Question: Trendy Clothing, Inc. is a manufacturer of

> The Platinum Company is a national mattress manufacturer. Its Marion plant will become idle on December 31, 2020. Nina Simon, the corporate control- ler, has been asked to look at three options regarding the plant: ■ Option 1: The plant can be leased to

> Ortel Telecom sells telecommunication products and services to a variety of small businesses. Two of Ortel’s key clients are Square and Cloudburst, both fast-growing technology start- ups located in New York City. Ortel has compiled inf

> Captain Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Captain made the following estimates related to the new machinery: Assume depreciation is calculated on a straight-line basis for tax pur

> Jenna’s Bakery plans to purchase a new oven for its store. The oven has an estimated useful life of 4 years. The estimated pretax cash flows for the oven are as shown in the table that follows, with no anticipated change in working capi

> Lulus Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year. Lyssa Bickerson, staff analyst at Lulus, is preparing an analysis of the three

> New Med Corporation is a rapidly growing biotech company that has a required rate of return of 12%. It plans to build a new facility in Santa Clara County. The building will take 2 years to complete. The building contractor offered New Med a choice of th

> Joshua Wilson is the controller of Apex Frame Mouldings, a division of Garman Enterprises. As the division is preparing to count year-end inventory, Wilson is approached by Doug Leonard, the division’s president. A selection of inventory previously value

> Eastern Cola is considering the purchase of a special-purpose bottling machine for $70,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: Easter

> Assume the same facts as in Exercise 22-23 except that City Hospital is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes. Required 1. Complete requirement 1 of Exercise 22-23 taking the income tax rate of 30%

> Heavenly Candy Company is considering purchasing a second chocolate dipping machine in order to expand its business. The information Heavenly has accumulated regarding the new machine is Heavenly estimates it will be able to produce more candy using the

> To be sure that you understand how to use the tables in Appendix A at the end of this text, solve the following exercises. Ignore income tax considerations. The correct answers, rounded to the nearest dollar, appear on page 904. Required 1. You have jus

> Silicon Valley Computer (SVC), the producer of keyboards for personal computers, which is discussed in the chapter, is a subsidiary of El Camino Corporation. Each year, headquarters of El Camino provides a capital budget to each of their subsidiaries, th

> Refer to Exercise 21-27. Jose, the unit manager of Raymore, is concerned that switching to the backflush costing system will lower the operating income of his unit. The senior management at Outdoor UnPlugged tells Jose that this will only be the case if

> Raymore, a unit of Outdoor UnPlugged, manu- factures a line of electric, cordless, lawn mowers. Senior management of Outdoor UnPlugged has noticed that Raymore has been producing more lawn mowers than it has been selling, and that the unitâ€&#

> The TyeNeck Company manufactures men’s neckwear at its A1 plant. TyeNeck is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs would be $280,000. b. A

> Endrino Bot Company’s annual demand for its only product, R2-T2, is 10,000 units. Endrino is currently analyzing possible combinations of relevant carrying cost per unit per year and relevant ordering cost per purchase order, depending

> TurfPro Company produces lawn mowers and purchases 4,500 units of a rotor blade part each year at a cost of $30 per unit. TurfPro requires a 15% annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handli

> Brook Exteriors is a firm that provides house painting services. Richard Brook, the owner, is trying to find new ways to increase revenues. Mr. Brook performs the following actions, not in the order listed. a. Mr. Brook decides to buy the paint sprayers

> The HomeServe Corporation provides a wide range of household essentials to householders. One of the products it offers is dotted paper rolls, used in kitchens and toilets. The supplier for the dotted paper rolls pays all incoming freight. No incoming ins

> MakeWatch (MW) manufactures the TagMe wristwatches that RightTime (RT) sells to its customers. MW has recently installed a computer software that enables its customers to conduct “one-stop” purchasing using state-of- the-art Web site technology. RT’s ord

> RightTime (RT) Corporation operates a retail store featuring wristwatches. It maintains an EOQ decision model to make inventory decisions. Currently, it is considering inventory decisions for its TagMe wristwatches product line, which is very popular. Da

> Prescott Manufacturing evaluates the performance of its production managers based on a variety of factors, including cost, quality, and cycle time. The following are nonfinancial measures for quality and time for 2019 and 2020 for its only product: The f

> Global Cell Phones (GCP) has developed a cell phone that can be used anywhere in the world (even countries like Japan that have a relatively unique cell phone system). GCP has been receiving complaints about the phone. For the past two years, GCP has bee

> Refer to the information presented in Exercise 20-24. The head of the registration advisors at BU has decided that the advisors must finish their advising in 2 weeks (10 working days) and therefore must advise 420 students a day. However, the average wai

> The registration advisors at the Brunendorf University (BU) in Berlin help 4,200 students develop their class schedules and register for classes each semester. Each advi- sor works for 10 hours a day during the registration period. BU currently has 10 ad

> It’s a Dog’s World (IDW) makes toys for big-breed puppies. IDW’s managers have recently learned that they can calculate the average waiting time for an order from the time an order is received till th

> AquaPro produces water purifiers for the household. Business is good but Derek, the manager, has noticed that customers complain because they find leakages in the plastic nozzles used. AquaPro provides a warranty for each machine and charges $115 for eac

> Pressing Matters manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: Pressing Matters’ current presses have a quality problem that causes variations

> State the five-step decision-making process in an organization. Josephine and Amira are planning to expand their bakery business, this will require an additional $15,000 which they hope to obtain from the bank. Explain how the five-step decision making p

> iProtect produces covers for all makes and models of iPads. iProtect sells 1,500,000 units each year at a price of $30 per unit and a contribution margin of 35%. A survey of iProtect’s customers over the past 12 months indicates that cu

> KidsTravel produces car seats for children from newborn to two years old. KidsTravel’s only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection. Inspection costs $4.00 per

> Calculus Company makes calculators for students. The company has been working on improving its quality over the last year and it wants to confirm a reduction in their costs-of- quality (COQ). Here are the results: Required 1. Identify the category for e

> Osborn, Inc., produces cell phone equipment. Amanda Westerly, Osborn’s president, implemented a quality-improvement program that has now been in operation for two years. The cost report shown here has recently been issued. Required 1.

> Rufenstein War Systems Pvt. Ltd. has an extensive job-costing facility that uses a variety of metals. Consider each requirement independently. Required 1. Job 372 uses a particular metal alloy that is not used for any other job. Assume that scrap is mat

> Heyer Appliances assembles dishwashers at its plant in Tuscaloosa, Alabama. In February 2020, 60 circulation motors that cost $110 each (from a new supplier that subsequently went bankrupt) were defective and had to be disposed of at zero net disposal va

> Refer to the information in Exercise 19-30. Suppose that WaferCo determines standard costs of $240 per equivalent unit for direct materials and $100 per equivalent unit for conver- sion costs for both beginning work in process and work done in the curren

> Refer to the information in Exercise 19-29. Required 1. Do Exercise 19-29 using the FIFO method of process costing. 2. Should WaferCo’s managers choose the weighted-average method or the FIFO method? Explain briefly.

> WaferCo is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectabl

> Roku Electronics manufactures universal power adapters at its Desert Sands plant. The company provides you with the following information regarding operations for April 2020: Assume the spoiled units have no disposal value. Required 1. What is the unit

> Fred Harris is the president of United Maintenance Service. He takes the following actions, not necessarily in the order given. For each action (a–e) state whether it is a planning decision or a control decision. a. Fred contemplates procuring a digital

> Mason produces small machined parts. Mason uses a job-costing system. The nature of its process is such that management expects normal spoilage at a rate of 2% of good parts. Data for last quarter are shown below: The spoiled parts were identified after

> Do Exercise 19-25 using the FIFO method. 2. What are the managerial issues involved in selecting or reviewing the percentage of spoilage considered normal? How would your answer to requirement 1 differ if all spoilage were viewed as normal?

> For the data in Exercise 19-21, use the FIFO method to summarize the total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign costs to units completed and transferred out (including normal s

> Gray Manufacturing Company uses the FIFO method of process costing instead of the weighted-average method. Required Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

> For the data in Exercise 19-21, summarize the total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign costs to units completed and transferred out (including normal spoilage), to abnormal s

> Consider the following data for November 2020 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the p

> The following data, in physical units, describe a grinding process for January: Inspection occurs at the 100% completion stage. Normal spoilage is 4% of the good units passing inspection. Required 1. Compute the normal and abnormal spoilage in units. 2.

> Purex produces three different types of detergents: Breeze, Fresh, and Joy. The company uses four operations to manufacture the detergents: spray drying, mixing, blending, and packaging. Breeze and Fresh are produced in powder form in the mixing departme

> Refer to the information in Exercise 18-31. Suppose Trendy uses the FIFO method instead of the weighted-average method in all its departments. The only changes to Exercise 18-31 under the FIFO method are that total transferred-in costs of beginning work

> Goldings Limited produces sports wears for school children. The company incurred the following costs in the production of its inter-school sports wears: Required 1. Classify each of the costs listed above as either direct or indirect costs. 2. Compute t

> Do Exercise 18-29 using the FIFO method. 2. Tomlinson’s management seeks to have a more consistent cost per equivalent unit. Which method of process costing should the company choose and why?

> Tomlinson Corporation is a biotech company based in Milpitas. It makes a cancer-treatment drug in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Tomlinson uses

> Whole Goodness Bakery needs to determine the cost of two work orders for the month of June. Work order 215 is for 2,400 packages of dinner rolls, and work order 216 is for 2,800 loaves of multigrain bread. Dinner rolls are mixed and cut into individual r

> For the data in Exercise 18-24, use the FIFO method to summarize the total costs to account for, calculate the cost per equivalent unit for direct materials and conversion costs, and assign costs to units completed (and transferred out) and to units in e

> Refer to the information in Exercise 18-24. Suppose the assembly division at Fenton Watches, Inc., uses the FIFO method of process costing instead of the weighted-average method. Required Compute equivalent units for direct materials and conversion cost

> For the data in Exercise 18-24, summarize the total costs to account for, calculate the cost per equivalent unit for direct materials and conversion costs, and assign costs to the units completed (and transferred out) and units in ending work in process.

> The assembly division of Fenton Watches, Inc., uses the weighted-average method of process costing. Consider the following data for the month of May 2020: Required Compute equivalent units for direct materials and conversion costs. Show physical units i

> Pilar Chemicals has a mixing department and a refining department. Its process-costing system in the mixing department has two direct materials cost categories (chemical P and chemical Q) and one conversion costs pool. The following data pertain to the m

> Panagra, Inc. manufactures digital cameras. It has two departments: assembly and testing. In January 2020, the company incurred $775,000 on direct materials and $816,000 on conversion costs, for a total manufacturing cost of $1,591,000. Required 1. Assu

> Royston, Inc., is a large food-processing company. It processes 150,000 pounds of peanuts in the peanuts department at a cost of $180,000 to yield 12,000 pounds of product A, 65,000 pounds of product B, and 16,000 pounds of product C. â– 

> Dalworth Construction Company provides construction services for major projects. Managers at the company believe that construction is a people-management business, and they list the following as factors critical to their success: a. Hire external consult

> Carl Jason is a prospector in the Texas Panhandle. He has also been running a side business for the past couple of years. Based on the popularity of shows such as “Rattlesnake Nation,” there has been a surge of interes

> Tasty, Inc., is a producer of potato chips. A single production process at Tasty, Inc., yields potato chips as the main product and a byproduct that can also be sold as a snack. Both products are fully processed by the splitoff point, and there are no se

> Illinois Soy Products (ISP) buys soy- beans and processes them into other soy products. Each ton of soybeans that ISP purchases for $340 can be converted for an additional $190 into 575 pounds of soy meal and 160 gallons of soy oil. A pound of soy meal c

> Fancy Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as stock, which Fancy d

> Sinclair Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons to generate three nonsalable intermediate products: ICR8, ING4, and XGE3. These intermediate products are further processed separately to produce crude oil, nat

> The KZee Company operates a simple chemical process to convert a single material into three separate items, referred to here as A, B, andC. All three end products are separated simultaneously at a single splitoff point. Products A and B are ready for sal

> Stenback Company is one of the world’s leading corn refiners. It produces two joint products—corn syrup and corn starch—using a common production process. In July 2020, Stenback reported the following

> Quality Chicken is computing the ending inventory values for its July 31, 2020, balance sheet. Ending inventory amounts on July 31 are 15 pounds of breasts, 4 pounds of wings, 6 pounds of thighs, 5 pounds of bones, and 2 pounds of feathers. Quality Chick

> Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2020 follows: Joint cost of production in July 2020 was $50. A special shipment of 40 pounds of breasts and 15 p

> Hall Auto Sales uses all types of media to advertise its products (television, radio, newspaper, and so on). At the end of 2019, the company president, Tina Hall, decided that all advertising costs would be incurred by corporate headquarters and allocate

> Vortex Consulting has issued a report recommending changes for its newest high-tech manufacturing client, Precision Instruments. Precision currently manufactures a single product, a surgical robot that is sold and distributed internationally. The report

> 16. Which of the following is not correct regarding variable costs and fixed costs. a. Variable costs change in proportion to changes in the related level of activity while fixed costs remain unchanged irrespective of the level of activity within the rel

> Essence Company blends and sells designer fragrances. It has a Men’s Fragrances Division and a Women’s Fragrances Division, each with different sales strategies, distribution channels, and product offerings. Essence is

> E-books, an online book retailer, has two operating departments— corporate sales and consumer sales—and two support departments—human resources and information sys- tems. Each sales department conduct

> Refer to the data given in Exercise 16-19. Required 1. Allocate the two support departments’ costs to the two operating departments using the reciprocal method. Use (a) linear equations and (b) repeated iterations. 2. Compare and explain differences i

> Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services (AS) and information systems (IS)—and two operating departments&

> Ebbelly Transport Services is a trucking business in the United States. The company has two divisions (Loading and Off-loading) and uses the dual-rate method for allocating trucking costs to each round-trip to both divisions. At the start of 2019, the bu

> Soda-King prepared the budget for 2020 assuming a 12.5% market share based on total sales in the western region of the Australia. The total soft drinks market was estimated to reach sales of 10 million cartons in the region. However, actual total sales v

> Soda-King manufactures and sells two soft drinks: Kola and Limor. Budgeted and actual results for 2020 are as follows: Required 1. Compute the total sales-volume variance, the total sales-mix variance, and the total sales-quantity variance. (Calculate a

> The Hiro Corporation sells two brands of wine glasses: Plain and Chic. Hiro provides the following information for sales in the month of June 2020: All variances are computed in contribution-margin terms. Required 1. Calculate the sales-quantity varianc

> Lofty Bread Ltd is a baking company that operates in Thailand. The company produces two types of bread—a full loaf and a mini loaf. A full loaf is 8 inches long and a mini loaf is 3 inches long. Each full loaf is sold for à&cedil

> Holbrook Corporation has three divisions: pulp, paper, and fibers. Holbrook’s new controller, Paul Weber, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following informati

> Taco Bell, a fast-food restaurant, incurs the following costs: a. Cost of oil for the deep fryer b. Wages of the counter help who give customers the food they order c. Cost of tortillas and lettuce d. Cost of salsa packets given away with customer orders

> Martini Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includes a 300-room hotel, a casino, and a restaurant. As Martini’s new controller, your manager asks you to recommend the basis the hotel should use

> Blueback Manufacturing has four divisions named after its locations: China, Cambodia, Bangladesh, and India. Corporate headquarters is in Minnesota. Blueback corporate headquarters incurs $8,400,000 per period, which is an indirect cost of the divisions.

> HQ Drugs is a distributor of pharmaceutical products. Its ABC system has five activities: Rick Flair, the controller of HQ Drugs, wants to use this ABC system to examine individual customer profit- ability within each distribution market. He focuses firs

> Lapworth County Council has been awarded the office window cleaning contract against competition from private firms. The contract price is $6.20 per of- fice window and budget and actual results for first quarter are as follows: Required 1. Calculate th

> Enviro-Tech has only two retail and two whole- sale customers. Information relating to each customer for 2020 follows (in thousands): Enviro-Tech’s annual distribution-channel costs are $33 million for wholesale customers and $12 millio

> Dave Meltzer vacationed at Lake Tahoe last winter. Unfortunately, he broke his ankle while skiing and spent 2 days at the Sierra University Hospital. Meltzer’s insurance company received a $4,800 bill for his 2-day stay. One item that c

> Fun Stay Express operates a 100-room hotel near a busy amusement park. During June, a 30-day month, Fun Stay Express experienced a 65% occupancy rate from Monday evening through Thursday evening (weeknights). On Friday through Sunday evenings (weekend ni

> Jurgensen Manufacturing, Inc., plans to develop a new industrial-powered vacuum sweeper for household use that runs exclusively on rechargeable batteries. The product will take 6 months to design and test. The company expects the vacuum sweeper to sell 1

> TinRoof, Inc., manufactures and sells a do-it-your- self storage shed kit. In 2019, it reported the following: Required 1. What was TinRoof’s operating income in 2019? What was the full cost per unit? What was the selling price? What w

> John Branch is the managing partner of a business that has just finished building a 60-room motel. Branch anticipates that he will rent these rooms for 16,000 nights next year (or 16,000 room-nights). All rooms are similar and will rent for the same pric

> Pfizer, a pharmaceutical company, incurs the following costs: a. Payment of booth registration fee at a medical conference to promote new products to physicians b. Cost of redesigning an insulin syringe to make it less painful c. Cost of a toll-free tele

> Sun Systems provides energy audits in residential areas of southern Ohio. The energy audits provide information to homeowners on the benefits of solar energy. A consultant from Sun Systems educates the homeowner about federal and state rebates and tax cr

> Neuro Instruments uses a manufacturing costing system with one direct-cost category (direct materials) and three indirect-cost categories: a. Setup, production-order, and materials-handling costs that vary with the number of batches b. Manufacturing-oper

> Snappy Tiles is a small distributor of marble tiles. Snappy identifies its three major activities and cost pools as ordering, receiving and storage, and ship- ping, and it reports the following details for 2019: For 2019, Snappy buys 250,000 marble tiles

> Europa Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2020 is as follows: The percentage of time spent by professional staff on various activities follows: Assume administrative and suppor

> Refer to Exercise 13-29. Required 1. Calculate the amount and cost of unused architectural support capacity at the beginning of 2020, based on the number of jobs actually done in 2020. 2. Suppose Krater can add or reduce its architectural support capaci