2 Cash $100 $100 $100 $100 Accounts Receivable 200 100 100 600 Inventory 200 500 900 50 Accounts Payable 100 100 100 100

> If you chose to use only long-term financing, what total amount of borrowing would you need to have on a permanent basis? Forecast your excess cash levels under this scenario. Quarter ($000) 2 Cash $100 $100 $100 $100 Accounts Receivable 200 100 100

> What are the permanent working capital needs of your company? What are the temporary needs? Quarter ($000) 2 Cash $100 $100 $100 $100 Accounts Receivable 200 100 100 600 Inventory 200 500 900 50 Accounts Payable 100 100 100 100

> Use the following income statement and balance sheet for Jim’s Espresso: What is the amount of net new financing needed for Jim’s? Income Statement Balance Sheet Sales 200,000 Assets Costs Except Depreciation (100,

> Emerald City Umbrellas sells umbrellas and rain gear in Seattle, so its sales are fairly level across the year. However, it is branching out to other markets where it expects demand to be much more variable across the year. It expects sales in its new ma