Question: Why is the flexible-budget variance the

> Quality Chicken is computing the ending inventory values for its July 31, 2015, statement of financial position. Ending inventory amounts on July 31 are 15 kilograms of breasts, 4 kilograms of wings, 6 kilograms of thighs, 5 kilograms of bones, and 2 kil

> A number of terms are listed below: byproduct …………………….constant gross margin percentage estimated net realizable value …………………….joint products main product ………………………………………..physical measure products …………………………………………sales value at splitoff scrap ……………………

> Consider E-books again. The controller of E-books reads a widely used textbook that states “The reciprocal method is conceptually the most defensible.” He seeks your assistance. Required: 1. Describe the key features of the reciprocal method. 2. Allocat

> E-books, an online book retailer, has two operating divisions— corporate sales and consumer sales—and two support divisions—human resources and information systems. Each sales division conducts mercha

> Three restaurants in a downtown area of a large city have decided to share a valet service and parking lot for their customers. The cost of the service and lot is $10,000 per month. The owners of the restaurants need to decide how to divide the $10,000 c

> The Bow River Company has prepared division overhead budgets for budgeted-volume levels before allocations as follows: Management has decided that the most appropriate in ventory costs are achieved by using individual division overhead rates. These rat

> Refer to the data given in Exercise 14-20. Required: 1. Allocate the two support divisions’ costs to the two operating divisions using the reciprocal method. 2. Compare and explain differences in requirement 1 with those in requirement

> Explain the main conceptual issue under variable and absorption costing regarding the proper timing for the release of fixed manufacturing overhead as expense.

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

> Chocolat Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each round trip. At the start of 2015, the budgeted costs were: Variable cost per round trip ……â€&

> Chocolat Inc. is a producer of premium chocolate based in Owen Sound. The company has a separate division for each of its two products: dark chocolate and milk chocolate. Chocolat purchases ingredients from Toronto for its dark chocolate division and fro

> The Saskatchewan power plant that services all manufacturing divisions of Sask Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms: The expected monthly costs for operating the power plant during

> Dave Meltzer went to Lake Tahoe for his annual winter vacation. Unfortunately, he broke his ankle severely while skiing and had to spend two days at the Tahoe General Hospital. Meltzer’s insurance company received a $4,800 bill for his two-day stay. One

> A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. Target pricing is a policy well suited to a highly competitive environment where the corporation is a ___________ because customers

> Refer to Exercise 13-27. Required: 1. Calculate Lakeside’s operating income in both 2015 and 2016. 2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2015 to 2016. 3. C

> Lakeside T-Shirt Company sells a variety of T-shirts. Lakeside presents the following data for its first two years of operations, 2015 and 2016. For simplicity, assume that all purchasing and selling costs are included in the average cost per T-shirt and

> Refer to the Snyder Corporation information in Exercise 13-23. Required: 1. Where possible, calculate the amount and cost of unused capacity for (a) software implementation support and (b) software development at the beginning of 2016, based on units of

> Suppose that during 2016 the market for implementing sales management software increased by 5%, and that Snyder experiences a 1% decline in prices. Assume that any further decreases in selling prices and increases in market share are strategic choices by

> Why is the term direct costing a misnomer for variable costing?

> Refer to the information in Exercise 13-23. Required: 1. Calculate the change in operating income of Snyder Corporation in 2015 and 2016. 2. Calculate the growth, price-recovery, and productivity components of changes in operating income between 2015 an

> Snyder Corporation is a small information systems consulting firm that specializes in helping companies implement sales management software. The market for Snyder’s products is very competitive. To compete, Snyder must deliver quality s

> Refer to the Grey Corporation information in Exercise 13-18. Required: 1. Where possible, calculate the amount and cost of unused capacity for (a) manufacturing, (b) selling and customer service, and (c) design at the beginning of 2015 based on 2015 pro

> Suppose that between 2015 and 2016 the market for Grey’s special-purpose machines grew at 3%. All increases in market share (that is, sales increases greater than 3%) are the result of Grey’s strategic actions. Required: Calculate how much of the change

> Refer to the information in Exercise 13-18. Required: 1. Calculate the change in operating income of Grey Corporation in 2015 and 2016. 2. Calculate the growth, price-recovery, and productivity components of changes in operating income between 2015 and

> Grey Corporation makes a special-purpose D4H machine used in the textile industry. Grey has designed the D4H machine for 2015 to be distinct from its competitors. It has been generally regarded as a superior machine. Grey presents the following data for

> La Flamme Corporation manufactures corrugated cardboard boxes. It competes and plans to grow by producing high-quality boxes at a low price that are delivered to customers in a timely manner. Many other manufacturers produce similar boxes. La Flamme beli

> A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. Any management team must understand how it created value for its customers and decide how to accomplish this goal better than all it

> Carson Associates prepares architectural drawings to conform to local structural-safety codes. Its statement of comprehensive income for 2015 is: Revenue ……………………………………………………………………………………..$680,000 Salaries of professional staff (8,000 hours × $50 per ho

> The following financial data apply to the DVD production plant of the Dill Company for October 2015: Budgeted Manufacturing Cost per DVD Direct materials ………………………………….$1.60 Direct manufacturing labour ………………..0.90 Variable manufacturing overhead ………..0

> The production-volume variance should always be written off to “Cost of Goods Sold.” Do you agree? Explain

> Screen Games (SG) distributes DVD games to retail stores and game parlours. It has a simple business model: Order the DVD games, catalogue the games on SG’s website, deliver and provide on-site support, and bill and collect from the cus

> The Montreal Company is an electronics business with eight product lines. Income data for one of the products (XT-107) for June 2015 are: Dorval Ltd., an instruments company, has a problem with its preferred supplier of XT-107 components. This supplier

> Executive Power (EP) manufactures and sells computers and computer peripherals to several nationwide retail chains. Johan Farnham is the manager of the printer division. Its two largest selling printers are P-41 and P-63. The manufacturing cost of each p

> Snappy Tiles is a small distributor of marble tiles. Snappy identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2015: For 2015, Snappy buys 250,000 marble tiles

> Digital Arts Inc. manufactures game systems. Digital Arts has decided to create and market a new system with wireless controls and excellent video graphics. Digital Arts’s managers are thinking of calling this system the Yew. Based on p

> Bradshaw Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2014 is as follows: a.Materials and labour for servicing machine tools …………..$800,000 b.Rework costs ……………………………………………………………………75,000 c.Expediting costs ca

> Medical 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 o

> Manitoba Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Holstein cows raised on a special corn-based diet. One kilogram of soft cheese, which has a contribution margin of $8, requires 4 litres of milk. A well-known gourmet res

> John Beck is the managing partner of a business that has just finished building a 60-room motel. Beck 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 price. B

> Waterbury, Inc. manufactures and sells RF17, a specialty raft used for whitewater rafting. In 2015, it reported the following: Required: 1. What was the selling price in 2015? What was the percentage markup on full cost? What was the variable cost per

> Body-Builders, Inc., produces two basic types of weightlifting equipment, Model 9 and Model 14. Pertinent data are as follows The weight-lifting craze is such that enough of either Model 9 or Model 14 can be sold to keep the plant operating at full cap

> Nevada Industries manufactures electronic testing equipment. Nevada also installs the equipment at customers’ sites and ensures that it functions smoothly. Additional information on the manufacturing and installation departments is as follows (capacities

> Westford Company produces three products, A110, B382, and C657. Unit data for the three products follow: All three products use the same direct material, Bistide. The demand for the products far exceeds the direct material available to produce the prod

> The Svenson Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2015 and the expecte

> The following conversation occurred between Brian Richardson, plant manager at Glendale Engineering, and Charles Cheng, plant controller. Glendale manufactures automotive component parts, such as gears and crankshafts, for automobile manufacturers. Richa

> The cooking department of Deli Inc. uses a processcosting system. Direct materials are added at the beginning of the cooking process. Conversion costs are added evenly during the cooking process. Consider the following data for the cooking department of

> Farkas Shoes, a high-end shoe manufacturer, produces two lines of shoes for women. The shoes are identical in design, but differ in the materials used and the trim added to the shoes. The basic shoes are made from a synthetic leather, have a synthetic in

> Margaret Major is the corporate controller of Leisure Suits. Leisure Suits has 20 plants worldwide that manufacture basic suits for retail stores. Each plant uses a process-costing system. At the end of each month, each plant manager submits a production

> Ira Stone, the president of General Hospital, has a meeting with the Medical Economics Group (MEG). MEG is a consulting firm in the health services sector. It reports that General’s billing operations are grossly inefficient. Its standard costing per bil

> A large metropolitan health-care complex, General Hospital, has had difficulty controlling its accounts receivable. Costs currently available from the information system are inaccurate and have led to gross errors in reports to the various government fun

> As a producer of wine in the Niagara region, you have the opportunity either to lease vineyards from local grape-growers or to purchase grapes from other farmers. In the past you have purchased grapes from the Okanagan Valley in British Columbia, and fro

> Flash Chip Company (FCC) produces memory modules i n a two-step process: chip fabrication and module assembly. In chip fabrication, each batch of raw silicon wafers yields 500 standard chips and 500 deluxe chips. Chips are classified as standard or delux

> In the United States, organ procurement organizations (OPOs), transplant centres, and the medical professions coordinate the organ donation process. The U.S. government pays for this treatment through its Medicare program. What price should the U.S. gove

> Hernandez Corporation is bidding on a new construction contract, here called Contract No. 1. If the bid is accepted, work will begin in a few days, on January 1, 2016. Contract No. 1 requires a special cement. Hernandez has already purchased 10,000 kilog

> Lynn Hardt, a management accountant with the Paibec Corporation, is evaluating whether a component, MTR-2000, should continue to be manufactured by Paibec or purchased from Marley Company, an outside supplier. Marley has submitted a bid to manufacture an

> Nost Vineyards is a wine manufacturer. It distributes its products to retailers across Canada. Nost’s objective is to be the number one distributor of its product lines in Canada. Nost competes against a limited number of Canadian companies, but also mus

> Describe just-in-time (JIT) purchasing and its benefits.

> Name five cost categories that are important in managing goods for sale in a retail organization.

> The costs of reworking defective units are always charged to the specific jobs where the defects were originally discovered.” Do you agree? Explain.

> The point of inspection is the key to the allocation of spoilage costs.” Do you agree? Explain.

> In accounting for spoiled goods, we are dealing with cost assignment rather than cost incurrence.” Explain.

> What has been regarded as normal spoilage in the past is not necessarily acceptable as normal spoilage in the present or future.” Explain.

> Transferred-in costs are those incurred in the preceding accounting period.” Do you agree? Explain.

> Sooke Ale recently purchased a brewing plant from a bankrupt company. It was constructed only two years ago. The plant has budgeted fixed manufacturing overhead of $50 million per year ($4.167 million each month) in 2015. Paul Vautin, the controller of t

> Identify the main difference between journal entries in process costing and the ones in job costing.

> State two conditions under which computing equivalent units will make a material difference to reported inventory amounts.

> Give three examples of industries that often use process-costing systems.

> How can the extent of price discounting be tracked on a customer-by-customer basis?

> Are for-profit businesses the only users of revenue allocation? Explain.

> Why is customer profitability analysis a vitally important topic to managers?

> Why might some companies choose not to compute market-size and market-share variances?

> Explain why a favourable sales-quantity variance occurs.

> How might a dispute over the allocation of revenues of a bundled product be resolved?

> Why is the constant gross margin percentage NRV method sometimes called a “joint cost and a profit allocation” method?

> EnRG Inc. produces trail mix packaged for sale in convenience stores across Canada. At the beginning of April 2015, EnRG has no inventory of trail mix. Demand for the next three months is expected to remain constant at 50,000 bags per month. EnRG plans t

> How might a company simplify its use of the estimated NRV method when the final selling prices can vary sizably in an accounting period and management makes frequent changes to the point at which it sells individual products?

> What is one key method to avoid disputes over allocation of support costs with respect to government contracts?

> What is theoretically the most defensible method for allocating service division costs?

> To ensure unbiased cost allocations, fixed indirect costs should be allocated on the basis of estimated long-run use by user division managers.” Do you agree? Why?

> Name three decisions managers face when designing the cost allocation component of an accounting system.

> What are two basic reasons for a management team to select one period cost allocation method over another?

> What are four purposes of cost allocation?

> What is the difference between a stakeholder and a shareholder?

> What is a strategy map?

> What is a customer preference map and why is it useful?

> Halsey Company sells women’s clothing. Halsey’s strategy is to offer a wide selection of clothes and excellent customer service and to charge a premium price. Halsey presents the following data for 2015 and 2016. For s

> Assume variable manufacturing overhead is allocated using machine-hours. Give three possible reasons for a $30,000 favourable variable overhead efficiency variance.

> Describe three alternative cost-plus methods.

> It is not important for a firm to distinguish between cost incurrence and locked-in costs.” Do you agree? Explain.

> Give two examples of pricing decisions with a short-run focus.

> All future costs are relevant.” Do you agree? Explain briefly.

> Define opportunity cost .

> What is the goal of an ordinary least squares (OLS) linear regression?

> All independent variables in a cost function estimated with regression analysis are cost drivers.” Do you agree?

> The difference between practical capacity and master-budget capacity utilization is the best measure of management’s ability to balance the costs of having too much capacity and having too little capacity.” Do you agree? Explain.

> Which denominator-level concepts emphasize what a plant can supply? Which denominator-level concepts emphasize what customers demand for products produced by a plant?

> Explain how four-variance analysis differs from one-, two-, and three-variance analysis.

> Select the graph that matches the numbered manufacturing cost data. Indicate by letter which of the graphs best fits each of the situations or items described. The vertical axes of the graphs represent total dollars of cost, and the horizontal axes repre

> Explain how the analysis of fixed overhead costs differs for (a) planning and control on the one hand and (b) inventory costing for financial reporting on the other.

> The rate variance for variable manufacturing overhead is affected by several factors. Explain.