Question: Use the information for Octavia Corp. in

> Svenson Technology considers direct labor cost too insignificant to separately account for, and, therefore, uses a $22.50 per machine hour predetermined conversion cost rate (of which $16 is related to fixed overhead costs). The conversion rate was estab

> Bird’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for v

> Auto Brakes Inc. manufactures brake rotors and has always applied overhead to production using direct labor hours. Recently, company facilities were automated, and the accounting system was revised to show only two cost categories: direct material and co

> An HMO medical program began reimbursing hospitals according to diagnostic-related groups (DRGs). Each DRG has a specified standard “length of stay.” If a patient leaves the hospital early, the hospital is financially impacted favorably, but a patient st

> Many companies face the prospect of paying workers overtime wages; some of these payments are at time-and-a-half wages. a. How does overtime pay affect direct labor cost? Variable overhead? b. Obviously, paying overtime to already employed workers makes

> McNeal Concrete makes precast concrete steps for use with manufactured housing. The company had the following 2010 budget based on expected production of 6,400 units: Actual production for 2010 was 7,000 units, and actual costs for the year were as follo

> At year-end 2010, the trial balance of Pennopscott Corp. showed the following accounts and amounts: Assume that, taken together, the variances are believed to be significant. Prepare the journal entries to close the variances at year-end. Round any neces

> Bobcat Inc.’s total predetermined overhead rate is $50 per hour based on a monthly capacity of 58,000 machine hours. Overhead is 30 percent variable and 70 percent fixed. During September 2010, Bobcat Inc. produced 5,100 units of product and recorded 60,

> Li Corporation’s flexible budget formula for total overhead is $360,000 plus $8 per direct labor hour. The combined overhead rate is $20 per direct labor hour. The following data have been recorded for 2010: Actual total overhead ……………………………..$580,000 To

> Munich Ltd. uses a combined overhead rate of $2.90 per machine hour to apply overhead to products. The rate was developed at an expected capacity of 264,000 machine hours; each unit of product requires two machine hours to produce. At 264,000 machine hou

> Kemp Manufacturing set 70,000 direct labor hours as the 2010 capacity measure for computing its predetermined variable overhead rate. At that level, budgeted variable overhead costs are $315,000. Kemp will apply budgeted fixed overhead of $140,400 on the

> The manager of the Texas Department of Transportation has determined that it typically takes 30 minutes for the department’s employees to register a new car. In Bexar County, the predetermined fixed overhead rate was computed on an estimated 10,000 direc

> Georgia Shacks produces small outdoor buildings. The company began operations in 2010, producing 2,000 buildings and selling 1,500. A variable costing income statement for 2010 follows. During the year, variable production costs per unit were $800 for di

> Refer to the information in Exercise 22 for Wyoming Wholesale. a. Using the least squares method, develop the equation for predicting weekly receiving report costs based on the number of shipments received. b. What is the predicted amount of receiving re

> As a three-person team, choose an activity that is commonly performed every day, such as taking a shower/bath, preparing a meal, or doing homework. Have each team member time him- or herself performing that activity for two days and then develop a standa

> Contact a local company that uses a standard cost system. Make an appointment with a manager at that company to interview her or him on the following issues: • the characteristics that should be present in a standard cost system to encourage positive emp

> What is an “equivalent unit of production,” and why is it a necessary concept to employ in a process costing system?

> (Appendix 2) In a process costing system, how are normal and abnormal spoilage typically treated? Why are normal and abnormal spoilage treated differently? Appendix 2: Spoilage The chapter examples assumed that all units to be accounted for have been tr

> Which cost component can be found in a downstream department of a multidepartment production process that will not be present in the first upstream department? Discuss.

> Is one equivalent unit computation sufficient for all cost components? Explain your answer.

> How do the weighted average and first-in, first-out methods of process costing differ in their treatment of beginning Work in Process Inventory units?

> What are the characteristics of a company that would be more likely to use process costing than job order costing?

> (Appendix 2) What is meant by the “method of neglect”? How does the use of this method affect cost of good production? Appendix 2: Spoilage The chapter examples assumed that all units to be accounted for have been tra

> What is a hybrid costing system? In what circumstances are hybrid costing systems typically employed?

> Tom Snider is a staff accountant for BigBiz. Snider was recently given the task of developing a monthly flexible budget formula for several manufacturing costs. He was told that his equations would be used as an aid in developing future budgets for these

> Why does standard costing make process costing more clerically and computationally efficient?

> A company has two sequential processing departments. On the cost of production reports for the departments, will the cost per unit transferred out of the first department always be equal to the cost per unit transferred in to the second department? Expla

> How is the cost of ending inventory calculated in a process costing system?

> What is meant by the term transferred-out cost? Why does the transferred-out cost under the WA method include only one computation but the FIFO method includes multiple computations?

> What is meant by the phrase units started and completed? Why is this phrase more closely associated with the first-in, first-out method of process costing than with the weighted average method?

> Use the information from Problem 4 for Delacroix Co. a. Prepare a cost of production report for March using the FIFO method. b. In general, what differences exist between the WA and FIFO methods of process costing and why do these differences exist? Inf

> Use the Fresh Seasons information from Problem 4, except assume that the company uses a FIFO process costing system. Information form Problem 4: Delacroix Co. had 800 units of inventory at the beginning of March 2010. Other information about that beginn

> Itzgood makes a variety of healthy snack foods. The following information for January 2010 relates to a trail mix. Materials are added at the beginning of processing; overhead is applied based on direct labor. The mix is transferred to a second departmen

> Delacroix Co. had 800 units of inventory at the beginning of March 2010. Other information about that beginning Work in Process Inventory is as follows: Direct labor costs were extremely high during February, because the company had a labor strike and pa

> Fresh Seasons is a contract manufacturer for Delectable Dressing Company. Fresh Seasons uses a weighted average process costing system to account for its salad dressing production. All ingredients are added at the start of the process. Delectable provide

> The Splash makes large fiberglass swimming pools and uses machine hours and direct labor hours to apply overhead in the Production and Installation departments, respectively. The monthly cost formula for overhead in Production is y = $7,950 + $4.05 MH; t

> Spangenberg Products manufactures computer cases. All material is added at the start of production and overhead is applied to each product at the rate of 70 percent of direct labor cost. At the beginning of July, there were no units in the Finished Goods

> Ro-Day-O Inc. manufactures belt buckles in a single-step production process. The following information is available for June 2010: Beginning inventory units were 100 percent complete as to material and 80 percent complete as to labor. The ending inventor

> Use the LaToya Company data given in Problem 20. However, assume that the spoiled goods were detected when conversion was 30 percent complete. Prepare a May 2010 cost of production report using the FIFO method. The cost of normal spoilage is attached to

> LaToya Company produces door pulls, which are inspected at the end of production. Spoilage may occur because the door pull is improperly stamped or molded. Any spoilage in excess of 3 percent of the completed good units is considered abnormal. Direct mat

> Strongarm manufactures various lines of bicycles. Because of the high volume of each type of product, the company employs a process cost system using the weighted average method to determine unit costs. Bicycle parts are manufactured in the Molding Depar

> Gary’s Tools manufactures one of its products in a two-department process. A separate Work in Process Inventory account is maintained for each department, and the company uses a weighted average process costing system. The first departm

> Turkburg produces frozen turkey patties. In the Forming Department, ground turkey is formed into patties and cooked; an acceptable shrinkage loss for this department is 1 percent of the pounds started. The patties are then transferred to the Finishing De

> Be-at-Ease Industries manufactures a series of three models of molded plastic chairs: standard (without arms), deluxe (with arms), and executive (with arms and padding). All are variations of the same design. The company uses batch manufacturing and has

> Donbrowski Co. manufactures reflective lenses and uses a standard process costing system. For May 2010, the following data are available: Standard Cost of 1 Unit Standard Cost of 1 Unit Direct material ……………………………………………………………………………….$ 5.50 Conversion ………

> KeepIn makes fencing in a two-stage production system. In the Cutting Department, wood is cut and assembled into 6-foot fence sections. In the Coating Department, the sections are pressure-treated to resist the effects of weather and then coated with a p

> Joe’s Lawn Care Service primarily mows lawns for residential customers. Management has determined direct labor hours is the primary cost driver and has developed the following cost equations based on direct labor hours: Grooming supplies (variable) y = $

> Elijah Inc. produces accent stripes for automobiles in 50-inch rolls. Each roll passes through three departments (Striping, Adhesion, and Packaging) before it is ready for shipment to customers. Product costs are tracked by department and assigned using

> Always Christmas makes artificial Christmas trees in two departments: Cutting and Boxing. In the Cutting Department, wire wrapped with green “needles” is placed into production at the beginning of the process and is cu

> Octavia Corp.’s products are manufactured in three separate departments: Molding, Curing, and Finishing. Materials are introduced in Molding; additional material is added in Curing. The following information is available for the Curing

> Waltham Mfg. makes skateboards and uses a weighted average process costing system. On May 1, 2010, the company had 400 boards in process that were 70 percent complete as to material and 85 percent complete as to conversion. During the month, 3,800 additi

> BeGone manufactures spray cans of insect repellent. On August 1, 2010, the company had 9,800 units in the beginning WIP Inventory that were 100 percent complete as to canisters, 60 percent complete as to other materials, 40 percent complete as to direct

> Pylonic Mfg. produces concrete garden border sections. All material is added at the beginning of processing. Production and cost information for May 2010 are as follows: WA EUP Direct material ……………………………………………160,000 sections Direct labor ……………………………………

> Assume that Rojo Inc. in Exercise 24 had 7,200 EUP for direct material in October’s beginning WIP Inventory, 8,000 EUP for direct labor, and 7,920 EUP for overhead. What was the October FIFO cost per EUP for direct material, direct labor, and overhead?

> In October 2010, Rojo Inc.’s production was 53,600 equivalent units for direct material, 48,800 equivalent units for direct labor, and 42,000 equivalent units for overhead. During October, direct material, conversion, and overhead costs incurred were as

> On April 30, 2010, Alvira Co. had 21,600 units in process that were 85 percent complete as to material, 60 percent complete as to direct labor, and 45 percent complete as to overhead. During May, 561,000 units were started. The 13,700 units in ending inv

> Bon Voyage provides charter cruises in the eastern Caribbean. Tina Louise, the owner, wants to understand how her labor costs change per month. She recognizes that the cost is neither strictly fixed nor strictly variable. She has gathered the following i

> Ynugai Corp. uses a process costing system to assign costs to its steel production. During March 2010, Ynugai had beginning Work in Process Inventory of 180,000 tons of steel (100 percent complete as to material and 65 percent complete as to conversion).

> Funtime Inc. makes small toys in a one-department production process. Plastic is added at the beginning of the process; all other materials are considered indirect. The following information is available relative to September 2010 production activities:

> Using the information in Exercise 4 and assuming a FIFO method of process costing, determine the equivalent units of production for labor and overhead. Data given in Exercise 4: For each of the following situations, use the weighted average method to de

> Assume that O’Malley Corp. in Exercise 16 uses the FIFO method of process costing. a. What are the equivalent units of production for direct material? b. What are the equivalent units of production for conversion? Data from Exercise 16 O’Malley Corp. us

> Assume that Trevano Corp. in Exercise 15 uses the FIFO method of process costing. a. What proportion of work needs to be performed on the beginning inventory units to complete them? b. What are the equivalent units of production for direct material? c. W

> For each of the following situations, use the weighted average method to determine the equivalent units of production for labor and overhead, assuming that they are continuously at the same percentage of completion: a. Beginning WIP Inventory (45% comple

> O’Malley Corp. uses a weighted average process costing system. Material is added at the beginning of the production process and overhead is applied on the basis of direct labor. O’Malley’s records indicate that 70,000 units were in process at the beginni

> In manufacturing its products, Trevano Corp. adds all direct material at the beginning of the production process. The company’s direct labor and overhead are considered to be continuously at the same degree of completion. September production information

> Hebert Industries uses a weighted average process costing system. Management has specified that the normal loss from shrinkage cannot exceed 3 percent of the units started in a period. All raw material is added at the start of the production process. Spo

> Oehkle Inc. produces paint in a process in which spoilage occurs continually. Spoilage of 2 percent or fewer of the gallons of raw material placed into production is considered normal. The following operating statistics are available for June 2010: Begin

> Green Shade manufactures insulated windows. The firm’s repair and maintenance (R&M) cost is mixed and varies most directly with machine hours worked. The following data have been gathered from recent operations: a. Use the high&acir

> Pat Koontz makes necklaces from glass beads, metal beads, and natural beads. After reading about hybrid costing, she realized that the different types of necklaces did not cost the same amount of money to make, even though they took the same amount of ti

> Batwings makes one-size-fits-most capes. Each cape goes through the same conversion process, but three types of fabric (Dacron, denim, and cotton) are available. The company uses a standard costing system, and standard costs for each type of cape follow.

> Najm Company uses a standard costing system to account for its pita bread manufacturing process. The bread is sold in packages of one dozen pieces. The company has set the following cost standards for each package: Direct material—ingredients …………………………$

> Alberton Co. uses a standard costing system to account for its production of toys. Plastic is added at the start of production; labor and overhead are incurred at equal rates throughout the process. The standard cost of one toy is as follows: Direct mate

> Baum Co. has two processing departments: Fabrication and Assembly. In the Fabrication Department, metal is cut and formed into various components, which are then transferred to Assembly. The components are welded, polished, and coated with sealant in the

> Use the information in Exercise 36 and assume that Lamb Inc. uses the FIFO method of process costing. For the Assembly Department, compute the following: a. equivalent units of production for each cost component b. cost per EUP for each cost component c.

> Lamb Inc. produces calendars in a two-process, two-department operation. In the Printing Department, calendars are printed and cut. In the Assembly Department, the material received from Printing is assembled into individual calendars and bound. Each dep

> Found Sound Company mass-produces miniature speakers for personal sound systems. The following cost information is available for June 2010: Beginning inventory direct material cost …………………………$ 4,133.20 Beginning inventory conversion cost …………………………………….8

> In November 2010, Angerstein Co. computed its equivalent unit costs under FIFO process costing as follows: Direct material ………………………….$29.50 Packaging …………………………………….3.00 Direct labor …………………………………10.84 Overhead ………………………………………7.68 Direct material and pa

> In October 2010, Tibbetts Company had the following production and cost data: Beginning inventory units (80% complete as to DM; 45% complete as to DL; 30% complete as to OH)……………………….42,600 October completed production ……….………………………………………1,570,000 Units

> Wisconsin Dairy determined that the total predetermined OH rate for costing purposes is $26.80 per cow per day (referred to as an animal day). Of this, $25.20 is the variable portion. Overhead cost information for two levels of activity within the releva

> During August 2010, Berman Company’s Department Y equivalent unit product costs, computed under the weighted average method, were as follows: Material …………………………$2 Conversion ………………………6 Transferred in ……………….10 All material is introduced at the end of th

> The following production and cost per EUP data are available for Vendome Corp. for February 2010: Units completed during February ……………………………………………………390,000 Units in ending inventory (100% complete as to direct material; 30% complete as to direct labor;

> Use the information in Exercise 15 except assume that Waltham Mfg. uses FIFO costing. Prepare a schedule showing the August 2010 computation of FIFO equivalent units of production and cost per equivalent unit. Data given in Exercise 15: Waltham Mfg. mak

> Use the information in Exercise 27 except assume that BeGone uses FIFO process costing. Prepare a schedule showing the BeGone August 2010 computation of FIFO equivalent units of production and cost per equivalent unit. Data given in Exercise 27: BeGone

> In a team of three or four people, choose a company whose mass production process you would like to study. Use the library, the Internet, and (if possible) personal resources to gather information. Prepare a visual representation (similar to Exhibit 6&ac

> How can information produced by a job order costing system assist managers in operating their firms more efficiently?

> In choosing a product costing system, what are the three valuation method alternatives? Explain how these methods differ.

> In choosing a product costing system, what are the two choices available for a cost accumulation system? How do these systems differ?

> Why are normal and abnormal spoilage accounted for differently? Typically, how does one determine which spoilage is normal and which is abnormal?

> If normal spoilage is generally anticipated to occur on all jobs, how should the cost of that spoilage be treated?

> Grand Island Brake Co. budgeted the following variable and fixed overhead costs for 2010: Variable indirect labor …………………………………………$100,000 Variable indirect materials ………………………………………20,000 Variable utilities ………………………………………………………80,000 Variable portion o

> How can the variance information provided by standard costing be used to improve cost control?

> In using standard costing in a job order costing system, are standards established for material and labor costs and quantities?

> In a job order costing system, what key documents support the cost accumulation process and what is the purpose of each?

> Production data for the first week in November 2010 for Florida Fabricators were as follows: Finished Goods Inventory, Nov. 1: $23,800 Finished Goods Inventory, Nov. 5: $0 Direct labor hours worked in the first week of November were 680 at a cost of $15

> Stockman Co. began 2010 with three jobs in process: During 2010, the following transactions occurred: 1. The firm purchased and paid for $542,000 of raw material. 2. Factory payroll records revealed the following: • Indirect labor incur

> Ialani Corp. uses a job order costing system for the yachts it constructs. On September 1, 2010, the company had the following account balances: Raw Material Inventory …………………………………$ 332,400 Work in Process Inventory ………………………………1,512,600 Cost of Goods S

> Polaski Inc. uses an actual cost, job order system. The following transactions are for August 2010. At the beginning of the month, Direct Material Inventory was $2,000, Work in Process Inventory was $10,500, and Finished Goods Inventory was $6,500. • Dir

> Summer Shade installs awnings on residential and commercial structures. The company had the following transactions for February 2010: • Purchased $790,000 of building (raw) material on account. • Issued $570,000 of building (direct) material to jobs. • I

> PlastiCo produces plastic pipe to customer specifications. Losses of less than 5 percent are considered normal because they are inherent in the production process. The company applies overhead to products using machine hours. PlastiCo used the following

> Prudoe Compounds produces a variety of chemicals that are used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compounds includes normal spoilage cost in its predetermined O